---
kind: "section"
citation: "7 U.S.C. § 1988"
title: "7"
title_heading: "Agriculture"
number: "1988"
heading: "Appropriations"
release: "119-102"
date: "2026-07-12"
url: "https://uscodex.org/usc/7/1988"
units:
  - "Chapter 50 — Agricultural Credit"
  - "Subchapter IV — Administrative Provisions"
---

# §1988. Appropriations

- (a) **Authorization—** There is authorized to be appropriated to the [Secretary](/usc/7/499a.md?p=b-2) such sums as the Congress may from time to time determine to be necessary to enable the [Secretary](/usc/7/499a.md?p=b-2) to carry out the purposes of this chapter and for the administration of assets transferred to the [Farmers](/usc/7/1991.md?p=a-1) Home Administration or the [Rural](/usc/7/1991.md?p=a-13-A) Development Administration.
- (b) **Sale by lender and any holder of guaranteed portion of loan pursuant to regulations governing such sales; limitations; issuance of pool certificates representing ownership of guaranteed portion of guaranteed loan; terms and conditions, etc.; reporting requirements—**
  - (1)
    - (A) The guaranteed portion of any loan made under this chapter may be sold by the lender, and by any subsequent holder, in accordance with regulations governing such sales as the [Secretary](/usc/7/499a.md?p=b-2) shall establish, subject to the following limitations:
      - (i) All fees due the [Secretary](/usc/7/499a.md?p=b-2) with respect to a guaranteed loan are to be paid in full before any sale.
      - (ii) The loan is to have been fully disbursed to the [borrower](/usc/7/1991.md?p=b-1) before the sale.
    - (B) After a loan is sold in the secondary [market](/usc/7/198.md?p=1), the lender shall remain obligated under its guarantee agreement with the [Secretary](/usc/7/499a.md?p=b-2), and shall continue to service the loan in accordance with the terms and conditions of such agreement.
    - (C) The [Secretary](/usc/7/499a.md?p=b-2) shall develop such procedures as are necessary for the facilitation, administration, and promotion of secondary [market](/usc/7/198.md?p=1) operations, and for determining the increase of [farmers](/usc/7/1991.md?p=a-1)’ access to capital at reasonable rates and terms as a result of secondary [market](/usc/7/198.md?p=1) operations.
    - (D) This subsection shall not be interpreted to impede or extinguish the right of the [borrower](/usc/7/1991.md?p=b-1) or the successor in interest to such [borrower](/usc/7/1991.md?p=b-1) to prepay (in whole or in part) any loan made under this chapter, or to impede or extinguish the rights of any party under any provision of this chapter.
  - (2)
    - (A) The [Secretary](/usc/7/499a.md?p=b-2) may, directly or through a [market](/usc/7/198.md?p=1) maker approved by the [Secretary](/usc/7/499a.md?p=b-2), issue pool certificates representing ownership of part or all of the guaranteed portion of any loan guaranteed by the [Secretary](/usc/7/499a.md?p=b-2) under this chapter. Such certificates shall be based on and backed by a pool established or approved by the [Secretary](/usc/7/499a.md?p=b-2) and composed solely of the entire guaranteed portion of such loans.
    - (B) The [Secretary](/usc/7/499a.md?p=b-2) may, on such terms and conditions as the [Secretary](/usc/7/499a.md?p=b-2) deems appropriate, guarantee the timely payment of the principal and interest on pool certificates issued on behalf of the [Secretary](/usc/7/499a.md?p=b-2) by approved [market](/usc/7/198.md?p=1) makers for purposes of this subsection. Such guarantee shall be limited to the extent of principal and interest on the guaranteed portions of loans that compose the pool. If a loan in such pool is prepaid, either voluntarily or by reason of default, the guarantee of timely payment of principal and interest on the pool certificates shall be reduced in proportion to the amount of principal and interest such prepaid loan represents in the pool. Interest on prepaid or defaulted loans shall accrue and be guaranteed by the [Secretary](/usc/7/499a.md?p=b-2) only through the date of payment on the guarantee. During the term of the pool certificate, the certificate may be called for redemption due to prepayment or default of all loans constituting the pool.
    - (C) The full faith and credit of the [United States](/usc/7/1991.md?p=a-6) is pledged to the payment of all amounts that may be required to be paid under any guarantee of such pool certificates issued by approved [market](/usc/7/198.md?p=1) makers under this subsection. The [Secretary](/usc/7/499a.md?p=b-2) may expend amounts in the Agricultural Credit Insurance Fund to make payments on such guarantees.
    - (D) The [Secretary](/usc/7/499a.md?p=b-2) shall not collect any fee for any guarantee under this subsection. The preceding sentence shall not preclude the [Secretary](/usc/7/499a.md?p=b-2) from collecting a fee for the functions described in [paragraph (3)](#b-3).
    - (E) Within 30 days after a [borrower](/usc/7/1991.md?p=b-1) of a guaranteed loan is in default of any principal or interest payment due for 60 days or more, the [Secretary](/usc/7/499a.md?p=b-2) shall—
      - (i) purchase the pool certificates representing ownership of the guaranteed portion of the loan; and
      - (ii) pay the registered holder of the certificates an amount equal to the guaranteed portion of the loan represented by the certificate.
    - (F)
      - (i) If the [Secretary](/usc/7/499a.md?p=b-2) pays a claim under a guarantee issued under this subsection, the claim shall be subrogated fully to the rights satisfied by such payment, as may be provided by the [Secretary](/usc/7/499a.md?p=b-2).
      - (ii) No [State](/usc/7/1991.md?p=a-6) or local law, and no Federal law, shall preclude or limit the exercise by the [Secretary](/usc/7/499a.md?p=b-2) of the [Secretary](/usc/7/499a.md?p=b-2)’s ownership rights in the portions of loans constituting the pool against which the certificates are issued.
  - (3) On the adoption of final rules and regulations, the [Secretary](/usc/7/499a.md?p=b-2) shall do the following:
    - (A) Provide for the central collection of registration information from all participating [market](/usc/7/198.md?p=1) makers for all loans and pool certificates sold under paragraphs [(1)](#b-1) and [(2)](#b-2). Such information shall include, with respect to each original sale and any subsequent sale, identification of the interest rate paid by the [borrower](/usc/7/1991.md?p=b-1) to the lender, the lender’s servicing fee, whether interest on the loan is at a fixed or variable rate, identification of each purchaser of a pool certificate, the interest rate paid on the certificate, and such other information as the [Secretary](/usc/7/499a.md?p=b-2) deems appropriate.
    - (B) Before any sale, require the seller to disclose to each prospective purchaser of the portion of a loan guaranteed under this chapter and to each prospective purchaser of a pool certificate issued under [paragraph (2)](#b-2), information on the terms, conditions, and yield of such instrument. As used in this subparagraph, if the instrument being sold is a loan, the term “seller” does not include (i) the [person](/usc/7/499a.md?p=b-1) who made the loan or (ii) any [person](/usc/7/499a.md?p=b-1) who sells three or fewer guaranteed loans per year.
    - (C) Provide for adequate custody of any pooled guaranteed loans.
    - (D) Take such actions as are necessary, in restructuring pools of the guaranteed portion of loans, to minimize the estimated costs of paying claims under guarantees issued under this subsection.
    - (E) Require each [market](/usc/7/198.md?p=1) maker—
      - (i) to service all pools formed, and participations sold, by the [market](/usc/7/198.md?p=1) maker; and
      - (ii) to provide the [Secretary](/usc/7/499a.md?p=b-2) with information relating to the collection and disbursement of all periodic payments, prepayments, and default funds from lenders, to or from the reserve fund that the [Secretary](/usc/7/499a.md?p=b-2) shall establish to enable the timely payment guarantee to be self-funding, and from all beneficial holders.
    - (F) Regulate [market](/usc/7/198.md?p=1) makers in pool certificates sold under this subsection.
  - (4) The [Secretary](/usc/7/499a.md?p=b-2) may contract for goods and services to be used for the purposes of this subsection without regard to the provisions of titles [5](/usc/5.md), [40](/usc/40.md), and [41](/usc/41.md), and any regulations issued thereunder.

## Source credit

(Pub. L. 87–128, title III, § 338, Aug. 8, 1961, 75 Stat. 316; Pub. L. 89–429, § 5, May 24, 1966, 80 Stat. 167; Pub. L. 100–233, title VII, § 711(a), Jan. 6, 1988, 101 Stat. 1707; Pub. L. 100–399, title VI, § 605, Aug. 17, 1988, 102 Stat. 1006; Pub. L. 101–624, title XXIII, § 2303(d), Nov. 28, 1990, 104 Stat. 3981; Pub. L. 104–127, title VII, § 749(a), Apr. 4, 1996, 110 Stat. 1129; Pub. L. 105–362, title I, § 101(a), Nov. 10, 1998, 112 Stat. 3281.)

## Notes

### Editorial Notes

### References in Text

This chapter, referred to in text, was in the original “this title”, meaning title III of Pub. L. 87–128, Aug. 8, 1961, 75 Stat. 307, known as the Consolidated Farm and Rural Development Act, which is classified principally to this chapter. For complete classification of title III to the Code, see Short Title note set out under section 1921 of this title and Tables.

### Amendments

1998—Subsec. (b)(4), (5). Pub. L. 105–362 redesignated par. (5) as (4) and struck out former par. (4) which provided that not later than March 31 of each year, Secretary was to transmit to Congress a report on secondary market operations under subsec. (b) during preceding calendar year, and described contents of reports.

1996—Subsecs. (b) to (f). Pub. L. 104–127 redesignated subsec. (f) as (b) and struck out former subsecs. (b) to (e) which provided for: in subsec. (b), form and denomination of notes to obtain funds for making direct loans under this chapter as well as maturities, terms and conditions, interest rate, purchase by Treasury, and public debt transaction; in subsec. (c), establishment of Farmers Home Administration direct loan account as well as deposits into account, liabilities, obligations, expenditures, and net expenditure basis of budgeting; in subsec. (d), sale of notes and mortgages; and in subsec. (e), distribution of real estate loans among States.

1990—Subsec. (a). Pub. L. 101–624 inserted “or the Rural Development Administration” after “Farmers Home Administration”.

1988—Subsec. (f)(5). Pub. L. 100–399 added par. (5).

Subsec. (f). Pub. L. 100–233 added subsec. (f).

1966—Subsec. (c). Pub. L. 89–429 inserted references to section 8 of the Watershed Protection and Flood Prevention Act, as amended, and section 32(e) of the Bankhead-Jones Farm Tenant Act, as amended.

### Statutory Notes and Related Subsidiaries

### Effective Date of 1988 Amendment

Amendment by Pub. L. 100–399 effective as if enacted immediately after enactment of Pub. L. 100–233, which was approved Jan. 6, 1988, see section 1001(a) of Pub. L. 100–399, set out as a note under section 2002 of Title 12, Banks and Banking.

### Regulations

Pub. L. 100–233, title VII, § 711(b), Jan. 6, 1988, 101 Stat. 1709, provided that: “Within 180 days after the date of the enactment of this Act [Jan. 6, 1988], the Secretary shall develop and promulgate final regulations to implement this section and the amendment made by this section [amending this section and enacting provisions set out below].”

### Pool Certificates Not To Be Issued Until Final Regulations Take Effect

Pub. L. 100–233, title VII, § 711(c), Jan. 6, 1988, 101 Stat. 1709, provided that: “The Secretary of Agriculture shall not implement paragraph (2) of section 338(f) [now 338(b)] of the Consolidated Farm and Rural Development Act [7 U.S.C. 1988(f) [now 1988(b)]], as added by subsection (a), until the final regulations governing the administration of such paragraph take effect.”

### Loans to Indians

Authority of the Secretary of Agriculture to make loans to Indian tribes and tribal corporations to acquire land within reservations, see sections 5136 to 5143 of Title 25, Indians.