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Farmers Home Administration: Billions of Dollars in Farm Loans Are at Risk

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Report Type Reports and Testimonies
Report Date April 3, 1992
Report No. RCED-92-86
Subject
Summary:

GAO has begun a special audit effort focusing on 16 high-risk federal programs to help identify and eliminate fraud, waste, abuse, and mismanagement. This report examines one of those high-risk areas--the Farmers Home Administration's (FmHA) farm loan programs. In GAO's view, FmHA seems destined to continue losing millions of dollars annually in bad loans as long as its mandated mission--to keep high-risk farmers on their farms--conflicts with normal fiscal controls and policies that minimize risk and financial losses. GAO recommends that FmHA establish a system to ensure that (1) lending officials stick to the agency's loan standards, (2) delinquent borrowers are prohibited from receiving direct loans, (3) FmHA establish a range of guarantees that places the highest percentage guarantee on the least risky loan and a lower percentage guarantee on the most risky loan, and (4) FmHA uses competitive methods in selling farm inventory properties.

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