Farmers Home Administration

Pursuant to a congressional request, GAO reviewed the Farmers Home Administration's (FmHA) new process for handling and resolving appeals of loan making and servicing decisions, focusing on FmHA: (1) implementation of the process and its treatment of minorities; and (2) farmer and rural housing program decisions in Arkansas, Mississippi, and Texas.

GAO found that: (1) individuals in Arkansas, Mississippi, and Texas, from July 12, 1988, through December 31, 1989, filed 918 appeals involving FmHA farm program loan decisions and 451 appeals involving rural housing program loan decisions; (2) 64 percent of the 918 farmer program loan appeals were heard by FmHA appeals officials, 21 percent were concluded or withdrawn without a hearing, and 15 percent had hearings pending; (3) hearing officers reversed or modified 50 percent of those cases; (4) 58 percent of the 451 rural housing loan program appeals had been heard by FmHA appeals officials, 34 percent were concluded or withdrawn without a hearing, and 8 percent had hearings pending; (5) hearing officers reversed or modified 46 percent of those cases; (6) 677 of the 850 appeals that went to hearings exceeded the 45-day standard for appeals processing, with farmer program loan appeals taking 122 days for a hearing and rural housing program loan appeals taking 75 days; (7) hearing offices issued decisions on 52 percent of the 350 appeals filed by minorities and on 58 percent of the 1,019 appeals filed by nonminorities; and (8) overall rates of reversals for minorities and nonminorities were comparable, with 43 percent of prior loan decisions involving minorities reversed and about 50 percent involving nonminorities reversed.