§ 1989. — Rules and regulations.
[Laws in effect as of January 24, 2002]
[Document not affected by Public Laws enacted between
January 24, 2002 and December 19, 2002]
[CITE: 7USC1989]
TITLE 7--AGRICULTURE
CHAPTER 50--AGRICULTURAL CREDIT
SUBCHAPTER IV--ADMINISTRATIVE PROVISIONS
Sec. 1989. Rules and regulations
(a) In general
The Secretary is authorized to make such rules and regulations,
prescribe the terms and conditions for making or insuring loans,
security instruments and agreements, except as otherwise specified
herein, and make such delegations of authority as he deems necessary to
carry out this chapter.
(b) Debt service margin requirements
Notwithstanding subsection (a) of this section, in providing farmer
program loan guarantees under this chapter, the Secretary shall consider
the income of the borrower adequate if the income is equal to or greater
than the income necessary--
(1) to make principal and interest payments on all debt
obligations of the borrower, in a timely manner;
(2) to cover the necessary living expenses of the family of the
borrower; and
(3) to pay all other obligations and expenses of the borrower
not financed through debt obligations referred to in paragraph (1).
(c) Certified Lenders Program
(1) In general
The Secretary shall establish a program under which the
Secretary shall guarantee loans for any purpose specified in
subchapter II of this chapter that are made by lending institutions
certified by the Secretary.
(2) Certification requirements
The Secretary shall certify a lending institution that meets
such criteria as the Secretary may prescribe in regulations,
including the ability of the institution to properly make, service,
and liquidate the loans of the institution.
(3) Condition of certification
As a condition of the certification, the Secretary shall require
the institution to undertake to service the loans guaranteed by the
Secretary under this subsection, using standards that are not less
stringent than generally accepted banking standards concerning loan
servicing employed by prudent commercial or cooperative lenders. The
Secretary shall, at least annually, monitor the performance of each
certified lender to ensure that the conditions of the certification
are being met.
(4) Effect of certification
Notwithstanding any other provision of law:
(A) The Secretary shall guarantee 80 percent of a loan made
under this subsection by a certified lending institution as
described in paragraph (1), subject to county committee
certification that the borrower of the loan meets the
eligibility requirements and such other criteria as may be
applicable to loans guaranteed by the Secretary under other
provisions of this chapter.
(B) With respect to loans to be guaranteed by the Secretary
under this subsection, the Secretary shall permit certified
lending institutions to make appropriate certifications (as
provided by regulations issued by the Secretary)--
(i) relating to issues such as creditworthiness,
repayment ability, adequacy of collateral, and feasibility
of farm operation; and
(ii) that the borrower is in compliance with all
requirements of law, including regulations issued by the
Secretary.
(C) The Secretary shall approve or disapprove a guarantee
not later than 14 calendar days after the date that the lending
institution applied to the Secretary for the guarantee. If the
Secretary rejects the loan application within the 14-day period,
the Secretary shall state, in writing, all of the reasons the
application was rejected.
(5) Relationship to other requirements
Neither this subsection nor subsection (d) of this section shall
affect the responsibility of the Secretary to certify eligibility,
review financial information, and otherwise assess an application.
(d) Preferred Certified Lenders Program
(1) In general
Commencing not later than two years after October 28, 1992, the
Secretary shall establish a Preferred Certified Lenders Program for
lenders who establish their--
(A) knowledge of, and experience under, the program
established under subsection (c) of this section;
(B) knowledge of the regulations concerning the guaranteed
loan program; and
(C) proficiency related to the certified lender program
requirements.
The Secretary shall certify any lending institution as a Preferred
Certified Lender that meets such criteria as the Secretary may
prescribe by regulation.
(2) Revocation of designation
The designation of a lender as a Preferred Certified Lender
shall be revoked at any time that the Secretary determines that such
lender is not adhering to the rules and regulations applicable to
the program or if the loss experiences of a Preferred Certified
Lender are excessive as compared to other Preferred Certified
Lenders, except that such suspension or revocation shall not affect
any outstanding guarantee.
(3) Condition of certification
As a condition of such preferred certification, the Secretary
shall require the institution to undertake to service the loans
guaranteed by the Secretary under this subsection using generally
accepted banking standards concerning loan servicing employed by
prudent commercial or cooperative lenders. The Secretary shall, at
least annually, monitor the performance of each preferred certified
lender to ensure that the conditions of such certification are being
met.
(4) Effect of preferred lender certification
Notwithstanding any other provision of law, the Secretary
shall--
(A) guarantee 80 percent of an approved loan made by a
certified lending institution as described in this subsection,
subject to county committee certification that the borrower
meets the eligibility requirements or such other criteria as may
be applicable to loans guaranteed by the Secretary under other
provisions of this chapter;
(B) permit certified lending institutions to make all
decisions, with respect to loans to be guaranteed by the
Secretary under this subsection relating to credit worthiness,
the closing, monitoring, collection and liquidation of loans,
and to accept appropriate certifications, as provided by
regulations issued by the Secretary, that the borrower is in
compliance with all requirements of law or regulations
promulgated by the Secretary; and
(C) be deemed to have guaranteed 80 percent of a loan made
by a preferred certified lending institution as described in
paragraph (1), if the Secretary fails to approve or reject the
application of such institution within 14 calendar days after
the date that the lending institution presented the application
to the Secretary. If the Secretary rejects the application
within the 14-day period, the Secretary shall state, in writing,
the reasons the application was rejected.
(e) Administration of Certified Lenders and Preferred Certified Lenders
programs
The Secretary may administer the loan guarantee programs under
subsections (c) and (d) of this section through central offices
established in States or in multi-State areas.
(Pub. L. 87-128, title III, Sec. 339, Aug. 8, 1961, 75 Stat. 318; Pub.
L. 102-554, Sec. 18, Oct. 28, 1992, 106 Stat. 4155; Pub. L. 106-31,
title III, Sec. 3019(a), May 21, 1999, 113 Stat. 99; Pub. L. 107-171,
title V, Sec. 5309, May 13, 2002, 116 Stat. 346.)
References in Text
For definition of ``this chapter'', referred to in text, see note
set out under section 1921 of this title.
Amendments
2002--Subsec. (e). Pub. L. 107-171 added subsec. (e).
1999--Subsec. (b)(3). Pub. L. 106-31 struck out ``, including
expenses of replacing capital items (determined after taking into
account depreciation of the items)'' after ``paragraph (1)''.
1992--Pub. L. 102-554, inserted section catchline, designated
existing provisions as subsec. (a), inserted heading, and added subsecs.
(b) to (d).
Regulations
Section 23 of Pub. L. 102-554 provided that:
``(a) Interim Regulations.--Not later than 180 days after the date
of enactment of this Act [Oct. 28, 1992], the Secretary of Agriculture
shall issue such interim regulations as are necessary to implement this
Act [see Short Title of 1992 Amendment note set out under section 1921
of this title] and the amendments made by this Act.
``(b) Final Regulations.--Not later than October 1, 1993, the
Secretary of Agriculture shall issue such final regulations as are
necessary to implement this Act and the amendments made by this Act.''
Pub. L. 100-233, title VI, Sec. 624, Jan. 6, 1988, 101 Stat. 1685,
provided that: ``Within 150 days after the date of the enactment of this
title [Jan. 6, 1988], and after considering public comment obtained
under section 553 of title 5, United States Code, the Secretary shall
issue final regulations to carry out the amendments made by this title
[enacting sections 1981d, 1981e, 1983c, and 2001 to 2005 of this title,
amending sections 1927, 1927a, 1981, 1982, 1983b, 1985, 1991, 1997,
1999, and 2000 of this title, and amending provisions set out as a note
under section 1999 of this title].''
Study and Report to Congress Before Issuance of Certain Final
Regulations
Pub. L. 100-233, title VI, Sec. 621, Jan. 6, 1988, 101 Stat. 1684,
provided that: ``Not later than 60 days before the Secretary of
Agriculture issues final regulations providing for the use of ratios and
standards as part of loan applications or preapplications, for
determining the degree of potential loan risk on loans insured or
guaranteed under the Consolidated Farm and Rural Development Act [7
U.S.C. 1921 et seq.], the Secretary shall complete a study and report to
the Committee on Agriculture, Nutrition, and Forestry of the Senate and
the Committee on Agriculture of the House of Representatives on the
effects of such regulations on a representative sample of persons who,
as of the date of the enactment of this Act [Jan. 6, 1988], are
borrowers or potential borrowers of such loans, and shall demonstrate in
such study that the implementation of such final regulations will not
result in a portfolio of borrowers that is inconsistent with the
purposes of the Consolidated Farm and Rural Development Act.''
Availability of Funds for Continuing Assistance to Delinquent Borrowers;
Prohibition on Use of Funds
Pub. L. 100-71, title I, July 11, 1987, 101 Stat. 429, provided in
part that:
``Hereafter, funds appropriated or available to the Farmers Home
Administration under this or any other Act to make or to service farm
loans shall be available for continuing assistance to delinquent
borrowers on the basis of the policies contained in Farmers Home
Administration Announcement Number 1113-1960, dated November 30, 1984.
``Hereafter, none of the funds appropriated or made available by
this or any other Act, or otherwise made available to the Secretary of
Agriculture or the Farmers Home Administration, may be used to implement
section 1944.16(c)(1) of title 7, Code of Federal Regulations, as
published in 52 Federal Register 11983 (April 14, 1987) or any other
regulation that would have the same effect as such regulation.''
Coordinated Financial Statements; Use of Submission Requirement
Prohibited
Pub. L. 99-198, title XIII, Sec. 1325, Dec. 23, 1985, 99 Stat. 1540,
provided that: ``The Secretary of Agriculture shall not use or require
the submission of the coordinated financial statement referred to in the
proposed regulations of the Farmers Home Administration published in the
Federal Register of November 8, 1983 (48 F.R. 51312-51317) in connection
with an application submitted on or after the date of the enactment of
this Act [Dec. 23, 1985] for any loan under any program of the
Department of Agriculture carried out by the Farmers Home
Administration.''
Section Referred to in Other Sections
This section is referred to in section 1983a of this title.
