444 
‘‘(C) $667,000. 
‘‘(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 between— 
‘‘(i) 4 percent; and 
‘‘(ii) the interest rate for farm owner-
ship loans under this chapter; or 
‘‘(B) 1.5 percent. 
‘‘(3) DURATION.—Each loan under this section 
shall be made for a period of 20 years or less, at the 
option of the borrower. 
‘‘(4) REPAYMENT.—Each borrower of a loan 
under this section shall repay the loan to the Sec-
retary in equal annual installments. 
‘‘(5) NATURE OF RETAINED SECURITY INTER-
EST.—The Secretary shall retain an interest in each 
farm acquired with a loan made under this section 
that shall— 
‘‘(A) be secured by the farm; 
‘‘(B) be junior only to such interests in the 
farm as may be conveyed at the time of acquisi-
tion to the person (including a lender) from 
whom the borrower obtained a loan used to ac-
quire the farm; and 
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‘‘(C) require the borrower to obtain the 
permission of the Secretary before the borrower 
may grant an additional security interest in the 
farm. 
‘‘(c) LIMITATIONS.— 
‘‘(1) BORROWERS
REQUIRED
TO
MAKE
MIN-
IMUM
DOWN
PAYMENT.—The Secretary shall not 
make a loan under this section to any borrower with 
respect to a farm if the contribution of the borrower 
to the down payment on the farm will be less than 
5 percent of the purchase price of the farm. 
‘‘(2) PROHIBITED TYPES OF FINANCING.—The 
Secretary shall not make a loan under this section 
with respect to a farm if the farm is to be acquired 
with other financing that contains any of the fol-
lowing conditions: 
‘‘(A) The financing is to be amortized over 
a period of less than 30 years. 
‘‘(B) A balloon payment will be due on the 
financing during the 20-year period beginning 
on the date on which the loan is to be made by 
the Secretary. 
‘‘(d) ADMINISTRATION.—In carrying out this section, 
the Secretary shall, to the maximum extent practicable— 
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‘‘(1) facilitate the transfer of farms from retir-
ing farmers to persons eligible for insured loans 
under this subtitle; 
‘‘(2) make efforts to widely publicize the avail-
ability of loans under this section among— 
‘‘(A) potentially eligible recipients of the 
loans; 
‘‘(B) retiring farmers; and 
‘‘(C) applicants for farm ownership loans 
under this chapter; 
‘‘(3) encourage retiring farmers to assist in the 
sale of their farms to qualified beginning farmers 
and socially disadvantaged farmers providing seller 
financing; 
‘‘(4) coordinate the loan program established by 
this section with State programs that provide farm 
ownership or operating loans for beginning farmers 
or socially disadvantaged farmers; and 
‘‘(5) establish annual performance goals to pro-
mote the use of the down payment loan program and 
other joint financing arrangements as the preferred 
choice for direct real estate loans made by any lend-
er to a qualified beginning farmer or socially dis-
advantaged farmer. 
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447 
‘‘SEC. 3108. BEGINNING FARMER AND SOCIALLY DISADVAN-
TAGED FARMER CONTRACT LAND SALES 
PROGRAM. 
‘‘(a) IN GENERAL.—The Secretary shall, in accord-
ance with this section, guarantee a loan made by a private 
seller of a farm to a qualified beginning farmer or socially 
disadvantaged farmer on a contract land sales basis. 
‘‘(b) ELIGIBILITY.—To be eligible for a loan guar-
antee under subsection (a)— 
‘‘(1) the qualified beginning farmer or socially 
disadvantaged farmer shall— 
‘‘(A) on the date the contract land sale 
that is subject of the loan is complete, own and 
operate the farm that is the subject of the con-
tract land sale; 
‘‘(B) have a credit history that— 
‘‘(i) includes a record of satisfactory 
debt repayment, as determined by the Sec-
retary; and 
‘‘(ii) is acceptable to the Secretary; 
and 
‘‘(C) demonstrate to the Secretary that the 
farmer is unable to obtain sufficient credit with-
out a guarantee to finance any actual need of 
the farmer at a reasonable rate or term; and 
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‘‘(2) the loan shall meet applicable underwriting 
criteria, as determined by the Secretary. 
‘‘(c) LIMITATIONS.—The Secretary shall not provide 
a loan guarantee under subsection (a) if— 
‘‘(1) the contribution of the qualified beginning 
farmer or socially disadvantaged farmer to the down 
payment for the farm that is the subject of the con-
tract land sale would be less than 5 percent of the 
purchase price of the farm; or 
‘‘(2) the purchase price or the appraisal value 
of the farm that is the subject of the contract land 
sale is greater than $500,000. 
‘‘(d) PERIOD
OF GUARANTEE.—A loan guarantee 
under this section shall be in effect for the 10-year period 
beginning on the date on which the guarantee is provided. 
‘‘(e) GUARANTEE PLAN.— 
‘‘(1) SELECTION OF PLAN.—A private seller of 
a farm who makes a loan guaranteed by the Sec-
retary under subsection (a) may select— 
‘‘(A) a prompt payment guarantee plan, 
which shall cover— 
‘‘(i) 3 amortized annual installments; 
or 
‘‘(ii) an amount equal to 3 annual in-
stallments (including an amount equal to 
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