How does Farmer Mac make money?
How does Farmer Mac make money?
If Farmer Mac buys loans or lends against collateral, it earns interest income. If it guarantees loans, it earns fee income. Farmer Mac is careful to say that: “The interest and principal on Farmer Mac’s debt obligations are not guaranteed by, and do not constitute debts or obligations of…the United States…”
Is Farmer Mac a GSE or federal agency?
As a government sponsored enterprise (GSE), what are Farmer Mac’s key ties to the U.S. Government? We are regulated by the Farm Credit Administration (FCA), an independent agency in the executive branch of the United States government.
Is Farmer Mac a primary lender?
Farmer Mac is designated by statute as an FCS institution but is different from other FCS institutions in several respects. In general, most FCS institutions are primary lenders to farmers and ranchers and other borrowers in rural America.
How does the farm credit system work?
Farm Credit raises funds by selling debt securities on the nation’s money markets through the Federal Farm Credit Banks Funding Corporation. Farm Credit insures its debt insured through the Farm Credit System Insurance Corporation, a self-funded insurance entity. Each district has its own regional wholesale bank.
How does a Remic lose value?
A REMIC may be subject to disqualification as a REMIC unless it is able to satisfy a 1% safe harbor for de minimis non-qualifying assets. If a REMIC does not satisfy such 1% safe harbor, the REMIC may lose its tax status as a REMIC and become taxable as a corporation.
Is Farmer Mac part of the Farm Credit System?
Although Farmer Mac is an institution of the Farm Credit System, it is not liable for any debt or obligation of any other System institution.
What kind of debt does Farmer Mac issue?
Farmer Mac’s charter includes the ability to issue debt securities. The cash flow from these sales is reinvested into agricultural mortgages and rural loan purchases. Farmer Mac issues a variety of debt securities, including discount notes, fixed and floating-rate medium-term notes, and callable notes.
What is Farmer Mac and how does it work?
In 1987, Congress responded to the emergency by approving the Agricultural Credit Act, which created Farmer Mac. In the years that followed, Congress expanded Farmer Mac’s authority to include US Department of Agriculture (USDA) guaranteed securities, whole loans, and rural utility loans. 5
What is a FAMC loan?
Federal Agricultural Mortgage Corporation (FAMC), founded by an act of Congress in 1988, has a focus on the agricultural industry. Its mission is to create a secondary market for agricultural mortgage securities (AMBs) and ease conditions for agricultural and rural borrowing. Farmer Mac is another name for FAMC.
Why was the federal Agricultural Mortgage Corporation (FAMC) created?
The creation of the Federal Agricultural Mortgage Corporation (FAMC) was a result of a combination of decreased farm income and increased interest rates. These two pressures led to a crisis among agricultural borrowers. In 1987, Congress responded to the emergency by approving the Agricultural Credit Act, which created Farmer Mac.
