Profile: Federal Agricultural Mortgage Corp (AGMa.N)

The Federal Agricultural Mortgage Corporation (Farmer Mac) is a stockholder-owned, federally chartered corporation that combines private capital and public sponsorship to serve a public purpose. Farmer Mac was created to establish a secondary market for agricultural real estate and rural housing mortgage loans. This secondary market was designed to increase the availability of long-term credit at stable interest rates to America’s rural communities, farmers, ranchers and rural homeowners and to provide those borrowers with the benefits of capital markets pricing and product innovation. It conducts these activities through three programs: Farmer Mac I, Farmer Mac II and Rural Utilities. The loans eligible for the Farmer Mac secondary market include mortgage loans secured by liens on agricultural real estate and rural housing (encompassing the Farmer Mac I program); certain agricultural and rural loans guaranteed by the United States Department of Agriculture (encompassing the Farmer Mac II program), and loans to finance electrification and telecommunications systems in rural areas (encompassing the Rural Utilities program). As of December 31, 2011, the total outstanding amount of the eligible loans included in all of Farmer Mac’s programs was $11.9 billion.

Farmer Mac I

Under the Farmer Mac I program, Farmer Mac purchases eligible mortgage loans secured by first liens on agricultural real estate assumes, for a fee, the credit risk on agricultural real estate. Farmer Mac also guarantees securities representing interests in, or obligations secured by, pools of eligible mortgage loans secured by first liens on agricultural real estate. The securities guaranteed by Farmer Mac under the Farmer Mac I program are referred to as Farmer Mac I Guaranteed Securities. To be eligible for the Farmer Mac I program, loans must meet Farmer Mac's credit underwriting, collateral valuation, documentation and other specified standards that are discussed in Business-Farmer Mac ProgramsFarmer Mac I. As of December 31, 2011, outstanding Farmer Mac I loans held by Farmer Mac and loans that either backed Farmer Mac I Guaranteed Securities or were subject to LTSPCs in the Farmer Mac I program totaled $8.1 billion.

Farmer Mac II

Under the Farmer Mac II program, Farmer Mac's subsidiary, Farmer Mac II LLC, purchases the portions of certain agricultural, rural development, business and industry, and community facilities loans guaranteed by the USDA pursuant to the Consolidated Farm and Rural Development Act (7 U.S.C. 1921 et seq.) (USDA-guaranteed portions or USDA Guaranteed Securities). Farmer Mac II LLC also purchases USDA-guaranteed portions and issues securities to third parties backed by those USDA-guaranteed portions that are guaranteed by Farmer Mac (Farmer Mac II Guaranteed Securities). As of December 31, 2011, outstanding USDA Guaranteed Securities and Farmer Mac II Guaranteed Securities totaled $1.5 billion.

Rural Utilities

Farmer Mac's authorized activities under this program are similar to those conducted under the Farmer Mac I program-loan purchases, guarantees of securities (Farmer Mac Guaranteed Securities - Rural Utilities) and issuance of LTSPCs-with respect to eligible rural utilities loans. To be eligible for the Rural Utilities program, loans must meet Farmer Mac's credit underwriting and other specified standards that are discussed in Business-Farmer Mac Programs-Rural Utilities. To date, Farmer Mac has not issued any LTSPCs with respect to rural utilities loans. As of December 31, 2011, the aggregate outstanding principal balance of rural utilities loans held and Farmer Mac Guaranteed Securities - Rural Utilities was $2.3 billion.

Farmer Mac Guaranteed Securities

Farmer Mac I Guaranteed Securities, Farmer Mac II Guaranteed Securities and Farmer Mac Guaranteed Securities - Rural Utilities are sometimes collectively referred to as Farmer Mac Guaranteed Securities. The assets underlying Farmer Mac Guaranteed Securities include loans or USDA-guaranteed portions eligible under one of Farmer Mac's programs and and general obligations of lenders secured by pools of eligible loans. The Corporation guarantees the timely payment of principal and interest on the resulting Farmer Mac Guaranteed Securities. Farmer Mac may retain Farmer Mac Guaranteed Securities in its portfolio or sell them to third parties. AgVantage is a registered trademark of Farmer Mac used to designate Farmer Mac's guarantees of securities related to general obligations of lenders that are secured by pools of eligible loans. AgVantage securities are issued under the Farmer Mac I and Rural Utilities programs.