Farmers Home Administration

In response to a congressional request, GAO provided information on: (1) the extent to which Farmers Home Administration (FmHA) borrowers are continually delinquent on their farm loans; and (2) the implementation of the FmHA November 1985 revised loan-servicing regulations for delinquent farm borrowers.

GAO found that: (1) of the 261,000 total FmHA farm borrowers, 50,033 were continually delinquent and 34,600 accounted for 78 percent of the $6.8 billion in delinquent payments owed as of June 30, 1986; (2) of the 50,033 delinquent borrowers, 8,043 had discontinued or were discontinuing farming as of July 1986 and 41,983 were still actively farming; (3) 25,441 of the delinquent borrowers who were actively farming had not made a loan payment on at least one loan since 1983 or earlier and 1,364 had never made a payment on any of their FmHA loans; (4) 63 percent of the total delinquent amounts owed by the 41,983 active delinquent borrowers was for emergency disaster loans; (5) FmHA had sent about 2,500 loan-servicing notices to farm borrowers with loan defaults in Missouri who accounted for $147.5 million in delinquent payments; (6) of 191 Missouri borrowers studied, 22 had loan defaults resolved through FmHA servicing actions, 15 had resolved loan defaults on their own, and 68 had liquidated or were liquidating their farm operations; (7) the majority of the 14,649 farmers who became FmHA direct-loan borrowers from June 1985 to June 1986 were financially stressed, having an average debt-to-asset ratio of 70.6 percent, while all other existing FmHA farm borrowers had an average debt-to-asset ratio of 88.6 percent; and (8) the Department of Agriculture's Economic Research Service stated that farmers with debt-to-asset ratios above 70 percent generally have problems meeting their interest and principal repayments, resulting in many of the farms becoming insolvent.