Refinancing of guaranteed loans 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 (1) In general Not later than 1 year after the date of enactment of this subsection, 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. (2) Requirements (A) In general The regulations promulgated under paragraph (1) shall provide that a guaranteed loan described in that paragraph may be refinanced into a direct loan described in that paragraph only if the Secretary, in consultation with the lender holding the guaranteed loan, determines that— (i) the guaranteed loan is distressed due to its status as a non-performing loan that does not have a positive cashflow; (ii) the borrower on the guaranteed loan has attempted to work with the lender and has been unsuccessful; (iii) the borrower on the guaranteed loan is in default and the lender has notified the borrower of a pending liquidation or foreclosure action; (iv) a reasonable chance for the success of the operation financed by the guaranteed loan exists; and (v) all other criteria established by the Secretary for purposes of this section 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)(iv), 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 those problems, the operation can achieve, or be returned to, a sound financial basis. (3) Loan programs In making direct loans pursuant to the regulations promulgated under paragraph (1), 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 new direct loan is issued. (4) Maximum amount of direct refinancing loans A direct loan issued by the Farm Service Agency pursuant to the regulations promulgated under paragraph (1) 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..