§ 1922. Persons eligible for real estate loans

2,394 words·~11 min read·/usc/title-7/section-1922

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(a)In general

(1)Eligibility requirements The Secretary may make and insure loans under this subchapter to farmers and ranchers in the United States, and to farm cooperatives and private domestic corporations, partnerships, joint operations, trusts, limited liability companies, and such other legal entities as the Secretary considers appropriate, that are controlled by farmers and ranchers and engaged primarily and directly in farming or ranching in the United States, subject to the conditions specified in this section. To be eligible for such loans, applicants who are individuals, or, in the case of cooperatives, corporations, partnerships, joint operations, trusts, limited liability companies, and such other legal entities, individuals holding a majority interest in such entity, must

(A)be citizens of the United States,

(B)for direct loans only, have either training or farming experience that the Secretary determines is sufficient to assure reasonable prospects of success in the proposed farming operations, taking into consideration all farming experience of the applicant, without regard to any lapse between farming experiences,

(C)be or will become owner-operators of not larger than family farms (or in the case of cooperatives, corporations, partnerships, joint operations, trusts, limited liability companies, and such other legal entities in which a majority interest is held by individuals who are related by blood or marriage, as defined by the Secretary, such individuals must be or will become either owners or operators of not larger than a family farm and at least one such individual must be or will become an operator of not larger than a family farm or, in the case of holders of the entire interest who are related by blood or marriage and all of whom are or will become farm operators, the ownership interest of each such holder separately constitutes not larger than a family farm, even if their interests collectively constitute larger than a family farm, as defined by the Secretary), and

(D)be unable to obtain sufficient credit elsewhere to finance their actual needs at reasonable rates and terms, taking into consideration prevailing private and cooperative rates and terms in the community in or near which the applicant resides for loans for similar purposes and periods of time. In addition to the foregoing requirements of this section, in the case of corporations, partnerships, joint operations, trusts, limited liability companies, and such other legal entities, the family farm requirement of subparagraph

(C)of the preceding sentence shall apply as well to the farm or farms in which the entity has an ownership and operator interest and the requirement of subparagraph

(D)of the preceding sentence shall apply as well to the entity in the case of cooperatives, corporations, partnerships, joint operations, trusts, limited liability companies, and such other legal entities.

(2)Special rules

(A)Eligibility of certain operating-only entities An entity that is or will become only the operator of a family farm shall be considered to meet the owner-operator requirements of paragraph

(1)if the individuals that are the owners of the family farm own more than 50 percent (or such other percentage as the Secretary determines is appropriate) of the entity.

(B)Eligibility of certain embedded entities An entity that is an owner-operator described in paragraph (1), or an operator described in subparagraph

(A)of this paragraph that is owned, in whole or in part, by other entities, shall be considered to meet the direct ownership requirement imposed under paragraph

(1)if at least 75 percent of the ownership interests of each embedded entity of the entity is owned directly or indirectly by the individuals that own the family farm.

(b)Direct loans

(1)In general Subject to paragraph (3), the Secretary may make a direct loan under this subchapter only to a farmer or rancher who has participated in the business operations of a farm or ranch for not less than 3 years or has other acceptable experience for a period of time, as determined by the Secretary, and—

(A)is a qualified beginning farmer or rancher;

(B)has not received a previous direct farm ownership loan made under this subchapter; or

(C)has not received a direct farm ownership loan under this subchapter more than 10 years before the date the new loan would be made.

(2)Youth loans The operation of an enterprise by a youth under section 1941(b) of this title shall not be considered the operation of a farm or ranch for purposes of paragraph (1).

(3)Transition rule

(A)In general Subject to subparagraphs

(B)and (C), the Secretary may make a direct loan under this subchapter to a farmer or rancher who has a direct loan outstanding under this subchapter on April 4, 1996.

(B)Less than 5 years If, as of April 4, 1996, a farmer or rancher has had a direct loan outstanding under this subchapter for less than 5 years, the Secretary shall not make a loan to the farmer or rancher under subparagraph

(A)after the date that is 10 years after April 4, 1996.

(C)5 years or more If, as of April 4, 1996, a farmer or rancher has had a direct loan outstanding under this subchapter for 5 years or more, the Secretary shall not make a loan to the farmer or rancher under subparagraph

(A)after the date that is 5 years after April 4, 1996.

(D)Notice Beginning with fiscal year 2000 not later than 12 months before a borrower will become ineligible for direct loans under this subchapter by reason of this paragraph, the Secretary shall notify the borrower of such impending ineligibility.

(4)Waiver authority In the case of a qualified beginning farmer or rancher, the Secretary may—

(A)reduce the 3-year requirement in paragraph

(1)to 1 or 2 years, if the farmer or rancher has—

(i)not less than 16 credit hours of post-secondary education in a field related to agriculture;

(ii)successfully completed a farm management curriculum offered by a cooperative extension service, a community college, an adult vocational agriculture program, a nonprofit organization, or a land-grant college or university;

(iii)at least 1 year of experience as hired farm labor with substantial management responsibilities;

(iv)successfully completed a farm mentorship, apprenticeship, or internship program with an emphasis on management requirements and day-to-day farm management decisions;

(v)significant business management experience;

(vi)been honorably discharged from the armed forces of the United States;

(vii)successfully repaid a youth loan made under section 1941(b) of this title; or

(viii)an established relationship with an individual who has experience in farming or ranching, or is a retired farmer or rancher, and is participating as a counselor in a Service Corps of Retired Executives program authorized under section 637(b)(1)(B) of title 15, or with a local farm or ranch operator or organization, approved by the Secretary, that is committed to mentoring the farmer or rancher; or

(B)waive the 3-year requirement in paragraph

(1)if the farmer or rancher meets the requirements of clauses

(iii)and

(viii)of subparagraph (A).

(Pub. L. 87–128, title III, § 302, Aug. 8, 1961, 75 Stat. 307; Pub. L. 91–620, § 2, Dec. 31, 1970, 84 Stat. 1862; Pub. L. 95–334, title I, § 101, Aug. 4, 1978, 92 Stat. 420; Pub. L. 97–98, title XVI, § 1601(a), Dec. 22, 1981, 95 Stat. 1346; Pub. L. 99–198, title XIII, §§ 1301(a), 1302(a), 1303, Dec. 23, 1985, 99 Stat. 1518, 1519; Pub. L. 104–127, title VI, § 601, Apr. 4, 1996, 110 Stat. 1084; Pub. L. 105–277, div. A, § 101(a) [title VIII, §§ 804, 805(1)], Oct. 21, 1998, 112 Stat. 2681, 2681–39;

Pub. L. 107–171, title V, §§ 5001, 5302(a), May 13, 2002, 116 Stat. 341, 344; Pub. L. 110–234, title V, § 5001, May 22, 2008, 122 Stat. 1142; Pub. L. 110–246, § 4(a), title V, § 5001, June 18, 2008, 122 Stat. 1664, 1903; Pub. L. 113–79, title V, § 5001(a), (b), Feb. 7, 2014, 128 Stat. 832, 833; Pub. L. 115–334, title V, § 5101, Dec. 20, 2018, 132 Stat. 4668.)

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