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1 1 (May 16, 1996)

handle is hein.crs/crsaafc0001 and id is 1 raw text is: 96-431 ENR May 16, 1996 Credit Provisions of the Enacted 1996 Farm Bill Ralph M. Chite Specialist in Agricultural Policy Environment and Natural Resources Policy Division Summary The Federal Agricultural Improvement and Reform Act of 1996 (P.L. 104-127, the 1996 farm bill), which was signed into law on April 4, 1996, contains a credit title (Title VI) that directly affects eligibility for USDA farm loans and the servicing of its delinquent loans. Among its provisions, the credit title eliminates a requirement that USDA provide operating loans to farm borrowers who are delinquent on previous loans; denies new farm loans to any borrower who had a delinquent loan on which the debt was forgiven; reduces the mandated period USDA must wait to notify borrowers that they are delinquent and to inform them of their loan servicing options; continues the shift in USDA lending resources from direct loans to guaranteed loans; and expedites the sale of acquired USDA farm property. A provision in the omnibus FY1996 appropriations and rescissions bill (P.L. 104-134) enacted on April 26, 1996, waives the farm bill's tighter qualifications for new USDA farm loans for any applicant who is less than 90 days delinquent and submitted a loan application before April 5, 1996. However, subsequent loan applications are subject to the tighter provisions in the credit title. Background The U.S. Department of Agriculture through its Farm Service Agency (and formerly through its Farmers Home Administration (FmHA)) serves as the Federal lender of last resort to eligible family-sized farmers whose financial condition is too weak to permit them to obtain commercial credit. The Consolidated Farm and Rural Development Act (P.L. 87-128) as amended provides statutory authority for all USDA farm lending programs. USDA has the budgetary authority to provide both direct and guaranteed loans to eligible farmers. Direct loans are made and serviced by USDA. Guaranteed loans are made by a private lender such as a commercial bank or the cooperatively-owned Farm Credit System. USDA guarantees the lender the timely repayment of the interest and 90 percent of the principal on the loan. USDA's primary farm loan programs are: 1) farm ownership loans (direct and guaranteed) -- for acquiring, enlarging, or improving farms; 2) farm operating loans (direct Congressional Research Service o*o The Library of Congress CRS Report for Congress Received through the CRS Web

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