7 U.S.C. § 936a — Prepayment of loans
submitted 90 years ago by Pub. L. 99-509 to r/title-7-AGRICULTURE · 444 words · no verdicts yet
Certain borrowers may prepay Federal Financing Bank loans at principal balance without an added charge if they replace the loan with private capital and meet the certification rule. The Secretary may limit eligibility when prepayment would harm the Federal Financing Bank and must direct required fiscal-year 1987 prepayments to borrowers most in need.
(a) Conditions for prepayment. Unless (c) applies, a borrower may prepay a Federal Financing Bank loan guaranteed under 7 U.S.C. § 936, including an advance, by paying its outstanding principal if: (1) the loan was outstanding on July 2, 1986; (2) private capital using the existing guarantee replaces it; and (3) the borrower certifies that the savings will go to customers or strengthen the borrower financially in hardship cases.
(b) No prepayment charges. No amount beyond outstanding principal may be charged because of the prepayment to the borrower, the fund, or the Secretary*.
(c) Disqualification. The borrower is ineligible if the Treasury Secretary believes prepayment would harm the Federal Financing Bank’s operation. In fiscal year 1987, this applies only when the prepayment would make cumulative net proceeds from all such prepayments exceed $2,017,500,000.
(d) Required amount and criteria. (1) Subject to (a), the Secretary must allow fiscal-year 1987 principal prepayments under this section or Public Law 99–349 sufficient to produce at least $2,017,500,000 in net proceeds. (2) The Secretary must establish criteria directing required prepayments to cooperative borrowers most in need of the benefits, and any other criteria needed to carry out this subsection.
(e) Assignment and transfer. A guarantee for a prepaid loan is fully assignable under 7 U.S.C. § 936 and transferable. The Secretary may require a transferred or assigned guarantee to be tied to a loan or security that, when sold, is grouped with nonguaranteed loans or securities so the sale does not unreasonably compete with sales of United States obligations.
Except as provided in subsection (c), a borrower of a loan made by the Federal Financing Bank and guaranteed under section 936 of this title may prepay such loan (or any loan advance thereunder) by paying the outstanding principal balance due on the loan (or advance), if—
the loan is outstanding on July 2, 1986;
private capital, with the existing loan guarantee, is used to replace the loan; and
the borrower certifies that any savings from such prepayment will be passed on to its customers or used to improve the financial strength of the borrower in cases of financial hardship.
No sums in addition to the payment of the outstanding principal balance due on the loan may be charged as the result of such prepayment against the borrower, the fund, or the Secretary*.
A borrower will not qualify for prepayment under this section if, in the opinion of the Secretary of the Treasury, to prepay in such borrower’s case would adversely affect the operation of the Federal Financing Bank.
Paragraph (1) shall be effective in fiscal year 1987 only for any loan the prepayment of the principal amount of which will cause the cumulative amount of net proceeds from all such prepayments made during such year to exceed $2,017,500,000.
The Secretary shall permit, subject to subsection (a), prepayments of principal on loans in fiscal year 1987 under this section or Public Law 99–349 in such amounts as to realize net proceeds from all such prepayments in fiscal year 1987 in an amount not less than $2,017,500,000.
The Secretary shall establish—
eligibility criteria to ensure that any loan prepayment activity required to be carried out under this subsection will be directed to those cooperative borrowers in greatest need of the benefits associated with prepayment, as determined by the Secretary; and
such other eligibility criteria as the Secretary determines are necessary to carry out this subsection.
Any guarantee of a loan prepaid under this section shall be fully assignable under the provisions of section 936 of this title and transferable. However, the Secretary may require that any such guarantee, if transfered 1 or assigned, be transferred or assigned to a loan or security that, if sold, will be grouped with nonguaranteed loans or securities and sold in a manner to ensure that such sale will not unreasonably compete with the marketing of obligations of the United States.
Source credit: (May 20, 1936, ch. 432, title III, § 306A, as added Pub. L. 99–509, title I, § 1011(a), Oct. 21, 1986, 100 Stat. 1875; amended Pub. L. 103–354, title II, § 235(a)(7), (13), Oct. 13, 1994, 108 Stat. 3221.)
- 1936Enacted · Pub. L. 99-509 · 100 Stat. 1875
- 1994Amended · Pub. L. 103-354 · 108 Stat. 3221
A history note hasn’t been published yet. The record shows enactment by Pub. L. 99-509 on 1936-05-20.
all 0 arguments · sorted by: best
no arguments yet — make the first case