§1928. Full faith and credit

(a) In general

A contract of insurance or guarantee executed by the Secretary under this chapter shall be an obligation supported by the full faith and credit of the United States.

(b) Contestability

A contract of insurance or guarantee executed by the Secretary under this chapter shall be incontestable except for fraud or misrepresentation that the lender or any holder-

(1) has actual knowledge of at the time the contract or guarantee is executed; or

(2) participates in or condones.

( Pub. L. 87–128, title III, §308, Aug. 8, 1961, 75 Stat. 308 ; Pub. L. 87–798, Oct. 11, 1962, 76 Stat. 908 ; Pub. L. 89–240, §2(a), Oct. 7, 1965, 79 Stat. 932 ; Pub. L. 90–488, §6, Aug. 15, 1968, 82 Stat. 770 ; Pub. L. 92–133, Oct. 5, 1971, 85 Stat. 364 ; Pub. L. 101–624, title XXIII, §2388(a), Nov. 28, 1990, 104 Stat. 4052 ; Pub. L. 104–127, title VI, §605, Apr. 4, 1996, 110 Stat. 1086 .)

Editorial Notes

References in Text

This chapter, referred to in text, was in the original "this title", meaning title III of Pub. L. 87–128, Aug. 8, 1961, 75 Stat. 307 , known as the Consolidated Farm and Rural Development Act, which is classified principally to this chapter. For complete classification of title III to the Code, see Short Title note set out under section 1921 of this title and Tables.

Amendments

1996-Pub. L. 104–127 amended section generally. Prior to amendment, section read as follows: "Loans under this subchapter may be insured by the Secretary whenever funds are advanced or a loan is purchased by a lender other than the United States. In connection with insurance of loans, the Secretary-

"(1) is authorized to make agreements with respect to the servicing of loans insured hereunder and to purchase such loans on such terms and conditions as he may prescribe; and

"(2) may retain out of payments by the borrower a charge at a rate specified in the insurance agreement applicable to the loan.

Any contract of insurance executed by the Secretary under this subchapter shall be an obligation supported by the full faith and credit of the United States and incontestable except for fraud or misrepresentation of which the holder has actual knowledge."

1990-Pub. L. 101–624 redesignated pars. (a) and (b) as pars. (1) and (2), respectively, and in par. (1), substituted "prescribe;" for "prescribe,;".

1971-Pub. L. 92–133 eliminated October 1, 1971, as time limitation for insurance of loans.

1968-Pub. L. 90–488 authorized insurance of loans until Oct. 1, 1971, without the $450,000,000 limitation on aggregate amount in any one year.

1965-Pub. L. 89–240 substituted "$450,000,000" for "$200,000,000", "may retain" for "shall retain", and "specified in the insurance agreement applicable to the loan" for "determined by the Secretary from time to time equivalent to not less than one-half of 1 per centum per annum on the principal unpaid balance of the loan", and struck out "except that no agreement shall provide for purchase by the Secretary at a date sooner than three years from the date of the note" after "he may prescribe".

1962-Pub. L. 87–798 increased aggregate amount of loans that may be insured in any one year from $150,000,000 to $200,000,000.