7 U.S.C. § 1935 - Down payment loan program
|Cite as:||7 U.S.C. § 1935|
|Currency:||Current through P.L. 116-135 (03/26/2020)|
(a) In general
Notwithstanding any other section of this subchapter, the Secretary shall establish, within the farm ownership loan program established under this subchapter, a program under which loans shall be made under this section to eligible farmers or ranchers for down payments on farm ownership loans.
The Secretary shall be the primary coordinator of credit supervision for the down payment loan program established under this section, in consultation with the commercial or cooperative lender and, if applicable, the contracting credit counseling service selected under section 2006b(c) of this title.
(b) Loan terms
Each loan made under this section shall be in an amount that does not exceed 45 percent of the least of-
(A) the purchase price of the farm or ranch to be acquired;
(B) the appraised value of the farm or ranch to be acquired; or
(2) Interest rate
The interest rate on any loan made by the Secretary under this section shall be a rate equal to the greater of-
(A) the difference obtained by subtracting 4 percent from the interest rate for farm ownership loans under this subchapter; or
(B) 1.5 percent.
Each loan under this section shall be made for a period of 20 years or less, at the option of the borrower.
Each borrower of a loan under this section shall repay the loan to the Secretary in equal annual installments.
(5) Nature of retained security interest
The Secretary shall retain an interest in each farm or ranch acquired with a loan made under this section that shall-
(A) be secured by the farm or ranch;
(B) be junior only to such interests in the farm or ranch as may be conveyed at the time of acquisition to the person (including a lender) from whom the borrower obtained a loan used to acquire the farm or ranch; and
(C) require the borrower to obtain the permission of the Secretary before the borrower may grant an additional security interest in the farm or ranch.
(1) Borrowers required to make minimum down payment
The Secretary shall not make a loan under this section to any borrower with respect to a farm or ranch if the contribution of the borrower to the down payment on the farm or ranch will be less than 5 percent of the purchase price of the farm or ranch.
(2) Prohibited types of financing
The Secretary shall not make a loan under this section with respect to a farm or ranch if the farm or ranch is to be acquired with other financing that contains any of the following conditions:
To continue readingFREE SIGN UP