§2006f Rural Development Certified Lenders Program

Summary

The Secretary may create a program to guarantee loans made by lenders the Secretary certifies for rural development. A lender can be certified only if it meets rules the Secretary sets, including showing it can properly make, service, and liquidate guaranteed loans. As a condition, a certified lender must agree to service loans using standards no less strict than the generally accepted banking standards used by prudent commercial or cooperative lenders. The Secretary may guarantee not more than 80 percent of a loan from a certified lender if the borrower meets eligibility and other criteria. The Secretary may let certified lenders make certain certifications about creditworthiness, repayment ability, collateral, feasibility, and borrower compliance, but the Secretary still must determine eligibility and review financial information. The Secretary may also create a preferred certified lenders program for lenders with proven experience, knowledge of the program rules, and required proficiency. The Secretary may set extra criteria and can revoke preferred status if a lender breaks rules or has worse loss experience than other preferred lenders; revocation does not affect existing guarantees. Preferred lenders must service loans to the same accepted banking standards, and the Secretary will monitor them at least annually. The Secretary may guarantee not more than 80 percent of approved loans made by preferred lenders, and may allow those lenders to make final decisions and handle closing, monitoring, collection, and liquidation, and to accept certifications that borrowers follow the law and regulations.