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The Federal Agricultural Mortgage Corporation, commonly known as Farmer Mac, is a stockholder-owned, government sponsored enterprise or "GSE" created by Congress to improve the availability of long-term credit for America's farmers, ranchers, rural homeowners, businesses and communities. Farmer Mac accomplishes this public policy mission by providing a secondary market for qualified agricultural mortgage loans, rural housing mortgage loans, rural utilities loans (to cooperative borrowers made by cooperative lenders) and the guaranteed portions of agricultural and rural development loans guaranteed by the U.S. Department of Agriculture.
The Farmer Mac secondary market provides liquidity and lending capacity to lenders by:
- purchasing newly originated and existing eligible loans directly from lenders;
- exchanging loan-backed securities guaranteed by Farmer Mac ("Farmer Mac Guaranteed Securities") for eligible loans that back those securities in "swap" transactions;
- issuing long-term standby purchase commitments ("LTSPCs") for eligible loans; and
- purchasing and guaranteeing loan backed securities secured by eligible loans, which are referred to as AgVantage® bonds.
Farmer Mac conducts these activities through the following programs-Farmer Mac I, Farmer Mac II, and Rural Utilities Loans:
- Under the Farmer Mac I program, Farmer Mac purchases or commits to purchase eligible agricultural mortgage loans or securities backed by eligible agricultural mortgage loans. To be eligible for the Farmer Mac I program, loans must meet Farmer Mac's credit underwriting, collateral valuation, documentation and other specified standards. Eligible collateral includes: (1) agricultural real estate that is used for the production of one or more agricultural commodities or products (may be improved by permanently affixed structures such as facilities) and (2) rural residences with excess acreage where the production of agricultural commodities or products is underway or planned on the property.
- Under the Farmer Mac II program, Farmer Mac purchases the guaranteed portions of loans guaranteed by the United States Department of Agriculture ("USDA-guaranteed portions"). Eligible USDA-guaranteed portions include Farm Service Agency Guaranteed Farm Ownership and Operating (Term) loans and Rural Development Business and Industry and Community Facility Guaranteed loans.
- Under the Rural Utilities Loans program, Farmer Mac purchases, or commits to purchase, qualified rural utilities loans, or guarantees the timely payment of interest and principal of securities representing interests in or obligations backed by pools of such loans.
The securities Farmer Mac guarantees are either sold to investors in capital markets, retained on the books of the holder or purchased by Farmer Mac and retained in its portfolio.
Farmer Mac's programs provide participants with an efficient and competitive secondary market that enhances the participants' ability to offer eligible loans to farmers, ranchers, rural homeowners, rural communities and businesses.
Please refer to the most recent Farmer Mac Annual Report for a more complete description of Farmer Mac and its programs. Additional information about Farmer Mac is available on the Corporation's website, www.farmermac.com.
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