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in subparagraph (F)) to purchase or lease such property, if such borrower-owner has acted in good faith with the Secretary, as defined in regulations issued by the Secretary, in connection with such loan.

[See main edition for text of (ii) and (iii)] (iv) In the case of real property described in clause (i) that was acquired by the Secretary before January 6, 1988, that is (or has been at any time during the 12-month period preceding November 28, 1990) under lease to a person described in subparagraph (C), and that has not been conveyed (or contracted to be conveyed) by the Secretary prior to November 28, 1990, the Secretary shall, during the 30-day period following November 28, 1990, make the person an offer, to be held open for a period of 90 days, to purchase the property on the same terms and conditions that such offers are made in the case of property coming into inventory on or after November 28, 1990.

under an annual lease or a lease with an option to purchase, with a preference for sale. The terms of such sale shall require an initial downpayment and the remainder of the sales price payable in installments with interest on unpaid balance at the rate determined by the Secretary, but not in any event at rates and terms more favorable than those legally permissible for eligible borrowers. Any conveyances under this section shall include all of the interest of the United States, including mineral rights, other than easements acquired under section 1997 of this title. Notwithstanding the preceding sentence, the Secretary may for conservation purposes grant or sell an easement, restriction, development rights, or the equivalent thereof, to a unit of local or State government or a private nonprofit organization separately from the underlying fee or sum of all other rights possessed by the United States.

(2)(A) Notwithstanding any other provision of law, the Secretary shall sell suitable farmland administered under this chapter to persons in the following order:

(i) Qualified beginning farmers or ranchers (as defined pursuant to section 1991(a)(8) of this title), as of the time immediately after such contract for sale or lease is entered into, as determined by the county committee.

(ii) Operators, as of the time immediately after such contract for sale or lease is entered into, of not larger than family sized farms, as determined by the county committee.

(B) In selling such land, the county committee shall

(i) grant a priority to persons eligible for loans under subchapter I of this chapter, including individuals approved for, but who, as of January 6, 1988, have not yet received, such loans; (ii) offer such land

(I) for sales pursuant to subsection (e)(1)(C) of this section, at a price not greater than that which reflects the appraised market value of such farmland; and

(II) for all other sales, at a price not greater than that which reflects the fair market value of such land as determined by bids after advertising or by negotiated sale;

(iii) select from among qualified applicants the applicant who has the greatest need for farm income and best meets the criteria for eligibility to receive loans under subchapter I of this chapter, except that if the committee determines that two or more applicants meet the loan eligibility criteria, the committee shall select between the qualified applicants on a random basis; and

(iv) publish or cause to be published three consecutive weekly announcements at least twice annually of the availability of such farmland, in at least one newspaper that is widely circulated in the county in which the land is located until the property is sold.

[See main edition for text of (d)] (e)(1)(A)(i) During the 180-day period beginning on the date of acquisition, or during the applicable period under State law, the Secretary shall allow the borrower-owner (as defined

(See main edition for text of (B)] (C) The Secretary shall give preference in the sale or lease, with option to purchase, of property that has been foreclosed, purchased, redeemed, or otherwise acquired by the Secretary to persons in the following order:

(i) The immediate previous borrower-owner of the acquired property, if such borrowerowner has acted in good faith with the Secretary, as defined in regulations issued by the Secretary, in connection with the loan of such borrower-owner for which such property served as security.

[See main edition for text of (ii) and (iii)]

(iv) Qualified beginning farmers or ranchers (as defined pursuant to section 1991(a)(8) of this title) as of the time immediately after such contract for sale or lease is entered into, of not larger than family-sized farm or ranching operations.

(v) Operators (as of the time immediately after such sale or lease is entered into) of not larger than family-size farms. (D)(i) Except as provided in subparagraph (G), if

[See main edition for text of (I) to (IID) the Secretary shall dispose of or administer the property only as provided for in this subparagraph.

[See main edition for text of (ii) to (id)) (x) This subparagraph shall apply to all lands in the land inventory established under this chapter (as of November 28, 1990) that were (immediately prior to November 28, 1990) owned by an Indian borrower-owner described in clause (i) and that are situated within an Indian reservation (as defined in clause (ii)), re. gardless of the date of foreclosure or acquisi: tion by the Secretary. The Secretary shall afford an opportunity to a tribal member, an Indian corporate entity, or the tribe to purchase or lease the real property as provided in

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clause (iii). If the right is not exercised or no
expression of intent to exercise such right is re-
ceived within 180 days after November 28, 1990,
the Secretary shall transfer the real property
to the Secretary of the Interior as provided in
clause (v).

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principal and interest of the loan, which. ever is higher;

(dd) the property may be purchased by another party; and

(ee) if the property is purchased by an. other party, the property will not be placed in the inventory of the Secretary and the borrower-owner will forfeit the rights and protections provided under this chapter; and

(III) the opportunity of the borrower-owner to consult with the Indian tribe that has jurisdiction over the reservation in which the real property is located or counsel to determine if State or tribal law provides rights and protections that are more beneficial than those provided the borrower-owner under this chapter.

(iv)(I) Except as provided in subclause (II), the Secretary shall accept the voluntary conveyance of real property described in clause (i).

(II) If a hazardous substance (as defined in section 9601(14) of title 42) is located on the property and the Secretary takes remedial action to protect human health or the environment if the property is taken into inventory, the Secretary shall accept the voluntary conveyance of the property only if the Secretary determines that it is in the best interests of the Federal Government.

(v) If a borrower-owner does not voluntarily convey to the Secretary real property described in clause (i), at least 30 days before a foreclosure sale of the property, the Secretary shall provide written notice to the Indian tribe that has jurisdiction over the reservation in which the real property is located of

(I) the sale;

(II) the fair market value of the property; and

(III) the requirements of this subparagraph.

(vi)(I) Except as provided in subclause (II), at a foreclosure sale of real property described in clause (i), the Secretary shall offer a bid for the property that is equal to the higher of

(aa) the fair market value of the property; or

(bb) the outstanding principal and interest of the loan.

(II) If a hazardous substance (as defined in section 9601(14) of title 42) is located on the property and the Secretary takes remedial action to protect human health or the environment if the property is taken into inventory, subclause (I) shall apply only if the Secretary determines that it is in the best interests of the Federal Government.

[See main edition for text of (E))
(F) As used in this paragraph, the term “bor-
rower-owner" means-

(i) a borrower from whom the Secretary ac-
quired real farm or ranch property (including
the principal residence of the borrower) used
to secure any loan made to the borrower
under this chapter; or

(ii) in any case in which an owner of proper-
ty pledged the property to secure the loan
and the owner is different than the borrower,
the owner.
(G)(i) If-

(I) the real property described in subpara-
graph (A)(i) is located within an Indian reser-
vation;

(II) the borrower-owner is an Indian tribe that has jurisdiction over the reservation in which the real property is located or the borrower-owner is a member of an Indian tribe;

(III) the borrower-owner has obtained a loan made, insured, or guaranteed under this chapter; and

(IV) the borrower-owner and the Secretary have exhausted all of the procedures provided for in this chapter to permit a borrowerowner to retain title to the real property, such that it is necessary for the borrower

owner to relinquish title, the Secretary shall dispose of or administer the property only as provided in subparagraph (D), as modified by this subparagraph.

(ii) The Secretary shall provide the borrowerowner of real property that is described in' clause (i) with written notice of

(I) the right of the borrower-owner to voluntarily convey the real property to the Secretary; and

(II) the fact that real property so conveyed will be placed in the inventory of the Secretary.

(iii) The Secretary shall provide the borrower-owner of the real property with written notice of the rights and protections provided under this chapter to the borrower-owner, and the Indian tribe that has jurisdiction over the reservation in which the real property is located, from foreclosure or liquidation of the real property, including written notice of

(I) the provisions of subparagraphs (C)(i), (C)(ii), and (D), this subparagraph, and subsection (g)(6) of this section;

(II) if the borrower-owner does not voluntarily convey the real property to the Secretary, that

(aa) the Secretary may foreclose on the property;

(bb) in the event of foreclosure, the property will be offered for sale;

(cc) the Secretary must offer a bid for the property that is equal to the fair market value of the property or the outstanding

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[See main edition for text of (2) and (3)]

(4) (See main edition for text of (A))

(B) If two or more qualified operators of not larger than family-size farms desire to purchase, or lease with an option to purchase, such land, the appropriate county committee shall randomly select the operator who may purchase such land, on such basis as the Secretary

8 1985

TITLE 7--AGRICULTURE

(B) if the reduction provided in subparamay prescribe by regulation, in accordance with subsection (c)(2)(B)(iii) of this section.

graph (A) is not applicable, or is not suffi

cient to ensure that the particular parcel [See main edition for text of (5) to (10); ()

would be a marketable agricultural produe

tion unit, amend the wetland conservation (g)(1) Subject to paragraphs (2) through (5),

easements established on the wetlands that in the disposal of real property under this section, the Secretary shall establish perpetual have been frequently planted to agricultural wetland conservation easements to protect and commodities to permit the production of agrirestore wetlands or converted wetlands that cultural commodities (consistent with title exist on inventoried property, as determined by XII of the Food Security Act of 1985 (16 the Secretary in accordance with title XII of U.S.C. 3801 et seq.)) on the wetlands, to the the Food Security Act of 1985 (16 U.S.C. 3801 et extent necessary to maintain the parcel as a seq.).

marketable agricultural production unit. (2) In establishing the wetland conservation

(6) The Secretary shall provide prior written easements on land that is considered to be crop

notification to a borrower considering preservaland as of November 28, 1990, the Secretary

tion loan servicing that a wetlands conservation shall avoid, to the extent practicable, an ad

easement may be placed on land for which the verse impact on the productivity of the crop

borrower is negotiating a lease option. lands, as provided in this subsection.

(7) The appraised value of the farm shall re(3) In order to avoid the adverse impact, the flect the value of the land due to the placement Secretary shall(A) not establish the wetland conservation

of wetland conservation easements. easements with respect to wetlands that were

(8) Notwithstanding the limitations described converted prior to December 23, 1985, and

under paragraphs (3) and (4), the limitations that have been in cropland use, as determined

may be voluntarily, knowingly waived by any by the Secretary, in excess of 10 percent of

person with respect to real property described the existing cropland available for production

in paragraph (3) or (4). of agricultural commodities on the particular

(As amended Pub. L. 101-624, title XVIII

, parcel of inventoried property;

$$ 1813(a)-(h)(1), 1816(e),

title

XXIII, (B) not establish the wetland conservation $$ 2303(c), 2388(g), Nov. 28, 1990, 104 Stat

. easements with respect to wetlands that have 3821-3823, 3827, 3981, 4053; Pub. L. 102-237, been frequently planted to agricultural com- title V, $ 501(f), Dec. 13, 1991, 105 Stat. 1867

; modities and wetlands described in subpara- Pub. L. 102-552, title V, $ 516h)(1), Oct. 28, graph (A), in excess of 20 percent of the exist- 1992, 106 Stat. 4138; Pub. L. 102-554, $$ 16, 17, ing cropland available for production of agri. Oct. 28, 1992, 106 Stat. 4154.) cultural commodities on the particular parcel of inventoried property;

REFERENCES IN TEXT (C) ensure that the buffer area adjacent to The Food Security Act of 1985, referred to in subsec

. the wetland is generally not more than 100 (g)(1), (5)(B), is Pub. L. 99-198, Dec. 23, 1985, 99 Stat

. feet in average width; and

1354, as amended. Title XII of the Act, popularly (D) ensure that access to other portions of

known as the “Sodbuster Law”, is classified principals the property for farming and other uses is

to chapter 58 (8 3801 et seq.) of Title 16, Conservation

. provided.

For complete classification of this Act to the Code, see

Tables. (4) The wetland conservation easements shall be placed on wetlands that have a history of

AMENDMENTS haying and grazing, as determined by the Sec- 1992–Subsec. (c)(1). Pub. L. 102-554, $ 16, in fourth retary, except that in no case shall the quantity sentence, inserted “(A)" after “shall be" and "or (B) of the wetland subject to the easements exceed leased to persons eligible for assistance under the pro50 percent of the existing forage lands on the visions of any law administered by the Farmers Home parcel of inventoried property. All haying and

Administration or the Rural Development Administragrazing practices on the wetlands (including

tion under an annual lease or a lease with an option to the timing and intensity of haying and grazing)

purchase, with a preference for sale" before period at

end. shall conform to forage management standards

Subsec. (e)(1XAXİ). Pub. L. 102-552, which, in designed to protect wetlands.

amending directory language of Pub. L. 102-237

, (5) If, despite the limitations contained in $ 501(f)(1), directed the substitution of "the borrower paragraph (3), wetland conservation easements owner (as defined in subparagraph (F))” for “borrow established under paragraph (1) would prevent er-owner (as defined in subparagraph (F))", was exe a particular parcel of inventoried property that cuted by making the substitution in text which did not is to be sold or leased to a borrower described in

contain a closing parenthesis after “(F)", to reflect the clause (i), (ii), or (iii) of subsection (e)(1)(C) of

probable intent of Congress. See 1991 Amendment

note below. this section, or to a borrower who is a beginning

Subsec. (e)(1)(DXi), Pub. L. 102-554, $ 17(1), substifarmer or rancher, from being a marketable ag.

tuted “Except as provided in subparagraph (G), it" for ricultural production unit that is comparable to If". the parcel as acquired, the Secretary may

Subsec. (e)(1XG), Pub. L. 102-554, $ 17(2), added (A) establish wetland conservation ease- subpar. (G). ments on wetland that was converted prior to

1991–Subsec. (e)(1)(A)(i), Pub. December 23, 1985, in a quantity that is less

$ 501(f)(1), as amended by Pub. L. 102-552, substituted

"the borrower-owner (as defined in subparagraph than 10 percent of the existing croplands

(F))” for “the borrower from whom the Secretary ac available for production of agricultural com

quired real farm or ranch property (including the modities on the particular parcel; and

principal residence of the borrower) used to secure

L. 102-237,

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TITLE 7-AGRICULTURE

8 1988 any loan made to the borrower under this chapter (hereinafter referred to in this paragraph as the 'bor

see 1992 Amendment note above) shall take effect imrower-owner')". See 1992 Amendment note above.

mediately after section 501(f) of the Food, Agricul. Subsec. (e)(1)(F). Pub. L. 102-237, $ 501(f)(2), added

ture, Conservation, and Trade Act of 1990 [probably subpar. (F).

should be Food, Agriculture, Conservation, and Trade 1990–Subsec. (a). Pub. L. 101-624, $$ 1813(a),

Act Amendments of 1991 (Pub. L. 102-237]] took 2303(c)(1), inserted “or the Rural Development Ad

effect." ministration" after “Farmers Home Administration" and substituted "12 months from the date first pub

EFFECTIVE DATE OF 1990 AMENDMENT lished under paragraph (2)(D)” for “three years from

Amendment by section 1816 of Pub. L. 101-624 appli. the date of acquisition".

cable to new applications submitted under section 2001 Subsec. (c)(1). Pub. L. 101-624, $ 2303(c)(2), inserted

of this title on or after Nov. 28, 1990, see section 1861 "or the Rural Development Administration" after

of Pub. L. 101-624, set out as a note under section 2001 "Farmers Home Administration".

of this title. Subsec. (c)(2)(A), (B), Pub. L. 101-624, § 1813(e)(1), added subpar. (A) and subpar. (B) introductory provi.

COMPLETION OF SALES OF FARMERS HOME sions, redesignated former subpars. (A) through (D) as

ADMINISTRATION INVENTORY FARMS cls. (i) through (iv), respectively, of subpar. (B), and

Pub. L. 102-142, title VII, $ 740, Oct. 28, 1991, 105 struck out former introductory provisions which read

Stat. 915, provided that: “Hereafter, the Secretary as follows: "Notwithstanding any other provision of

shall complete the sales of Farmers Home Administra. law, the Secretary shall sell suitable farmland admin- tion inventory farms, in accordance with the law and istered under this subchapter to operators (as of the

regulations in effect before November 28, 1990, in situtime immediately after such contract for sale or lease

ations in which a County Committee, acting pursuant is entered into) of not larger than family sized farms,

to section 335 of the Consolidated Farm and Rural Deas determined by the county committee. In selling velopment Act (7 U.S.C. 1985), had made its initial sesuch land, the county committee shall—".

lection of a buyer before November 28, 1990. Such Subsec. (c)2)(B)(ii). Pub. L. 101-624, § 1813(g)(1), sales shall be completed as soon as the selection deciamended cl. (ii) generally. Prior to amendment, cl. (ii) sion is administratively final and all terms and condiread as follows: "offer suitable land at a price not tions have been agreed to. In carrying out sales of ingreater than that which reflects the appraised market ventory property, priority shall be given to the former value of such land;”.

owner and members of the immediate family.” Subsec. (c)(2)(B)(iii). Pub. L. 101-624, § 1813(b)(1), inserted before semicolon ", except that if the com

FARM OWNERSHIP OUTREACH PROGRAM TO SOCIALLY mittee determines that two or more applicants meet

DISADVANTAGED INDIVIDUALS the loan eligibility criteria, the committee shall select Section 623 of Pub. L. 100-233, as amended by Pub. between the qualified applicants on a random basis”. L. 101-624, title XVIII, § 1852, Nov. 28, 1990, 104 Stat. Subsec. (C)(2)(B)(iv). Pub. L. 101-624, § 2388(g), sub

3837, provided that: stituted "cause" for "caused".

(a) IN GENERAL.- The Secretary of Agriculture, in Subsec. (e)(1)(A)i). Pub. L. 101-624, § 1813(c), substi- coordination with the limited resource farmers' initiatuted "real farm or ranch property (including the

tive in the office of the Director of the Office of Advoprincipal residence of the borrower)" for "real proper

cacy and Enterprise, shall establish a farm ownership ty”.

outreach program for persons who are members of Pub. L. 101-624, $ 1816(e)(1), inserted before period

any group with respect to which an individual may be at end “, if such borrower-owner has acted in good

identified as a socially disadvantaged individual under faith with the Secretary, as defined in regulations

section 8(a)(5) of the Small Business Act (15 U.S.C. issued by the Secretary, in connection with such

637(a)(5)) to encourage the acquisition of inventory loan”.

farmland of the Farmers Home Administration bySubsec. (e)(1)(A)(iv). Pub. L. 101-624, § 1813(d),

“(1) informing persons eligible for assistance under added cl. (iv).

any other provision of this Act (see Short Title of Subsec. (e)(1)(C)(i). Pub. L. 101-624, § 1816(e)(2), in

1988 Amendment note set out under section 2001 of serted before period at end “, if such borrower-owner

Title 12, Banks and Banking) ofhas acted in good faith with the Secretary, as defined

“(A) the possiblity (sic) of acquiring such invenin regulations issued by the Secretary, in connection

tory farmland; and with the loan of such borrower-owner for which such

"(B) various farm ownership loan programs; and property served as security".

“(2) providing technical assistance to such persons Subsec. (e)(1)(C)(iv), (v). Pub. L. 101-624,

in the acquisition of such inventory farmland. $ 1813(e)(2), added cl. (iv) and redesignated former cl.

“(b) AUTHORIZATION OF APPROPRIATIONS.—There are (iv) as (v).

authorized to be appropriated to carry out this section Subsec. (e)(1)(D)(x). Pub. L. 101-624, $ 1813(f),

$2,500,000 for each of the fiscal years 1991 through added cl. (x).

1995." Subsec. (e)(4)(B), Pub. L. 101-624, $ 1813(g)(2), redesignated subpar. (C) as (B) and struck out former

SECTION REFERRED TO IN OTHER SECTIONS subpar. (B) which read as follows: "The Secretary

This section is referred to in sections 1471, 1929a, shall offer such land for sale to operators of not larger

1991, 2001 of this title. than family-size farms at a price that reflects the average annual income that may be reasonably anticipated

8 1988. Appropriations to be generated from farming such land.” Subsec. (e) 4XC). Pub. L. 101-624, $ 1813(g)(2), redes

(a) Authorization ignated former subpar. (C) as (B).

Pub. L. 101-624, § 1813(b)(2), substituted "shall ran- There is authorized to be appropriated to the domly" for "shall, by majority vote," and inserted

Secretary such sums as the Congress may from ", in accordance with subsection (c)(2)(B)(iii) of this

time to time determine to be necessary to section".

enable the Secretary to carry out the purposes Subsec. (g). Pub. L. 101-624, § 1813(h)(1), added

of this chapter and for the administration of subsec. (g).

assets transferred to the Farmers Home AdminEFFECTIVE DATE OF 1992 AMENDMENT

istration or the Rural Development Administra

tion. Section 516(1)(2) of Pub. L. 102-552 provided that: "The amendments made by paragraph (1) of this sub

[See main edition for text of (b) to ] section (amending section 501(f) of Pub. L. 102-237,

TITLE 7-AGRICULTURE

8 1989

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(As amended Pub. L. 101-624, title XXIII,
$ 2303(d), Nov. 28, 1990, 104 Stat. 3981.)

AMENDMENTS
1990-Subsec. (a). Pub. L. 101-624 inserted "or the
Rural Development Administration" after “Farmers
Home Administration",

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§ 1989. Rules and regulations (a) In general

The Secretary is authorized to make such rules and regulations, prescribe the terms and conditions for making or insuring loans, securi. ty instruments and agreements, except as otherwise specified herein, and make such delegations of authority as he deems necessary to carry out this chapter. (b) Debt service margin requirements

Notwithstanding subsection (a) of this section, in providing farmer program loan guarantees under this chapter, the Secretary shall consider the income of the borrower adequate if the income is equal to or greater than the income necessary

(1) to make principal and interest payments on all debt obligations of the borrower, in a timely manner;

(2) to cover the necessary living expenses of the family of the borrower; and

(3) to pay all other obligations and expenses of the borrower not financed through debt obligations referred to in paragraph (1), including expenses of replacing capital items (determined after taking into account depre

ciation of the items). (c) Certified Lenders Program (1) In general

The Secretary shall establish a program under which the Secretary shall guarantee loans for any purpose specified in subchapter II of this chapter that are made by lending institutions certified by the Secretary. (2) Certification requirements

The Secretary shall certify a lending institution that meets such criteria as the Secretary may prescribe in regulations, including the ability of the institution to properly make, service, and liquidate the loans of the institution. (3) Condition of certification

As a condition of the certification, the Secretary shall require the institution to undertake to service the loans guaranteed by the Secretary under this subsection, using standards that are not less stringent than generally accepted banking standards concerning loan servicing employed by prudent commercial or cooperative lenders. The Secretary shall, at least annually, monitor the performance of each certified lender to ensure that the conditions of the certification are being met. (4) Effect of certification Notwithstanding any other provision of law:

(A) The Secretary shall guarantee 80 percent of a loan made under this subsection by a certified lending institution as described in paragraph (1), subject to county

committee certification that the borrower
of the loan meets the eligibility require.
ments and such other criteria as may be ap-
plicable to loans guaranteed by the Secre-
tary under other provisions of this chapter.

(B) With respect to loans to be guaran-
teed by the Secretary under this subsection,
the Secretary shall permit certified lending
institutions to make appropriate certifica-
tions (as provided by regulations issued by
the Secretary)-

(i) relating to issues such as creditworthiness, repayment ability, adequacy of collateral, and feasibility of farm operation; and

(ii) that the borrower is in compliance with all requirements of law, including regulations issued by the Secretary.

(C) The Secretary shall approve or disapprove a guarantee not later than 14 calendar days after the date that the lending institution applied to the Secretary for the guarantee. If the Secretary rejects the loan application within the 14-day period, the Secretary shall state, in writing, all of the

reasons the application was rejected. (5) Relationship to other requirements

Neither this subsection nor subsection (d)
of this section shall affect the responsibility
of the Secretary to certify eligibility, review
financial information, and otherwise assess an

application.
(d) Preferred Certified Lenders Program
(1) In general

Commencing not later than two years after
October 28, 1992, the Secretary shall estab-
lish a Preferred Certified Lenders Program
for lenders who establish their

(A) knowledge of, and experience under, the program established under subsection (c) of this section;

(B) knowledge of the regulations concern.
ing the guaranteed loan program; and

(C) proficiency related to the certified
lender program requirements.
The Secretary shall certify any lending insti-
tution as a Preferred Certified Lender that
meets such criteria as the Secretary may pre-
scribe by regulation,
(2) Revocation of designation

The designation of a lender as a Preferred
Certified Lender shall be revoked at any time
that the Secretary determines that such
lender is not adhering to the rules and regula-
tions applicable to the program or if the loss
experiences of a Preferred Certified Lender
are excessive as compared to other Preferred
Certified Lenders, except that such suspen-
sion or revocation shall not affect any out-
standing guarantee.
(3) Condition of certification

As a condition of such preferred certifica-
tion, the Secretary shall require the institu-
tion to undertake to service the loans guaran-
teed by the Secretary under this subsection
using generally accepted banking standards

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