Farmers Home Administration (FmHA)

FmHA stands for Farmers Home Administration. It is a former agency of the Department of Agriculture in the United States of America. The agency had been created for financing and insuring loans for farmers and rural families.

The FmHA helps in providing technical as well as credit assistance through utility, housing, community, and business development programs. During the overall height of its respective activities, the agency was responsible for operating around 1900 county as well as district loan offices across the nation.

An Insight into Farmers Home Administration

In the year 1946, the Congress had given authorization to FmHA for providing families with advanced financing tools like grants and loans that are aimed at helping them to re-establish farming efforts that are self-sufficient –after the Great Depression. Since then, the given agency has been renamed several times. Currently, it is referred to as the Office of Rural Development under the USDA.

As per the Federal Home Loan Center in the United States of America, the housing loan program of the agency speaks of a loan Portfolio worth $86 billion. It has helped in administering approximately $16 billion in grants, loan guarantees, and program loans.

Historical Issues with FmHA

By the time of 1990s, some members belonging to Congress were becoming largely concerned with the increasing number of defaults on the respective FmHA loans as well as significant losses. As such, the agency was accruing due to its weak lending practices. In the year 1992, Congress had directed the GAO (Government Accountability Office) in the United States of America for conducting a study. This led to a series of problems with the Farmers Home Administration.

Quite significantly, the report revealed that around $14 billion or 70 percent of the direct loan portfolio of FmHA was at significant risk of Default. This was because the subsequent loans were held by offensive borrowers, or by people who debts had been rescheduled during repayment difficulties. In the given year, FmHA had witnessed an overall potential loss of around $1.2 billion or around 28 percent of the guaranteed loan program.

At the same time, the Government Accountability Office (GAO) also examined that a number of field lending officials had failed to comply with the respective loan servicing and loan-making standards as established by the FmHA for safeguarding the respective financial interests of the federal.

The GOA also realized that by the time of 30th September, 1990, the FmHA had been capable of acquiring at least 3100 farms from the respective borrowers who had not been able to replay the respective loans. On an overall Basis, the GAO came to the conclusion that weaknesses related to FmHA management contributed to long-term loan management issues along with weakened financial controls.