Farmer Mac conducts its activities through three programs: Farmer Mac I, Farmer Mac II and Rural Utilities
Farmer Mac I: Farmer Mac I qualified loans must be secured by a first mortgage on agricultural real estate. Farmer Mac I offers lenders several options to help strengthen customer relationships and reduce the risk in the institution’s lending activity. Each option, as briefly outlined below, offers a select group of benefits. One of the most frequent options is to sell loans to Farmer Mac. A second is to request Farmer Mac to commit to purchase a loan at a future time, normally if it becomes at least 90 days delinquent in its payments. A third structure is to borrow funds from Farmer Mac through a Farmer Mac guarantee on a lender’s general debt obligation secured by pools of eligible mortgage loans.
To be eligible for any of the options under the Farmer Mac I program, loans must meet Farmer Mac’s credit underwriting, collateral valuation, documentation requirements and must be sourced by Farmer Mac qualified lenders (“Sellers”). Eligible collateral includes agricultural real estate that is used for the production of one or more agricultural commodities or products.
Farmer Mac II: Under the Farmer Mac II program, Farmer Mac purchases the guaranteed portions of certain loans guaranteed by the United States Department of Agriculture. Eligible guarantees include Farm Service Agency Guaranteed Farm Ownership and Operating (Term) loans and Rural Development Business and Industry and Community Facility Guaranteed loans.
Rural Utilities: Under the Rural Utilities 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. To be eligible for the Rural Utilities program, loans must meet Farmer Mac’s credit underwriting and other specified standards for rural utilities loans.