110 STAT. 1086 PUBLIC LAW 104-127—APR. 4, 1996 " SEC. 304. SOIL AND WATER CONSERVATION AND PROTECTION. " (a) IN GENERAL.—Loans"; (3) by striking "(2) In making or insuring" and inserting the following: "(b) PRIORITY.—In making or guaranteeing"; (4) by striking "(3) The Secretary" and inserting the following: "(c) LOAN MAXIMUM.— The Secretary"; (5) by redesignating subparagraphs (A) through (F) of subsection (a) (as amended by paragraph (2)) as paragraphs (1) through (6), respectively; and (6) by redesignating subparagraphs (A) and (B) of subsection (c) (as amended by paragraph (4)) as paragraphs (1) and (2), respectively. SEC. 604. INTEREST RATE REQUIREMENTS. Section 307(a)(3) of the Consolidated Farm and Rural Development Act (7 U.S.C. 1927(a)(3)) is amended— (1) in subparagraph (B), by inserting "subparagraph (D) and in" after "Except as provided in"; and (2) by adding at the end the following: "(D) JOINT FINANCING ARRANGEMENT.— If a direct farm ownership loan is made under this subtitle as part of a joint financing arrangement and the amount of the direct farm ownership loan does not exceed 50 percent of the total principal amount financed under the arrangement, the interest rate on the direct farm ownership loan shall be at least 4 percent annually.". SEC. 605. INSURANCE OF LOANS. Section 308 of the Consolidated Farm and Rural Development Act (7 U.S.C. 1928) is amended to read as follows: "SEC. 308. FULL FAITH AND CREDIT. "(a) IN GENERAL. —^A contract of insurance or guarantee executed by the Secretary under this title 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 title 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.". SEC. 606. LOANS GUARANTEED. Section 309(h) of the Consolidated Farm and Rural Development Act (7 U.S.C. 1929(h)) is amended by adding at the end the following: "(4) MAXIMUM GUARANTEE OF 90 PERCENT.—Except as provided in paragraphs (5) and (6), a loan guarantee under this title shall be for not more than 90 percent of the principal and interest due on the loan. " (5) REFINANCED LOANS GUARANTEED AT 95 PERCENT. — The Secretary shall guarantee 95 percent of— "(A) in the case of a loan that solely refinances a direct loan made under this title, the principal and interest due on the loan on the date of the refinancing; or
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