4.14.307    LOANS TO BEGINNING FARMERS/RANCHERS AND SECURITY ARRANGEMENTS

(1)  Loans to beginning farmers/ranchers involve the financial institution, beginning farmer/rancher, and the authority.  The program involves either the sale of the individual industrial development bonds, to individual financial institutions or a public bond sale to provide funds for an aggregation of loans.

(2)  The authority will make the loan to the eligible beginning farmer/rancher and the financial institution will purchase the bond as an investment or the loan will be made from a portion of an aggregate bond sale.  To facilitate the servicing of the loan the financial institution and the authority will enter into an agency relationship whereby the financial institution agrees to act as agent and fiduciary for the authority for all purposes in connection with servicing the loan.

(3)  The financial institution will make its own security evaluation of the loan and the beginning farmer's/rancher's ability to repay principal and interest payments.  The interest rate and other conditions of the loan are set by the financial institution.  The interest rate may be either variable or fixed for the term of the loan as long as the method for determining the rate is contained in the loan agreement and the rate is reasonable as determined by the authority.

(4)  In no case may the loan repayment period (term)  exceed 30 years.  The principal and interest shall be limited obligations, payable solely out of the revenue derived from the debt obligation, collateral, or other security furnished by or on the behalf of the beginning farmer/rancher (a co-signer on the note is permissible)  .

(5)  The bond which is issued by the authority is a non-recourse obligation.   The principal and interest on the bond do not constitute an indebtedness of the authority or a charge against its general credit or general fund. It should also be noted that any recording or filing fees associated with the loan will be paid by the beginning farmer/rancher or financial institution not the authority.

History: 80-12-103, MCA; IMP, 80-12-201, MCA; NEW, 1984 MAR p. 363, Eff. 3/1/84; AMD, 2001 MAR p. 1723, Eff. 9/7/01.