509 
† HR 2642 EAS 
‘‘(ii) the basic security for a farmer 
program loan. 
‘‘(2) GENERAL RELEASE.—The Secretary shall 
release from the normal income security provided for 
a loan an amount sufficient to pay for the essential 
household and farm operating expenses of the bor-
rower, until such time as the Secretary accelerates the 
loan. 
‘‘(3) NOTICE OF REPORTING REQUIREMENTS AND 
RIGHTS.—If a borrower is required to plan for or to 
report as to how proceeds from the sale of collateral 
property will be used, the Secretary shall notify the 
borrower of— 
‘‘(A) the requirement; and 
‘‘(B) the right to the release of funds under 
this subsection and the means by which a request 
for the funds may be made. 
‘‘(e) EASEMENTS ON INVENTORIED PROPERTY.— 
‘‘(1) IN GENERAL.—Subject to paragraph (2), in 
the disposal of real property under this section, the 
Secretary shall establish perpetual wetland conserva-
tion easements to protect and restore wetland or con-
verted wetland that exists on inventoried property.
510 
† HR 2642 EAS 
‘‘(2) LIMITATION.—The Secretary shall not es-
tablish a wetland conservation easement on an inven-
toried property that— 
‘‘(A) was cropland on the date the property 
entered the inventory of the Secretary; or 
‘‘(B) was used for farming at any time dur-
ing the period— 
‘‘(i) beginning on the date that is 5 
years before the property entered the inven-
tory of the Secretary; and 
‘‘(ii) ending on the date on which the 
property entered the inventory of the Sec-
retary. 
‘‘(3) NOTIFICATION.—The Secretary shall pro-
vide prior written notification to a borrower consid-
ering homestead retention that a wetland conservation 
easement may be placed on land for which the bor-
rower is negotiating a lease option. 
‘‘(4) APPRAISED VALUE.—The appraised value of 
the farm shall reflect the value of the land due to the 
placement of wetland conservation easements. 
‘‘SEC. 3410. CONTRACTS ON LOAN SECURITY PROPERTIES. 
‘‘(a) CONTRACTS ON LOAN SECURITY PROPERTIES.— 
Subject to subsection (b), the Secretary may enter into a
511 
† HR 2642 EAS 
contract related to real property for conservation, recre-
ation, or wildlife purposes. 
‘‘(b) LIMITATIONS.—The Secretary may enter into a 
contract under subsection (a) if— 
‘‘(1) the property is wetland, upland, or highly 
erodible land; 
‘‘(2) the property is determined by the Secretary 
to be suitable for the purpose involved; and 
‘‘(3)(A) the property secures a loan made under 
a law administered and held by the Secretary; and 
‘‘(B) the contract would better enable a qualified 
borrower to repay the loan in a timely manner, as de-
termined by the Secretary. 
‘‘(c) TERMS AND CONDITIONS.—The terms and condi-
tions specified in a contract under subsection (a) shall— 
‘‘(1) specify the purposes for which the real prop-
erty may be used; 
‘‘(2) identify any conservation measure to be 
taken, and any recreational and wildlife use to be al-
lowed, with respect to the real property; and 
‘‘(3) require the owner to permit the Secretary, 
and any person or governmental entity designated by 
the Secretary, to have access to the real property for 
the purpose of monitoring compliance with the con-
tract.
512 
† HR 2642 EAS 
‘‘(d) REDUCTION OR FORGIVENESS OF DEBT.— 
‘‘(1) IN GENERAL.—Subject to this section, the 
Secretary may reduce or forgive the outstanding debt 
of a borrower— 
‘‘(A) in the case of a borrower to whom the 
Secretary has made an outstanding loan under 
a law administered by the Secretary, by can-
celing that part of the aggregate amount of the 
outstanding loan that bears the same ratio to the 
aggregate amount as— 
‘‘(i) the number of acres of the real 
property of the borrower that are subject to 
the contract; bears to 
‘‘(ii) the aggregate number of acres se-
curing the loan; or 
‘‘(B) in any other case, by treating as pre-
paid that part of the principal amount of a new 
loan to the borrower issued and held by the Sec-
retary under a law administered by the Sec-
retary that bears the same ratio to the principal 
amount as— 
‘‘(i) the number of acres of the real 
property of the borrower that are subject to 
the contract; bears to
513 
† HR 2642 EAS 
‘‘(ii) the aggregate number of acres se-
curing the new loan. 
‘‘(2) 
MAXIMUM
CANCELED
AMOUNT.—The 
amount canceled or treated as prepaid under para-
graph (1) shall not exceed— 
‘‘(A) in the case of a delinquent loan, the 
greater of— 
‘‘(i) the value of the land on which the 
contract is entered into; or 
‘‘(ii) the difference between— 
‘‘(I) the amount of the out-
standing loan secured by the land; and 
‘‘(II) the value of the land; or 
‘‘(B) in the case of a nondelinquent loan, 33 
percent of the amount of the loan secured by the 
land. 
‘‘(e) CONSULTATION WITH FISH AND WILDLIFE SERV-
ICE.—If the Secretary uses the authority provided by this 
section, the Secretary shall consult with the Director of the 
Fish and Wildlife Service for the purposes of— 
‘‘(1) selecting real property in which the Sec-
retary may enter into a contract under this section; 
‘‘(2) formulating the terms and conditions of the 
contract; and 
‘‘(3) enforcing the contract.
514 
† HR 2642 EAS 
‘‘(f) ENFORCEMENT.—The Secretary, and any person 
or governmental entity (including an agency of the Federal 
Government) designated by the Secretary, may enforce a 
contract entered into by the Secretary under this section. 
‘‘SEC. 3411. DEBT RESTRUCTURING AND LOAN SERVICING. 
‘‘(a) IN GENERAL.—The Secretary shall modify a de-
linquent farmer program loan made under this subtitle, or 
purchased from the lender or the Federal Deposit Insurance 
Corporation under section 3902, to the maximum extent 
practicable— 
‘‘(1) to avoid a loss to the Secretary on the loan, 
with priority consideration being placed on writing- 
down the loan principal and interest (subject to sub-
sections (d) and (e)), and debt set-aside (subject to 
subsection (e)), to facilitate keeping the borrower on 
the farm, or otherwise through the use of primary 
loan service programs under this section; and 
‘‘(2) to ensure that a borrower is able to continue 
farming operations. 
‘‘(b) ELIGIBILITY.—To be eligible to obtain assistance 
under subsection (a)— 
‘‘(1) the delinquency shall be due to a cir-
cumstance beyond the control of the borrower, as de-
fined in regulations issued by the Secretary, except 
that the regulations shall require that, if the value of
515 
† HR 2642 EAS 
the assets calculated under subsection (c)(2)(A)(ii) 
that may be realized through liquidation or other 
methods would produce enough income to make the 
delinquent loan current, the borrower shall not be eli-
gible for assistance under subsection (a); 
‘‘(2) the borrower shall have acted in good faith 
with the Secretary in connection with the loan as de-
fined in regulations issued by the Secretary; 
‘‘(3) the borrower shall present a preliminary 
plan to the Secretary that contains reasonable as-
sumptions that demonstrate that the borrower will be 
able— 
‘‘(A) to meet the necessary family living 
and farm operating expenses of the borrower; 
and 
‘‘(B) to service all debts of the borrower, in-
cluding restructured loans; and 
‘‘(4) the loan, if restructured, shall result in a 
net recovery to the Federal Government, during the 
term of the loan as restructured, that would be more 
than or equal to the net recovery to the Federal Gov-
ernment from an involuntary liquidation or fore-
closure on the property securing the loan. 
‘‘(c) RESTRUCTURING DETERMINATIONS.—
516 
† HR 2642 EAS 
‘‘(1) DETERMINATION
OF
NET
RECOVERY.—In 
determining the net recovery from the involuntary 
liquidation of a loan under this section, the Secretary 
shall calculate— 
‘‘(A) the recovery value of the collateral se-
curing the loan, in accordance with paragraph 
(2); and 
‘‘(B) the value of the restructured loan, in 
accordance with paragraph (3). 
‘‘(2) RECOVERY
VALUE.—For the purpose of 
paragraph (1), the recovery value of the collateral se-
curing the loan shall be based on the difference be-
tween— 
‘‘(A)(i) the amount of the current appraised 
value of the interests of the borrower in the prop-
erty securing the loan; and 
‘‘(ii) the value of the interests of the bor-
rower in all other assets that are— 
‘‘(I) not essential for necessary family 
living expenses; 
‘‘(II) not essential to the operation of 
the farm; and 
‘‘(III) not exempt from judgment credi-
tors or in a bankruptcy action under Fed-
eral or State law;
517 
† HR 2642 EAS 
‘‘(B) the estimated administrative, attorney, 
and other expenses associated with the liquida-
tion and disposition of the loan and collateral, 
including— 
‘‘(i) the payment of prior liens; 
‘‘(ii) taxes and assessments, deprecia-
tion, management costs, the yearly percent-
age decrease or increase in the value of the 
property, and lost interest income, each cal-
culated for the average holding period for 
the type of property involved; 
‘‘(iii) resale expenses, such as repairs, 
commissions, and advertising; and 
‘‘(iv) other administrative and attor-
ney costs; and 
‘‘(C) the value, as determined by the Sec-
retary, of any property not included in subpara-
graph (A)(i) if the property is specified in any 
security agreement with respect to the loan and 
the Secretary determines that the value of the 
property should be included for purposes of this 
section. 
‘‘(3) VALUE OF THE RESTRUCTURED LOAN.— 
‘‘(A) IN
GENERAL.—For the purpose of 
paragraph (1), the value of the restructured loan
518 
† HR 2642 EAS 
shall be based on the present value of payments 
that the borrower would make to the Federal 
Government if the terms of the loan were modi-
fied under any combination of primary loan 
service programs to ensure that the borrower is 
able to meet the obligations and continue farm-
ing operations. 
‘‘(B) PRESENT VALUE.—For the purpose of 
calculating the present value referred to in sub-
paragraph (A), the Secretary shall use a dis-
count rate of not more than the current rate at 
the time of the calculation of 90-day Treasury 
bills. 
‘‘(C) CASH FLOW MARGIN.—For the purpose 
of assessing under subparagraph (A) the ability 
of a borrower to meet debt obligations and con-
tinue farming operations, the Secretary shall as-
sume that the borrower needs up to 110 percent 
of the amount indicated for payment of farm op-
erating expenses, debt service obligations, and 
family living expenses. 
‘‘(4) NOTIFICATION.—Not later than 90 days 
after receipt of a written request for restructuring 
from the borrower, the Secretary shall—
519 
† HR 2642 EAS 
‘‘(A) make the calculations specified in 
paragraphs (2) and (3); 
‘‘(B) notify the borrower in writing of the 
results of the calculations; and 
‘‘(C) provide documentation for the calcula-
tions. 
‘‘(5) RESTRUCTURING OF LOANS.— 
‘‘(A) IN GENERAL.—If the value of a re-
structured loan is greater than or equal to the re-
covery value of the collateral securing the loan, 
not later than 45 days after notifying the bor-
rower under paragraph (4), the Secretary shall 
offer to restructure the loan obligations of the 
borrower under this subtitle through primary 
loan service programs that would enable the bor-
rower to meet the obligations (as modified) under 
the loan and to continue the farming operations 
of the borrower. 
‘‘(B) RESTRUCTURING.—If the borrower ac-
cepts an offer under subparagraph (A), not later 
than 45 days after receipt of notice of accept-
ance, the Secretary shall restructure the loan ac-
cordingly.
520 
† HR 2642 EAS 
‘‘(6) TERMINATION OF LOAN OBLIGATIONS.—The 
obligations of a borrower to the Secretary under a 
loan shall terminate if— 
‘‘(A) the borrower satisfies the requirements 
of paragraphs (1) and (2) of subsection (b); 
‘‘(B) the value of the restructured loan is 
less than the recovery value; and 
‘‘(C) not later than 90 days after receipt of 
the notification described in paragraph (4)(B), 
the borrower pays (or obtains third-party fi-
nancing to pay) the Secretary an amount equal 
to the current market value. 
‘‘(7) NEGOTIATION OF APPRAISAL.— 
‘‘(A) IN
GENERAL.—In making a deter-
mination concerning restructuring under this 
subsection, the Secretary, at the request of the 
borrower, shall enter into negotiations with the 
borrower concerning appraisals required under 
this subsection. 
‘‘(B) INDEPENDENT APPRAISAL.— 
‘‘(i) IN
GENERAL.—If the borrower, 
based on a separate current appraisal, ob-
jects to the decision of the Secretary regard-
ing an appraisal, the borrower and the Sec-
retary shall mutually agree, to the extent
562 
† HR 2642 EAS 
‘‘(A) IN GENERAL.—An eligible expenditure 
described in this subparagraph is an expendi-
ture— 
‘‘(i) to purchase farmland or make a 
down payment on an accepted purchase 
offer for farmland; 
‘‘(ii) to make mortgage payments on 
farmland purchased pursuant to clause (i), 
for up to 180 days after the date of the pur-
chase; 
‘‘(iii) to purchase breeding stock, fruit 
or nut trees, or trees to harvest for timber; 
and 
‘‘(iv) for other similar expenditures, as 
determined by the Secretary. 
‘‘(B) TIMING.— 
‘‘(i) IN GENERAL.—An eligible partici-
pant may make an eligible expenditure at 
any time during the 2-year period begin-
ning on the date on which the last matching 
funds 
are 
provided 
under 
paragraph 
(4)(B)(ii)(I) to the individual development 
account established for the eligible partici-
pant.
563 
† HR 2642 EAS 
‘‘(ii) UNEXPENDED
FUNDS.—At the 
end of the period described in clause (i), 
any funds remaining in an individual de-
velopment account established for an eligible 
participant shall revert to the reserve fund 
of the demonstration program under which 
the account was established. 
‘‘(c) APPLICATIONS.— 
‘‘(1) IN GENERAL.—A qualified entity that seeks 
to carry out a demonstration program under this sec-
tion may submit to the Secretary an application at 
such time, in such form, and containing such infor-
mation as the Secretary may prescribe. 
‘‘(2) CRITERIA.—In considering whether to ap-
prove an application to carry out a demonstration 
program under this section, the Secretary shall as-
sess— 
‘‘(A) the degree to which the demonstration 
program described in the application is likely to 
aid eligible participants in successfully pursuing 
new farming opportunities; 
‘‘(B) the experience and ability of the quali-
fied entity to responsibly administer the dem-
onstration program;