FUNDS HELD

All Funds Held accounts earn the following interest rate – up to the bill rate for the associated loan:
4.50% effective Dec 1, 2022
  • Maximize your return on cash by using your farm real estate loan's unique Funds Held account feature
  • Advance payments on your farm real estate loan can be placed in your Funds Held account to earn interest until they are automatically applied to your next loan payment.
  • This can effectively reduce your cost of borrowing

 

                                                                                      Funds Held Disclosure 

Farm Credit Illinois (FCI) offers a Voluntary Advance Conditional Payment Program (known as “Funds Held”) that provides certain borrowers with the opportunity to make advance payments on designated loans in compliance with FCA Regulation 614.4175. 

Objective

FCI offers this program for the benefit and convenience of borrowers who desire to make advance payments. The following terms and conditions apply to all Funds Held unless the loan agreement or related documents between FCI and the borrower provide for other limitations. FCI reserves the right, in its discretion, to change these terms and conditions of the Funds Held Program, or terminate the Funds Held Program in its entirety, at any time. 

Eligibility

The Funds Held Program is not available on loans of $10 million and greater, or on short term loans. Some stockholders may be excluded from eligibility in the Funds Held Program as a condition of loan approval. Other restrictions also may apply.

Advance Payment Application

Advance payments received on a loan participating in Funds Held before the loan has been billed will normally be placed in Funds Held, to be applied against the next installment or other related charges on the installment due date. This is subject to any rights that FCI may have to apply such payments in a different manner as specified in loan documents governing designated loans.

Payments received on a loan participating in Funds Held after the loan has been billed will be directly applied to the installment due on the loan or other related charges and will not earn interest. Funds received in excess of the billed amount will be placed in Funds Held unless the borrowers have specified the funds to be applied as a special prepayment of principal or another application authorized by FCI.

When a loan installment becomes due, monies in Funds Held for the related loan(s) will be automatically applied toward the installment on the due date. Any accrued interest on the Funds Held will be applied first. If the balance in Funds Held does not fully satisfy the entire installment, the borrowers must pay the difference by the installment due date. Even though no payment on the related loan is due, FCI may apply funds from the Funds Held account without notice to the borrowers in the following circumstances:

• FCI may apply funds to satisfy an installment or other payment due on another loan to the same borrower.

• If borrowers fail to timely pay other obligations pursuant to their loan agreement or other loan documents, FCI may apply funds in the account to pay such obligations.

• If borrowers sell, assign, or transfer any interest in mortgage or deed of trust security for a loan, FCI may apply funds in the account against the remaining loan balance.

• If all borrowers on a loan are deceased, FCI may apply the Funds Held account to the remaining loan balance.

In the event of default by the borrower, FCI may apply Funds Held to the unpaid loan balance and other amounts due but shall return any excess to the borrower.

Account Maximum

The amount in Funds Held may not exceed the unpaid principal balance on the related loan(s) and may be limited by other restrictions.

Interest Rate on Funds Held

Interest will accrue on Funds Held at a rate determined by FCI, but the rate may never exceed the interest rate charged on the related loan. Interest on Funds Held (exclusive of funds applied directly to billed amounts) will normally accrue from the date of receipt of the funds until the date the funds are applied to the loan against an installment due or other related charges. FCI may change the interest rate from time to time, and may provide for a different interest rate for different categories of loans. Currently, funds in a Funds Held account earn a rate of interest equal to the lesser of: (i) the interest rate charged on the related loan; and (ii) 0.50% over the upper limit of the Federal Funds target range. For example, if the Federal Funds target range is 3.00%-3.25%, the rate of interest paid on funds in a Funds Held account would be (i) equal to the interest charged on the related loan if the loan interest rate is 3.75% or less; or (ii) 3.75% if the related loan has an interest rate greater than 3.75%.

Typically, when a change in the Federal Funds target range results in a change to the rate of interest paid on Funds Held under the foregoing formula, FCI will adjust the interest rate paid on Funds Held on the first day of the month following a change in the Federal Funds target range. However, if the change in the Federal Funds target rate occurs near the end of a month, the adjustment to the Funds Held rate may not occur until the first day of the second month following the change in the Federal Funds target rate. 

Withdrawal of Funds

Funds in a Funds Held account may be withdrawn, upon request, on one or more occasions by any party directly liable on the related loan for an eligible loan purpose in lieu of increasing the borrower’s loan. Withdrawals from Funds Held are limited to 12 withdrawals per year. The minimum withdrawal amount is the lesser of $500 or the remaining balance.

Uninsured Account and Liquidation

Funds Held is not a depository account and is not insured. In the event of the liquidation of FCI, all borrowers having funds in Funds Held shall be notified in accordance with FCA Regulation 627.2735. The notice shall advise that the funds ceased earning interest when the receivership was instituted, and the funds will be applied against the outstanding indebtedness of any loans of such borrower unless, within 15 days of such notice, the borrower directs the receiver to otherwise apply such funds in the manner provided for in existing loan documents. 

Termination

If FCI terminates the Funds Held program, account balances may be applied to the loan balance, and any remaining excess funds will be refunded to the Borrower. 

Questions

Please direct any questions regarding Funds Held to your local Farm Credit Illinois representative.

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