Lenders have the option of accessing Farmer Mac directly by becoming a Farmer Mac Seller or indirectly by becoming a correspondent lender for an existing Seller. Institutions electing to sell loans directly to Farmer Mac submit a Seller application, sign a Seller/Servicer Agreement and purchase Farmer Mac voting stock in accordance with the asset size of the institution.

Farmer Mac underwrites the loans submitted from ag lenders in accordance with the standards and guidelines outlined in the Farmer Mac Seller/Servicer Guide. Loan underwriting takes place through Farmer Mac’s web-based AgPower® LOS (Loan Origination System). Lenders enter the customer’s financial information on a series of screens in the AgPower® LOS system. Once submitted, underwriters respond to the Seller’s request, typically within two business days.

Many lenders access Farmer Mac to enable their farm customers to benefit from the long-term fixed rates, up to 25 years. However, a wide variety of competitively-priced product options are available ranging from indexed ARMs (1-month up to 5-year ARMs) and VRM product options where the rate resets every 10 or 15 years. The AgEquity revolving line of credit enables farm customers to use their equity in land to access a 5-year or 10-year revolving line of credit.

Farmer Mac is responsible for certain Central Servicing functions, namely sending payment and transactional notices to and receiving payments from borrowers. Sellers act as Field Servicers and are responsible for maintaining direct contact with borrowers and performing other servicing functions under the direction of Farmer Mac’s Central Servicers. These responsibilities include the monitoring of the payment of property taxes and hazard insurance premiums. Should delinquencies occur, Central Servicers will be actively involved with the Field Servicer to resolve the delinquency through a payment or workout plan. These procedures are conducted in accordance with the Servicing Timeline outlined in Chapter 403.3 of the Farmer Mac Seller/Servicer Guide.

Sellers are compensated through the receipt of a field servicing fee equal to the interest paid on the loan in excess of the Farmer Mac Servicing Released Net Yield as listed on the Farmer Mac I Rate Sheet. The field servicing fee must be a minimum of 10 basis points and a maximum of 150 basis points. Sellers also may collect an origination fee from the customer and keep that fee as Farmer Mac has no loan fees.

Closing documents are prepared by the Seller incorporating Farmer Mac product-specific information into the documents. Farmer Mac Sellers have the option of preparing the documents using their own documentation preparation method or using PPDocs, Inc., a documentation preparation service available to Farmer Mac Sellers of loans. Working closely with Farmer Mac, PPDocs developed a national set of real estate loan documents that they represent as conforming to the guidelines of the Farmer Mac I Farm and Ranch mortgage loan program. The Seller remains responsible for the enforceability and accuracy of the forms they prepare through PPDocs.

The primary benefits of selling loans through Farmer Mac I include:

Ag lending institutions can keep Farmer Mac I qualified loans in portfolio, retain servicing on those loans, and still receive benefits through the use of the LTSPC (Long-Term Standby Purchase Commitment Program). Retaining qualified loans in portfolio, Sellers commit to sell loans and Farmer Mac commits to purchase delinquent loans at par after a 90-day collection period has ended. In return for the commitment from Farmer Mac, Sellers pay an annual commitment fee. Minimum pool size is $1 million. Participation interests may be included in the pool. The LTSPC enables ag lending institutions to transfer credit risk to Farmer Mac and receive the resulting benefits including:

Farmer Mac has a 15-member Board of Directors. Five of the 15 members are appointed by the President of the United States with the advice and consent of the Senate and serve at the pleasure of the President with no defined term. No more than three of the appointed members can be from any one political party. An additional five Board members are elected by the financial institutions who own Class A voting common stock. Five Board members are also elected by the Farm Credit System institutions who own Class B voting common stock. The ten elected directors serve for one year terms, but can be re-elected each year with no limit on the number of terms served.

Farmer Mac offers debt securities of various maturities in the public capital markets through a network of over 20 dealers who are listed separately on this web site. The debt securities issued by Farmer Mac include discount notes and fixed and floating rate medium-term notes, including callable notes. The proceeds from these securities are used to fund Farmer Mac’s activities, including the purchases of loans from approved Farmer Mac Seller/Servicers.

Although Farmer Mac was created by the U.S. Congress and is regulated by an independent agency in the executive branch of the U.S. government, the U.S. government does not guarantee payments due on Farmer Mac’s guaranteed securities, debt or equity securities, dividend payments on preferred or common stock, or profitability.

As a corporation chartered by Congress to serve a public purpose, Farmer Mac’s debt securities and assets subject to a Farmer Mac guarantee or Long Term Standby Purchase Commitment, carry a 20 percent capital risk weighting for federally regulated entities.

Farmer Mac is regulated by the Farm Credit Administration (FCA), an independent agency in the executive branch of the U.S. government. FCA, acting through the Office of Secondary Market Oversight (OSMO), has general regulatory and enforcement authority over Farmer Mac and is responsible for an annual safety and soundness examination of Farmer Mac. Farmer Mac is required to file quarterly reports on its financial condition with FCA and is also required to comply with the periodic reporting requirements of the Securities Exchange Act of 1934.

The primary purpose of our investment portfolio is to provide liquidity in the event that we are unable to access the capital markets. Our federal charter authorizes us to maintain reasonable amounts of liquid investments for business operations, including adequate liquidity. Additionally, FCA regulations require us to maintain sufficient liquid investments to provide at least 60 days of liquidity. We invest in assets that both comply with FCA regulations and are in accordance with policies established by our Board, including dollar amount, issuer concentration and credit quality limitations.

Farmer Mac funds its loan purchases by issuing liabilities that have similar interest rate characteristics. By Board policy, the expected duration of the assets and liabilities is kept to a narrow gap which is reported on a quarterly basis. Because of the small duration gap, Farmer Mac believes that changes in interest rates should not have a significant impact on future earnings related to its current balance sheet.

Farmer Mac is required by its charter to maintain capital equal to the greater of the statutory minimum capital requirement or the risk-based capital requirement. The statutory minimum capital requirement is calculated based on 2.75 percent of on-balance sheet assets plus 0.75 percent of off-balance sheet obligations. The risk-based capital requirement is a calculation prescribed by FCA that determines the capital necessary for Farmer Mac to maintain positive capital during 10 years of sustained defaults and losses plus severe interest rate shocks. Historically, the minimum capital requirement has always been the higher of the two requirements. The amount of capital held by Farmer Mac that is greater than the capital requirement is deemed to be the capital surplus.

The Farm Credit System (FCS) is a nationwide network of borrower-owned lending institutions and specialized service organizations. The FCS, like Farmer Mac, is regulated by the Farm Credit Administration. Farmer Mac is designated by statute as an FCS institution but is different from other FCS institutions in several respects. In general, most FCS institutions are primary lenders to farmers and ranchers and other borrowers in rural America. In contrast, Farmer Mac serves as a secondary market for lenders that extend credit in rural America which provides rural borrowers with greater access to product innovation and competitive pricing through originating lenders that utilize Farmer Mac. Also, Farmer Mac is a stockholder-owned company while the other FCS institutions are organized as cooperatives. Although Farmer Mac is an FCS institution, it is not liable for any debt or obligation of any other FCS institution. Likewise, no other FCS institution is liable for any debt or obligation of Farmer Mac.

There are three key drivers of Farmer Mac’s earnings. The two positive drivers are (1) the net effective interest spread earned on the on-balance sheet assets and (2) the guarantee and commitment fees earned on off-balance sheet guarantees and commitments. The third driver is the provision for losses which is based on changes in the credit risk in Farmer Mac’s program assets.

Farmer Mac has developed strong credit and appraisal standards to determine the eligibility of assets for its programs. With regard to our agricultural program assets, Farmer Mac only buys first mortgage loans on agricultural farmland, with the exception of our USDA-guaranteed loans in the Farmer Mac II program. In addition, Farmer Mac lends on a highly diversified portfolio of over 135 individual agricultural commodities. Finally, with regard to Rural Utilities, Farmer Mac benefits from the strong credit history of rural electric cooperatives. Farmer Mac has never had a credit loss on its Farmer Mac II program or its Rural Utilities program.

Farmer Mac has three different business segments ─ Farmer Mac I, Farmer Mac II and Rural Utilities. The first and largest is the Farmer Mac I program. Under this program, Farmer Mac operates a secondary market for mortgage loans on agricultural real estate. To be eligible, a loan must be secured by a first lien on agricultural property within the United States. The maximum original loan-to-value (LTV) on such loans is generally 70 percent. In addition, under the Farmer Mac I program, Farmer Mac may offer credit enhancement alternatives to financial institutions. This is generally done through Long Term Standby Purchase Commitments (LTSPCs) or guarantees of agricultural mortgage-backed securities (AMBS) that represent interests in the underlying qualified loans. Under LTSPCs, Farmer Mac agrees to purchase eligible loans from an identified pool of loans, if any such loans become seriously delinquent (three or four months). The loans in the pools underlying LTSPCs or AMBS must meet Farmer Mac’s standards at the time of commitment or guarantee. Under the Farmer Mac I Program, Farmer Mac also purchases or guarantees AgVantage securities which represent secured debt obligations of agricultural lenders. These AgVantage securities are over-collateralized by eligible agricultural loans that must be current with respect to principal and interest payments. Farmer Mac has never experienced a delinquency or credit loss in its AgVantage securities.

The second business segment is the Farmer Mac II program. Under this program Farmer Mac’s subsidiary, Farmer Mac II LLC, purchases in the secondary market, the USDA-guaranteed portion of private sector loans from an originating lender. Loan collateral for such loans includes farm real estate, farm equipment, rural business assets and community facilities. To date, Farmer Mac has never incurred a credit loss in the Farmer Mac II Program.

The third business segment is the Rural Utilities program. Under this program, Farmer Mac buys rural utility loans which are originated by a rural utility cooperative. Farmer Mac also issues AgVantage securities under the Rural Utilities program, where we purchase or guarantee obligations of rural utility cooperative lenders that are secured by eligible rural utility loans. Farmer Mac has never experienced a credit loss in its Rural Utilities program.

Farmer Mac's Website and Online Software tools require a standard hardware and software configuration. To ensure that our Website and Online Software tools perform at or above the expected levels as determined by our performance baseline testing, you may find it necessary to upgrade your current computer configuration.

While the configurations were formulated with our Website and Online Software tools in mind, these upgrades may also improve the performance of your other business applications.

Carefully review the following configurations to ensure that you meet or exceed them. If you would like assistance in assessing your current configuration, contact your organization's computer support representative.

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