[Code of Federal Regulations]

[Title 12, Volume 6]

[Revised as of January 1, 2006]

From the U.S. Government Printing Office via GPO Access

[CITE: 12CFR614.4040]



[Page 107-108]

 

                       TITLE 12--BANKS AND BANKING

 

                 CHAPTER VI--FARM CREDIT ADMINISTRATION

 

PART 614_LOAN POLICIES AND OPERATIONS--Table of Contents

 

                      Subpart A_Lending Authorities

 

Sec. 614.4040  Production credit associations.



    (a) Loan terms. (1) Production credit associations are authorized to 

make or guarantee loans and other similar financial assistance for the 

following terms:

    (i) Not more than 7 years

    (ii) More than 7 years, but not more than 10 years, subject to 

authorization in policies approved by the funding bank

    (iii) Not more than 15 years to producers or harvesters of aquatic 

products for major capital expenditures, including but not limited to 

the purchase of vessels, construction or purchase of shore facilities, 

and similar purposes directly related to the producing or harvesting 

operation

    (2) Subject to policies approved by the funding bank, production 

credit associations may amortize loans over a period greater than the 

loan terms authorized under paragraph (a)(1) of this section, provided 

that:

    (i) The loan is amortized over a period not to exceed 15 years

    (ii) The loan may be refinanced only if the lender determines, at 

the time of refinancing, that the loan meets its loan policy and 

underwriting criteria;

    (iii) Any refinancing may not extend repayment beyond 15 years from 

the date of the original loan; and

    (iv) The loan is not being made solely for the purpose of acquiring 

unimproved real estate; and

    (3) Short- and intermediate-term loans shall be made with maturities 

that are appropriate for the purpose and underlying collateral of the 

loan and that comply with an institution's loan underwriting standards 

adopted pursuant to Sec. 614.4150 and the general requirements of Sec. 

614.4200 of this part.

    (b) Loan participations. Subject to the requirements of subpart H of 

this part, a production credit association may enter into participation 

agreements with:

    (1) Farm Credit banks and associations that are direct lenders and 

lenders that are not Farm Credit institutions on loans of the type it is 

authorized to make under title II of the Act;

    (2) Farm Credit banks and associations that are direct lenders on 

loans it is not authorized to make, provided the borrower eligibility, 

membership, term, amount, loan security, and stock or participation 

certificate requirements of the originating institution are met; and

    (3) The Federal Agricultural Mortgage Corporation to the extent 

provided in Sec. 614.4055.

    (c) Other interests in loans. (1) Subject to the requirements of 

subpart H of this part and the supervision of their respective funding 

banks, production credit associations may sell interests in loans that 

are made under paragraph (a) of this section to:

    (i) Banks of the Farm Credit System, as authorized by their 

respective funding banks; and

    (ii) Any certified agricultural mortgage marketing facility, as 

defined by section 8.0(3) of the Act, for the purpose of pooling and 

securitizing such loans under title VIII of the Act.

    (2) Subject to the requirements of subpart H of this part, 

production credit associations, as authorized by their respective 

funding banks, may purchase interests in loans that comply with the 

requirements of paragraph (a)



[[Page 108]]



of this section and nonvoting stock from banks of the Farm Credit 

System.

    (3) Production credit associations, in their capacity as certified 

mortgage marketing facilities under title VIII of the Act, may purchase 

from Farm Credit System institutions and institutions that are not Farm 

Credit System institutions interests in loans (other than participation 

interests authorized by paragraph (c) of this section) for the purpose 

of pooling and securitizing such loans under title VIII of the Act.



[55 FR 24880, June 19, 1990; 55 FR 28511, July 11, 1990, as amended at 

57 FR 38247, Aug. 24, 1992; 62 FR 51013, Sept. 30, 1997; 64 FR 43049, 

Aug. 9, 1999; 65 FR 24102, Apr. 25, 2000; 67 FR 1285, Jan. 10, 2002]