Farmers Home Administration:

Information on Agricultural Credit Provided to Indians on 14 Reservations

RCED-87-79BR: Published: Mar 11, 1987. Publicly Released: Mar 24, 1987.

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In response to a congressional request, GAO provided information on Farmers Home Administration (FmHA) and Indian Tribal Land Acquisition Program (ITLAP) loans to Indians located on 14 reservations, specifically: (1) statistics on past, current, and predicted losses of land that Indian borrowers pledged as security; (2) options available to help Indians avoid the loss of reservation land; (3) historical information on ITLAP use and tribal interest in its future use; and (4) the working relationship between FmHA and the Bureau of Indian Affairs (BIA) in issuing, servicing, and foreclosing on farm loans to Indians and their views on shifting FmHA functions to BIA.

GAO found that, as of July 1986: (1) 370 borrowers on 12 of the 14 reservations had pledged 351,166 acres to FmHA as loan security; (2) the loans were worth nearly $49 million in unpaid principal and interest; (3) 144 of the 370 borrowers were either in the process of or were predicted to be at risk of foreclosure or voluntary conveyance and could lose 132,068 acres of reservation land; and (4) the potential loss of land ranged from a low of zero percent on one reservation to a high of 75 percent on another. GAO noted that there were options available to help Indians avoid the loss of reservation land, such as interest rate adjustment and the revision of loan repayment schedules; however, once a borrower fell significantly behind in payments, there were very few options to help him avoid collateral loss, since FmHA did not have special options for Indian borrowers. GAO also found that: (1) 10 of the 14 tribes participated in ITLAP, which authorized FmHA to make loans to tribes and tribal corporations to purchase land within their reservations, and borrowed about $52 million to purchase 621,281 acres; (2) tribes valued ITLAP as a means to expand their tribally owned land base, and 12 of the 14 tribes would use it in the future; (3) FmHA state and county offices and BIA agency offices established working agreements to assist them in dealing with Indian borrowers; and (4) both FmHA and BIA expressed negative views about shifting FmHA functions to BIA.

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