Farm Loans: Actions Needed to Safeguard Taxpayers' Interests (Testimony,
03/31/95, GAO/T-RCED-95-147).

The Farmers House Administration's (FmHA) farm loan program has
generated huge losses--$12.5 billion during fiscal years 1989-94. About
98 percent of the losses, or $12.2 billion, have occurred in the direct
loan program.  Additional substantial losses can be expected because
delinquent borrowers held about 26 percent of the agency's $18 billion
direct and guaranteed loan portfolio as of September 1994.  Several
factors have contributed to the direct farm loan program's financial
vulnerability.  First, FmHA's field offices have not consistently
implemented lending, servicing, and property management standards
intended to protect the government's interests.  Second, some of FmHA's
loan policies expose the program to losses.  For example, a borrower can
obtain a new loan despite being delinquent on another loan.  A third
source of problems is conflicting program objectives.  FmHA's mission of
providing temporary credit to high-risk farmers is often at odds with
normal fiscal controls designed to minimize risk and financial losses.
GAO urges FmHA and Congress to strengthen loan policies as well as
clarify the agency's basic mission.

--------------------------- Indexing Terms -----------------------------

 REPORTNUM:  T-RCED-95-147
     TITLE:  Farm Loans: Actions Needed to Safeguard Taxpayers' Interests
      DATE:  03/31/95
   SUBJECT:  Farm credit
             Lending institutions
             Direct loans
             Government guaranteed loans
             Losses
             Risk management
             Loan defaults
             Taxpayers
             Farm income stabilization programs
IDENTIFIER:  FmHA Direct Farm Loan Program
             FmHA Guaranteed Farm Loan Program
             
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