12 U.S. Code § 2279aa–8 - Standards for qualified loans
(1) In general
The Corporation shall establish underwriting, security appraisal, and repayment standards for qualified loans taking into account the nature, risk profile, and other differences between different categories of qualified loans.
(2) Supervision, examination, and report of condition
The standards shall be subject to the authorities of the Farm Credit Administration under section 2279aa–11 of this title.
(3) Mortgage loans
In establishing standards for qualified loans, the Corporation shall confine corporate operations, so far as practicable, to mortgage loans that are deemed by the Board to be of such quality so as to meet, substantially and generally, the purchase standards imposed by private institutional mortgage investors.
(b) Minimum criteria
To further the purpose of this subchapter to provide a new source of long-term fixed rate financing to assist farmers and ranchers to purchase agricultural real estate, the standards established by the Board pursuant to subsection (a) of this section with respect to loans secured by agricultural real estate shall, at a minimum—
(1) provide that no agricultural mortgage loan with a loan-to-value ratio in excess of 80 percent may be treated as a qualified loan;
(2) require each borrower to demonstrate sufficient cash-flow to adequately service the agricultural mortgage loan;
(4) contain adequate standards to protect the integrity of the appraisal process with respect to any agricultural mortgage loans;
(5) contain adequate standards to ensure that the farmer or rancher is or will be actively engaged in agricultural production, and require the borrower to certify to the originator that the borrower intends to continue agricultural production on the farm or ranch involved;
(c) Loan amount limitation
(1) In general
A loan secured by agricultural real estate may not be treated as a qualified loan if the principal amount of such loan exceeds $2,500,000, adjusted for inflation, except as provided in paragraph (2).
(d) Nondiscrimination requirement
The standards established under subsection (a) of this section shall not discriminate against small originators or small agricultural mortgage loans that are at least $50,000. The Board shall promote and encourage the inclusion of qualified loans for small farms and family farmers in the agricultural mortgage secondary market.
Source(Pub. L. 92–181, title VIII, § 8.8, as added Pub. L. 100–233, title VII, § 702,Jan. 6, 1988, 101 Stat. 1700; amended Pub. L. 100–399, title VI, § 601(i),Aug. 17, 1988, 102 Stat. 1005; Pub. L. 104–105, title I, § 110,Feb. 10, 1996, 110 Stat. 165; Pub. L. 110–234, title V, § 5406(c),May 22, 2008, 122 Stat. 1158; Pub. L. 110–246, § 4(a), title V, § 5406(c),June 18, 2008, 122 Stat. 1664, 1920.)
Pub. L. 110–234and Pub. L. 110–246made identical amendments to this section. The amendments by Pub. L. 110–234were repealed by section 4(a) ofPub. L. 110–246.
2008—Subsec. (a). Pub. L. 110–246, § 5406(c)(1), added pars. (1) and (2), designated last sentence as par. (3) and inserted heading, and struck out former first sentence which read as follows: “Not later than 120 days after the appointment and election of the permanent Board, the Corporation, in consultation with originators, shall establish uniform underwriting, security appraisal, and repayment standards for qualified loans.”
Subsec. (b). Pub. L. 110–246, § 5406(c)(2)(A), inserted “with respect to loans secured by agricultural real estate” after “subsection (a) of this section” in introductory provisions.
Subsec. (b)(5). Pub. L. 110–246, § 5406(c)(2)(B), substituted “ensure that the farmer or rancher” for “ensure that the borrower” and “farm or ranch” for “site”.
Subsec. (c)(1). Pub. L. 110–246, § 5406(c)(3), inserted “secured by agricultural real estate” after “A loan”.
Subsecs. (d), (e). Pub. L. 110–246, § 5406(c)(4), (5), redesignatedsubsec. (e) as (d) and struck out former subsec. (d). Prior to amendment, text read as follows: “No standard prescribed under subsection (a) of this section shall take effect before the later of—
“(1) the end of a period consisting of 30 legislative days and beginning on the date such standards are submitted to the Congress; or
“(2) the end of a period consisting of 90 calendar days and beginning on such date.”
1996—Subsec. (e). Pub. L. 104–105inserted at end “The Board shall promote and encourage the inclusion of qualified loans for small farms and family farmers in the agricultural mortgage secondary market.”
1988—Subsec. (a). Pub. L. 100–399inserted “permanent” after “appointment and election of the”.
Effective Date of 2008 Amendment
Amendment of this section and repeal of Pub. L. 110–234by Pub. L. 110–246effective May 22, 2008, the date of enactment of Pub. L. 110–234, see section 4 ofPub. L. 110–246, set out as an Effective Date note under section 8701 of Title 7, Agriculture.
Effective Date of 1988 Amendment
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