Farmers Home Administration:

Final Resolution of Farm Loan or Servicing Appeals

RCED-93-28: Published: Feb 10, 1993. Publicly Released: Feb 10, 1993.

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Pursuant to a congressional request, GAO reviewed the final resolution of appeals of Farmers Home Administration (FmHA) loan decisions to determine whether appellants received loans: (1) they requested after FmHA lending decisions were remanded for reconsideration; and (2) and loan servicing in a timely manner.

GAO found that: (1) of the 680 remanded loanmaking appeals, an estimated 41 percent of appellants received at least part of the requested loan, 26 percent were denied loans because they were unable to repay loans, and 26 percent did not receive loans because of their own actions; (2) of the 2,220 remanded loan-servicing appeals, 52 percent of the appellants received loan-servicing action, 17 percent were denied services because of their inability to pay the restructured debt, and 10 percent were denied because of their own actions; (3) while FmHA established time frames for loanmaking and initial loan-servicing applications, FmHA did not establish time frames for loanmaking and loan-servicing appeals that are remanded to county offices; (4) approximately 79 percent of appellants waited more than 60 days after their applications were remanded before receiving loans, and 64 percent waited 90 days or longer before loan servicing actions were completed; (5) reasons for delays in completing actions on remanded loanmaking and loan-servicing cases involved appellants providing untimely and insufficient information, untimely FmHA application approval, unavailable funds at the time of approval, and unclear communications between loan officers and appellants; and (6) FmHA managers cannot effectively oversee timely resolution of appeals because the appeals decisions tracking system's categorization of the status of appeals is inaccurate.

Recommendations for Executive Action

  1. Status: Closed - Not Implemented

    Comments: While the agency generally agrees with the recommendations, it has not acted on them.

    Recommendation: To further improve the management of the agency's loan programs and results of its appeals process, the Secretary of Agriculture should direct the Administrator, FmHA, to develop specific time standards for completing actions on remanded loanmaking and loan-servicing decisions.

    Agency Affected: Department of Agriculture

  2. Status: Closed - Implemented

    Comments: FmHA clarified the language in its decision letters as recommended.

    Recommendation: To help ensure timely actions on remanded decisions, the Secretary of Agriculture should direct the Administrator, FmHA, to clarify the National Appeals Staff hearing officers' decision letters to specify the responsibilities of and actions required by FmHA lending officials and appellants.

    Agency Affected: Department of Agriculture

  3. Status: Closed - Not Implemented

    Comments: No action has been taken by the agency.

    Recommendation: To help ensure that FmHA managers can effectively oversee the timely resolution of remanded appeal decisions, the Secretary of Agriculture should direct the Administrator, FmHA, to clearly define each of the status categories in the Implementation of Reversed and Modified Appeals Decisions (IRMAD) system.

    Agency Affected: Department of Agriculture

 

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