§ 936c. Refinancing and prepayment of FFB loans

Legislative history

Reconstructed from this section’s Code source credit and amendment notes, resolved against the local Statutes at Large. Editorial notes are evidence, not the law that made the change.

1. 1936

   Agricultural Reconciliation Act of 1993

   Pub. L. 103–66 title I § 1201(a) · 107 Stat. 312

   Enacted · 7 U.S.C. § 936c

   May 20, 1936, ch. 432, title III, § 306C, as added Pub. L. 103–66, title I, § 1201(a), Aug. 10, 1993, 107 Stat. 327

   Source evidence

   Code source credit
   May 20, 1936, ch. 432, title III, § 306C, as added Pub. L. 103–66, title I, § 1201(a), Aug. 10, 1993, 107 Stat. 327

   Enacted provision · exact public law section
   (a) In General.— Title III of the Rural Electrification Act of 1936 (7 U.S.C. 931 et seq.) is amended by inserting after section 306B (7 U.S.C. 936b) the following new section: “SEC. 306C. REFINANCING AND PREPAYMENT OF FFB LOANS. “(a) In General.— A borrower of a loan made by the Federal Financing Bank and guaranteed under section 306 may, at the option of the borrower, refinance or prepay the loan or an advance on the loan, or any portion of the loan or advance. “(b) Penalty.— “(1) Determination of penalty.— A penalty shall be assessed against a borrower that refinances or prepays a loan or loan advance, or any portion of a loan or advance, under this section. Except as provided in paragraph (2), the penalty shall be equal to the lesser of— “(A) the difference between the outstanding principal balance of the loan being refinanced and the present value of the loan discounted at a rate equal to the then current cost of funds to the Department of the Treasury for obligations of comparable maturity to the loan being refinanced or prepaid; “(B) 100 percent of the amount of interest for 1 year on the outstanding principal balance of the loan or loan advance, or any portion of the loan or advance, being refinanced, multiplied by the ratio that— “(i) the number of quarterly payment dates between the date of the refinancing or prepayment and the maturity date for the loan advance; bears to “(ii) the number of quarterly payment dates between the first quarterly payment elate that occurs 12 years after the end of the year in which the amount being refinanced was advanced and the maturity date of the loan advance; and “(C) (i) the present value of 100 percent of the amount of interest for 1 year on the outstanding principal balance of the loan or loan advance, or any portion of the loan or advance, being refinanced or prepaid; plus “(ii) for the interval between the date of the refinancing or prepayment and the first quarterly payment date that occurs 12 years after the end of the year in which the amount being refinanced or prepaid was advanced, the present value of the difference between— “(I) each payment scheduled for the interval on the loan amount being refinanced or prepaid; and “(II) the payment amounts that would be required during the interval on the amounts being refinanced or prepaid if the interest rate on the loan were equal to the then current cost of funds to the Department of the Treasury for obligations of comparable maturity to the loan being refinanced or prepaid. “(2) Limitation.— “(A) In general.— Except as provided in subparagraph (B), the penalty provided by paragraph (1)(A) shall be required for refinancing or prepayment under this section. “(B) Exception.— In the case of a loan advanced under an agreement that permits the refinancing or prepayment of the loan advance based on the payment of 1 year of interest on the outstanding principal balance of the loan advance, a borrower may, in lieu of the penalty required by paragraph (1)(A), pay a penalty as provided by— “(i) paragraph (1)(B), if the loan advance has reached the 12-year maturity required under the loan agreement for the refinancing or prepayment; or “(ii) paragraph (1)(C), if the loan advance has not reached the 12-year maturity required under the loan agreement for the refinancing or prepayment. “(3) Financing of penalty.— “(A) In general.— In the case of a refinancing under this section, a borrower may, at the option of the borrower, meet the penalty requirements of paragraph (1) by— “(i) making a payment in the amount of the required penalty at the time of the refinancing; or “(ii) increasing the outstanding principal balance of the loan advance guaranteed by the Administrator that is being refinanced under this section by the amount of the penalty. “(B) Increased principal.— If a borrower meets the penalty requirements of paragraph (1) by increasing the outstanding principal balance of the loan advance that is being refinanced, the borrower shall make a payment at the time of the refinancing equal to 2.5 percent of the amount of the penalty that is added to the outstanding principal balance of the loan. “(c) Loan Terms and Conditions After Refinancing.— “(1) In general.— On the payment of a penalty as provided by subsection (b), the loan or loan advance, or any portion of the loan or advance, shall be refinanced at the interest rate described in paragraph (2) for a term selected by the borrower pursuant to paragraph (3), except that this paragraph shall not apply if the loan advance, or any portion of the advance, is prepaid by the borrower. “(2) Interest rate.— The interest rate on a loan refinanced under this section shall be determined to be equal to the then current cost of funds to the Department of the Treasury for obligations of comparable maturity to a term selected by the borrower pursuant to paragraph (3). “(3) Loan term.— Subject to paragraph (4), the borrower of a loan that is refinanced under this section— “(A) shall select the term for which an interest rate shall be determined pursuant to paragraph (2); and “(B) at the end of the term (and any succeeding term selected by the borrower under this paragraph), may renew the loan for another term selected by the borrower. “(4) Maximum term.— The borrower may not select a term pursuant to paragraph (3) that ends after the maturity date set for the loan before the refinancing of the loan under this section. “(5) Existing loans.— In the case of the refinancing of a loan of a borrower pursuant to this section and the inclusion of a penalty in the outstanding principal balance of the refinanced loan pursuant to subsection (b)(3)— “(A) the refinancing and inclusion of the penalty shall not be subject to appropriations or limited by the amount provided during a fiscal year for new loans, loan guarantees, or other credit activity; “(B) the request of the borrower for the refinancing under this section may not be denied or delayed; and “(C) the borrower may not be limited in the selection of any refinancing or prepayment option provided by this section to the borrower.”.

2. 1993

   Pub. L. 103–129 § 2(c)(10)(A) · 107 Stat. 1356

   Inserted · 7 U.S.C. § 936c(c)(2)

   Pub. L. 103–129, § 2(c)(10)(A), inserted before period at end “, except that such rate shall not be greater than 7 percent per year, subject to subsection (d) of this section”

   Source evidence

   Code amendment note
   Subsec. (c)(2). Pub. L. 103–129, § 2(c)(10)(A), inserted before period at end “, except that such rate shall not be greater than 7 percent per year, subject to subsection (d) of this section”.

   Enacted provision · exact public law section
   (C) by inserting after subsection (b) (as so redesignated) the following new subsections:

3. 1993

   Pub. L. 103–129 § 2(c)(10)(B) · 107 Stat. 1356

   Added · 7 U.S.C. § 936c(d)

   Pub. L. 103–129, § 2(c)(10)(B), added subsec. (d)

   Source evidence

   Code amendment note
   Subsec. (d). Pub. L. 103–129, § 2(c)(10)(B), added subsec. (d).

   Enacted provision · exact public law section
   (C) by inserting after subsection (b) (as so redesignated) the following new subsections:

4. 1994

   Department of Agriculture Reorganization Act of 1994

   Pub. L. 103–354 title II § 235(a)(13) · 108 Stat. 3178

   Substituted · 7 U.S.C. § 936c(b)(3)(A)(ii); 7 U.S.C. § 936c(b)(3)(d)(4)

   Pub. L. 103–354 substituted “Secretary” for “Administrator”

   Source evidence

   Code amendment note
   Subsecs. (b)(3)(A)(ii), (d)(4). Pub. L. 103–354 substituted “Secretary” for “Administrator”.

   Enacted provision · exact public law section
   (13) except as otherwise provided in this subsection, by striking “Administrator” each place it appears in such Act and inserting “Secretary”.

4 of 4 references resolved to an enrolled provision