7 U.S.C. § 936a : US Code - Section 936A: Prepayment of loans

Search 7 U.S.C. § 936a : US Code - Section 936A: Prepayment of loans

(a) Conditions for prepayment
Except as provided in subsection (c) of this section, a borrower
of a loan made by the Federal Financing Bank and guaranteed under
section 936 of this title may prepay such loan (or any loan advance
thereunder) by paying the outstanding principal balance due on the
loan (or advance), if - 
(1) the loan is outstanding on July 2, 1986;
(2) private capital, with the existing loan guarantee, is used
to replace the loan; and
(3) the borrower certifies that any savings from such
prepayment will be passed on to its customers or used to improve
the financial strength of the borrower in cases of financial
hardship.
(b) Charges on prepayment prohibited
No sums in addition to the payment of the outstanding principal
balance due on the loan may be charged as the result of such
prepayment against the borrower, the fund, or the Secretary.
(c) Disqualification for prepayment on finding of adverse affect on
Federal Financing Bank
(1) A borrower will not qualify for prepayment under this section
if, in the opinion of the Secretary of the Treasury, to prepay in
such borrower's case would adversely affect the operation of the
Federal Financing Bank.
(2) Paragraph (1) shall be effective in fiscal year 1987 only for
any loan the prepayment of the principal amount of which will cause
the cumulative amount of net proceeds from all such prepayments
made during such year to exceed $2,017,500,000.
(d) Amount of permissible prepayments; establishment of eligibility
criteria
(1) The Secretary shall permit, subject to subsection (a) of this
section, prepayments of principal on loans in fiscal year 1987
under this section or Public Law 99-349 in such amounts as to
realize net proceeds from all such prepayments in fiscal year 1987
in an amount not less than $2,017,500,000.
(2) The Secretary shall establish - 
(A) eligibility criteria to ensure that any loan prepayment
activity required to be carried out under this subsection will be
directed to those cooperative borrowers in greatest need of the
benefits associated with prepayment, as determined by the
Secretary; and
(B) such other eligibility criteria as the Secretary determines
are necessary to carry out this subsection.
(e) Assignability and transferability of guarantees of loans
Any guarantee of a loan prepaid under this section shall be fully
assignable under the provisions of section 936 of this title and
transferable. However, the Secretary may require that any such
guarantee, if transfered (!1) or assigned, be transferred or
assigned to a loan or security that, if sold, will be grouped with
nonguaranteed loans or securities and sold in a manner to ensure
that such sale will not unreasonably compete with the marketing of
obligations of the United States.