Refinancing of indebtedness into direct loans

Section 303 of the Consolidated Farm and Rural Development Act (7 U.S.C. 1923) is amended by adding at the end the following: (d) Refinancing of guaranteed loans into direct loans Within 1 year after the date of the enactment of this subsection, the Secretary, acting through the Administrator of the Farm Service Agency (referred to in this section as the Secretary), shall promulgate regulations allowing certain loans guaranteed by the Farm Service Agency to be refinanced into direct loans issued by the Farm Service Agency, in accordance with this subsection. (1) Requirements (A) In general A guaranteed loan may be refinanced into a direct loan pursuant to this subsection only if the Secretary determines that— (i) the guaranteed loan is distressed due to its status as a nonperforming loan that does not have a positive cash flow at rates and terms available from the lender; (ii) the borrower on the guaranteed loan is in monetary default and subject to liquidation or foreclosure action; (iii) a reasonable chance for the success of the operation financed by the guaranteed loan exists; and (iv) all other criteria established by the Secretary for purposes of this subsection to protect taxpayer funds and the loan programs of the Farm Service Agency have been satisfied. (B) Reasonable chance of success For purposes of subparagraph (A)(iii), the Secretary may determine that a reasonable chance for the success of an operation exists if the Secretary determines that— (i) all relevant problems with the operation financed by the guaranteed loan— (I) have been identified; and (II) can be corrected; and (ii) on correction of the problems, the operation can achieve, or be returned to, a sound financial basis. (2) Loan programs In making direct loans pursuant to the regulations promulgated under this subsection, the Secretary may refinance a loan guaranteed under 1 program of the Farm Service Agency into a direct loan issued under another program of the Farm Service Agency, as the Secretary determines to be appropriate and in accordance with the laws applicable to the program under which the direct loan is issued. (3) Refinanced guaranteed loans A direct loan issued by the Farm Service Agency pursuant to the regulations promulgated under subsection (a) of this section shall be subject to any otherwise applicable limitation on the maximum amount of a direct loan issued by the Farm Service Agency, including, if applicable, the limitations described in sections 305 and 313..

Section 303 of the Consolidated Farm and Rural Development Act (7 U.S.C. 1923) is amended by adding at the end the following: (d) Refinancing of guaranteed loans into direct loans Within 1 year after the date of the enactment of this subsection, the Secretary, acting through the Administrator of the Farm Service Agency (referred to in this section as the Secretary), shall promulgate regulations allowing certain loans guaranteed by the Farm Service Agency to be refinanced into direct loans issued by the Farm Service Agency, in accordance with this subsection. (1) Requirements (A) In general A guaranteed loan may be refinanced into a direct loan pursuant to this subsection only if the Secretary determines that— (i) the guaranteed loan is distressed due to its status as a nonperforming loan that does not have a positive cash flow at rates and terms available from the lender; (ii) the borrower on the guaranteed loan is in monetary default and subject to liquidation or foreclosure action; (iii) a reasonable chance for the success of the operation financed by the guaranteed loan exists; and (iv) all other criteria established by the Secretary for purposes of this subsection to protect taxpayer funds and the loan programs of the Farm Service Agency have been satisfied. (B) Reasonable chance of success For purposes of subparagraph (A)(iii), the Secretary may determine that a reasonable chance for the success of an operation exists if the Secretary determines that— (i) all relevant problems with the operation financed by the guaranteed loan— (I) have been identified; and (II) can be corrected; and (ii) on correction of the problems, the operation can achieve, or be returned to, a sound financial basis. (2) Loan programs In making direct loans pursuant to the regulations promulgated under this subsection, the Secretary may refinance a loan guaranteed under 1 program of the Farm Service Agency into a direct loan issued under another program of the Farm Service Agency, as the Secretary determines to be appropriate and in accordance with the laws applicable to the program under which the direct loan is issued. (3) Refinanced guaranteed loans A direct loan issued by the Farm Service Agency pursuant to the regulations promulgated under subsection (a) of this section shall be subject to any otherwise applicable limitation on the maximum amount of a direct loan issued by the Farm Service Agency, including, if applicable, the limitations described in sections 305 and 313..