LTSPC
An LTSPC allows lenders to retain agricultural real estate loans in portfolio while reducing capital requirements and credit risk on those loans. Under the agreement, the lender commits to sell and Farmer Mac commits to purchase qualified agricultural real estate mortgage loans. In return for that long-term commitment, lenders pay Farmer Mac an ongoing annual commitment fee. Qualified Loans are those that meet Farmer Mac I Farm and Ranch underwriting guidelines and may include both newly-originated loans as well as seasoned loans. The LTSPC is meant for institutions that have a strong history of farm, ranch or agribusiness lending, especially mortgage lending. The minimum pool size is $1 million in qualified and approved loans.
LTSPC Introduction
How do lenders benefit from using LTSPC?
Freeing up capital to use for other purposes is just one of the reasons ag lenders turn to the LTSPC.
LTSPC Qualifying Loans
First mortgage farm and ranch loans meeting Farmer Mac I Farm and Ranch underwriting criteria qualify for LTSPC.
Farmer Mac’s charter authorizes a maximum loan size of $9.8 million (adjusted annually for inflation) for a Farmer Mac I eligible loan secured by more than 1,000 acres.
LTSPC Fees
LTSPC fees are paid to Farmer Mac monthly (in arrears) based on the unpaid balance of the loan.
The LTSPC fees paid are on a per loan basis and tied to the level of risk presented in the individual loan when placed in the pool.
LTSPC Operations
The LTSPC permits the Seller to retain the loan pool in its portfolio until such time, if ever, that the Seller delivers some or all of the loans to Farmer Mac for purchase.
Farmer Mac will purchase upon request the loans at any time in the future so long as the loans remain in the commitment pool and have not been substantively modified.
