§940c — Title 7 Agriculture | U.S. Code

Summary

The Secretary must create and promote a program that encourages borrowers to voluntarily put money into cushion of credit accounts inside the Rural Electrification and Telephone Revolving Fund. No deposits can be made into those accounts on or after December 20, 2018. Money in each account earns interest: normally 5% per year, but 4% for fiscal year 2021 and then the then-applicable 1‑year Treasury rate after that. Borrowers may reduce the account only to make scheduled loan payments. Between December 20, 2018 and September 30, 2020, borrowers may instead use the money to prepay loans, and no prepayment fee may be charged for amounts prepaid under that rule. The Treasury must make available funds needed to cover loan modification costs. Cushion payments are held in the Fund as cash balances in borrowers’ accounts. All such cash balances earn interest for the Fund at the Fund’s weighted average rate on outstanding certificates of beneficial ownership, and that interest is used to reduce the Fund’s interest payments on those certificates. The Secretary must keep a subaccount that is credited each month by multiplying outstanding cushion payments made after October 1, 1987 by the monthly-converted difference between the Fund’s average weighted certificate rate and 5%.

Title 7, §940c

Agriculture — Source: USLM XML via OLRC

(a)(1)(A)The Secretary shall develop and promote a program to encourage borrowers to voluntarily make deposits into cushion of credit accounts established within the Rural Electrification and Telephone Revolving Fund.

(B)Effective on December 20, 2018, no deposits may be made under subparagraph (A).

(2)(A)Amounts in each cushion of credit account shall accrue interest to the borrower at a rate of 5 percent per annum.

(B)Notwithstanding subparagraph (A), amounts in each cushion of credit account shall accrue interest to the borrower at a rate equal to—

(i)4 percent per annum in fiscal year 2021; and

(ii)the then applicable 1-year Treasury rate thereafter.

(3)(A)A borrower may reduce the balance of its cushion of credit account only if the amount obtained from the reduction is used to make scheduled payments on loans made or guaranteed under this chapter.

(B)Notwithstanding subparagraph (A) and subject to subparagraph (C), beginning on December 20, 2018, and ending with September 30, 2020, a borrower may, at the sole discretion of the borrower, reduce the balance of its cushion of credit account if the amount obtained from the reduction is used to prepay loans made or guaranteed under this chapter.

(C)Notwithstanding any other provision of this chapter, no prepayment premium shall be imposed or collected with respect to that portion of a loan that is prepaid by a borrower in accordance with subparagraph (B).

(D)Notwithstanding section 661c of title 2, out of any funds in the Treasury not otherwise appropriated, the Secretary of the Treasury shall make available such sums as necessary to cover any loan modification costs as defined in section 661a of title 2.

(b)(1)(A)Cushion of credit payments shall be held in the Rural Electrification and Telephone Revolving Fund as a cash balance in the cushion of credit accounts of borrowers.

(B)All cash balance amounts (obtained from cushion of credit payments, loan payments, and other sources) held by the Fund shall bear interest to the Fund at a rate equal to the weighted average rate on outstanding certificates of beneficial ownership issued by the Fund.

(C)The amount of interest accrued on the cash balances shall be credited to the Fund as an offsetting reduction to the amount of interest paid by the Fund on its certificates of beneficial ownership.

(2)The Secretary shall maintain a subaccount within the Rural Electrification and Telephone Revolving Fund to which shall be credited, on a monthly basis, a sum determined by multiplying the outstanding cushion of credit payments made after October 1, 1987, by the difference (converted to a monthly basis) between the average weighted interest rate paid on outstanding certificates of beneficial ownership issued by the Fund and 5 percent.

Notes & Related Subsidiaries

Editorial Notes

Amendments

2018—Subsec. (a)(1). Pub. L. 115–334, § 6503(1), designated existing provisions as subpar. (A), inserted heading, and added subpar. (B). Subsec. (a)(2). Pub. L. 115–334, § 6503(2), designated existing provisions as subpar. (A), inserted heading, and added subpar. (B). Subsec. (a)(3). Pub. L. 115–334, § 6503(3), designated existing provisions as subpar. (A), inserted heading, and added subpar. (B). Subsec. (b)(2). Pub. L. 115–334, § 6504(b), struck out subpar. (A) designation and heading before “The Secretary shall”, substituted “5 percent.” for “the 5 percent rate of interest provided to borrowers on cushion of credit payments.”, and struck out subpars. (B) to (E) which related to grants, repayments, proceeds, and number of grants, respectively. 1994—Subsecs. (a)(1), (b)(2)(A) to (C). Pub. L. 103–354 substituted “Secretary” for “Administrator”.

§940c Cushion of Credit Payments Program

Summary

Title 7, §940c

Notes & Related Subsidiaries

Editorial Notes

Amendments

Citations & Metadata