|Legal Opinion Summary|
|Topic:||Eligibility and Scope of Financing: May a partner in a business that borrows from a Farm Credit System association refinance a home in a community where the population exceeds 2,500 inhabitants?|
An association asked whether it could make a loan to refinance a home in a city with 100,000 inhabitants. The applicant is a partner in a business that borrowed from the association. OGC concluded that the association has no authority to finance homes for applicants who are not farmers, ranchers, or aquatic producers and harvesters in cities where the population exceeds 2,500 inhabitants.
The Farm Credit Act (Act) authorizes Farm Credit banks (except title III banks) and associations to make loans to persons who are not agricultural or aquatic producers for moderately priced, single-family homes in rural communities where the population does not exceed 2,500 inhabitants. See Sections 1.11(b) and 2.4(b) of the Act (12 U.S.C. §§ 2019(b) and 2075(b)). The association has no authority to make this loan because the applicant is not a farmer, rancher, or aquatic producer or harvester, and the home is located in a city with 100,000 residents. The loan to the business does not confer eligibility on the partner because each person who applies for a loan from a Farm Credit bank or association must demonstrate that he or she independently meets the eligibility and scope of financing requirements in the Act and applicable regulations.