AGRICULTURAL LOAN PACKAGING 3371 South US. Highway #385 February 20, 1997 U.S. House Committee on Agriculture Dear Sirs, What people often forget, is the important role the American Farmer plays. Our cost of living would go sky high without American farm production. It seems to me that several people are forgetting this, and that the American Farmer is a “dying breed". There are several reasons this is happening, but I feel that farm credit, or the lack of farm credit is the largest contributor. I represent over one hundred (100) farmers in the West Texas region. My job is to package their farm operating and equipment loans for F.S.A. Ag Credit, and to act as a mediator between F.S.A. and the banks. I work with five different county F.S.A. offices, and not one of the offices process loans the same way, or do they require the same paper work. The one factor however that I have found to be consistent, is the untimely way they handle the processing of these loans. Farm credit is especially important in bad times and must be handled in a timely fashion or else it leads to further depressed times. The "buck” doesn't just stop with the farmer. When the cash flow stops, everyone in that community suffers, from the local fertilizer dealer to the grocery store and restaurants. My findings have been that the F.S.A. Ag credit managers do not live in the communities they work in, and usually could care less what happens to the farmer or the community. It is just a job to them, but what they are forgetting is that they are being paid to provide a service to the farmer, and that farmer's tax dollars are what is paying them. The last two years have been especially bad in Hockley County and the surrounding area. The drought has caused innumerable problems, as well as the high cost of production. Adding to these factors, was the inability of F.S.A. to make timely loans, which further depressed the economy. When 90% of the F.S.A. farmers do not get financed before planting time in April, the stage is already set for another disastrous year. This has been the scenario in Hockley County. Loans that were called compete in January, were finally funded in June and July. By that time, either the farmer did not fertilize because of no funding, or the local business had to carry the burden. The banks did what they could 39-584 97 -5 with interim financing, but when processing the loans took such a long time, the banks hands became tied. There is F.S.A. procedure that states that all loans after being called complete, must be processed, and either approved or denied in sixty (60) days. This has not been applied in the Hockley County office. There is presently a loan that was determined to be complete on October 24, 1996, that has still not been completed. The borrower, has not been notified as to the status of the loan, and when he goes to the F.S.A. office to ask about it, they always tell him that there is nothing else for him to do, but that he will just have to wait. This loan, and what has been done to this farmer, is nothing short of gross cruelty and mismanagement on F.S.A.'s part. This loan is just one example of several others. The Ag Credit Manager in Hockley County does not have a working knowledge of farming, or farming practices. If she did, this loan and others would have been worked in a timely manner. Farmers cannot make up for lost time. Lost time means lost revenues. There is a time to prepare the land, a time to plant and cultivate, and a time to harvest. If you miss any of these steps, the farmer has missed the crop. The Ag Credit Manager receives her check every two weeks, whether she has worked a loan or not. A farmer, who is waiting for a loan, does not have this luxury. He has to worry about how to feed his family, and run his farm without proper funding. Even certified lenders in Hockley County could not make a guaranteed loan in a timely manner. The procedure on guarantees states that F.S.A. must either approve or deny a loan in fourteen (14) days. There was only one loan in Hockley County during the 1996 loan season that was handled in that time frame. There were some guaranteed loans that took up to sixty days or longer to be approved and funded. This lack of timely processing must end. There are several good farmers, and good agri-businesses going out of business due to the gross mismanagement of the F.S.A. office. This cannot be tolerated. F.S.A. offices with a large number of borrowers should be fully staffed, with people that have a true understanding of farming, and can handle the position. The problem in Hockley County is extremely serious. The farmer is not the only victim in this scenario, the whole community suffers. One good example of this, is the sale at the Hockley County Livestock Show the first of February. The buyers pool was way down, and the sale average was way down this year. The main reason for this was that the local agri-businesses were scared to pay out too much money because they do not know when the farmers will get their loans processed, and were afraid to get in a cash flow bind. This hurt our youth. The youth use the proceeds from this year's sale to buy their animals for next year, and to put away money for college. Again, the farmer is not the only victim here. I have documentation showing the untimely processing of loans from last year's loan season. At this time, there are several borrowers with complete applications that have not been scheduled for appointments. With the passing of the new Farm Bill, it is extremely important that loans get processed and serviced before they become delinquent. I know that farmers have requested servicing in a timely manner. I hope that these loans will be processed before it is too late for these farmers. The loss of one farmer, can hurt a community. The loss of several farmers, will hurt our nation. Sincerely, Vandy Coleman Sandy Coleman Agricultural Loan Packaging Since I am aware that you are going to visit with the State Rep. of FSA. I would like to remind you of the experience that Brodie and I had with our local FSA office (FHA at that time). in hopes that you might share our feelings at your meeting. Back on May 31. 1990 we had a tornado that hit our 6 section farm. At that time Brodie's father actually owned the land and we cash rented from him. This tornado did damages that were estimated in excess of 1 million dollars of damages. to surrounding farms as well as our own. After Sarpolius announced that is was declared a disaster area and there were going to be funds available at the FIA office for non-insured farmers. we went and visited with Mike Heck at our local office. He handed us a stack of paperwork (of which I still have copies). and we completed all of the information and returned it to him. After a few weeks of which we did not hear from him. we contacted him and he advised us that our application was not sufficient because Brodie's father actually owned the land. which would entail the fences. sprinklers. barns. corrals. etc. and that it would have to be redone in his father's name. So. we went back in and started this whole thing over again. completed it and returned it to him. Soon after we reapplied. Brodie's father had a massive stroke and died. That was the end of the "financial help" from the FHA office. In 1995. we suffered another loss on small grains and we applied for the Emergency Disaster Loan again through Mike Heck. but this time Mr. Joe Stubblefield of Canyon was assisting us in our paperwork. He worked many long hours with our local FHA office as well as with you at the First National Bank. trying to sort out everything and make proper application. But it seems as if everything that he did was not meeting the satisfaction of Mike Heck. I spoke with Mike myself and asked him just what in the world it was going to take to get some kind of application made and approved and he told me that in the 14 years. (or it may have been 12). that he had been in this office. he nas not made a single disaster loan. and that he didn't forsee us to be able to qualify for one either. So I asked him. "just what are the qualifications" and he named several of which we met, then he said "collateral". As I remember he said that we needed a ratio of 1.5 to 1. In other words, we were applying for in the proximity of 40000. and we needed 100.000. of collateral. However he wasn't sure about that either. and he wasn't going to commit to taking a second lien on a piece of property that had 80,000. to 90.000. equity in it. He just didn't know whether or not the FHA would even look at that, and since that was our "best available collateral". we were discouraged from proceeding any further. He asked us to obtain 3 separate appraisals on this one particular tract of land containing approximately 320 acres. Brodie and I discussed it and I called an appraiser who was willing to do the appraisal. and Mike had several stipulations and restrictions on the way in which this appraisal should be done, and honestly I think the appraiser was discouraged from doing it. AS of yet, we have neither obtained a loan or heard anything else from Mike Heck, so we. like many people in out County have basically set this on the back burner because we just got tired of messing with him. and the paperwork. and the requests, etc. And while I'm mentioning all of this. I would also like to say that Mike Heck in one of his conversations with Joe Stubblefield. made us out to be liars. and told Joe that we had applied back in 1990 and that they came out to do appraisals on the equipment and that it was "just old junk". and not damaged by the tornado. We were just trying to pull a fast one. And he also told Joe that we had made application on the 1990 incident in the wrong name. There was a big lie about ownership of equipment etc. We have NEVER intentionally lied about any of this. and as you well know. First National Bank of Spearman had a complete inventory on the equipment because it was mortgaged against our loan at FNB. I certainly hope that you can get some kind of changes made in our office so that Ochiltree and Hansford Counties can have the same representation and assistance that other counties in Texas have and deserve. If I can be of any further assistance, please do not hesitate to contact me. Very Truly Yours. Ron R. Daniel Lisa R. Daniel AG PRODUCTS, INC P.O. BOX 786 79336 (806)894-6665 U.S. Congressman, Larry Combest 1205 Texas Ave. Room 810 Lubbock, TX 79401 Attn: Jimmy Clark Dear Sir: As an agri-business man and farmer we are deeply concerned about the way the Hockley County FHA office is being administered. It has been called to my attention that the person in charge of the Levelland office is not willing to work with the applicant for the farmer or the farmer themselves. Some loans have already been denied for the 1997 crop year. I do not know the details concerning these applications but the person at the Levelland office is not willing to work or help. Last year (1996 crop year) loans that were approved and the money available in March, some farmers did not receive their money until June. I don't know whether this problem exists in other counties or not, but we Ag businesses and farmers need your help desperately soon in Hockley County. Please advise. Sincerely, |