§ 939. Loan terms and conditions

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

   Pub. L. 93–32 § 2 · 87 Stat. 65

   Enacted · 7 U.S.C. § 939

   May 20, 1936, ch. 432, title III, § 309, as added Pub. L. 93–32, § 2, May 11, 1973, 87 Stat. 70

   Source evidence

   Code source credit
   May 20, 1936, ch. 432, title III, § 309, as added Pub. L. 93–32, § 2, May 11, 1973, 87 Stat. 70

   Enacted provision · exact public law section
   Sec. 2. Title III of the Rural Electrification Act of 1936, as amended, is amended by striking out all of sections 301 and 302 and inserting in lieu thereof the following new sections: “Sec. 301. Rural Electrification and Telephone Revolving Fund.— (a) There is hereby established in the Treasury of the United States a fund, to be known as the Rural Electrification and Telephone Revolving Fund (hereinafter referred to as the ‘fund’), consisting of: “(1) all notes, bonds, obligations, liens, mortgages, and property delivered or assigned to the Administrator pursuant to loans heretofore or hereafter made, under sections 4. 5, and 201 of this 49 Stat. 1365. 63 Stat. 948. 7 USC 904, 905, 922. Act and under this title, as of the effective date of this title, as revised herein, and all proceeds from the sales hereunder of such notes, bonds, obligations, liens, mortgages, and property, which shall be transferred to and be assets of the fund; “(2) undisbursed balances of electric and telephone, loans made under sections 4, 5, and 201, which as of the effective date of this title, as revised herein, shall be transferred to and be assets of the fund; “(3) notwithstanding section 3(a) of title I. all collections of principal and interest received on and after July 1, 1972, on notes, bonds, judgments, or other obligations made or held under titles I 49 Stat. 1363; 63 Stat. 948. 7 USC 901, 921. and II of this Act and under this title, except for net collection proceeds previously appropriated for the purchase of class A stock in the Rural Telephone Bank, which shall be paid into and be assets of the fund; “(4) all appropriations for interest subsidies and losses required under this title which may hereafter be made by the Congress; “(5) moneys borrowed from the. Secretary of the Treasury pursuant to section 304(a); and “(6) shares of the capital stock of the Rural Telephone Bank 85 Stat. 33. 7 USC 946. purchased by the United States pursuant to section 406(a) of this Act and moneys received from said bank upon retirement of said shares of stock in accordance with the provisions of title IV 7 USC 941. of this Act, which said shares and moneys shall be assets of the fund. “Sec. 302. Liabilities and Uses of Fund.— (a) The notes of the Administrator to the Secretary of the Treasury to obtain funds for loans under sections 4, 5, and 201 of this Act, and all other liabilities against the appropriations or assets in the fund in connection with electrification and telephone loan operations shall be liabilities of the fund, and all other obligations against such appropriations or assets in the fund arising out of electrification and telephone loan operations shall be obligations of the fund. “(b) The assets of the fund shall be available only for the following purposes: “(1) loans which could be insured under this title, and for advances in connection with such loans and loans previously made, as of the effective date of this title, as revised herein, under sections 4, 5, and 201 of this Act; 63 Stat. 948. 85 Stat. 37. 7 USC 904, 905, 932. “(2) payment of principal when due (without interest) on outstanding loans to the Administrator from the Secretary of the Treasury for electrification and telephone purposes pursuant to section 3(a) of this Act and payment of principal and interest 61 Stat. 546. 7 USC 903. when due on loans to the Administrator from the Secretary of the Treasury pursuant to section 304(a) of this title; Infra. “(3) payment of amounts to which the holder of notes is entitled on insured loans: Provided, That payments other than final payments need not be remitted to the holder until due or until the next agreed annual, semiannual, or quarterly remittance date; “(4) payment to the holder of insured notes of any defaulted installment or, upon assignment of the note to the Administrator at his request, the entire balance due on the note; “(5) purchase of notes in accordance with contracts of insurance entered into by the Administrator; “(6) payment in compliance with contracts of guarantee: “(7) payment of taxes, insurance, prior liens, expenses necessary to make fiscal adjustments in connection with the application, and transmittal of collections or necessary to obtain credit reports on applicants or borrowers, expenses for necessary services, including construction inspections, commercial appraisals, loan servicing, consulting business advisory or other commercial and technical services, and other program services, and other expenses and advances authorized in section 7 of this Act in connection with 49 Stat. 1365. 7 USC 907. insured loans. Such items may be paid in connection with guaranteed loans after or in connection with the acquisition of such loans or security thereof after default, to the extent determined to be necessary to protect the interest of the Government, or in connection with any other activity authorized in this Act; “(8) payment of the purchase price and any costs and expenses incurred in connection with the purchase, acquisition, or operation of property pursuant to section 7 of this Act. “Sec. 303. Deposit of Fund Moneys.— Moneys in the fund shall remain on deposit in the Treasury of the United States until disbursed. “Sec. 304. Financial Transactions of the Fund.— (a) The Interim note issuance. Administrator is authorized to make and issue interim notes to the Secretary of the Treasury for the purpose of obtaining funds necessary for discharging obligations of the fund and for making loans, advances and authorized expenditures out of the fund. Such notes shall be in such form and denominations and have such maturities and be subject to such terms and conditions as may be agreed upon by the Interest raie determination. Administrator and the Secretary of the Treasury. Such notes shall bear interest at a rate fixed by the Secretary of the Treasury, taking into consideration the current average market yield of outstanding marketable obligations of the United States having maturities comparable to the notes issued by the Administrator under this section. The Secretary of the Treasury is authorized and directed to purchase any notes of the Administrator issued hereunder, and for that purpose, the Secretary’ of the Treasury is authorized to use as a public debt transaction the proceeds from the sale of any securities issued 40 Stat. 288. 31 USC 774. under the Second Liberty Bond Act, as amended, and the purposes for which such securities may be issued under such Act, as amended, are extended to include the purchase of notes issued by the Administrator. All redemptions purchases, and sales by the Secretary of the Treasury of such notes shall be treated as public debt transactions of the United U.S. budget totals, exclusion. States: Provided, however, That such interim notes to the Secretary of the Treasury shall not be included in the totals of the budget of the United States Government and shall be exempt from any general limitation imposed by statute on expenditures and net lending (budget outlays) of the United States. “(b) The Secretary of the Treasury is authorized and directed to purchase for resale obligations insured through the fund when offered by the Administrator. Such resales shall he upon such terms and conditions U.S. budget totals, exclusion. as the Secretary of the Treasury shall determine. Purchases and resales by the Secretary of the Treasury hereunder shall not be included in the totals of the budget of the United States Government and shall be exempt from any general limitation imposed by statute on expenditures and net lending (budget outlays) of the United States. “(c) The Administrator may on an insured basis or otherwise, sell and assign any notes in the fund or sell certificates of beneficial ownership therein to the Secretary of the Treasury or in the private market. Any sale by the Administrator of notes individually or in blocks shall be treated as a sale of assets for the purposes of the Budget and 42 Stat. 20. 31 USC 1. Accounting Act, 1921, notwithstanding the fact that the Administrator, under an agreement with the purchaser or purchasers, holds the debt instruments evidencing the loans and holds or reinvests payments thereon as trustee and custodian for the purchaser or purchasers of the individual note or of the certificate of beneficial ownership in a number Liens. of such notes. Security instruments taken by the Administrator in connection with any notes in the fund may constitute liens running to the United States notwithstanding the fact that such notes may be thereafter held by purchasers thereof. “Sec. 305. Insured Loans; Interest Rates and Lending Levels.— (a) The Administrator is authorized to make insured loans under this title and at the interest rates hereinafter provided to the full extent of the assets available in the fund, subject only to limitations as to amounts authorized for loans and advances as may be from time to time imposed by the Congress of the United States for loans to be made in any one year, which amounts shall remain available until Transfer of funds. expended: Provided, That the Congress in the annual appropriation Act may also authorize the transfer of any excess cash in the fund for deposit into the Treasury as miscellaneous receipts: And provided further, U.S. budget totals, exclusion. That any such loans and advances shall not be included in the totals of the budget of the United States Government and shall be exempt from any general limitation imposed by statute on expenditures and net lending (budget outlays) of the United States. “(b) Insured loans made under this title shall bear interest at either 2 per centum per annum (hereinafter called the ‘special rate’), or 5 “Special rate.” “Standard rate.” per centum per annum (hereinafter called the ‘standard rate’). Loans bearing the special rate shall be available only for an electric or telephone borrower which meets either of the following conditions: “(1) has an average consumer or subscriber density of two or fewer per mile, or “(2) has an average gross revenue per mile which is at least $450 below the average gross revenue per mile of REA-financed electric systems, in the case of elective borrowers, or at least $300 below the average gross revenue per mile of REA-financed telephone systems, in the ease of telephone borrowers: Provided, however, That the Administrator may, in his sole discretion, make a loan at the special rate if he finds that the borrower: “(A) has experienced extenuating circumstances or extreme hardship; or “(B) cannot, in accordance with generally accepted management and accounting principles, produce net income or margins before interest at least equal to 150 per centum of its total interest requirements on all outstanding and proposed loans with an interest rate greater than 2 nor centum per annum on the entire current loan, and still meet the objectives of the Act, or “(C) cannot, in accordance with generally accepted management and accounting principles and without an excessive increase in the rates charged by such borrowers to their consumers or subscribers, provide service consistent with the objectives of the Act. “(c) Loans made under this section shall be insured by the Administrator when purchased by a lender. As used in this Act, an insured loan is one which is made, held, and serviced by the Administrator, and sold and insured by the Administrator hereunder; such loans shall be sold and insured by the Administrator without undue delay. “Sec. 306. Guaranteed Loans: Accommodation and Subordination of Liens.— The Administrator may provide financial assistance to borrowers for purposes provided in the Rural Electrification Act of 1936, as amended, by guaranteeing loans, in the full amount thereof, made 49 Stat. 1363; 85 Stat. 29. 7 USC 901. by the Rural Telephone Bank, National Rural Utilities Cooperative Finance Corporation, and any other legally organized lending agency, or by accommodating or subordinating liens or mortgages in the fund held by the Administrator as owner or as trustee or custodian for purchases of notes from the. fund, or by any combination of such guarantee, accommodation, or subordination. No fees or charges shall be assessed for any such guarantee, accommodation, or subordination. Guaranteed loans shall bear interest, at the rate agreed upon by the borrower and the lender. Guaranteed loans, and accommodation and subordination of liens or mortgages, may be made concurrently with a loan insured at the standard rate. The amount of guaranteed loans shall be subject only to such limitations as to amounts as may be authorized from time to time by the Congress of the United States: Provided, That any am omits guaranteed hereunder shall not be U.S. budget totals, exclusion included in the total’s of the budget of the United States Government and shall be exempt from any general limitation imposed by statute on expenditures and net lending (budget outlays) of the United States. As used in this title a guaranteed loan is one which is made, held, and Definition. serviced by a legally organized lending agency and which is guaranteed by the Administrator hereunder. “Sec. 307. Other Financing.— When it appears to the Administrator that the loan applicant is able to obtain a loan for part of his credit needs from a responsible cooperative or other credit source at reasonable rates and terms consistent with the loan applicant’s ability to pay and the achievement of the Act’s objectives, he may request, the loan applicant to apply for and accept such a loan concurrently with a loan insured at the standard rate, subject, however, to full use being made by the Administrator of the funds made available hereunder for such insured loans under this title. “Sec. 308. Fuel Faith and Credit of the United States.— Any contract of insurance or guarantee, executed by the Administrator under this title shall be an obligation supported by the full faith and credit of the United States and incontestable except for fraud or misrepresentation of which the holder has actual knowledge. “Sec. 309. Loan Terms and Conditions.— Loans made from or insured through the fund shall be for the same purposes and on the same terms and conditions as are provided for loans in titles 1 and II 49 Stat. 1363; 63 Stat. 948. 7 USC 901, 921. Ante, p. 67. of this Act except as otherwise provided in sections 303 to 308 inclusive. “Sec. 310. Refinancing of Rural Development Act Loans.— At the request of the borrower, the Administrator is authorized and directed to refinance with loans which will lie insured under this Act Ante, p. 68. at the interest rates provided in section 305 any loans made for rural electric and telephone facilities muter any provision of the Consolidated 86 Stat. 657. 7 USC 1921 note. Repeal. 7 USC 903. 85 Stat. 32. 7 USC 945. Farm and Rural Development Act.”

2. 1990

   Rural Telecommunications Improvements Act of 1990

   Pub. L. 101–624 title XXIII § 2360 · 104 Stat. 3359

   1. Amended · 7 U.S.C. § 939

      Pub. L. 101–624 designated existing provisions as subsec. (a)

   2. Added · 7 U.S.C. § 939

      Pub. L. 101–624 added subsec. (b)

   Source evidence

   Code amendment note
   Pub. L. 101–624 designated existing provisions as subsec. (a) and added subsec. (b).

   Enacted provision · exact public law section
   SEC. 2360. BORROWERS TO DETERMINE AMORTIZATION PERIOD FOR INSURED TELEPHONE LOANS. 7 USC 939. Section 309 (7 U.S.C. 940) is amended— (1) by striking “Sec. 309. Loan Terms and Conditions.—Loans made from or” and inserting the following: “SEC. 309. LOAN TERMS AND CONDITIONS. “(a) In General.— Loans made from or”; and (2) by adding at the end the following new subsection: “(b) Telephone Loans Under This Title.— The term of any telephone loan made under this title shall be determined by the borrower at the time the loan application is submitted.”.

3. 1993

   Pub. L. 103–129 § 2(b)(2) · 107 Stat. 1356

   Inserted · 7 U.S.C. § 939(a)

   Pub. L. 103–129 inserted at end “The preceding sentence shall not be construed to make section 948(b)(2) or 950b of this title applicable to this subchapter.”

   Source evidence

   Code amendment note
   Subsec. (a). Pub. L. 103–129 inserted at end “The preceding sentence shall not be construed to make section 948(b)(2) or 950b of this title applicable to this subchapter.”

   Enacted provision · exact public law section
   (b) Funding.— (1) Limitations on authorization of appropriations.— Section 314 of such Act (7 U.S.C. 940d) is amended to read as follows:

4. 1996

   Federal Agriculture Improvement and Reform Act of 1996

   Pub. L. 104–127 title VII § 779 · 110 Stat. 888

   Struck · 7 U.S.C. § 939

   Pub. L. 104–127 struck out subsec. (a) designation and heading “In general” and heading and text of subsec. (b). Prior to amendment, text read as follows: “The term of any telephone loan made under this subchapter shall be determined by the borrower at the time the loan application is submitted.”

   Source evidence

   Code amendment note
   Pub. L. 104–127 struck out subsec. (a) designation and heading “In general” and heading and text of subsec. (b). Prior to amendment, text read as follows: “The term of any telephone loan made under this subchapter shall be determined by the borrower at the time the loan application is submitted.”

   Enacted provision · exact public law section
   SEC. 779. TELEPHONE LOAN TERMS AND CONDITIONS. Section 309 of the Rural Electrification Act of 1936 (7 U.S.C. 939) is amended— (1) in subsection (a), by striking “(a) In General.—”; and (2) by striking subsection (b).

5. 2018

   Agriculture Improvement Act of 2018

   Pub. L. 115–334 title VI § 6602(b)(11) · 132 Stat. 4490

   Struck · 7 U.S.C. § 939

   Pub. L. 115–334 struck out at end “The preceding sentence shall not be construed to make section 948(b)(2) or 950b of this title applicable to this subchapter.”

   Source evidence

   Code amendment note
   Pub. L. 115–334 struck out at end “The preceding sentence shall not be construed to make section 948(b)(2) or 950b of this title applicable to this subchapter.”

   Enacted provision · exact public law section
   (11) Section 309 of such Act (7 U.S.C. 739) is amended by striking the last sentence.

6 of 6 references resolved to an enrolled provision