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B-223816 1 (1988-06-17)

handle is hein.gao/gaobadncz0001 and id is 1 raw text is: The Comptroller General of the United States Washington, D.C. 20548 Decision Farmers Home Administration - Authority to Matter of: Terminate Accrual of Interest File: B-223816 Date: June 17, 1988 DIGEST The Farmers Home Administration (FmHA) appears to have broad statutory authority that would allow it to terminate the accrual of interest on the guaranteed portion of defaulted loans. However, under the regulations FmHA has promulgated to implement its statutory authority, FmHA may only terminate the accrual of interest on loans in limited circumstances if the borrower is eligible for such a debt reduction in accordance with the applicable regulatory requirements. DECISION This decision is in response to a request from the Adminis- trator of the Farmers' Home Administration (FmHA) for a decision from our Office as to FmHA's authority to administratively terminate interest accrual on the guaranteed portion of defaulted loans in certain circum- stances. While it is our view, for the reasons set forth hereafter, that FmHA does have statutory authority that would allow it to terminate the accrual of interest on defaulted loans in the circumstances cited, we believe its authority to do so has been restricted by the regulations it has adopted to implement the statute. Under those regula- tions, FmHA may only terminate the accrual of interest on a loan in limited circumstances if the borrower is eligible for such a debt reduction in accordance with the applicable requirements set forth in the regulations. BACKGROUND FmHA has been approving requests from its state offices to terminate the accrual of interest on the guaranteed portions of defaulted loans. FmHA has been adhering to this policy on an administrative basis in order to make the Business and Industry Division of FmHA function in a manner consistent with the private sector. After questions were raised about the legality of the practice by the Office of General Counsel of the Department of Agriculture, FmHA

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