§2006f Rural Development Certified Lenders Program

Summary

The Secretary may set up a program to guarantee loans made by lenders the Secretary approves for rural development. To be approved, a lender must meet rules the Secretary writes, including showing it can make, service, and handle failed loans. The Secretary may require approved lenders to service loans using standards at least as strict as those used by careful commercial or cooperative lenders. The Secretary may guarantee up to 80 percent of a loan if the borrower meets eligibility rules. Approved lenders may be allowed to certify things like creditworthiness, repayment ability, collateral, feasibility, and that the borrower follows the law, but the Secretary still must determine eligibility and review applications and financial information. The Secretary may also create a preferred approved-lender program for lenders with extra experience and skill under the program. Preferred lenders must meet additional rules and may be allowed to make decisions about credit, closings, monitoring, collection, and liquidation, and to accept borrower compliance certifications. The Secretary will check preferred lenders at least once a year and can revoke the preferred status for rule violations or poor loss performance; revocation does not affect existing guarantees.