The Farmers Home Administration (FmHA) has halted most sales of farmland from its 1.5 million-acre inventory and stopped farm foreclosure actions while it prepares new regulations ordered by Congress to protect borrowers' rights.
The expanded FmHA borrower protections, included by Congress last year in its $4 billion rescue package for the ailing Farm Credit System, were aimed at making major changes in the federal lending agency's controversial style.
Many of more than 65,000 farmers, delinquent on their loans last fall, could get a new lease on farming as a result of the changes, which will require FmHA to consider debt restructuring, writedowns and other steps to ease their stress.
Farmers against whom the FmHA has begun "acceleration," a step toward foreclosure or liquidation, will be notified this month of new provisions that will enable them to obtain up to $18,000- a-year living and operating expenses that the agency had been withholding previously from their loans.
The legislation was signed into law by President Reagan last month, although he complained about "new and unnecessary" spending it would entail.
Agency spokesman Marlyn Aycock said that FmHA expects to meet its congressionally ordered May deadline for its regulations and applying the new directions for dealing with overdue borrowers.
Aycock also said the agency has been unable to calculate if or how much the legislation will increase its costs. "We're setting up guidelines on how to figure costs," he said, "but the issue of cost really will be a case-by-case thing."
Meanwhile, as FmHA works on the new regulations, the administration has renewed efforts on Capitol Hill to alter the FmHA section of the credit law. Agriculture Secretary Richard E. Lyng has sent a list of proposed technical changes to Congress and asked that the legislation be reopened for review.
"We are keeping a close watch on developments at FmHA . . . . It was a very lengthy legislative process, in which we lost some things, and now we have to see that we don't lose more in the regulatory process," said Kathy Ozer of the National Save the Family Farm Coalition.
The coalition, representing more than 40 rural advocacy groups in 30 states, played a key role in pushing Congress to include the FmHA revisions in its bailout bill for the Farm Credit System.
FmHA policies since 1981, stressing efforts to force indebted farmers to pay off their loans, have drawn heavy fire from Congress and the advocacy groups. The agency also has been thwarted in several major federal court cases in which judges found that FmHA failed to observe its own procedures in dealing with borrowers.
The new legislation includes these features:
Previous owners of land in the FmHA inventory now will have first option to repurchase the property or lease it from the government.
The agency must restructure a farmer's debt if he can demonstrate a chance of success in continued farming operations and if restructuring will result in less cost to the government than liquidation.
Land in the inventory must be reclassified so that more of it is available to farmers attempting to get back into business. In some states, the agency's classification policies have led to quick sale of land to investors.
The FmHA must set up a new appeals division for handling borrower complaints and borrowers must be given broader access to program information, appraisals and loan-servicing opportunities at county offices.
In farm foreclosure cases, borrowers can remain in their homes as renters for as long as five years and can lease outbuildings and up to 10 acres of adjacent land.