Down payment loan program

7 U.S.C. § 1935
in effect
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(a) In general(1) EstablishmentNotwithstanding any other section of this subchapter, the Secretary shall establish, within the farm ownership loan program established under this subchapter, a program under which loans shall be made under this section to eligible farmers or ranchers for down payments on farm ownership loans. (2) AdministrationThe Secretary shall be the primary coordinator of credit supervision for the down payment loan program established under this section, in consultation with the commercial or cooperative lender and, if applicable, the contracting credit counseling service selected under section 2006b(c) of this title. (b) Loan terms(1) PrincipalEach loan made under this section shall be in an amount that does not exceed 45 percent of the least of—(A) the purchase price of the farm or ranch to be acquired; (B) the appraised value of the farm or ranch to be acquired; or (C) $667,000. (2) Interest rateThe interest rate on any loan made by the Secretary under this section shall be a rate equal to the greater of—(A) the difference obtained by subtracting 4 percent from the interest rate for farm ownership loans under this subchapter; or (B) 1.5 percent. (3) DurationEach loan under this section shall be made for a period of 20 years or less, at the option of the borrower. (4) RepaymentEach borrower of a loan under this section shall repay the loan to the Secretary in equal annual installments. (5) Nature of retained security interestThe Secretary shall retain an interest in each farm or ranch acquired with a loan made under this section that shall—(A) be secured by the farm or ranch; (B) be junior only to such interests in the farm or ranch as may be conveyed at the time of acquisition to the person (including a lender) from whom the borrower obtained a loan used to acquire the farm or ranch; and (C) require the borrower to obtain the permission of the Secretary before the borrower may grant an additional security interest in the farm or ranch. (c) Limitations(1) Borrowers required to make minimum down paymentThe Secretary shall not make a loan under this section to any borrower with respect to a farm or ranch if the contribution of the borrower to the down payment on the farm or ranch will be less than 5 percent of the purchase price of the farm or ranch. (2) Prohibited types of financingThe Secretary shall not make a loan under this section with respect to a farm or ranch if the farm or ranch is to be acquired with other financing that contains any of the following 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 the loan is to be made by the Secretary. (d) AdministrationIn carrying out this section, the Secretary shall, to the maximum extent practicable—(1) facilitate the transfer of farms and ranches from retiring farmers and ranchers to persons eligible for insured loans under this subchapter; (2) make efforts to widely publicize the availability of loans under this section among—(A) potentially eligible farmers or ranchers; (B) retiring farmers and ranchers; and (C) applicants for farm ownership loans under this subchapter; (3) encourage retiring farmers and ranchers to assist in the sale of their farms and ranches to eligible farmers or ranchers by providing seller financing; (4) coordinate the loan program established by this section with State programs that provide farm ownership or operating loans for—(A) beginning farmers or ranchers; (B) socially disadvantaged farmers or ranchers, as defined in section 2003(e) of this title; or (C) veteran farmers or ranchers, as defined in section 2279(a) of this title; and; and 11 So in original. (5) establish annual performance goals to promote 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 lender to an eligible farmer or rancher. (e) Definition of eligible farmer or rancherIn this section, the term “eligible farmer or rancher” means—(1) a qualified beginning farmer or rancher; (2) a socially disadvantaged farmer or rancher, as defined in section 2003(e) of this title; and (3) a veteran farmer or rancher, as defined in section 2279(a) of this title.

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