12 U.S.C. § 2279aa–8 (BANKS AND BANKING)
§ 2279aa–8. Standards for qualified loans
(a) Standards
(1) In general
The Corporation shall establish underwriting, security appraisal, and repayment standards for qualified loans taking into account the nature, risk profile, and other differences between different categories of qualified loans.
(2) Supervision, examination, and report of condition
The standards shall be subject to the authorities of the Farm Credit Administration under section 2279aa–11 of this title.
(3) Mortgage loans
In establishing standards for qualified loans, the Corporation shall confine corporate operations, so far as practicable, to mortgage loans that are deemed by the Board to be of such quality so as to meet, substantially and generally, the purchase standards imposed by private institutional mortgage investors.
(b) Minimum criteria
To further the purpose of this subchapter to provide a new source of long-term fixed rate financing to assist farmers and ranchers to purchase agricultural real estate, the standards established by the Board pursuant to subsection (a) with respect to loans secured by agricultural real estate shall, at a minimum—
(1) provide that no agricultural mortgage loan with a loan-to-value ratio in excess of 80 percent may be treated as a qualified loan;
(2) require each borrower to demonstrate sufficient cash-flow to adequately service the agricultural mortgage loan;
(3) contain sufficient documentation standards;
(4) contain adequate standards to protect the integrity of the appraisal process with respect to any agricultural mortgage loans;
(5) contain adequate standards to ensure that the farmer or rancher is or will be actively engaged in agricultural production, and require the borrower to certify to the originator that the borrower intends to continue agricultural production on the farm or ranch involved;
(6) minimize speculation in agricultural real estate for nonagricultural purposes; and
(7) in establishing the value of agricultural real estate, consider the purpose for which the real estate is taxed.
(c) Loan amount limitation
(1) In general
A loan secured by agricultural real estate may not be treated as a qualified loan if the principal amount of such loan exceeds $2,500,000, adjusted for inflation, except as provided in paragraph (2).
(2) Acreage exception
Paragraph (1) shall not apply with respect to any agricultural mortgage loan described in such paragraph if such loan is secured by agricultural real estate that, in the aggregate, comprises not more than 1,000 acres.
(d) Nondiscrimination requirement
The standards established under subsection (a) shall not discriminate against small originators or small agricultural mortgage loans that are at least $50,000. The Board shall promote and encourage the inclusion of qualified loans for small farms and family farmers in the agricultural mortgage secondary market.
(Pub. L. 92–181, title VIII, § 8.8, as added Pub. L. 100–233, title VII, § 702, Jan. 6, 1988, 101 Stat. 1700; amended Pub. L. 100–399, title VI, § 601(i), Aug. 17, 1988, 102 Stat. 1005; Pub. L. 104–105, title I, § 110, Feb. 10, 1996, 110 Stat. 165; Pub. L. 110–234, title V, § 5406(c), May 22, 2008, 122 Stat. 1158; Pub. L. 110–246, § 4(a), title V, § 5406(c), June 18, 2008, 122 Stat. 1664, 1920; Pub. L. 115–334, title V, § 5410(a), Dec. 20, 2018, 132 Stat. 4678.)
heading: Amendment of Subsection (c)(2)
text: Pub. L. 115–334, title V, § 5410, Dec. 20, 2018, 132 Stat. 4678, provided that, effective 1 year after the date a report submitted in accordance with section 5414 of Pub. L. 115–334 indicates that it is feasible to increase the acreage limitation in subsection (c)(2) of this section to 2,000 acres, subsection (c)(2) of this section is amended by striking “1,000” and inserting “2,000”. See 2018 Amendment note below.
heading: Codification
text: Pub. L. 110–234 and Pub. L. 110–246 made identical amendments to this section. The amendments by Pub. L. 110–234 were repealed by section 4(a) of Pub. L. 110–246.
heading: Amendments
text: 2018—Subsec. (c)(2). Pub. L. 115–334 substituted “2,000” for “1,000”.
2008—Subsec. (a). Pub. L. 110–246, § 5406(c)(1), added pars. (1) and (2), designated last sentence as par. (3) and inserted heading, and struck out former first sentence which read as follows: “Not later than 120 days after the appointment and election of the permanent Board, the Corporation, in consultation with originators, shall establish uniform underwriting, security appraisal, and repayment standards for qualified loans.”
Subsec. (b). Pub. L. 110–246, § 5406(c)(2)(A), inserted “with respect to loans secured by agricultural real estate” after “subsection (a)” in introductory provisions.
Subsec. (b)(5). Pub. L. 110–246, § 5406(c)(2)(B), substituted “ensure that the farmer or rancher” for “ensure that the borrower” and “farm or ranch” for “site”.
Subsec. (c)(1). Pub. L. 110–246, § 5406(c)(3), inserted “secured by agricultural real estate” after “A loan”.
Subsecs. (d), (e). Pub. L. 110–246, § 5406(c)(4), (5), redesignated subsec. (e) as (d) and struck out former subsec. (d). Prior to amendment, text read as follows: “No standard prescribed under subsection (a) shall take effect before the later of—
“(1) the end of a period consisting of 30 legislative days and beginning on the date such standards are submitted to the Congress; or
“(2) the end of a period consisting of 90 calendar days and beginning on such date.”
1996—Subsec. (e). Pub. L. 104–105 inserted at end “The Board shall promote and encourage the inclusion of qualified loans for small farms and family farmers in the agricultural mortgage secondary market.”
1988—Subsec. (a). Pub. L. 100–399 inserted “permanent” after “appointment and election of the”.
heading: Effective Date of 2018 Amendment
text: Pub. L. 115–334, title V, § 5410(b), Dec. 20, 2018, 132 Stat. 4678, provided that: “The amendment made by subsection (a) [amending this section] shall take effect 1 year after the date a report submitted in accordance with section 5414 of this Act [132 Stat. 4724] indicates that it is feasible to increase the acreage limitation in section 8.8(c)(2) of the Farm Credit Act of 1971 [12 U.S.C. 2279aa–8(c)(2)] to 2,000 acres.”
heading: Effective Date of 2008 Amendment
text: Amendment of this section and repeal of Pub. L. 110–234 by Pub. L. 110–246 effective May 22, 2008, the date of enactment of Pub. L. 110–234, see section 4 of Pub. L. 110–246, set out as an Effective Date note under section 8701 of Title 7, Agriculture.
heading: Effective Date of 1988 Amendment
text: Amendment by Pub. L. 100–399 effective as if enacted immediately after enactment of Pub. L. 100–233, which was approved Jan. 6, 1988, see section 1001(a) of Pub. L. 100–399, set out as a note under section 2002 of this title.