
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: 7USC1935]

 
                          TITLE 7--AGRICULTURE
 
                     CHAPTER 50--AGRICULTURAL CREDIT
 
                     SUBCHAPTER I--REAL ESTATE LOANS
 
Sec. 1935. Down payment loan program


(a) In general

                          (1) Establishment

        Notwithstanding any other section of this subchapter, the 
    Secretary shall establish, within the farm ownership loan program 
    established under this subchapter, a program under which loans shall 
    be made under this section to qualified beginning farmers and 
    ranchers for down payments on farm ownership loans.

                         (2) Administration

        The Secretary shall be the primary coordinator of credit 
    supervision for the down payment loan program established under this 
    section, in consultation with the commercial or cooperative lender 
    and, if applicable, the contracting credit counseling service 
    selected under section 2006b(c) of this title.

(b) Loan terms

                            (1) Principal

        Each loan made under this section shall be in an amount equal to 
    30 percent of the purchase price or appraisal value, whichever is 
    lower, of the farm or ranch to be acquired, unless the borrower 
    requests a lesser amount.

                          (2) Interest rate

        The interest rate on any loan made by the Secretary under this 
    section shall be 4 percent.

                            (3) Duration

        Each loan under this section shall be made for a period of 10 
    years or less, at the option of the borrower.

                            (4) Repayment

        Each borrower of a loan under this section shall repay the loan 
    to the Secretary in equal annual installments.

              (5) Nature of retained security interest

        The Secretary shall retain an interest in each farm or ranch 
    acquired with a loan made under this section that shall--
            (A) be secured by the farm or ranch;
            (B) be junior only to such interests in the farm or ranch as 
        may be conveyed at the time of acquisition to the person 
        (including a lender) from whom the borrower obtained a loan used 
        to acquire the farm or ranch; and
            (C) require the borrower to obtain the permission of the 
        Secretary before the borrower may grant an additional security 
        interest in the farm or ranch.

(c) Limitations

         (1) Borrowers required to make minimum down payment

        The Secretary shall not make a loan under this section to any 
    borrower with respect to a farm or ranch if the contribution of the 
    borrower to the down payment on the farm or ranch will be less than 
    10 percent of the purchase price of the farm or ranch.

            (2) Maximum price of property to be acquired

        The Secretary shall not make a loan under this section with 
    respect to a farm or ranch for which the purchase price or appraisal 
    value, whichever is lower, exceeds $250,000.

                  (3) Prohibited types of financing

        The Secretary shall not make a loan under this section with 
    respect to a farm or ranch if the farm or ranch is to be acquired 
    with other financing that contains any of the following conditions:
            (A) The financing is to be amortized over a period of less 
        than 30 years.
            (B) A balloon payment will be due on the financing during 
        the 10-year period beginning on the date the loan is to be made 
        by the Secretary.

(d) Administration

    In carrying out this section, the Secretary shall, to the maximum 
extent practicable--
        (1) facilitate the transfer of farms and ranches from retiring 
    farmers and ranchers to persons eligible for insured loans under 
    this subchapter;
        (2) make efforts to widely publicize the availability of loans 
    under this section among--
            (A) potentially eligible recipients of the loans;
            (B) retiring farmers and ranchers; and
            (C) applicants for farm ownership loans under this 
        subchapter;

        (3) encourage retiring farmers and ranchers to assist in the 
    sale of their farms and ranches to qualified beginning farmers and 
    ranchers by providing seller financing; and
        (4) coordinate the loan program established by this section with 
    State programs that provide farm ownership or operating loans for 
    beginning farmers and ranchers.

(Pub. L. 87-128, title III, Sec. 310E, as added Pub. L. 102-554, 
Sec. 7(a), Oct. 28, 1992, 106 Stat. 4144.)

                  Section Referred to in Other Sections

    This section is referred to in sections 1925, 1929, 1991, 1994 of 
this title.
