Farm Finance:

Legislative Proposals for Secondary Markets for Farm Real Estate Loans

RCED-87-172FS: Published: Jul 2, 1987. Publicly Released: Jul 2, 1987.

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In response to a congressional request, GAO provided information on nine legislative proposals to create an active secondary market for agricultural real estate loans.

GAO found that: (1) the proposals would all require some level of government involvement; (2) three proposals would vest the responsibility of creating a secondary market with the Secretary of Agriculture, while the other six proposals would establish a federally chartered corporation as the secondary market institution; (3) of those six proposals, four would create the corporation within the Farm Credit System; (4) the government could incur direct financial liability, including initial funding, appropriated funds for stock purchases, or guarantees for loans and mortgage-backed securities traded in the market; and (5) although many of the proposals disclaim any government guarantee on the securities traded in the market, concern might remain over the government's implied backing resulting from the federal charter.

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