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The Federal Agricultural Mortgage Corporation, commonly known as Farmer Mac, is
a stockholder-owned, federally chartered instrumentality of the United States.
Farmer Mac was created by Congress in 1988 to establish a secondary market for
agricultural real estate and rural housing mortgage loans and to increase the
availability of long-term credit at stable interest rates to American farmers,
ranchers and rural homeowners.
The Farmer Mac secondary market for agricultural mortgage loans accomplishes
that public policy mission by providing liquidity and lending capacity to
agricultural mortgage lenders by:
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purchasing newly originated and pre-existing (“seasoned”) eligible mortgage
loans directly from lenders through its “cash window” and seasoned eligible
mortgage loans from lenders and other third parties in negotiated transactions;
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issuing long-term standby purchase commitments (“LTSPCs”) for newly originated
and seasoned eligible mortgage loans;
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exchanging newly issued agricultural mortgage-backed securities guaranteed by
Farmer Mac (“Farmer Mac Guaranteed Securities”) for newly originated and
seasoned eligible mortgage loans that back those securities in “swap”
transactions; and
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purchasing and guaranteeing mortgage backed bonds secured by eligible mortgage
loans, which are referred to as AgVantage bonds.
Farmer Mac conducts these activities through two programs—Farmer Mac I and
Farmer Mac II.
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Under the Farmer Mac I program, Farmer Mac purchases or commits to purchase
eligible loans. To be eligible for the Farmer Mac I program, loans must meet
Farmer Mac's underwriting, appraisal, documentation and other specified
standards.
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Under the Farmer Mac II program, Farmer Mac purchases the guaranteed portions
of loans guranteed by the United States Department of Agriculture
("USDA-guaranteed portions").
Farmer Mac III combines both Farmer Mac I and II by purchasing first-lien
mortgage loans that are senior to loans guaranteed via state or federal
programs. By leveraging government program dollars, Farmer Mac assists more
small farmers and family farmers in fulfillment of a key aspect of Farmer Mac's
mission.
Farmer Mac securitizes the loans it purchases and guarantees the timely payment
of principal and interest on the resulting Farmer Mac Guaranteed Securities.
Farmer Mac may retain Farmer Mac Guaranteed Securities in its portfolio or sell
them to third parties.
Farmer Mac's programs provide participants with a secondary market that
enhances the participants' ability to efficiently offer mortgage loans to
agricultural and rural housing borrowers at competitive rates and terms.
Farmer Mac Benefits:
Lending Institutions
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Strengthened customer relationships
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Enhanced return on equity through fee income
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Reduced or eliminated credit risk and interest rate risk from lending activity
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Improved liquidity
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Increased lending capacity
Farmers and Ranchers
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Flexible loan terms, including adjustable rates and fixed rates up to 20 years
for the Full-Time Farm Program and 30 years for the Part-Time Farm Programs
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Choice of lender
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Competitive rates
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A risk management tool to balance short-term borrowings with fixed-rate
mortgage
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