View all text of Subchapter III [§ 930 - § 940i]
§ 936c. Refinancing and prepayment of FFB loans
(a) In general
(b) Penalty
(1) Determination of penaltyA penalty shall be assessed against a borrower that refinances or prepays a loan or loan advance, or any portion of a loan or advance, under this section. Except as provided in paragraph (2), the penalty shall be equal to the lesser of—
(A) the difference between the outstanding principal balance of the loan being refinanced and the present value of the loan discounted at a rate equal to the then current cost of funds to the Department of the Treasury for obligations of comparable maturity to the loan being refinanced or prepaid;
(B) 100 percent of the amount of interest for 1 year on the outstanding principal balance of the loan or loan advance, or any portion of the loan or advance, being refinanced, multiplied by the ratio that—
(i) the number of quarterly payment dates between the date of the refinancing or prepayment and the maturity date for the loan advance; bears to
(ii) the number of quarterly payment dates between the first quarterly payment date that occurs 12 years after the end of the year in which the amount being refinanced was advanced and the maturity date of the loan advance; and
(C)
(i) the present value of 100 percent of the amount of interest for 1 year on the outstanding principal balance of the loan or loan advance, or any portion of the loan or advance, being refinanced or prepaid; plus
(ii) for the interval between the date of the refinancing or prepayment and the first quarterly payment date that occurs 12 years after the end of the year in which the amount being refinanced or prepaid was advanced, the present value of the difference between—(I) each payment scheduled for the interval on the loan amount being refinanced or prepaid; and(II) the payment amounts that would be required during the interval on the amounts being refinanced or prepaid if the interest rate on the loan were equal to the then current cost of funds to the Department of the Treasury for obligations of comparable maturity to the loan being refinanced or prepaid.
(2) Limitation
(A) In general
(B) ExceptionIn the case of a loan advanced under an agreement that permits the refinancing or prepayment of the loan advance based on the payment of 1 year of interest on the outstanding principal balance of the loan advance, a borrower may, in lieu of the penalty required by paragraph (1)(A), pay a penalty as provided by—
(i) paragraph (1)(B), if the loan advance has reached the 12-year maturity required under the loan agreement for the refinancing or prepayment; or
(ii) paragraph (1)(C), if the loan advance has not reached the 12-year maturity required under the loan agreement for the refinancing or prepayment.
(3) Financing of penalty
(A) In generalIn the case of a refinancing under this section, a borrower may, at the option of the borrower, meet the penalty requirements of paragraph (1) by—
(i) making a payment in the amount of the required penalty at the time of the refinancing; or
(ii) increasing the outstanding principal balance of the loan advance guaranteed by the Secretary that is being refinanced under this section by the amount of the penalty.
(B) Increased principal
(c) Loan terms and conditions after refinancing
(1) In general
(2) Interest rate
(3) Loan termSubject to paragraph (4), the borrower of a loan that is refinanced under this section—
(A) shall select the term for which an interest rate shall be determined pursuant to paragraph (2); and
(B) at the end of the term (and any succeeding term selected by the borrower under this paragraph), may renew the loan for another term selected by the borrower.
(4) Maximum term
(5) Existing loansIn the case of the refinancing of a loan of a borrower pursuant to this section and the inclusion of a penalty in the outstanding principal balance of the refinanced loan pursuant to subsection (b)(3)—
(A) the refinancing and inclusion of the penalty shall not be subject to appropriations or limited by the amount provided during a fiscal year for new loans, loan guarantees, or other credit activity;
(B) the request of the borrower for the refinancing under this section may not be denied or delayed; and
(C) the borrower may not be limited in the selection of any refinancing or prepayment option provided by this section to the borrower.
(d) Maximum rate option
(1) In general
(2) Limitation
(3) Fee
(4) Sunset
(May 20, 1936, ch. 432, title III, § 306C, as added Pub. L. 103–66, title I, § 1201(a), Aug. 10, 1993, 107 Stat. 327; amended Pub. L. 103–129, § 2(c)(10), Nov. 1, 1993, 107 Stat. 1365; Pub. L. 103–354, title II, § 235(a)(13), Oct. 13, 1994, 108 Stat. 3221.)