§ 3018. — Loans.
[Laws in effect as of January 24, 2002]
[Document not affected by Public Laws enacted between
January 24, 2002 and December 19, 2002]
[CITE: 12USC3018]
TITLE 12--BANKS AND BANKING
CHAPTER 31--NATIONAL CONSUMER COOPERATIVE BANK
SUBCHAPTER I--ESTABLISHMENT AND OPERATION
Sec. 3018. Loans
(a) General requirements for loans and commitments for loans;
limitations; allocation of assistance for low-income persons;
criteria and factors for making loans, etc.; publication
The Bank may make loans and commitments for loans under this
subsection to any organization determined by the Bank to be eligible
under the provisions of section 3015 of this title, and may purchase or
discount obligations of members of such organizations if the Bank, to
the exclusion of all other persons, entities, agencies, or
jurisdictions, also determines that the applicant has or will have a
sound organizational and financial structure, income in excess of its
operating costs and assets in excess of its obligations, and a
reasonable expectation of a continuing demand for its production, goods,
commodities, or services, or the use of its facilities, so that the loan
will be fully repayable in accordance with its terms and conditions.
Commencing on October 1, 1985, the Bank shall not make any loan to a
cooperative for the purpose of financing the construction, ownership,
acquisition, or improvement of any structure used primarily for
residential purposes if, after giving effect to such loan, the aggregate
amount of all loans outstanding for such purpose would exceed 30 per
centum of the gross assets of the Bank. The Board of Directors shall use
its best efforts to insure that at the end of each fiscal year of the
Bank at least 35 per centum of its outstanding loans are to--
(1) cooperatives at least a majority of the members of which are
low-income persons, and
(2) other cooperatives, if the proceeds of such loans are
directly applied to finance a facility, activity, or service that
the Board finds will be used predominantly by low-income persons.
The Board shall adopt and publish in the Federal Register rules defining
the term ``low-income persons'' for purposes of this subsection. The
criteria to be applied and the factors to be considered by the Bank in
making loans, loan commitments, purchases, discounts, and guarantees
shall include an assessment of the impact of the loan on existing small
businesses in the eligible organizations' business territory. The
criteria and factors shall be stated in rules of the Bank which shall be
published and made available to applicants and, upon request, to any
other person or organization.
(b) Repayment requirements; criteria for terms, rates, and charges;
advancement of loan proceeds
Loans under this section shall be repayable in not more than forty
years and, except for loans with final due date not longer than five
years from the date of the loan, shall be amortized as to principal and
interest. In setting the terms, rates, and charges, it shall be the
objective of the Bank to provide the type of credit needed by eligible
borrowers, at the lowest reasonable cost on a sound business basis,
taking into account the cost of money to the Bank, necessary reserve and
expenses of the Bank, and the technical and other assistance
attributable to loans under this section made available by the Bank. The
loan terms may provide for interest rates to vary from time to time
during the repayment period of the loan in accordance with the rates
being charged by the Bank for new loans at such times. The proceeds of a
loan under this subsection may be advanced by the borrower to its
members or stockholders under circumstances described in the bylaws or
rules of the Bank.
(c) Guarantees by Bank; requirements; charges
Subject to section 3012(13) of this title, the Bank may guarantee
all or any part of the principal and interest of any loan made by any
State or federally chartered lending institution to any borrower if such
loan is to an organization that would be an eligible borrower from the
Bank for a direct loan and is on terms and conditions (including the
rate of interest) which would be permissible terms and conditions for
such a direct loan. The Bank may impose a charge for any such guarantee.
No loan may be guaranteed by the Bank if the income therefrom to the
lender is excluded from such lender's gross income for purposes of
chapter 1 of title 26.
(d) Assignment of guaranteed loans; contestability of guarantee;
criteria for purchase by Bank of guaranteed loan in lieu of
requiring service by lender
Any loan guaranteed under subsection (c) of this section shall be
assignable to the extent provided in the contract of guarantee as may be
determined by the Bank. The guarantee shall be uncontestable, except for
fraud or misrepresentation of which the holder had actual knowledge at
the time he acquired the loan. The Bank in lieu of requiring such lender
to service such guaranteed loan until final maturity or liquidation, may
purchase the loan for the balance of the principal and accrued interest
thereon without penalty, if it determines that (1) the liquidation of
the loan would result in the insolvency of the borrower or deprive the
borrower of assets essential to its continued operation, and (2) the
loan will be repayable with revision of the loan rates, terms, or
payment periods or other conditions not inconsistent with loans made by
the Bank under subsection (a) of this section, which revisions the
lender or other holder of such guaranteed loan is unwilling to make.
(e) Aggregate amount of commitments to make or guarantee loans
As long as any of the class A stock of the Bank is held by the
Secretary of the Treasury, the aggregate amount of commitments by the
Bank to make or guarantee loans shall not exceed such amounts as may be
specified in annual appropriation Acts.
(Pub. L. 95-351, title I, Sec. 108, Aug. 20, 1978, 92 Stat. 508; Pub. L.
97-35, title III, Secs. 394(b), 396(e), Aug. 13, 1981, 95 Stat. 436,
440; Pub. L. 99-514, Sec. 2, Oct. 22, 1986, 100 Stat. 2095.)
Amendments
1986--Subsec. (c). Pub. L. 99-514 substituted ``Internal Revenue
Code of 1986'' for ``Internal Revenue Code of 1954'', which for purposes
of codification was translated as ``title 26'' thus requiring no change
in text.
1981--Subsec. (a). Pub. L. 97-35, Sec. 394(b), substituted ``1985''
for ``1983''.
Subsec. (b). Pub. L. 97-35, Sec. 396(e), struck out provisions
relating to proceeds from class A and class B stock.
Effective Date of 1981 Amendment
Amendment by section 396(e) of Pub. L. 97-35 effective on day after
Final Government Equity Redemption Date (Dec. 31, 1981), see section
396(i) of Pub. L. 97-35, set out as a note under section 3011 of this
title.
Section Referred to in Other Sections
This section is referred to in section 3043 of this title.
