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Farmers Home Administration: The Guaranteed Farm Loan Program Could Be Managed More Effectively

RCED-95-9 Published: Nov 16, 1994. Publicly Released: Nov 16, 1994.
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Highlights

GAO reviewed the Farmers Home Administration's (FmHA) guaranteed farm loan program, focusing on: (1) the extent of losses under the guaranteed loan program compared with those under the FmHA direct loan program; (2) the extent to which the guaranteed loan program has graduated FmHA direct loan borrowers to commercial credit; and (3) ways to make the guaranteed farm loan program more of a source for funding direct loan borrowers.

Recommendations

Recommendations for Executive Action

Agency Affected Recommendation Status
Department of Agriculture To ensure that FmHA effectively implements the congressionally directed plan for using guaranteed loans as an interim step in moving direct loan borrowers to commercial credit without a guarantee, the Secretary of Agriculture should direct the Administrator, FmHA, to develop and implement a plan to ensure that county office supervisors assign accurate loan classifications to all new direct loan borrowers.
Closed – Not Implemented
The agency does not plan to develop a plan for ensuring accurate loan classifications. Instead, it stated that it will continue to emphasize that field offices comply with current requirements for classifying new borrowers' loans.
Department of Agriculture To ensure that FmHA effectively implements the congressionally directed plan for using guaranteed loans as an interim step in moving direct loan borrowers to commercial credit without a guarantee, the Secretary of Agriculture should direct the Administrator, FmHA, to develop and implement a plan to ensure that county office supervisors promptly update loan classifications as borrowers' financial conditions change.
Closed – Not Implemented
Following passage of the 1996 Farm Bill, which had related graduation and use of guaranteed loan provisions, the agency issued regulations that implement the intent of this recommendation. Therefore, this recommendation is no longer applicable.
Department of Agriculture To ensure that FmHA effectively implements the congressionally directed plan for using guaranteed loans as an interim step in moving direct loan borrowers to commercial credit without a guarantee, the Secretary of Agriculture should direct the Administrator, FmHA, to develop and implement a plan to ensure that county office supervisors adequately evaluate each direct loan borrower listed annually for graduation potential to identify and graduate those borrowers who qualify for guaranteed loans or commercial credit.
Closed – Implemented
Following passage of the 1996 Farm Bill, which had related graduation and use of guaranteed loan provisions, the agency issued regulations that implement the intent of this recommendation. Therefore, this recommendation is no longer applicable.

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Topics

Direct loansEligibility determinationsFarm creditFarm income stabilization programsFarm subsidiesGovernment guaranteed loansLending institutionsLoan defaultsLossesRisk management