Issues Surrounding the Role and Mission of the Farmers Home Administration's Farm Loan Programs

Gao ID: T-RCED-90-22 January 25, 1990

GAO discussed its examination of the Farmers Home Administration's (FmHA) farm loan programs. GAO noted that: (1) delinquent borrowers held about half of the $23 billion in outstanding direct loan principal in the FmHA farm loan portfolio; (2) the FmHA farm loan programs had several material internal accounting control weaknesses involving inaccurate and incomplete property tracking information and an incomplete system for recording acquired property, and lacked a methodology for estimating loan losses; (3) FmHA lending policies resulted in the provision of loans to borrowers who were unable to repay them and who subsequently required extensive loan servicing; (4) FmHA has become a continuous source of subsidized credit, rather than a source of temporary credit, for many borrowers; and (5) FmHA generally made guaranteed loans to existing commercial lenders and shifted few direct farm loan borrowers to guaranteed loans.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

Director: John W. Harman Team: General Accounting Office: Resources, Community, and Economic Development Division Phone: (202) 512-5138


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