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Title 12 — Banks and BankingRelease 119-73not60

§2018 Security; Terms

Title 12 › Chapter 23— FARM CREDIT SYSTEM › Subchapter I— FARM CREDIT BANKS › § 2018

Last updated Apr 3, 2026|Official source

Summary

Farm Credit Banks must keep real estate mortgage loans to no more than 85% of the property's appraised value, unless certain exceptions apply. The Farm Credit Administration can require a lower limit of 75%. Loans guaranteed by federal, state, or other government agencies may go up to 97% if allowed by the Administration. If private mortgage insurance is used, the loan can exceed 85% only up to the amount the insurance covers. These loans must have a first lien on approved types of property. The bank must use appraisals that follow its rules and the Administration’s regulations. The bank can ask for extra collateral and must consider other credit factors too. Non‑real‑estate loans and discounts must be repaid within 7 years, except loans to producers or harvesters of aquatic products can be repaid in up to 15 years. The bank’s Board, under the Administration’s rules, may allow other loans (not aquatic) to have repayment terms up to 10 years.

Full Legal Text

Title 12, §2018

Banks and Banking — Source: USLM XML via OLRC

(a)(1)(A)Real estate mortgage loans originated by a Farm Credit Bank, or in which a Farm Credit Bank participates in with a lender that is not a System institution, shall not exceed 85 percent of the appraised value of the real estate security, except as provided for in subparagraphs (C) and (D).
(B)The Farm Credit Administration may, by regulation, require that loans not exceed 75 percent of the appraised value of the real estate security.
(C)If the loan is guaranteed by Federal, State, or other governmental agencies, the loan may not exceed 97 percent of the appraised value of the real estate security, as may be authorized under regulations of the Farm Credit Administration.
(D)A loan on which private mortgage insurance is obtained may exceed 85 percent of the appraised value of the real estate security to the extent that the loan amount in excess of such 85 percent is covered by the insurance.
(2)All loans originated or participated in by a bank under this section shall be secured by first liens on interests in real estate of such classes as may be prescribed by regulations of the Farm Credit Administration.
(3)To adequately secure the loan, the value of security shall be determined by appraisal under standards prescribed by the bank in accordance with regulations of the Farm Credit Administration.
(4)Additional security for any loan may be required by the bank to supplement real estate security. Credit factors, other than the ratio between the amount of the loan and the security value, shall be given due consideration.
(b)Loans, other than real estate loans, and discounts made under the provisions of this subchapter shall be repayable in not more than 7 years (15 years if made to producers or harvesters of aquatic products) from the time that such are made or discounted by the Farm Credit Bank, except that the Board of Directors, under regulations of the Farm Credit Administration, may approve policies permitting loans, advances, or discounts (other than those made to producers or harvesters of aquatic products) to be repayable in not more than 10 years from the time that such are made or discounted by such bank.

Legislative History

Notes & Related Subsidiaries

Editorial Notes

Prior Provisions

A prior section 2018, Pub. L. 92–181, title I, § 1.10, Dec. 10, 1971, 85 Stat. 586; Pub. L. 96–592, title I, § 107, Dec. 24, 1980, 94 Stat. 3438, related to purposes, prior to the general amendment of this subchapter by Pub. L. 100–233, § 401.

Amendments

1996—Subsec. (a)(1)(A). Pub. L. 104–105, § 202(b), substituted “subparagraphs (C) and (D)” for “paragraphs (2) and (3)”. Subsec. (a)(1)(D). Pub. L. 104–105, § 202(a), added subpar. (D). Subsec. (a)(5). Pub. L. 104–105, § 203, struck out heading and text of par. (5). Text read as follows: “Each Farm Credit Bank shall require a financial statement from each borrower at least once every 3 years, or during such shorter period of time as may be required under

Regulations

of the Farm Credit Administration.” 1988—Subsec. (a)(2). Pub. L. 100–399, § 401(h)(1), substituted “prescribed by

Regulations

of” for “approved by”. Subsec. (a)(3). Pub. L. 100–399, § 401(h)(2), substituted “under standards” for “under appraisal standards” and “in accordance with

Regulations

of” for “and approved by”. Subsec. (b). Pub. L. 100–399, § 401(i), substituted “harvesters of aquatic products) from” for “harvester of aquatic products) from”.

Statutory Notes and Related Subsidiaries

Effective Date

of 1988 AmendmentAmendment by Pub. L. 100–399 effective immediately after amendment made by section 401 of Pub. L. 100–233, which was effective 6 months after Jan. 6, 1988, see section 1001(b) of Pub. L. 100–399, set out as a note under section 2002 of this title.

Effective Date

Pub. L. 100–233, title IV, § 401, Jan. 6, 1988, 101 Stat. 1622, provided that this section is effective 6 months after Jan. 6, 1988.

Reference

Citations & Metadata

Citation

12 U.S.C. § 2018

Title 12 — Banks and Banking

Last Updated

Apr 3, 2026

Release point: 119-73not60