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7 U.S. Code § 936b

Sale or prepayment of direct or insured loans

7 U.S. Code § 936b. Sale or prepayment of direct or insured loans

(a) Discounted prepayment by borrowers of electric loans
(1) In general
Except as provided in paragraph (2), a direct or insured loan made under this chapter shall not be sold or prepaid at a value that is less than the outstanding principal balance on the loan.
(2) ExceptionOn request of the borrower, an electric loan made under this chapter, or a portion of such a loan, that was advanced before May 1, 1992, or has been advanced for not less than 2 years, shall be sold to or prepaid by the borrower at the lesser of—
(A)
the outstanding principal balance on the loan; or
(B)
the present value of the loan discounted from the face value at maturity at the rate established by the Secretary.
(3) Discount rate
The discount rate applicable to the prepayment under this subsection of a loan or loan advance shall be the then current cost of funds to the Department of the Treasury for obligations of comparable maturity to the remaining term of the loan.
(4) Tax exempt financing
If a borrower prepays a loan under this subsection using tax exempt financing, the discount shall be adjusted to ensure that the borrower receives a benefit that is equal to the benefit the borrower would receive if the borrower used fully taxable financing. The borrower shall certify in writing whether the financing will be tax exempt and shall comply with such other terms and conditions as the Secretary may establish that are reasonable and necessary to carry out this subsection.
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