Sec. 3. Farm loan reform
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Subtitle D of the Consolidated Farm and Rural Development Act is amended by inserting after section 374 ( 7 U.S.C. 2008i ) the following: In this section: The term adverse decision has the meaning given the term in section 271 of the Department of Agriculture Reorganization Act of 1994 ( 7 U.S.C. 6991 ). The term farm loan means a loan administered by the Farm Service Agency under subtitle A or B. The term principal residence means the principal residence of a borrower of a farm loan, including adjoining land of not more than 10 acres.
In the case of any adverse decision relating to a farm loan, a Farm Service Agency program benefit, or the noninsured crop disaster assistance program established by section 196 of the Federal Agriculture Improvement and Reform Act of 1996 ( 7 U.S.C. 7333 ), the Secretary shall include in a determination letter provided to the applicant, to the maximum extent practicable— a description of each reason known, or that reasonably should have been known, to the Secretary for that adverse decision; a reference to each regulation, and Farm Loan Program handbook instruction, with the maximum practicable specificity, that forms the basis for each reason described in subparagraph (A); and instructions for accessing the Electronic Code of Federal Regulations and Farm Loan Program handbook instructions online.
If the Secretary issues any adverse decision relating to an application for a farm loan, a Farm Service Agency program benefit, or the noninsured crop disaster assistance program established by section 196 of the Federal Agriculture Improvement and Reform Act of 1996 ( 7 U.S.C. 7333 ) and does not include in a determination letter provided to the applicant a reason known to the Secretary for that adverse decision, the Secretary may not subsequently issue an adverse decision to that applicant on the basis of the same reason, unless the circumstances of the applicant have substantially changed since the issuance of the prior adverse decision.
The Secretary may only secure a direct farm loan with a principal residence if the total value of other assets available to secure the farm loan does not provide adequate security (as defined in section 761.2(b) of title 7, Code of Federal Regulations (or successor regulations)) for the loan. In the case of a farm loan secured in part by a principal residence, the Secretary shall initiate a partial release of the principal residence as security in accordance with subpart H of part 765 of title 7, Code of Federal Regulations (or successor regulations), without any action required by the borrower, when the total value of other assets securing the farm loan is equal to 100 percent of the remaining loan amount.
In the case of a farm loan borrower who is delinquent prior to restructuring the farm loan, the borrower shall execute and provide to the Secretary a lien on assets necessary to achieve not more than 100 percent collateralization of the loan value. Except as provided in section 764.106 of title 7, Code of Federal Regulations (or successor regulations), the Secretary shall take the best lien obtainable on assets described in subparagraph (A), subject to the condition that a primary residence shall be the last option available to the Secretary to achieve 100 percent collateralization of the loan value.
The Secretary may not secure a direct farm loan with any property that provides security in excess of the amount of security value equal to the loan amount. The Secretary shall not impose any limitation relating to the number of years in which a farm loan may be closed by a borrower. . Section 303(a)(1) of the Consolidated Farm and Rural Development Act ( 7 U.S.C. 1923(a)(1) ) is amended by striking subparagraph
(E)and inserting the following: refinancing indebtedness. . Section 312(a) of the Consolidated Farm and Rural Development Act ( 7 U.S.C. 1942(a) ) is amended by striking paragraph
(9)and inserting the following: refinancing the indebtedness of a borrower; or . Section 373 of the Consolidated Farm and Rural Development Act ( 7 U.S.C. 2008h ) is amended— in subsection (b)(2)(A)— by striking clause (i); in clause (ii), by striking chapters 11, 12, or 13 of Title 11 of the and inserting chapter 11, 12, or 13 of title 11, ; and by redesignating clauses
(ii)and
(iii)as clauses
(i)and (ii), respectively; and by striking subsection
(c)and inserting the following: The Secretary shall not restrict the eligibility of a borrower for a farm ownership or operating loan under subtitle A or B based on a previous debt write-down or other loss to the Secretary. . Section 366 of the Consolidated Farm and Rural Development Act ( 7 U.S.C. 2008a ) is amended— in subsection (a)— in paragraph (1), by striking
(1)received and inserting (1)(A) received ; in paragraph (2)— by striking the period at the end and inserting ; or ; and by striking
(2)the Secretary and inserting
(B)the Secretary ; and by adding at the end the following: received a benefit under any other program administered by an agency (as defined in section 271 of the Department of Agriculture Reorganization Act of 1994 ( 7 U.S.C. 6991 )); and the Secretary determines is not in compliance with the requirements of the provisions of law that authorize that program. ; in subsection (b)(2), by inserting , including having made management or financial decisions for the farming or ranching operation of the farmer or rancher that were detrimental due to the erroneous nature of an official communication from the Department of Agriculture, regardless of whether a financial benefit was received or only promised before the period at the end; in subsection (c)(1), by striking (a)(2) and inserting (a)(1)(B) ; in subsection (e), by striking section in the matter preceding paragraph
(1)and all that follows through shall not be in paragraph
(2)and inserting section shall be ; and by adding at the end the following: An Administrative Judge of the National Appeals Division may provide equitable relief under this section. The Secretary may review a decision of an Administrative Judge to grant equitable relief pursuant to paragraph (1). In this subsection: The term adverse decision has the meaning given the term in section 271 of the Department of Agriculture Reorganization Act of 1994 ( 7 U.S.C. 6991 ). The term applicant means a person who submitted to the Farm Service Agency an application for— a direct farm ownership, operating, or emergency loan under this title; a Farm Service Agency program benefit; or the noninsured crop disaster assistance program established by section 196 of the Federal Agriculture Improvement and Reform Act of 1996 ( 7 U.S.C. 7333 ). A loan applicant shall be eligible for equitable relief under this section if— the National Appeals Division determines that the Farm Service Agency was in error in denying the loan, benefit, or payment based on feasibility; the National Appeals Division has confirmed the accuracy of the projected income and projected expenses described in the original application submitted by the applicant; and the original application submitted by the applicant is no longer feasible due to the delay caused by the erroneous denial by the Farm Service Agency and the length of the appeals process. The amount of equitable relief under subparagraph
(A)shall be the amount equal to the difference between— the projected income described in the application; and the projected expenses described in the application. A loan applicant shall be eligible for equitable relief under this section if— feasibility was not listed as a reason for an adverse decision in the determination letter provided to the applicant; eligibility was listed as a reason for an adverse decision in the determination letter provided to the applicant; the National Appeals Division determines that the Farm Service Agency was in error in denying the loan based on eligibility; and the original application submitted by the applicant is no longer feasible due to the delay caused by the erroneous denial by the Farm Service Agency and the length of the appeals process. An applicant shall be eligible for equitable relief under this section if— the Farm Service Agency issued an adverse decision on an application that the Farm Service Agency subsequently withdrew; and the original application submitted by the applicant is no longer feasible due to the delay caused by the adverse decision. An applicant shall be eligible for equitable relief under this section if— the Farm Service Agency indicated in an official communication made after the date of enactment of this subsection that the applicant could expect the loan, benefit, or payment, and then reversed its decision; and the applicant acted in good faith. .
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Sec. 3
Farm loan reform
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