§ 2009g. — Guarantee and commitment to guarantee loans.
[Laws in effect as of January 24, 2002]
[Document not affected by Public Laws enacted between
January 24, 2002 and December 19, 2002]
[CITE: 7USC2009g]
TITLE 7--AGRICULTURE
CHAPTER 50--AGRICULTURAL CREDIT
SUBCHAPTER V--RURAL COMMUNITY ADVANCEMENT PROGRAM
Sec. 2009g. Guarantee and commitment to guarantee loans
(a) ``Eligible public entity'' defined
In this section, the term ``eligible public entity'' means any unit
of general local government.
(b) Guarantee and commitment
The Secretary, on such terms and conditions as the Secretary may
prescribe, may guarantee and make commitments to guarantee notes or
other obligations issued by eligible public entities, or by public
agencies designated by the eligible public entities, for the purposes of
financing rural development activities authorized and funded under
section 2009f of this title.
(c) Limitation
The Secretary may not make a guarantee or commitment to guarantee
with respect to a note or other obligation if the total amount of
outstanding notes or obligations guaranteed under this section
(excluding any amount repaid under the contract entered into under
subsection (e)(1)(A) of this section) for issuers in the State would
exceed an amount equal to 5 times the sum of the total amount of grants
made to the State under section 2009f of this title.
(d) Payment of principal, interest, and costs
Notwithstanding any other provision of this subchapter, a State to
which a grant is made under section 2009f of this title may use the
grant (including program income derived from the grant) to pay principal
and interest due (including such servicing, underwriting, or other costs
as may be specified in regulations of the Secretary) on any note or
other obligation guaranteed under this section.
(e) Repayment contract; security
(1) In general
To ensure the repayment of notes or other obligations and
charges incurred under this section and as a condition for receiving
the guarantees, the Secretary shall require the issuer to--
(A) enter into a contract, in a form acceptable to the
Secretary, for repayment of notes or other obligations
guaranteed under this section;
(B) pledge any grant for which the issuer may become
eligible under this subchapter; and
(C) furnish, at the discretion of the Secretary, such other
security as may be considered appropriate by the Secretary in
making the guarantees.
(2) Security
To assist in ensuring the repayment of notes or other
obligations and charges incurred under this section, a State shall
pledge any grant for which the State may become eligible under this
subchapter as security for notes or other obligations and charges
issued under this section by any eligible public entity in the
State.
(f) Pledged grants for repayments
Notwithstanding any other provision of this subchapter, the
Secretary may apply grants pledged pursuant to paragraphs (1)(B) and (2)
of subsection (e) of this section to any repayments due the United
States as a result of the guarantees.
(g) Outstanding obligations
The total amount of outstanding obligations guaranteed on a
cumulative basis by the Secretary pursuant to subsection (b) of this
section shall not at any time exceed such amount as may be authorized to
be appropriated for such purpose for any fiscal year.
(h) Purchase of guaranteed obligations by Federal Financing Bank
Notes or other obligations guaranteed under this section may not be
purchased by the Federal Financing Bank.
(i) Full faith and credit
The full faith and credit of the United States is pledged to the
payment of all guarantees made under this section. Any such guarantee
made by the Secretary shall be conclusive evidence of the eligibility of
the obligations for the guarantee with respect to principal and
interest. The validity of the guarantee shall be incontestable in the
hands of a holder of the guaranteed obligations.
(Pub. L. 87-128, title III, Sec. 381H, as added Pub. L. 104-127, title
VII, Sec. 761, Apr. 4, 1996, 110 Stat. 1145.)
Section Referred to in Other Sections
This section is referred to in sections 2009f, 2009cc-4, 2009cc-5 of
this title.
