Page images

Exhibit 2-1


We have 2,791 Guaranteed Loan Borrowers owing $491,288,647 principal. These 2,791 borrowers have 4,779 loans. Of these loans, 441 are delinquent in the amount of $22,758,045. We have 9.23% of our guaranteed loans delinquent with 4.63% of dollar owed delinquent.

[merged small][ocr errors][merged small][ocr errors][merged small]

4,064 operating.

Exhibit 3-1


The Certified Lender Program is going reasonably well in Texas. We currently have 69 lenders participating in the Certified Lender Program in Texas. We believe this would represent approximately 70% of the lenders that have the loan volume and loss ratio to be considered eligible to participate.

The Preferred Lender Program has not been implemented. Representatives from Washington would need to comment on the status of this program.

The Agriculture Credit Improvement Act of 1992 (1992 Act) limited the number of years a borrower was eligible to receive loans from the Farm Service Agency (formerly Farmers Home Administration Farm Loans). The requirements of the 1992 Act were superseded by requirements in the 1996 Farm Bill. As we understand, part of the provision that changed limits the number of years a borrower could receive a loan instead of limiting the number of years the borrower had loans outstanding as provided for in the 1992 Act. We have not received the regulations implementing the provision of the 1996 Farm Bill. At this time, we are unsure as to how many borrowers this will affect in Texas. The number that will be affected immediately will be significantly less under the 1996 Farm Bill than would have been affected under the 1992 Act. We understand the 1996 Farm Bill provides for a transition rule to allow borrowers to retain eligibility during this transition period.

Exhibit 3-2

The Credit Reform Provisions of the 1996 Farm Bill provide limits to the number of times a borrower may receive debt forgiveness and limits the type of assistance for borrowers that have received a debt writedown. Since 1989 we have had 5,411 borrowers in Texas to receive debt forgiveness. Since 1989, the agency has written off $713,255,550 principal, $403,739,250 interest, and $43,768,096 partial writedown for a total of $1,160,762,896 in total debt forgiveness.

The number of borrowers receiving debt forgiveness in Texas during this time period is the highest in the nation. The 5,411 represents approximately 42% of the total receiving debt forgiveness in the Southwest Area. The average forgiveness per borrower is a little over $200,000 per borrower.

We believe 696 of the borrowers receiving debt forgiveness in the past currently have either Direct or Guaranteed Loans. Of these 696 borrowers, we believe 129 would be unable to receive any additional assistance. The balance of these borrowers would be able to receive direct or guaranteed loans for annual farm operating and family living expenses only.

We have 108 borrowers that received two or more debt forgivenesses in subsequent fiscal years since implementation of the Agricultural Credit Act of 1987.

We have attached a chart showing the dollar amount of Guaranteed Loans closed since the inception of the Guaranteed Program and the dollar amount of losses paid in Texas. This chart reflects we have closed a total of 12,872 guaranteed loans for a total dollar amount of $1,432,262,965 and we have paid 990 loss claims for a total of $59,321,280. The losses paid are tied back to the year the loans originated, not the year the claim was paid.

Exhibit 3-3

We have attached a copy of a chart comparing the number of loans obligated and dollar amount obligated during the last two fiscal years and a comparison of numbers at approximately this same time period the last two years compared to this year. Last year's total obligations and total dollar amount exceeded prior years' obligation and dollar amount. This was done with a shortage of personnel and at the same time we provided training to legacy ASCS employees.

Current reports indicate we are processing 85.5% of the Direct Loan applications within the required time frame with the average processing time of 45 days.

These reports indicate 70.4% of the gua teed loans from eligible lenders are processed within the required time frame with an average processing time of 21 days from date of receipt of a complete application. These reports indicate that only 35.4% of applications from certified and approved lenders are processed within the required 15 day time frame with an average processing time of 24 days. We have recently provided training to all Ag Credit Managers and Officers on guaranteed loan processing. We will be monitoring the processing of guaranteed loans from Certified Lenders in the State to assure that loan requests from Certified Lenders are processed more timely.

Exhibit 3-4

Some of the reasons guaranteed loans are not processed timely are listed below.

This past year we had an increase in the number of guaranteed applications that had a direct emergency loan request or other direct assistance included in the proposal for the guaranteed loan. This increases the processing time because the guaranteed loan is normally contingent upon the emergency loan being approved. Therefore, the guaranteed loan cannot be approved until the emergency loan is processed. Emergency loans require more involvement and time of the Ag Credit Manager and typically cannot be processed within the time limits set for guaranteed loans, particularly the time limits for Certified Lenders.

We are aware of several cases that exceeded the time limit due to the Credit Manager or District Director working with the bank and their customer to develop a plan that would overcome obstacles to our being able to approve the loan. Although we exceeded the time frame, we believe this was preferable in these cases to denying the loan initially.

Certified Lenders are allowed to use some of their own forms in loan processing. We find in some cases the lender has failed to complete all the information on their form or the information does not agree with other information in the file. More training is needed so that all of us will understand what is needed in a properly completed application.

We also have some Credit Managers and other employees who would benefit from additional training in analyzing a guaranteed loan request. We have recently provided training and will continue to provide training as needed.

« PreviousContinue »