Mr. CLARK. I am not sure we have that. We will be happy to give it to you.

Senator DASCHLE. Could you also, as you give us the figure, indicate the amount of land sold to buyers whose prime source of income is the farm and other buyers whose prime source of income is off the farm? Do you understand the question.

Mr. CLARK. Well, it would be easier to give it to you in surplus and eligible property. Would that meet your needs?

Senator DASCHLE. Yes, it would.

Mr. CLARK. We will be happy to give it to you.

[The following information was subsequently received by the committee:]

Mr. CLARK. We do not have a report with a break-down of this information but a recent limited survey of sales of farms from FmHA inventory during fiscal year 1986 and the first three months of fiscal year 1987 indicated that: 47.5 percent of the sales are to existing farmers, 17.1 percent of the sales are to new or beginning farmers and 35.4 percent of the sales are to other buyers which includes cash sales to individuals who derive their income from farming. Since they are cash sales, occupational information is not required concerning the buyer.

The number of farms sold during this period were 1,038; FmHA's average size farm in inventory is 291 acres; therefore, the total farms and acres sold to existing and beginning farmers during this period, is 671 farms totaling an estimated 195,261

acres.

Senator DASCHLE. The second question is the rationale for the second signature requirement?

Mr. CLARK. I am sorry?

Senator DASCHLE. Recently new regulations were proposed dealing with the second signature required of borrowers who may not own the land, who are renters and obtain a second signature of the landlord for an operating loan. What was the rationale for that? Why is the change required now.

Mr. CLARK. I am not aware of that happening, but we will be happy to look into that as well. I am not aware of that.

Senator DASCHLE. You are not aware that the Farmers Home is requiring borrowers who are renters to obtain a second signature of their landlord in operating loans?

Mr. CLARK. No.

Senator DASCHLE. So that must be a State requirement?

Mr. CLARK. No, it should not be. Our requirements are nationwide.

Senator DASCHLE. Could you get back to us?

Mr. CLARK. Would be happy to.

Senator DASCHLE. It has really caused a furor in South Dakota. I sure would be interested in finding out what the deal is.

Mr. CLARK. Be happy to. The landowner certainly should not have to sign it if he leases the land.

Senator DASCHLE. That is right.

Mr. CLARK. He is not responsible for that debt. The operator is. Senator DASCHLE. Well, that is happening. I would be interested if either of the other senators have heard complaints about it, but I have had that complaint. I have been home three times in the last month, and it is probably the most prominent complaint I am getting in South Dakota right now.

Mr. CLARK. Can you give me a county?

Senator DASCHLE. You bet. I can give you lots of counties. Lake County, Miner County, Beadle County.

Mr. CLARK. We will be happy to get back to you.

Senator DASCHLE. Thank you.

[The following information was subsequently received by the committee:]

Mr. CLARK. We have visited with our South Dakota State Office officials regarding Senator Daschle's complaint that FmHA was requiring borrowers who are renters to obtain the signature of their landlord on the note for operating loans. The South Dakota State officials are not aware of any such instance where a landlord was required to co-sign the note of the renter who was obtaining an FmHA loan. However, the State officials did advise of a clarification in the State Regulations which requires the spouse to sign the security agreement for chattel loans, this is a concern when one of the spouses has made application for a loan but the chattel property being pledged by the applicant/borrow is owned jointly by both spouses. The applicant/borrower is required to sign the note but the spouse is not required to sign the note, only the security agreement.

Senator CONRAD. If we can just quickly go through the other sections of the bill to get your reaction, Mr. Clark, to see if there are other areas of agreement. Section 7 sets out certain standards for the lease back of land to the former owner or owners. What is your reaction to that section, the farm lease back program?

Mr. CLARK. We are presently doing that, as I recall. That option to lease and buy back goes to the previous operator. Now if you want to carry that on to kin, I certainly would not have any objection to that.

Senator CONRAD. Section 8 requires the Secretary to release borrower income sufficient to assure a reasonable standard of living for the borrower and borrower's family, and to pay all necessary farm operating expenses. Do you have a reaction to section 8?

Mr. CLARK. We are doing that. That is part of our

Senator CONRAD. The problem is-you are doing it. But the problem is the tremendous difference from region to region within a State and region to region among States about what that policy is. If you have people staying to hear the testimony of others who will follow, you will hear, as we have heard, that there is a significant difference in the handling, that there is not some clear and consistent policy on that.

That is the reason this section is here.

Mr. CLARK. Our original documentation of that loan sets out those expenses that will be released when it comes to that point in

our

Senator CONRAD. So you do not have a problem with the notion of having some consistent handling of expenses?

Mr. CLARK. We think it is in place already.

Senator CONRAD. This is an area where there is clearly an enormous difference of perception. I hear it all the time. Section 9 provides direction to the Secretary in providing borrowers the opportunity to buy back the family farm homestead buildings, the so-called homestead provision. Do you have a problem with that?

Mr. CLARK. Again, we think the homestead provisions are adequate as they are. We are now allowing that to happen.

Senator CONRAD. Well, again, I tell you again, there is an enormous gap between what the professed policy is here and what we get back home.

Section 10 establishes a State Farmers Home Administration Policy Board elected by county committees to analyze and over see the effects of Federal and State FmHA policies and to determine the level of lending needed by farmers of the various States. This would be along the lines of the ASCS State board. That is the reason for it. It is basically to give the State director policy guidance, give him a sounding board.

Mr. CLARK. As a mandated issue, I do not think it should be in there. We now have an informal board in Iowa, for example, for just that reason. But when you get into making determinations of dollar allocations for loans, I think you are stirring up a big pot of trouble.

Senator CONRAD. No, no, no. We are talking about-no, we are not talking about that. We are talking about them determining, making a recommendation on how big the pot needs to be.

Mr. CLARK. Again, we have a board that we are piloting now in Iowa, and I would like to see the results of that.

Senator CONRAD. It works for ASCS. It would seem there would be no reason it could not be helpful, frankly, two ways, helpful to the Agency, helpful for the perception of the Agency among those it serves. That is the purpose, and I would urge you to take another look.

Let me just return to one other thing because I do not want to leave here without telling you, and getting this issue nailed down even further. We have had a lengthy discussion on the question of your testimony that S. 1179 is a $7.6 billion giveaway. I dispute that. I think that is terribly misleading given the fact that you acknowledge yourself that FmHA has already lost billions of the dollars which are delinquent. It is just a matter of when you take the writeoff, when you recognize it. And number two, I dispute the $7.6 billion since we are not talking about writing off the whole loan. We are talking about reducing it to market value when and if it would mean less of a loss to the Federal Government than foreclosure or liquidation. So, I want to make it very clear to all of those who are here, the fact is much of that $7.6 billion, which is delinquent, is gone.

Is there a breakdown, which you have readily available, on how delinquent the $7.6 billion is? How much of it is 4 years in arrears. How much of it is 3? How much? Could you give that to us here? Have you got those numbers?

Mr. CLARK. Yes, we do have that available. Again, as I pointed out earlier, the economic emergency loans that we made some years ago and the emergency disaster loans are the biggest segment and problem of that stressed portfolio. Of the $7.6 billion, 3 years or more, 75 percent of that debt is 3 years or more.

[The breakdown of delinquent amounts follow:]

Prepared by the Information Resources Management Division based on Report RC 616, 03/31/87

Senator CONRAD. Seventy-five percent of the $7.6 billion. So we are talking nearly $6 billion?

Mr. CLARK. That is right.

Senator CONRAD. Nearly $6 billion is delinquent more than 3 years. Well, S. 1179 is certainly not, as your testimony would indicate, going to cost us $7.6 billion then. The fact is, you have lost the lion's share of that already.

Mr. CLARK. Of that $7.6 over $4 billion are emergency loans. And I remind you, Senator, a lot of that is tied in with current operating commitments we have today.

Senator CONRAD. Well, I just want the record to be immanently clear, immanently clear, this bill is no $7.6 billion giveaway as your testimony would indicate. The fact is 75 percent of that is already, as you have testified, 4 years or more delinquent.

Mr. CLARK. Three years or more.

Senator CONRAD. Three years or more. Well, we all know as creditors what that means. And further, S. 1179 would not require writedowns except in those cases where the Government loses less. That makes good business sense to me. Well, thank you for your testimony, and as Senator Melcher said, let me tell you what the strategy is around here. We intend to take this bill, and after the hearing and after debate, make it part of the credit package through amendments.