Farmers Home Administration's Implementation of the Agricultural Credit Act of 1987 and Sales of Farm Inventory Property

GAO discussed the Farmers Home Administration's (FmHA) implementation of provisions concerning debt servicing and the sale of farm inventory properties. GAO noted that: (1) over one-third of the eligible delinquent borrowers qualified to either restructure their debts or pay FmHA the adjusted collateral value, and nearly all the remaining borrowers either did not apply for servicing or did not submit applications; (2) only 9 percent of the restructured borrowers had favorable financial potential for successful future farming operations, while the remaining 91 percent needed continued FmHA financial assistance; (3) FmHA allowed bad-faith borrowers to buy out their debt at the net recovery value of their collateral, and those borrowers were then eligible to reacquire their foreclosed properties; (4) FmHA was not required to consider unsecured assets in computing debt relief; and (5) future nondelinquent borrowers could seek Agricultural Credit Act assistance by becoming delinquent on their FmHA loans.