KENT CONRAD. PAGE 3. A companion bill in the House is sponsored by Congressmen Dorgan, Marlenee, Penny, Jeffords, Stallings, McDade, Glickman, Sikorsky, Sabo, and Kastenmeier. We know that the agricultural boom of the 1970's has 1980's. But, I am agency has coped SO given way to economic ruin in the particularly disappointed that the inadequately with this crisis. While commercial bankers are working to keep viable farmers in business, the agency continues to push farmers into liquidation and bankruptcy, imposing unnecessary human suffering and wasteful budget costs on the Federal government, farmers and rural communities. While the agency advocates the guaranteed loan program as an innovative new step to modernize FmHA, its application varies from county-to-county, and many banks find it cumbersome and nearly unworkable. We are faced with very serious problems. Το address these problems we need to answer some questions: Where do we want to go from here? Who do we want to own the land? What is the future of rural communities? Do we have to write them off or can we revitalize the economies of rural communties? KENT CONRAD. Page 4. Most importantly for this hearing, what role can Fm HA play in rural revitalization? Should FmHA merely be a repository of past loans trying to serve farmers who bought land at the wrong time? Or, should FmHA be reformed and modernized to face this crisis, to play a positive role, to help young and re-entering farmers to make a new beginning? The Rural America does not have to be turned into factory farms with absentee Owners and hired workers. family-size farm is still the most efficient. The challenge is to develop policies which revitalize family farming. FmHA is facing a crisis. Agriculture is in a great difficulty in meeting the recession. FmHA has had challenge. Today we will hear the testimony of FmHA experts; farmers, bankers, those who have fought to help farmers, and the Honorable Vance Clark, Administrator of FmHA. Before we begin with our first witnesses, let me provide a brief summary of S. 1179, "The Farmers Home Administration Reform and Modernization Act of 1987." KENT CONRAD. PAGE 5. Section 1 requires the Secretary to write down farm operating and ownership loans to the market value of the collateral when doing so would return at least as much to the Federal government as liquidation or bankruptcy proceedings.. Section 2 and Section 3 provide standards for loan servicing eligibility and loan servicing reform. It requires FmHA to notify the borrower of all loan servicing options. Much of this section may now be moot due to recent court rulings. Section 4 provides for reform of the county committee election procedure. Section 5 provides for a formal appeals procedure similar to that of other federal agencies. Section 6 requires FmHA to participate in credit dispute resolutions as required by various state laws and directs the Secretary to follow a specified preference order in selling acquired land. Section 7 sets out certain standards for the leaseback of land to the former owner or owners. Section 8 requires the Secretary to release borrower income sufficient "to assure a reasonable standard of living for the borrower and the borrower's family" and "to pay all necessary farm operating expenses." Administration Policy Boards" elected by county committees to analyze and Oversee the effects of Federal and State FmHA policies and to determine the level of lending needed by farmers of the various States. This bill was developed to address serious and growing problems in the administration of the Farmers Home Administration and to provide a stronger role for the agency in a rural economic revitalization. SENATORS KENT CONRAD, TOM DASCHLE, AND TOM HARKIN S. 1179 THE FARMERS HOME ADMINISTRATION REFORM AND MODERNIZATION ACT OF 1987 Section by Section Summary SECTION 1. FARMERS HOME ADMINISTRATION DEBT SETTLEMENT. Section 1 requires the Secretary to write down farm operating and farm ownership loans to the market value of the collateral when doing so would return at least as much to the Federal government as liquidation or bankruptcy proceedings. It also provides for a speedier method by which the FmHA can service bank loan guarantees in default and will therefore encourage greater use of guarantees and provide FmHA greater flexibility. These provisions will help keep viable farmers on the land at no cost to the Federal government. It forces FmHA to do what most commercial farm banks have been doing for some time; i.e., cutting their losses and keeping those farmers who can survive and pay back their loans on the farm. The Small Business Administration has extensive and valuable experience with guaranteed bank loans. This proposal gives FmHA similar authority and should encourage more extensive use of the FmHA guarantee loan program, thus providing desperately needed credit to the agricultural sector. SECTION 2. LOAN SERVICING ELIGIBILITY & SECTION 3. LOAN These sections provide standards for loan servicing eligibility and reform. It requires FmHA to notify the borrower of all loan servicing options and to provide means by which the borrower may apply for each alternative. These provisions are necessary to make borrowers aware of their rights and obligations under current law. The failure of FmHA to do so in the past has resulted in a class action suit which could reverse thousands of FmHA foreclosure actions taken over the past several years. |