Farmers Home Administration

In deciding on about 7,700 appeals of Farmers Home Administration (FmHA) loan or loan-servicing decisions, hearing officers ruled that lending officials had not made correct decisions in about 40 percent of the cases. As a result, FmHA must reconsider such applications and again decide whether to offer the appellants loans or loan servicing. GAO estimates that nearly half of the 2,900 appellants whose cases were remanded received at least part of their requested loans or loan servicing. FmHA reconsidered and denied loans or loan servicing for 19 percent of the appellants. Another 14 percent did not receive loans or loan servicing because they had rejected FmHA's offers. Actions for the remaining 18 percent of the appellants were still pending at the time of GAO's review. Although FmHA regulations generally specify time frames for completing actions on initial loan and loan-servicing applications, the agency has not set deadlines for completing actions on remanded decisions. GAO estimates that only 34 percent of the appellants who received loans and loan servicing had their appeals processed in a timely way. Appellants' not providing information in a timely manner was the main reason cited by FmHA officials for the delays.

GAO found that: (1) of the 680 remanded loanmaking appeals, an estimated 41 percent of appellants received at least part of the requested loan, 26 percent were denied loans because they were unable to repay loans, and 26 percent did not receive loans because of their own actions; (2) of the 2,220 remanded loan-servicing appeals, 52 percent of the appellants received loan-servicing action, 17 percent were denied services because of their inability to pay the restructured debt, and 10 percent were denied because of their own actions; (3) while FmHA established time frames for loanmaking and initial loan-servicing applications, FmHA did not establish time frames for loanmaking and loan-servicing appeals that are remanded to county offices; (4) approximately 79 percent of appellants waited more than 60 days after their applications were remanded before receiving loans, and 64 percent waited 90 days or longer before loan servicing actions were completed; (5) reasons for delays in completing actions on remanded loanmaking and loan-servicing cases involved appellants providing untimely and insufficient information, untimely FmHA application approval, unavailable funds at the time of approval, and unclear communications between loan officers and appellants; and (6) FmHA managers cannot effectively oversee timely resolution of appeals because the appeals decisions tracking system's categorization of the status of appeals is inaccurate.

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.

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