Farmers Home Administration:

Emergency Loan Processing Procedures in Stanislaus County, California

CED-80-64: Published: Mar 3, 1980. Publicly Released: Apr 4, 1980.

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The Farmers Home Administration (FmHA) Emergency Loan Program is administered by FmHA county offices located throughout the United States. The program's basic objective is to provide financial assistance to farmers after they have sustained severe losses as a result of a disaster. An audit of the FmHA Emergency Loan Program was undertaken to determine whether the loan processing regulations governing the awarding of loans under the program contain deficiencies which permit abuses or inappropriate use of taxpayers' dollars. The audit was limited to loans made by the FmHA Office in Stanislaus County, CA. All emergency loan applications received at the Stanislaus County office in fiscal year 1979 were reviewed, and the procedures for loan processing were discussed with the FmHA County Supervisor and FmHA officials at the State and national offices.

The Stanislaus County FmHA office processed emergency loan applications in a consistent manner and without giving preference to any applicant. However, certain loan processing procedures need to be strengthened to ensure that the amount loaned accurately reflects the amount of the loss resulting from the disaster. Problems which exist at the Stanislaus County FmHA office are: (1) emergency major adjustment loans do not always reflect just the funds needed to recover from the damage caused by the disaster as amounts are often included which help alleviate problems that existed prior to the disaster; (2) procedures for calculating normal year crop production reward the less efficient farmers by permitting them to use county average figures to achieve a higher percentage loss even when available data show the farmer has not in the past achieved the county averages; (3) applicants are not required to provide documented support for the claimed amount of disaster year crop loss, and (4) incomplete information on the financial status of an applicant can result in the FmHA spending a great deal of additional time processing an application.

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