7 U.S.C. § 936

Guaranteed loans; accommodations and subordination of liens; interest rates; assignability of guaranteed loans and related guarantees

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The Secretary may provide financial assistance to borrowers for purposes provided in this chapter by guaranteeing loans, in the full amount thereof, made by the National Rural Utilities Cooperative Finance Corporation and any other legally organized lending agency, or by accommodating or subordinating liens or mortgages in the fund held by the Secretary as owner or as trustee or custodian for purchases of notes from the fund, or by any combination of such guarantee, accommodation, or subordination. The Secretary shall not provide such assistance to any borrower of a telephone loan under this chapter unless the borrower specifically applies for such assistance. No fees or charges shall be assessed for any such accommodation or subordination. Guaranteed loans shall bear interest at the rate agreed upon by the borrower and the lender. Guaranteed loans, and accommodation and subordination of liens or mortgages, may be made concurrently with an insured loan. The amount of guaranteed loans shall be subject only to such limitations as to amounts as may be authorized from time to time by the Congress of the United States: Provided, That any amounts guaranteed hereunder shall not be included in the totals of the budget of the United States Government and shall be exempt from any general limitation imposed by statute on expenditures and net lending (budget outlays) of the United States. As used in this subchapter a guaranteed loan is one which is initially made, held, and serviced by a legally organized lending agency and which is guaranteed by the Secretary hereunder. A guaranteed loan, including the related guarantee, may be assigned to the extent provided in the contract of guarantee executed by the Secretary under this subchapter; the assignability of such loan and guarantee shall be governed exclusively by said contract of guarantee.

Notes of Decisions

Cited in 4 cases, 1989–2001 · leading case: Util. L. Rep. P 13,930 Wabash Valley Power Association, Inc., an Indiana Not-For-Profit Corporation v. Rural Electrifica

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Util. L. Rep. P 13,930 Wabash Valley Power Association, Inc., an Indiana Not-For-Profit Corporation v. Rural Electrifica (1993) 7th Cir. “7 U.S.C. § 936 (1980). . Further evidence of a policy of subsidizing rural electrification is found in the statutory provision affording the REA the discretion to lengthen the repayment period of loans and to subordinate the government's lien position in the event of default by…”

In Re Eastern Maine Electric Cooperative, Inc. (1990) Bankr. D. Me. “See 7 U.S.C. § 936 . CFC’s claim of approximately $650,000.”

Brazos Electric Power Cooperative, Inc. v. United States (2001) Fed. Cl. “) The Government cites a colloquy between the court and plaintiffs counsel which, the Government alleges, left the court with the misperception that the three “old form notes” which governed Brazos’s Comanche Peak debt prior to them 1994 refinancing into the Brazos FFB Note…”

Prepayment Authority Under the Rural Electrification Act of 1936 (1989) OLC “BACKGROUND Section 306 of the RE Act, 7 U.S.C. § 936 , authorizes the Administrator of REA to guarantee loans made by any legally organized lending agency.”

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