Title 7 — AgricultureRelease 119-73
§1989 Rules and regulations
Title 7 › Chapter CHAPTER 50— - AGRICULTURAL CREDIT › Subchapter SUBCHAPTER IV— - ADMINISTRATIVE PROVISIONS › § 1989
Summary
The Secretary can make rules, set terms, and give out or insure loans as needed to run this program. The Secretary must treat a borrower's income as enough if it is high enough to pay all loan principal and interest on time, cover the family's living costs, and pay other non-loan bills. The Secretary must run a program to guarantee loans made by lenders the Secretary approves. Approved lenders must meet rules the Secretary makes, show they can make, service, and collect loans, and follow normal banking standards. The Secretary will check each approved lender at least once a year. The government will guarantee 80 percent of a loan by an approved lender, but a county committee must confirm the borrower is eligible. Lenders may make certain written certifications about creditworthiness, repayment ability, collateral, farm feasibility, and legal compliance. The Secretary must say yes or no on a guarantee within 14 calendar days after a lender applies and must write the reasons if rejecting it. Within two years after October 28, 1992, the Secretary must start a Preferred Certified Lenders Program for experienced lenders, with similar service rules, annual checks, possible revocation for bad performance (which does not cancel existing guarantees), and an automatic 80 percent guarantee if the Secretary does not decide within 14 days. The Secretary may run these programs from regional offices.
Full Legal Text
Title 7, §1989
Agriculture — Source: USLM XML via OLRC
(a)The Secretary is authorized to make such rules and regulations, prescribe the terms and conditions for making or insuring loans, security instruments and agreements, except as otherwise specified herein, and make such delegations of authority as he deems necessary to carry out this chapter.
(b)Notwithstanding subsection (a), in providing farmer program loan guarantees under this chapter, the Secretary shall consider the income of the borrower adequate if the income is equal to or greater than the income necessary—
(1)to make principal and interest payments on all debt obligations of the borrower, in a timely manner;
(2)to cover the necessary living expenses of the family of the borrower; and
(3)to pay all other obligations and expenses of the borrower not financed through debt obligations referred to in paragraph (1).
(c)(1)The Secretary shall establish a program under which the Secretary shall guarantee loans for any purpose specified in subchapter II that are made by lending institutions certified by the Secretary.
(2)The Secretary shall certify a lending institution that meets such criteria as the Secretary may prescribe in regulations, including the ability of the institution to properly make, service, and liquidate the loans of the institution.
(3)As a condition of the certification, the Secretary shall require the institution to undertake to service the loans guaranteed by the Secretary under this subsection, using standards that are not less stringent than generally accepted banking standards concerning loan servicing employed by prudent commercial or cooperative lenders. The Secretary shall, at least annually, monitor the performance of each certified lender to ensure that the conditions of the certification are being met.
(4)Notwithstanding any other provision of law:
(A)The Secretary shall guarantee 80 percent of a loan made under this subsection by a certified lending institution as described in paragraph (1), subject to county committee certification that the borrower of the loan meets the eligibility requirements and such other criteria as may be applicable to loans guaranteed by the Secretary under other provisions of this chapter.
(B)With respect to loans to be guaranteed by the Secretary under this subsection, the Secretary shall permit certified lending institutions to make appropriate certifications (as provided by regulations issued by the Secretary)—
(i)relating to issues such as creditworthiness, repayment ability, adequacy of collateral, and feasibility of farm operation; and
(ii)that the borrower is in compliance with all requirements of law, including regulations issued by the Secretary.
(C)The Secretary shall approve or disapprove a guarantee not later than 14 calendar days after the date that the lending institution applied to the Secretary for the guarantee. If the Secretary rejects the loan application within the 14-day period, the Secretary shall state, in writing, all of the reasons the application was rejected.
(5)Neither this subsection nor subsection (d) shall affect the responsibility of the Secretary to certify eligibility, review financial information, and otherwise assess an application.
(d)(1)Commencing not later than two years after October 28, 1992, the Secretary shall establish a Preferred Certified Lenders Program for lenders who establish their—
(A)knowledge of, and experience under, the program established under subsection (c);
(B)knowledge of the regulations concerning the guaranteed loan program; and
(C)proficiency related to the certified lender program requirements.
(2)The designation of a lender as a Preferred Certified Lender shall be revoked at any time that the Secretary determines that such lender is not adhering to the rules and regulations applicable to the program or if the loss experiences of a Preferred Certified Lender are excessive as compared to other Preferred Certified Lenders, except that such suspension or revocation shall not affect any outstanding guarantee.
(3)As a condition of such preferred certification, the Secretary shall require the institution to undertake to service the loans guaranteed by the Secretary under this subsection using generally accepted banking standards concerning loan servicing employed by prudent commercial or cooperative lenders. The Secretary shall, at least annually, monitor the performance of each Preferred Certified Lender to ensure that the conditions of such certification are being met.
(4)Notwithstanding any other provision of law, the Secretary shall—
(A)guarantee 80 percent of an approved loan made by a certified lending institution as described in this subsection, subject to county committee certification that the borrower meets the eligibility requirements or such other criteria as may be applicable to loans guaranteed by the Secretary under other provisions of this chapter;
(B)permit certified lending institutions to make all decisions, with respect to loans to be guaranteed by the Secretary under this subsection relating to credit worthiness, the closing, monitoring, collection and liquidation of loans, and to accept appropriate certifications, as provided by regulations issued by the Secretary, that the borrower is in compliance with all requirements of law or regulations promulgated by the Secretary; and
(C)be deemed to have guaranteed 80 percent of a loan made by a preferred certified lending institution as described in paragraph (1), if the Secretary fails to approve or reject the application of such institution within 14 calendar days after the date that the lending institution presented the application to the Secretary. If the Secretary rejects the application within the 14-day period, the Secretary shall state, in writing, the reasons the application was rejected.
(e)The Secretary may administer the loan guarantee programs under subsections (c) and (d) through central offices established in States or in multi-State areas.
Legislative History
Notes & Related Subsidiaries
Editorial Notes
References in Text
This chapter, referred to in text, was in the original “this title”, meaning title III of Pub. L. 87–128, Aug. 8, 1961, 75 Stat. 307, known as the Consolidated Farm and Rural Development Act, which is classified principally to this chapter. For complete classification of title III to the Code, see
Short Title
note set out under section 1921 of this title and Tables.
Amendments
2018—Subsec. (d)(3). Pub. L. 115–334 substituted “Preferred Certified Lender” for “preferred certified lender”. 2002—Subsec. (e). Pub. L. 107–171 added subsec. (e). 1999—Subsec. (b)(3). Pub. L. 106–31 struck out “, including expenses of replacing capital items (determined after taking into account depreciation of the items)” after “paragraph (1)”. 1992—Pub. L. 102–554, inserted section catchline, designated existing provisions as subsec. (a), inserted heading, and added subsecs. (b) to (d).
Statutory Notes and Related Subsidiaries
Regulations
Pub. L. 102–554, § 23, Oct. 28, 1992, 106 Stat. 4161, provided that: “(a) Interim
Regulations
.—Not later than 180 days after the date of enactment of this Act [Oct. 28, 1992], the Secretary of Agriculture shall issue such interim
Regulations
as are necessary to implement this Act [see
Short Title
of 1992 Amendment note set out under section 1921 of this title] and the
Amendments
made by this Act. “(b) Final
Regulations
.—Not later than October 1, 1993, the Secretary of Agriculture shall issue such final
Regulations
as are necessary to implement this Act and the
Amendments
made by this Act.” Pub. L. 100–233, title VI, § 624, Jan. 6, 1988, 101 Stat. 1685, provided that: “Within 150 days after the date of the enactment of this title [Jan. 6, 1988], and after considering public comment obtained under section 553 of title 5, United States Code, the Secretary shall issue final
Regulations
to carry out the
Amendments
made by this title [enacting section 1981d, 1981e, 1983c, and 2001 to 2005 of this title, amending section 1927, 1927a, 1981, 1982, 1983b, 1985, 1991, 1997, 1999, and 2000 of this title, and amending provisions set out as a note under section 1999 of this title].” Study and Report to Congress Before Issuance of Certain Final
Regulations
Pub. L. 100–233, title VI, § 621, Jan. 6, 1988, 101 Stat. 1684, provided that: “Not later than 60 days before the Secretary of Agriculture issues final
Regulations
providing for the use of ratios and standards as part of loan applications or preapplications, for determining the degree of potential loan risk on loans insured or guaranteed under the Consolidated Farm and Rural Development Act [7 U.S.C. 1921 et seq.], the Secretary shall complete a study and report to the Committee on Agriculture, Nutrition, and Forestry of the Senate and the Committee on Agriculture of the House of Representatives on the effects of such
Regulations
on a representative sample of persons who, as of the date of the enactment of this Act [Jan. 6, 1988], are borrowers or potential borrowers of such loans, and shall demonstrate in such study that the implementation of such final
Regulations
will not result in a portfolio of borrowers that is inconsistent with the purposes of the Consolidated Farm and Rural Development Act.” Availability of Funds for Continuing Assistance to Delinquent Borrowers; Prohibition on Use of Funds Pub. L. 100–71, title I,
July 11, 1987, 101 Stat. 429, provided in part that: “Hereafter, funds appropriated or available to the Farmers Home Administration under this or any other Act to make or to service farm loans shall be available for continuing assistance to delinquent borrowers on the basis of the policies contained in Farmers Home Administration Announcement Number 1113–1960, dated
November 30, 1984. “Hereafter, none of the funds appropriated or made available by this or any other Act, or otherwise made available to the Secretary of Agriculture or the Farmers Home Administration, may be used to implement section 1944.16(c)(1) of title 7, Code of Federal
Regulations
, as published in 52 Federal Register 11983 (April 14, 1987) or any other regulation that would have the same effect as such regulation.” Coordinated Financial Statements; Use of Submission Requirement Prohibited Pub. L. 99–198, title XIII, § 1325, Dec. 23, 1985, 99 Stat. 1540, provided that: “The Secretary of Agriculture shall not use or require the submission of the coordinated financial statement referred to in the proposed
Regulations
of the Farmers Home Administration published in the Federal Register of November 8, 1983 (48 F.R. 51312–51317) in connection with an application submitted on or after the date of the enactment of this Act [Dec. 23, 1985] for any loan under any program of the Department of Agriculture carried out by the Farmers Home Administration.”
Reference
Citations & Metadata
Citation
7 U.S.C. § 1989
Title 7 — Agriculture
Last Updated
Apr 6, 2026
Release point: 119-73