7 U.S.C. § 1999 — Interest rate reduction program

(a) Establishment of program The Secretary must establish and carry out, as this section requires, an interest rate reduction program for loans guaranteed under this chapter. (b) Contracts with lenders Under the program, the Secretary must enter into a contract with, and make payments to, a legally organized institution to reduce the interest rate that a borrower pays during the contract term on a guaranteed loan made by that institution if— (1) the borrower— (A) cannot obtain enough credit elsewhere to finance the borrower’s actual needs at reasonable rates and terms, considering private and cooperative rates and terms for a loan for a similar purpose and period in the community where the borrower lives or in a nearby community; (B) otherwise cannot make timely payments on the loan; and (C) has total estimated cash income during the 24-month period beginning when the contract is entered into, including all farm and nonfarm income, that will equal or exceed the borrower’s total estimated cash expenses during that period, including all farm and nonfarm expenses; and (2) the lender reduces the annual interest rate payable on the loan during the contract term by at least the percentage specified in the contract. (c) Payments to lenders For a contract that a lender enters into under subsection (b) to reduce the interest rate paid on a loan, the Secretary must pay the lender no more than 100 percent of the cost of reducing the loan’s annual interest rate. But the payment may not be more than the cost of reducing the rate by 4 percent. (d) Duration of contracts A contract under this section to reduce the interest rate on a guaranteed loan may not last longer than the remaining term of that loan. (e) Agricultural Credit Insurance Fund use limitation (1) Despite any other provision of this chapter, the Secretary may use the Agricultural Credit Insurance Fund established under section 1929 of this title to carry out this section. (2) Maximum amount of funds— (A) In general The total amount of funds that the Secretary uses to carry out this section in a fiscal year may not exceed $750,000,000. (B) Beginning and veteran farmers and ranchers— (i) In general The Secretary must reserve at least 15 percent of the funds used under subparagraph (A) to make payments for guaranteed loans made to beginning farmers and ranchers or veteran farmers and ranchers, as defined in section 2279(a) of this title. (ii) Duration of reservation of funds Funds reserved under clause (i) for farmers or ranchers for a fiscal year must remain reserved only until March 1 of that fiscal year. (f) List of lender participants in guaranteed loan program On request, the Secretary must make available to farmers a list of lenders in the area that participate in guaranteed farm loan programs. The list must also include other lenders in the area that say they want to participate in those programs and ask to be included. (g) Foreclosure action provision in farm loan guarantees Despite any other law, every contract of guarantee for a farm loan entered into under this chapter after January 6, 1988, must state that the lender may not begin foreclosure action on the guaranteed loan until 60 days after a determination is made about whether the borrower is eligible to participate in the program under this section.