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loan discounted at a rate equal to the cur-
rent cost of funds to the Department of the
Treasury for obligations of comparable ma-
turity to the loan being refinanced;
‘‘(B) one hundred percent of the
amount of interest for one year on the out-
standing principal balance of such loan,
loan advance, or any portion thereof being
refinanced, multiplied by the ratio which—
‘‘(i) the number of quarterly pay-
ment dates between the refinancing
date and the maturity date of the loan
advance,
bears to—
‘‘(ii) the number of quarterly pay-
ment dates between the first quarterly
payment date that occurs 12 years
after the end of the year in which the
amount being refinanced was advanced
and the maturity date of such loan ad-
vance;
‘‘(C) one hundred percent of the
amount of interest for one year on the out-
standing principal balance of such loan,
loan advance, or any portion thereof being
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refinanced, plus, for the interval between the
date of the refinancing and the first quar-
terly payment date that occurs 12 years
after the end of the year in which the
amount being refinanced was advanced, the
present value of the difference between each
payment scheduled for such interval on such
loan amount being refinanced and the pay-
ment amounts that would be required dur-
ing such interval on the amount being refi-
nanced if the interest rate on the loan were
equal to the current cost of funds to the De-
partment of the Treasury for obligations of
comparable maturity to the loan being refi-
nanced.
‘‘(2) LIMITATION.—The penalty provided by
subsection (b)(1)(A) shall be required for a refi-
nancing under this section, except that in the
case of a loan advanced under an agreement exe-
cuted before 1984 which permits the prepayment
or refinancing of such loan advance based on the
payment of one year of interest on the outstand-
ing principal balance of such loan advance, a
borrower may, in lieu of the penalty required by
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subsection (b)(1)(A), pay a penalty as provided
by—
‘‘(A) subsection (b)(1)(B) if such loan
advance has reached the twelve year matu-
rity required under such loan agreement for
such prepayment or refinancing;
‘‘(B) subsection (b)(1)(C) if such loan
advance has not reached the twelve year
maturity required under such loan agree-
ment for such prepayment or refinancing.
‘‘(3) FINANCING OF PENALTY.—A borrower
may at its option meet the penalty requirements
of paragraph (1) by either making a payment in
the amount of such required penalty at the time
of such refinancing or by increasing the out-
standing principal balance of the loan advance
that is being refinanced under this section by the
amount of such penalty. If a borrower meets the
penalty requirements of paragraph (1) by in-
creasing the outstanding principal balance of the
loan advance that is being refinanced, the bor-
rower shall make a payment at the time of such
refinancing equal to 2.5 percent of the amount of
such penalty that is added to the outstanding
principal balance of such loan.
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‘‘(c) LOAN TERMS AND CONDITIONS AFTER RE-
FINANCING.—
‘‘(1) IN GENERAL.—Upon the payment of a
penalty as provided by subsection (b), the loan,
loan advance, or any portion thereof shall be re-
financed at the interest rate described in para-
graph (2) for the term or terms selected by the
borrower pursuant to paragraph (3).
‘‘(2) INTEREST RATE.—The interest rate on
a loan refinanced under this section shall be de-
termined to be equal to the current cost of funds
to the Department of the Treasury for obligations
of comparable maturity to the term selected by
the borrower pursuant to paragraph (3), but the
interest rate on such a refinanced loan shall not
exceed 7 percent.
‘‘(3) LOAN
TERM.—Subject to paragraph
(4), the borrower of a loan that is refinanced
under this section shall select the term for which
an interest rate shall be determined pursuant to
paragraph (2), and at the end of the term (and
any succeeding term selected by the borrower
under this paragraph), may renew the loan for
another term selected by the borrower.
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‘‘(4) MAXIMUM TERM.—The borrower may
not select a term pursuant to paragraph (3) that
ends after the maturity date set for such loan be-
fore its refinancing under this section.
‘‘(5) EXISTING LOAN.—The refinancing of a
loan pursuant to this section and the inclusion
of a penalty in the outstanding principal bal-
ance of such refinanced loan, pursuant to para-
graph (3), shall not, notwithstanding any other
provision of law, be considered the making of a
new loan, new loan guarantee or other new cred-
it activity, nor shall such refinancing be subject
to appropriations or limited by the amount pro-
vided during a fiscal year for new loans, loan
guarantees or other credit activity, nor may the
request of a borrower for such refinancing under
this section be denied.’’.