La. Admin. Code tit. 7 § III-131

Current through Register Vol. 50, No. 11, November 20, 2024

Section III-131 - Types of Loans to be Purchased or Made

A. The issuer shall only purchase agricultural loans made by lenders or enter into repurchase obligations with certain national banks who will in turn make agricultural loans to borrowers.

B. Acquisition of Eligible Loans

1. Moneys in the loan fund shall be used only for the acquisition of eligible loans pursuant to agreements or to enter into repurchase obligations, as described below. No eligible loan shall be purchased unless such eligible loan bears interest, payable semiannually on April 1 and October 1 of each year, at a rate no less than 9.10 percent, and matures no later than October 1, 1996. No repurchase obligation shall be entered into unless such repurchase obligation carries with it an interest component as a part of the resale price of 9.10 percent, and matures no later than October 1, 1996. No eligible loan or repurchase obligation shall be purchased unless it requires that any principal amounts prepaid under such eligible loan or repurchase obligation, for whatever reason, shall be paid to the trustee in accordance with Section 4.14 of the Indenture, and in no event shall any prepayment (including prepayments due to casualty or condemnation) be in an amount less than $100,000. Prior to the disbursement of any funds from the loan fund to acquire an eligible loan or enter into a repurchase obligation, the trustee shall complete a program checklist and submit the same to the issuer and to Standard and Poor's Corporation.

2. Moneys in the loan fund shall be used to acquire any eligible loans presented to the issuer and the trustee by a lender in accordance with the provisions set forth herein, pursuant to an agreement at a price described below upon receipt by the trustee of all documents, opinions and certificates required in the agreement and the program checklist. Each eligible loan shall be purchased at a purchase price of 99.78 percent of the outstanding principal amount of such eligible loan, less a surrender charge (as that term is defined in the investment agreement and which shall be payable to the insurance company), in the amount determined by the investment agreement provided that the purchase price of an eligible loan shall not be in an amount less than $100,000 and shall not exceed $5,000,000. The average principal amount of eligible loans must be at least $500,000. Eligible loans may not be acquired after September 30, 1991, and the total amount of withdrawals (as such term is defined in the investment agreement) at any point in time shall not exceed the applicable maximum cumulative withdrawal amounts (as defined in the investment agreement). Payments made by a credit provider under a letter of credit or guaranty shall be applied as a credit against amounts owing by a borrower under a financed eligible loan with respect to which such letter of credit or guaranty was issued.

3. The issuer will cooperate with each lender, and shall require each lender to cooperate with the issuer, such that all accrued interest through the date on which the eligible loan is acquired by the issuer is paid directly or reimbursed to each lender.

4. Each eligible loan shall be secured by an irrevocable letter of credit, a guaranty, or a comparable instrument which shall effectively guarantee payment of all principal and interest on such eligible loan, such letter of credit, guaranty or comparable instrument being issued by a credit provider whose long-term unsecured debt rating is rated at least as high as the initial rating on the bonds, as confirmed in writing by Standard and Poor's Corporation, or, if not so rated (and then only in the case of a letter of credit delivered by a savings and loan association insured by FSLIC or a state-chartered banking association insured by FDIC such credit provider shall pledge securities sufficient to maintain the initial rating on the bonds; the types of eligible collateral securities, and the level of collateralization required for each type of collateral security in order to obtain such a rating from Standard and Poor's Corporation, are set forth in Exhibit F; provided that if any such securities to be pledged consist of FHA/VA Mortgage Notes, Conventional Mortgage Notes, FHA/VA Mortgage Notes-ARMS and Conventional Mortgage Notes-ARMS (as those terms are used in the Collateral Pledge Agreement FSLIC), then prior to the acquisition of the eligible loan the trustee shall receive notice from Standard and Poor's Corporation (at the expense of the respective borrower) to the effect that the delivery of FHA/VA Mortgage Notes, Conventional Mortgage Notes, FHA/VA Mortgage Notes-ARMS and Conventional Mortgage Notes-ARMS by such credit provider will not adversely affect the rating on the bonds. In the event that an eligible loan is to be secured by an instrument other than a letter of credit or a guaranty in precisely the forms attached to the Indenture, such eligible loan shall not be purchased with bond proceeds until such time as the trustee receives written confirmation from Standard and Poor's Corporation (at the expense of the respective borrower) that such purchase will not adversely affect the rating of the bonds.

C. Repurchase Obligations. Moneys in the loan fund shall also be used by the issuer to enter into any repurchase obligation presented to it by a credit provider in accordance with the provisions set forth herein (to enable such credit provider to in turn finance an eligible loan). Securities purchased under a repurchase obligation shall be purchased at a price of 99.78 percent of the purchase price, less a surrender charge (as that term is defined in the investment agreement and which shall be payable to the insurance company) in the amount determined by the investment agreement. The purchase price of a repurchase obligation shall not be in an amount less than $100,000 and shall not exceed $5,000,000. The average principal amount of repurchase obligations must be at least $500,000. Repurchase obligations may not be acquired after September 30, 1991, and the total amount of withdrawals (as such term is defined in the investment agreement) at any point in time shall not exceed the applicable maximum cumulative withdrawal amounts (as defined in the investment agreement).

D. There shall be included as a provision to every loan note, the agreement of the maker thereof to the effect that the loan note shall continue to bear interest until such time as the trustee has on deposit available moneys representing sufficient funds for the payment of such loan note.

E. No eligible loan shall be purchased by the trustee, and no repurchase obligation shall be entered into by the trustee, during any period commencing with the date which would (if such eligible loan were otherwise purchased) constitute a draw date for such eligible loan and ending on the immediately succeeding interest payment date.

La. Admin. Code tit. 7, § III-131

Promulgated by the Department of Agriculture and Forestry, Agricultural Finance Authority, LR 17:165 (February 1991).

AUTHORITY NOTE: Promulgated in accordance with R.S. 3:266(4).