Farm Loan Restructuring

The Problem
Farmers and ranchers, like many other businesses, are suffering in the financial crisis. Many farmers will find it difficult or impossible to keep up their regularly scheduled loan payments.  Because most family farmers live on the farm, losing the farm means losing the family home as well.

Most farmers who are behind on their mortgage payments will not be able to qualify to restructure their mortgages under President Obama’s housing plan because their homes are a part of their farm loans, and thus are not residential loans.

The Solution
RAFI and its partners recommend that the government require private banks that receive stimulus or recovery funds to offer the farmers they finance a chance to restructure their payments, just as the USDA does for its direct loans.  

Farmers facing foreclosure would be able to refinance at or above the value that the property the bank would receive on the open market if it were to foreclose. This proposal would cost banks nothing, save taxpayers’ money on guaranteed loans, and keep farmers on their land and in their homes.

Support for farm loan restructuring
More than 50 organizations signed a letter to Treasury Secretary Geitner urging him to enact the proposed regulations. Nineteen Senators have signed a similar letter, and Senator Feingold sent a press release in support. Ten Representatives signed joint letter in support of this proposal. Representatives Butterfield and Miller sent letters as well.

Senator Dodd has agreed to work with Senators Feingold and Gillibrand to set up a meeting to discuss farm loan restructuring with Treasury Secretary Geitner. Read a discussion from the U.S. Senate record.

On July 21, 2009,a report issued by the Congressional Oversight Panel (COP) for the Troubled Asset Relief Program (TARP) confirmed our concerns about the impact the economy is having on farmers.  The report revealed that the worsening farm credit situation is making it increasingly difficult for farm families to stay on their farms and in their homes.  It outlines different methods that could be used to help farmers and ranchers restructure their loans as an alternative to foreclosure either through a mandatory program or a voluntary program that could be opened up to more than just TARP recipients.  

This report is the result of RAFI's work and the support of our partner organizations and legislators.