Federal Agricultural Mortgage Corporation:

GAO Actions to Meet Requirements in the Agricultural Credit Act of 1987

RCED-90-90: Published: Jan 5, 1990. Publicly Released: Jan 5, 1990.

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Pursuant to a legislative requirement, GAO provided information on the Federal Agricultural Mortgage Corporation (FAMC), established to provide more lending capacity for farm real estate and rural housing and more long-term credit for farmers and ranchers at stable interest rates, focusing on: (1) program development and status; (2) agricultural real estate secondary market issues; and (3) legislative requirements for GAO studies and reviews of FAMC.

GAO found that: (1) FAMC expected to be operational by early 1990; (2) the FAMC Board of Directors timely submitted standards for underwriting, security appraisal, repayment, loan pool composition, and certification for congressional review; and (3) FAMC was developing a securities guide that detailed program operating procedures and market participants' responsibilities. GAO also found that its previous reviews of agricultural real estate secondary market issues identified several key issues regarding the development of: (1) a new secondary market for agricultural real estate loans, concerning federal government involvement, market impact on the Farm Credit System and other lenders, the Farm Credit System's role, and appropriate types of loans; and (2) underwriting standards, concerning the act's geographical and agricultural commodity diversity requirements, real estate appraisals, exceptions to the standards, consistency of financial information, loan pool composition, and rural housing. GAO noted that, when FAMC became operational, it planned to conduct studies and reviews concerning: (1) the FAMC securities guide, intended to address several of the GAO-identified issues and concerns; (2) FAMC implementation of the act's provisions; (3) FAMC effects on producers, the Farm Credit System, other lenders, and capital markets; (4) annual reviews of actuarial soundness and fees; and (5) annual financial audits.

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