
From the U.S. Code Online via GPO Access
[wais.access.gpo.gov]
[Laws in effect as of January 2, 2001]
[Document not affected by Public Laws enacted between
  January 2, 2001 and January 28, 2002]
[CITE: 12USC2279aa-6]

 
                       TITLE 12--BANKS AND BANKING
 
                     CHAPTER 23--FARM CREDIT SYSTEM
 
         SUBCHAPTER VIII--AGRICULTURAL MORTGAGE SECONDARY MARKET
 
 Part A--Establishment and Activities of Federal Agricultural Mortgage 
                               Corporation
 
Sec. 2279aa-6. Guarantee of qualified loans


(a) Guarantee authorized for certified facilities

                           (1) In general

        Subject to the requirements of this section and on such other 
    terms and conditions as the Corporation shall consider appropriate, 
    the Corporation--
            (A) shall guarantee the timely payment of principal and 
        interest on the securities issued by a certified facility that 
        represents interests solely in, or obligations fully backed by, 
        any pool consisting solely of qualified loans which meet the 
        standards established under section 2279aa-8 of this title and 
        which are held by such facility; and
            (B) may issue a security, guaranteed as to the timely 
        payment of principal and interest, that represents an interest 
        solely in, or an obligation fully backed by, a pool consisting 
        of qualified loans that--
                (i) meet the standards established under section 2279aa-
            8 of this title; and
                (ii) have been purchased and held by the Corporation.

                  (2) Inability of facility to pay

        If the facility is unable to make any payment of principal or 
    interest on any security for which a guarantee has been provided by 
    the Corporation under paragraph (1), the Corporation shall make such 
    payment as and when due in cash, and on such payment shall be 
    subrogated fully to the rights satisfied by such payment.

                      (3) Power of Corporation

        Notwithstanding any other provision of law, the Corporation is 
    empowered, in connection with any guarantee under this subsection, 
    whether before or after any default, to provide by contract with the 
    facility for the extinguishment, on default by the facility, of any 
    redemption, equitable, legal, or other right, title, or interest of 
    the facility in any mortgage or mortgages constituting the pool 
    against which the guaranteed securities are issued. With respect to 
    any issue of guaranteed securities, in the event of default and 
    pursuant otherwise to the terms of the contract, the mortgages that 
    constitute such pool shall become the absolute property of the 
    Corporation subject only to the unsatisfied rights of the holders of 
    the securities based on and backed by such pool.

(b) Other responsibilities of and limitations on certified facilities

    As a condition for providing any guarantees under this section for 
securities issued by a certified facility that represent interests in, 
or obligations backed by, any pool of qualified loans, the Corporation 
shall require such facility to agree to comply with the following 
requirements:

                     (1) Loan default resolution

        The facility shall act in accordance with the standards of a 
    prudent institutional lender to resolve loan defaults.

        (2) Subrogation of United States and Corporation to 
                            interests of facility

        The proceeds of any collateral, judgments, settlements, or 
    guarantees received by the facility with respect to any loan in such 
    pool, shall be applied, after payment of costs of collection--
            (A) first, to reduce the amount of any principal outstanding 
        on any obligation of the Corporation that was purchased by the 
        Secretary of the Treasury under section 2279aa-13 of this title 
        to the extent the proceeds of such obligation were used to make 
        guarantees in connection with such securities; and
            (B) second, to reimburse the Corporation for any such 
        guarantee payments.

                         (3) Loan servicing

        The originator of any loan in such pool shall be permitted to 
    retain the right to service the loan.

           (4) Minority participation in public offerings

        The facility shall take such steps as may be necessary to ensure 
    that minority owned or controlled investment banking firms, 
    underwriters, and bond counsels throughout the United States have an 
    opportunity to participate to a significant degree in any public 
    offering of securities.

     (5) No discrimination against States with borrowers rights

        The facility may not refuse to purchase qualified loans 
    originating in States that have established borrowers rights laws 
    either by statute or under the constitution of such States, except 
    that the facility may require discounts or charge fees reasonably 
    related to costs and expenses arising from such statutes or 
    constitutional provisions.

(c) Additional authority of Board

    To ensure the liquidity of securities for which guarantees have been 
provided under this section, the Board shall adopt appropriate standards 
regarding--
        (1) the characteristics of any pool of qualified loans serving 
    as collateral for such securities; and
        (2) transfer requirements.

(d) Aggregate principal amounts of qualified loans

                          (1) Initial year

        During the first year after January 6, 1988, the Corporation may 
    not provide guarantees for securities representing interests in, or 
    obligations backed by, qualified loans (other than loans which back 
    securities issued by Farm Credit System institutions for which the 
    Corporation provides a guarantee) in an aggregate principal amount 
    in excess of 2 percent of the total agricultural real estate debt 
    outstanding at the close of the prior calendar year (as published by 
    the Board of Governors of the Federal Reserve System), less all 
    Farmers Home Administration agricultural real estate debt.

                           (2) Second year

        During the year following the year referred to in paragraph (1), 
    the Corporation may not provide guarantees for securities 
    representing interests in, or obligations backed by, qualified loans 
    (other than loans which back securities issued by Farm Credit System 
    institutions for which the Corporation provides a guarantee) in an 
    additional principal amount in excess of 4 percent of the total 
    agricultural real estate debt outstanding at the close of the prior 
    calendar year, less all Farmers Home Administration agricultural 
    real estate debt.

                           (3) Third year

        During the year following the year referred to in paragraph (2), 
    the Corporation may not provide guarantees for securities 
    representing interests in, or obligations backed by, qualified loans 
    (other than loans which back securities issued by Farm Credit System 
    institutions for which the Corporation provides a guarantee) in an 
    additional principal amount in excess of 8 percent of the total 
    agricultural real estate debt outstanding at the close of the prior 
    calendar year, less all Farmers Home Administration agricultural 
    real estate debt.

                        (4) Subsequent years

        In years subsequent to the year referred to in paragraph (3), 
    the Corporation may provide guarantees without regard to the 
    principal amount of the qualified loans guaranteed.

(e) Purchase of guaranteed securities

                       (1) Purchase authority

        The Corporation (and affiliates) may purchase, hold, and sell 
    any securities guaranteed under this section by the Corporation that 
    represent interests in, or obligations backed by, pools of qualified 
    loans. Securities issued under this section shall have maturities 
    and bear rates of interest as determined by the Corporation.

                  (2) Issuance of debt obligations

        The Corporation (and affiliates) may issue debt obligations 
    solely for the purpose of obtaining amounts for the purchase of any 
    securities under paragraph (1), for the purchase of qualified loans 
    (as defined in section 2279aa(9) of this title), and for maintaining 
    reasonable amounts for business operations (including adequate 
    liquidity) relating to activities under this subsection.

                      (3) Terms and limitations

        (A) Terms

            The obligations issued under this subsection shall have 
        maturities and bear rates of interest as determined by the 
        Corporation, and may be redeemable at the option of the 
        Corporation before maturity in the manner stipulated in the 
        obligations.

        (B) Requirement

            Each obligation shall clearly indicate that the obligation 
        is not an obligation of, and is not guaranteed as to principal 
        and interest by, the Farm Credit Administration, the United 
        States, or any other agency or instrumentality of the United 
        States (other than the Corporation).

        (C) Authority

            The Corporation may not issue obligations pursuant to 
        paragraph (2) under this subsection while any obligation issued 
        by the Corporation under section 2279aa-13(a) of this title 
        remains outstanding.

(Pub. L. 92-181, title VIII, Sec. 8.6, as added Pub. L. 100-233, title 
VII, Sec. 702, Jan. 6, 1988, 101 Stat. 1695; amended Pub. L. 100-399, 
title VI, Sec. 601(f)-(h), Aug. 17, 1988, 102 Stat. 1005; Pub. L. 102-
237, title V, Sec. 503(d), Dec. 13, 1991, 105 Stat. 1877; Pub. L. 104-
105, title I, Secs. 107, 108(a), (c)(2), 109(a), (b)(4), Feb. 10, 1996, 
110 Stat. 164, 165.)


                               Amendments

    1996--Subsec. (a)(1). Pub. L. 104-105, Sec. 107(1), designated part 
of existing text as subpar. (A) and added subpar. (B).
    Subsec. (a)(2). Pub. L. 104-105, Sec. 108(c)(2), struck out 
``subject to the provisions of subsection (b) of this section'' after 
``paragraph (1),''.
    Subsec. (b). Pub. L. 104-105, Secs. 108(a), 109(a)(2), redesignated 
subsec. (d) as (b) and struck out heading and text of former subsec.(b). 
Text read as follows: ``In the case of any pool referred to in 
subsection (a) of this section, the Corporation shall--
        ``(1) provide a guarantee only with respect to an individual 
    pool of qualified loans on application of a certified facility;
        ``(2) provide a guarantee only if a reserve, or retained 
    subordinated participating interests, in an amount equal to at least 
    10 percent of the outstanding principal amount of the loans 
    constituting the pool has been established in accordance with this 
    subchapter;
        ``(3) require that full recourse be taken against reserves and 
    retained subordinated participating interests before any demand be 
    made by the certified facility with respect to the guarantee of the 
    Corporation; and
        ``(4) ensure the timely receipt of principal and interest due to 
    security or obligation holders only after full recourse has been 
    taken against such reserves and retained subordinated participating 
    interests.''
    Subsec. (b)(4) to (6). Pub. L. 104-105, Sec. 109(b)(4), redesignated 
pars. (5) and (6) as (4) and (5), respectively, and struck out heading 
and text of former par. (4). Text read as follows: ``The facility shall 
comply with the standards adopted by the Board under subsection (c) of 
this section in establishing and maintaining the pool.''
    Subsec. (c). Pub. L. 104-105, Sec. 109(a), redesignated subsec. (e) 
as (c) and struck out heading and text of former subsec. (c) which 
related to standards requiring diversified pools, including 
establishment of minimum criteria for pools of qualified loans, 
provisions to encourage loans to small farms and family farmers, and 
requirements for congressional review of standards.
    Subsec. (d). Pub. L. 104-105, Sec. 109(a)(2), redesignated subsec. 
(f) as (d). Former subsec. (d) redesignated (b).
    Subsec. (d)(4) to (7). Pub. L. 104-105, Sec. 107(2), redesignated 
pars. (5) to (7) as (4) to (6), respectively, and struck out heading and 
text of former par. (4). Text read as follows: ``Each loan in the pool 
shall have been sold to the certified facility without recourse to the 
originator of such loan (other than recourse to any interest of such 
originator in a reserve established in connection with such loan or any 
subordinated participation interest of such originator in such loan).''
    Subsecs. (e), (f). Pub. L. 104-105, Sec. 109(a)(2), redesignated 
subsecs. (f) and (g) as (d) and (e), respectively. Former subsec. (e) 
redesignated (c).
    Subsec. (g). Pub. L. 104-105, Sec. 109(a)(2), redesignated subsec. 
(g) as (e).
    Subsec. (g)(2). Pub. L. 104-105, Sec. 107(3), substituted 
``2279aa(9) of this title'' for ``2279aa(9)(B) of this title''.
    1991--Subsec. (g). Pub. L. 102-237 added subsec. (g).
    1988--Subsec. (a)(1). Pub. L. 100-399, Sec. 601(f), substituted 
``represents interests solely in, or obligations fully backed by, any 
pool consisting solely of qualified loans which meet the standards 
established under section 2279aa-8 of this title and which are'' for 
``represents interests in, or obligations backed by, any pool of 
qualified loans''.
    Subsec. (e). Pub. L. 100-399, Sec. 601(g), redesignated par. (3) as 
(2) and struck out former par. (2) which read as follows: ``registration 
requirements (if any) with respect to such securities; and''.
    Subsec. (f)(1). Pub. L. 100-399, Sec. 601(h), substituted ``date of 
the enactment'' for ``effective date'', both of which for purposes of 
codification were translated as ``January 6, 1988,''.


                    Effective Date of 1988 Amendment

    Amendment by Pub. L. 100-399 effective as if enacted immediately 
after enactment of Pub. L. 100-233, which was approved Jan. 6, 1988, see 
section 1001(a) of Pub. L. 100-399, set out as a note under section 2002 
of this title.

                  Section Referred to in Other Sections

    This section is referred to in sections 2279aa, 2279aa-3, 2279aa-8, 
2279bb-1, 2279bb-2 of this title.
