High Risk Series

In 1990, GAO began a special effort to identify federal programs at high risk of waste, fraud, abuse, and mismanagement. GAO issued a series of reports in December 1992 on the fundamental causes of the problems in the high-risk areas. This report on farm loan programs is part of the second series that updates the status of this high-risk area. Readers have the following three options in ordering the high-risk series: (1) request any of the individual reports in the series, including the Overview (HR-95-1), the Guide (HR-95-2), or any of the 10 issue area reports; (2) request the Overview and the Guide as a package (HR-95-21SET); or (3) request the entire series as a package (HR-95-20SET).

GAO found that: (1) although FmHA has taken steps to correct some problems in its farm loan programs such as providing credit and financial analysis training to field officers to improve the quality of loans, it has not addressed many basic problems in its farm loan programs; (2) FmHA field office officials have significantly improved their compliance with FmHA loan servicing standards, but these field officials still fail to follow established procedures for servicing outstanding direct loans and managing farm properties; (3) FmHA continues to allow delinquent and defaulted borrowers to receive new loans, reduce and forgive delinquent borrowers' outstanding debt without requiring payments, and sell farm properties at fixed prices to targeted purchasers; and (4) in 1992, Congress required FmHA to establish programs for beginning farmers and target a certain portion of its loans to them, but it did not provide FmHA with clear guidance on how to be a fiscally prudent lender while providing temporary credit assistance to high risk borrowers.