A bill to amend the Rural Electrification Act of 1936 to permit the prepayment or repricing of certain loans according to the terms of the applicable loan contract, and for other purposes.

SECTION 1. PREPAYMENT OR REPRICING OF REA LOANS.

    Title III of the Rural Electrification Act of 1936 is amended by 
inserting after section 306B (7 U.S.C. 936b) the following new section:

``SEC. 306C. PREPAYMENT OR REPRICING OF LOANS.

    ``(a) In General.--Notwithstanding any other provision of law, the 
Secretary of the Treasury and the Administrator shall, on request of a 
borrower, allow the prepayment or repricing of a loan made by the 
Federal Financing Bank and guaranteed by the Administrator in 
accordance with this section and the terms of the applicable loan 
contract.
    ``(b) Terms of Repayment and Repricing.--
            ``(1) In general.--In the case of a loan made by the 
        Federal Financing Bank and guaranteed by the Administrator that 
        permits prepayment of the loan at any time later than 12 years 
        after the end of the year in which advances were made under the 
        loan on payment of a premium, the borrower of the loan may, at 
        any time prior to the maturity of the loan, prepay or reprice 
        all or any part of the advances made under the loan in 
        accordance with this subsection.
            ``(2) Prepayment.--A borrower of a loan described in 
        paragraph (1) may prepay the advances by paying the outstanding 
        principal balance of the loan, plus the sum of--
                    ``(A) the net present value of the 1-year interest 
                prepayment premium, as provided under the terms of the 
                note of the loan of the Federal Financing Bank; and
                    ``(B) for the period of time from the date of 
                prepayment until the end of the 12-year period provided 
                for in the note, the net present value of the 
                difference between--
                            ``(i) the income of the note at the 
                        effective interest rate; and
                            ``(ii) the income of the note at an 
                        interest rate equal to the then current cost of 
                        funds to the Department of the Treasury for 
                        obligations of comparable maturity to the 
                        remaining term of the loan.
            ``(3) Repricing.--A borrower of a loan described in 
        paragraph (1) may reprice the loan by paying the sum of--
                    ``(A) the net present value of the 1-year interest 
                prepayment premium, as provided under the terms of the 
                note of the loan of the Federal Financing Bank; and
                    ``(B) for the period of time from the date of 
                repricing until the end of the 12-year period provided 
                for in the note, the net present value of the 
                difference between--
                            ``(i) the income of the note at the 
                        effective interest rate; and
                            ``(ii) the income of the note at an 
                        interest rate equal to the then current cost of 
                        funds to the Department of the Treasury for 
                        obligations of comparable maturity to the 
                        remaining term of the loan.
            ``(4) Lien accommodation.--If a borrower of a loan 
        described in paragraph (1) elects to prepay an advance on the 
        loan and applies for a loan from a private lender in an amount 
        not to exceed the sum of the advance prepaid amount and any 
        premium on the amount paid pursuant to this section, on the 
        request of the borrower, the Administrator shall grant the 
        private lender a lien accommodation on the assets of the 
        borrower if the value of the assets subject to the lien will 
        exceed 120 percent of the amount of all of the outstanding 
        loans and guarantees secured under the lien.
    ``(c) Financing the Premiums.--In the case of a loan described in 
subsection (b)(1) that is prepaid or repriced in accordance with this 
section, the Administrator may guarantee a loan made to the borrower in 
an amount equal to the cost of any prepayment or repricing premium 
required under subparagraph (A) or (B) of subsection (b)(2) or 
subparagraph (A) or (B) of subsection (b)(3), as appropriate.
    ``(d) Hardship Prepayment Program.--
            ``(1) Prepayment.--A borrower of a loan made by the Federal 
        Financing Bank and guaranteed under section 306 may, at the 
        option of the borrower, prepay the loan or an advance on the 
        loan if the Administrator determines that the borrower is 
        eligible under paragraph (3).
            ``(2) Prohibition on prepayment premiums.--No sums in 
        addition to the payment of the outstanding principal balance 
        due on the loan may be charged against the borrower, as a 
        result of the prepayment.
            ``(3) Eligibility.--The Administrator shall allow the 
        repayment of a loan under this subsection if the Administrator 
        determines that the borrower--
                    ``(A) has experienced a severe hardship; or
                    ``(B) serves a predominantly rural, low-income, and 
                high unemployment area for which the electricity rates 
                exceed the Statewide average.
            ``(4) New loans.--On the prepayment of a loan under this 
        subsection and the request of the borrower, the Federal 
        Financing Bank and the Administrator shall make a new loan to 
        the borrower available at a level that at least equals the 
        principal amount of the prepayment.
            ``(5) Authorization of appropriations.--There are 
        authorized to be appropriated such sums as are necessary to 
        provide for the cost (as defined in section 502(5) of the 
        Congressional Budget Act of 1974 (2 U.S.C. 661a(5)) of the 
        waiver under this subsection of prepayment premiums for loans 
        made by the Federal Financing Bank and guaranteed by the 
        Administrator.''.

Summary: Amends the Rural Electrification Act of 1936 to prescribe guidelines under which the Secretary of the Treasury and the Rural Electrification Administrator shall allow, upon a borrower's request, the prepayment or repricing of a loan made by the Federal Financing Bank and guaranteed by the Administrator. Authorizes appropriations as necessary to provide for the cost of prepayment premium waivers for such loans.