Relief for Rural Development Borrowers Act

I 116TH CONGRESS 2D SESSION H. R. 7452 To require the Secretary of Agriculture to provide relief from hardship due to the COVID–19 pandemic to certain borrowers of rural development loans, and for other purposes. IN THE HOUSE OF REPRESENTATIVES JULY 1, 2020 Ms. FINKENAUER introduced the following bill; which was referred to the Committee on Agriculture A BILL To require the Secretary of Agriculture to provide relief from hardship due to the COVID–19 pandemic to certain borrowers of rural development loans, and for other pur- poses. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 SECTION 1. SHORT TITLE. 3 This Act may be cited as the ‘‘Relief for Rural Devel- 4 opment Borrowers Act’’. 5 VerDate Sep 11 2014 23:38 Jul 23, 2020 Jkt 099200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H7452.IH H7452 kjohnson on DSK79L0C42PROD with BILLS 2 •HR 7452 IH SEC. 2. SUBSIDY FOR PAYMENTS AND LOAN DEFERMENT 1 FOR RURAL DEVELOPMENT LOANS. 2 (a) DEFINITION OF SECRETARY.—In this section, the 3 term ‘‘Secretary’’ means the Secretary of Agriculture. 4 (b) SUBSIDY FOR CERTAIN LOAN PAYMENTS.— 5 (1) DEFINITION OF COVERED LOAN.—In this 6 subsection, the term ‘‘covered loan’’ means— 7 (A) a business and industry guaranteed 8 loan under section 310B(g) of the Consolidated 9 Farm and Rural Development Act (7 U.S.C. 10 1932(g)), other than such a loan guaranteed 11 using amounts made available for the ‘‘Rural 12 Business Program Account’’ by title I of divi- 13 sion B of the Coronavirus Aid, Relief, and Eco- 14 nomic Security Act (Public Law 116–136); 15 (B) a community facility guaranteed loan 16 under section 306(a) of the Consolidated Farm 17 and Rural Development Act (7 U.S.C. 18 1926(a)); and 19 (C) a community facility direct loan under 20 section 306(a) of the Consolidated Farm and 21 Rural Development Act (7 U.S.C. 1926(a)). 22 (2) PRINCIPAL AND INTEREST PAYMENTS.— 23 (A) IN GENERAL.—The Secretary shall pay 24 the principal, interest, and any associated fees 25 VerDate Sep 11 2014 23:38 Jul 23, 2020 Jkt 099200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H7452.IH H7452 kjohnson on DSK79L0C42PROD with BILLS 3 •HR 7452 IH that are owed on a covered loan in a regular 1 servicing status— 2 (i) with respect to a covered loan 3 made before the date of enactment of this 4 Act and not on deferment, for the 6-month 5 period beginning with the next payment 6 due on the covered loan; 7 (ii) with respect to a covered loan 8 made before the date of enactment of this 9 Act and on deferment, for the 6-month pe- 10 riod beginning with the next payment due 11 on the covered loan after the deferment pe- 12 riod; and 13 (iii) with respect to a covered loan 14 made during the period beginning on the 15 date of enactment of this Act and ending 16 on the date that is 6 months after that 17 date of enactment, for the 6-month period 18 beginning with the first payment due on 19 the covered loan. 20 (B) TIMING OF PAYMENT.—The Secretary 21 shall begin making payments under subpara- 22 graph (A) on a covered loan not later than 30 23 days after the date on which the first payment 24 described in that subparagraph is due. 25 VerDate Sep 11 2014 23:38 Jul 23, 2020 Jkt 099200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H7452.IH H7452 kjohnson on DSK79L0C42PROD with BILLS 4 •HR 7452 IH (C) APPLICATION OF PAYMENT.—Any pay- 1 ment made by the Secretary under subpara- 2 graph (A) shall be applied to the covered loan 3 such that the borrower is relieved of the obliga- 4 tion to pay that amount. 5 (3) OTHER REQUIREMENTS.—The Secretary 6 shall— 7 (A) communicate and coordinate with the 8 Federal Deposit Insurance Corporation, the Of- 9 fice of the Comptroller of the Currency, and 10 State bank regulators to encourage those enti- 11 ties to not require lenders to increase their re- 12 serves on account of receiving payments made 13 by the Secretary under paragraph (2); 14 (B) waive statutory limits on maximum 15 loan maturities for any covered loan durations 16 where the lender provides a deferral and ex- 17 tends the maturity of covered loans during the 18 1-year period following the date of enactment of 19 this Act; and 20 (C) when necessary to provide more time 21 because of the potential of higher volumes, trav- 22 el restrictions, and the inability to access some 23 properties during the COVID–19 pandemic, ex- 24 tend lender site visit requirements to— 25 VerDate Sep 11 2014 23:38 Jul 23, 2020 Jkt 099200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H7452.IH H7452 kjohnson on DSK79L0C42PROD with BILLS 5 •HR 7452 IH (i) not more than 60 days (which may 1 be extended at the discretion of the Sec- 2 retary) after the occurrence of an adverse 3 event, other than a payment default, caus- 4 ing a loan to be classified as in liquidation; 5 and 6 (ii) not more than 90 days after a 7 payment default. 8 (4) EFFECT.—Nothing in this section limits the 9 authority of the Secretary to make payments pursu- 10 ant to paragraph (2) with respect to a covered loan 11 solely because the covered loan has been sold in the 12 secondary market. 13 (c) SUBSIDY FOR OTHER LOAN PAYMENTS.— 14 (1) DEFINITION OF COVERED LOAN.—In this 15 subsection, the term ‘‘covered loan’’ means a rural 16 development loan made or guaranteed by the Sec- 17 retary, other than a loan described in subparagraph 18 (A), (B), or (C) of subsection (b)(1). 19 (2) PRINCIPAL AND INTEREST PAYMENTS.— 20 The Secretary shall pay the principal, interest, and 21 fees, for a borrower of a covered loan the application 22 of which is approved under paragraph (4)(B)— 23 (A) with respect to a covered loan made 24 before the date of enactment of this Act and 25 VerDate Sep 11 2014 23:38 Jul 23, 2020 Jkt 099200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H7452.IH H7452 kjohnson on DSK79L0C42PROD with BILLS 6 •HR 7452 IH not otherwise on deferment, for the 6-month pe- 1 riod beginning with the next payment due on 2 the covered loan; 3 (B) with respect to a covered loan made 4 before the date of enactment of this Act and 5 otherwise on deferment, for the 6-month period 6 beginning with the next payment due on the 7 covered loan after the deferment period; and 8 (C) with respect to a covered loan made 9 during the period beginning on the date of en- 10 actment of this Act and ending on the date that 11 is 6 months after that date of enactment, for 12 the 6-month period beginning with the first 13 payment due on the covered loan. 14 (3) LOANS HELD BY OTHER LENDERS.—In the 15 case of a covered loan held by a lender that is not 16 the Secretary, the Secretary shall require the lender 17 to provide the complete payment deferment relief de- 18 scribed in paragraph (2). 19 (4) APPLICATIONS.— 20 (A) IN GENERAL.—A borrower seeking 21 payment subsidies under paragraph (2) or (3) 22 shall submit to the Secretary an application in 23 such manner and containing such information 24 as the Secretary may require. 25 VerDate Sep 11 2014 23:38 Jul 23, 2020 Jkt 099200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H7452.IH H7452 kjohnson on DSK79L0C42PROD with BILLS 7 •HR 7452 IH (B) DETERMINATIONS.—The Secretary 1 shall approve an application submitted under 2 subparagraph (A) by a borrower that, as deter- 3 mined by the Secretary and demonstrated in 4 the application— 5 (i) is unable to make payments on a 6 covered loan because of a temporary cash 7 flow disruption due to the COVID–19 pan- 8 demic; and 9 (ii) makes a good faith certification 10 that the current economic conditions have 11 made payment deferment relief necessary. 12 (5) SECONDARY MARKET.—With respect to a 13 covered loan that is sold on the secondary market, 14 if an investor declines to approve a deferral re- 15 quested by a lender under paragraph (3), the Sec- 16 retary shall exercise the authority to purchase the 17 covered loan so that the borrower may receive a de- 18 ferral under this subsection. 19 (6) GUIDANCE.—Not later than 30 days after 20 the date of enactment of this Act, the Secretary 21 shall provide guidance on the deferment process de- 22 scribed in this subsection. 23 (d) WAIVER AUTHORITY.— 24 VerDate Sep 11 2014 23:38 Jul 23, 2020 Jkt 099200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\H7452.IH H7452 kjohnson on DSK79L0C42PROD with BILLS 8 •HR 7452 IH (1) IN GENERAL.—The Secretary may waive 1 any requirement that a borrower of a covered loan 2 reduce or eliminate a debt reserve established by the 3 borrower, as a condition of granting a loan defer- 4 ment under this section. 5 (2) CONDITIONS.—The Secretary may provide 6 such a waiver— 7 (A) when a borrower is seeking deferment 8 as the result of an inability to make payments 9 on a covered loan (as defined in subsection 10 (b)(1) because of a temporary cash flow disrup- 11 tion due to the COVID–19 pandemic, if paying 12 down a reserve established by the borrower for 13 debt servicing poses a threat to the continuing 14 financial stability of the borrower; and 15 (B) under other conditions as the Sec- 16 retary may deem necessary. 17 Æ VerDate Sep 11 2014 23:38 Jul 23, 2020 Jkt 099200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6301 E:\BILLS\H7452.IH H7452 kjohnson on DSK79L0C42PROD with BILLS