S. 1665 (100th): Farm Credit Act of 1987

Introduced:
Aug 07, 1987 (100th Congress, 1987–1988)
Status:
Died (Reported by Committee)
Sponsor
John Melcher
Senator from Montana
Party
Democrat
Related Bills
H.R. 3030 (Related)
Agricultural Credit Act of 1987

Signed by the President
Jan 06, 1988

S. 1486 (Related)
Agricultural Producer and Farm Credit System Borrower Act of 1987

Reported by Committee
Last Action: Nov 04, 1987

 
Status

This bill was introduced on November 4, 1987, in a previous session of Congress, but was not enacted.

Progress
Introduced Aug 07, 1987
Referred to Committee Aug 07, 1987
Reported by Committee Nov 04, 1987
 
Full Title

A bill to amend the Farm Credit Act of 1971 to ensure the continuation of the Farm Credit System as a source of agricultural credit at fair and competitive rates; to increase farmer and rancher participation in the Farm Credit System; to restore the impairment of borrower stock in Farm Credit System institutions; to reform the lending practices on the Farm Credit System; to require forbearance on and restructuring of certain high-risk and nonaccrual loans; and for other purposes.

Summary

No summaries available.

Cosponsors
26 cosponsors (13D, 13R) (show)
Committees

Senate Agriculture, Nutrition, and Forestry

The committee chair determines whether a bill will move past the committee stage.

 
Primary Source

THOMAS.gov (The Library of Congress)

GovTrack gets most information from THOMAS, which is updated generally one day after events occur. Activity since the last update may not be reflected here. Data comes via the congress project.

Widget

Get a bill status widget for your website »

Citation

Click a format for a citation suggestion:

Notes

S. stands for Senate bill.

A bill must be passed by both the House and Senate in identical form and then be signed by the president to become law.

The bill’s title was written by its sponsor.

GovTrack’s Bill Summary

We don’t have a summary available yet.

Library of Congress Summary

The summary below was written by the Congressional Research Service, which is a nonpartisan division of the Library of Congress.


12/4/1987--Indefinitely postponed in Senate.
(Measure indefinitely postponed in Senate, H.R. 3030 passed in lieu) Farm Credit Act Amendments of 1987 -
Title I - Farm Credit System Assistance
Amends the Farm Credit Act of 1971 to establish the Farm Credit System Assistance Board (Assistance Board) in lieu of the Farm Credit System Capital Corporation. States that the purposes of the Assistance Board shall be to:
(1) provide assistance to, and protect the stock of, borrowers of Farm Credit System (FCS) institutions; and
(2) assist in restoring such institutions' financial viability.
Sets forth provisions regarding:
(1) corporate powers; and
(2) certification of stock issuance eligibility.
Authorizes the Assistance Board to assist institutions by permitting preferred stock issues to:
(1) maintain the value of borrower equity;
(2) retire high-cost debt; and
(3) facilitate mergers.
States that in the case of an institution that requests certification of eligibility to issue preferred stock, the Assistance Board may:
(1) require approval of the institution's operating and investment plans;
(2) direct the Farm Credit Administration (FCA) to liquidate or appoint a conservator for such institution;
(3) request FCA to seek a merger;
(4) require approval of management or hiring decisions; and
(5) require approval of credit standards, including loan rates.
Requires the Assistance Board to report biannually to the Congress respecting borrower interest rates and institution solvency.
Directs the Assistance Board to establish a National Special Asset Council to monitor FCS borrower debt restructuring.
Directs the Council to review samples of special asset group restructuring determinations, and to make independent determinations of any foreclosure decisions.
States that if the Council determines that restructuring a loan rather than foreclosure is appropriate, the institution must implement such decision.
States that if an institution in a district is certified to issue preferred stock, the district board shall establish a special asset group to review such institution's decisions not to restructure loans.
Requires an institution to restructure a loan rather than foreclose if the special asset group so determines.
Requires certified institutions to review all existing nonaccrual loans and new nonaccrual loans for restructuring purposes.
Provides that if a Federal land bank or production credit association restructures a loan, the institution shall cancel equivalent borrower stock (or dollar amount of stock).
States that:
(1) a borrower shall keep at least one share of stock for voting and membership purposes; and
(2) such restructuring provisions shall not apply to the Central Bank for Cooperatives, a bank for cooperatives, or any uncertified institutions.
Sets forth provisions with respect to the Assistance Board's administration and succession to the FCS Capital Corporation. Terminates the Assistance Board on December 31, 1992.
Directs FCA to establish the FCS Financial Assistance Corporation (Financial Assistance Corporation) as a federally-chartered FCS institution whose purpose shall be to provide capital to financially-troubled institutions.
Directs the Financial Assistance Corporation to establish:
(1) the Farm Credit Assistance Fund; and
(2) the Financial Assistance Corporation Trust Fund. Authorizes the Financial Assistance Corporation to issue 15-year debt obligations.
Sets forth the following interest payment schedule:
(1) the Financial Assistance Corporation shall pay full interest for the first five years;
(2) the Financial Assistance Corporation and FCS institutions shall split the interest for the second five years; and
(3) FCS institutions shall pay full interest after the first ten years.
Makes the Financial Assistance Corporation liable for institution interest defaults.
States that institutions:
(1) shall repay the Government for interest costs incurred on their behalf; and
(2) such repayments shall be made when the institutions possess the necessary financial viability and in a manner that shall not impair stock or capital requirements.
Directs the Financial Assistance Corporation to:
(1) evaluate institutions as their obligations come due;
(2) furnish the Secretary of the Treasury and the appropriate congressional committees with such evaluations; and
(3) if an institution is unable to repay such stock, use Trust Fund amounts for such purpose.
States that:
(1) Treasury funds shall be used if the Financial Assistance Corporation is unable to meet interest or principal obligations; and
(2) the first $2,000,000,000 of Treasury payments to the Assistance Fund shall not be subject to institution repayment.
Authorizes appropriations for restructuring purposes.
Provides Trust Fund financing through institution purchases of Financial Assistance Corporation stock.
Permits district boards, with affected institution approval, to reallocate such required stock purchase assessments.
Terminates the Financial Assistance Corporation upon debt expiration.
Makes the current revolving fund available to assist institutions during the transition period.
Directs the FCA, during the period beginning September 30, 2001, and ending December 31, 2001, to evaluate the FCS and to report to the Secretary of the Treasury and the appropriate congressional committees.
Title II - Restructuring the Farm Credit System
Requires the Farm Credit Administration Board, effective January 1, 1992, to establish and maintain the Farm Credit System Central Reserve Account (Reserve Account). Funds the Reserve Account through institution assessments.
States that the Reserve Account shall assist institutions to:
(1) satisfy individual institution and FCS-wide or consolidated obligations; and
(2) retire defaulting institution stock at par value.
Provides borrower protection by guaranteeing borrower stock at par value, and participation certificates and other equity at face value.
Applies such protection to stock or certificates:
(1) that were frozen or retired at below par value after January 1, 1983;
(2) were outstanding on the date of enactment of this Act; or
(3) were purchased during a specified time in order to receive a loan under this Act. Authorizes mergers of FCS institutions in the same district if approved by the FCA, the boards of directors of the institutions, and a majority of the stockholders.
States that a merged bank shall have all the powers, and be subject to all the obligations imposed on the constituent banks.
Requires merged banks for cooperatives to file annual reports (for five years) with the FCA that:
(1) analyze the merger's effect;
(2) provide loan breakdowns; and
(3) describe the adequacy of credit and other services provided to small cooperatives.
Authorizes a production credit association to assign its lending authority and loan-related assets to the district Federal intermediate credit bank or to a merged bank having such a bank as one of its constituents.
Authorizes a production credit association or a Federal land bank association to merge into its supervisory bank.
Authorizes two or more district associations to merge into a single entity.
Sets forth conditions under which an institution may terminate FCS status.
Authorizes district Federal land bank associations to dissolve a Federal land bank.
Authorizes similar actions by production credit associations with regard to a Federal intermediate credit bank.
Sets forth liquidating provisions.
Provides for stockholder disclosure of information regarding mergers, dissolutions, terminations, and transfers.
Authorizes Federal land banks, Federal intermediate credit banks, and banks for cooperatives to merge with similar banks in other districts.
Authorizes similar mergers for Federal land bank associations and production credit associations.
Directs the FCA to ensure that nonmerging associations shall not be charged higher assessments and receive financial assistance on the same basis as other district associations.
States that loans originated by a Federal land bank, or in which such bank participates with a non-FCS bank shall not exceed 85 percent of the real estate security's appraisal.
Sets forth exceptions.
Requires institutions to comply with an FCA-approved uniform chart of accounts.
Establishes a FCS finance committee composed of a representative of each bank to determine maturities, interest rates, and participation by the several banks in each issue of consolidated obligations.
Title III - Capitalization
Requires FCS to issue regulations implementing FCS minimum capital adequacy standards. Phases such standards in over a five-year period. Prohibits FCS during such transition period from initiating enforcement actions against undercapitalized institutions unless recommended or agreed to by the Farm Credit Assistance Board. Requires institutions to establish by-laws which provide for classes of stock and fees based on such capital standards.
Title IV - Borrowers' Rights
Requires institutions to provide borrowers with specified loan information, including:
(1) the loan's current interest rate;
(2) adjustable interest loan information;
(3) applicable interest rate charges;
(4) potential stock risks;
(5) fees; and
(6) loan options.
Makes current borrowers' rights provisions effective until 120 days after enactment of this Act. Expresses the sense of the Congress that institutions should administer distressed loans to family farmers with the objective of using Federal and State loan restructuring programs as alternatives to foreclosures, on a case-by-case basis.
Entitles each FCS loan applicant to written notice of:
(1) the action on the application;
(2) reasons for loan denial; and
(3) appeal rights.
Requires an institution to notify a borrower of his right to apply for loan restructuring at least 14 days before accelerating the loan or beginning foreclosure action.
Requires institutions to establish credit review committees to review loan or restructuring denials.
Provides that with regard to a request for an independent appraisal as part of such appeal, the borrower shall select the appraiser from a creditor-supplied list.
Requires each farm credit district to:
(1) develop a policy to govern family farm loan restructuring within its district; and
(2) make such information available to borrowers.
Requires institutions, when making a loan restructuring decision, to consider:
(1) whether such costs are equal to or less than foreclosure costs;
(2) whether the borrower is applying all available income to repayment; and
(3) whether the borrower is capable of reestablishing a viable farming operation.
Enumerates the following loan restructuring cost factors:
(1) present value of interest and principal foregone by the bank in carrying out the restructuring;
(2) related administrative expenses;
(3) a borrower restructuring plan and cash-flow analysis that shows a probability of orderly debt retirement; and
(4) borrower financial statements.
Prohibits a bank from establishing a differential interest rate program for loans by the association's board.
Requires institutions offering different borrower interest rates to review, upon request, the loan's interest rate and explain to the borrower the basis for such rate.
Grants foreclosed borrowers the right of first refusal on property repurchase or lease.
Requires the institution holding the property to notify the previous owner of its intention to sell and of other repurchase rights.
Prohibits institutions from:
(1) requiring a borrower to provide additional collateral if loan payments are current; or
(2) foreclosing as a result of the failure to provide additional collateral.
States that such rights shall be in addition to any existing State protections.
Title V - State Mediation Program
Establishes guidelines for State farm loan mediation programs.
Enumerates criteria to be met by a State in order to qualify for the matching grant program instituted in this title.
Lists the requirements to be met by the farm loan mediation program of a State, including provisions with respect to mediator training and duties and applications for mediation.
Provides matching grants to a qualifying State for the operation and administration of its farm loan mediation program.
Limits the amount of such a grant to:
(1) no more than 50 percent of the costs of the operation and administration of the State's program; and
(2) $750,000 per year per State. Directs the Secretary of Agriculture to prescribe rules requiring each guarantee or insurance program under the Secretary's jurisdiction to:
(1) cooperate in good faith with requests for information or for analysis; and
(2) present and explore debt restructuring proposals advanced during the course of any farm loan mediation program.
Mandates corresponding rulemaking by the FCA with respect to FCS institutions.
Authorizes FY 1988 through 1991 appropriations.
Title VI - Farmers Home Administration Loan Restructuring
Amends the Consolidated Farm and Rural Development Act to prohibit the Secretary of Agriculture from:
(1) requiring a Farmers Home Administration (FmHA) borrower to provide additional collateral if loan payments are current; and
(2) foreclosing as a result of the failure to provide additional collateral.
Authorizes the Secretary to negotiate the settlement of a guaranteed loan with a lending institution to honor a portion of a guarantee and avoid foreclosure.
Directs the Secretary, within 90 days of a court-confirmed bankruptcy, to pay the lender an amount estimated to be equal to the guaranteed portion of the lender's loss.
Directs the Secretary to notify delinquent FmHA borrowers of the available loan service programs and how to apply for such assistance.
Requires that appropriate procedures be used to calculate future yields for loan application purposes in cases where past yields have been affected by natural disasters.
Provides minimum notice periods for county committee nominations (45 days) and elections (30 days).
Makes any farmer eligible for a director insured loan also eligible to serve as a county committee member (but only one such farmer may serve at one time.) Directs the Secretary to establish with FmHA a national appeals division to hear borrower loan appeals.
Requires a county committee to classify or reclassify farmland as suitable for meaningful farming operation unless it cannot be used to meet certain purposes.
Requires the Secretary to sell suitable farmland administered under a specified program to operators of not larger than family-size farms.
Directs the Secretary, during the longer of the 180-day period after acquisition or the applicable State-permitted period, to permit a borrower to repurchase or lease his or her property.
Establishes the following order of repurchase priority:
(1) the immediate previous owner;
(2) if actively engaged in farming, the spouse or child of the previous owner, or stockholder of a family-held corporation; and
(3) operators of not larger than family-size farms.
Authorizes the government of any Indian tribe to revise FmHA repurchase or lease priority.
States that such disposition rights shall be in addition to any State protections.
Provides certain farmers with income releases (from funds held as loan security) of up to $18,000 for 12 months for household and farm operating expenses.
Provides for a secondary market in the guaranteed portion of FmHA loans.
Requires that before any such sale all fees be paid in full and the loan be fully disbursed to the borrower.
States that after such a sale the lender shall remain obligated under the guarantee agreement and shall continue to service the loan.
Permits loan pooling.
Requires the Secretary to submit an annual report to the appropriate congressional committees.
Includes wildlife habitats in the conservation reserve program.
Amends the Food Security Act of 1985 to extend the interest rate reduction program until 1993.
Amends the Consolidated Farm and Rural Development Act to establish a three-year demonstration project to reduce loan interest for persons seeking to purchase FCS-held property.
Limits:
(1) interest reductions to not more than four percent; and
(2) the length of time such reductions shall apply to the lesser of five years or the outstanding term of such loan.
Authorizes:
(1) the Secretary to guarantee 95 percent of such loan; and
(2) subdividing of land into more affordable tracts.
Revises homestead protection provisions.
Permits occupancy for up to five years.
Requires the Secretary to notify the foreclosed borrower of such homestead rights.
Makes persons eligible for such protection who:
(1) apply within 90 days of foreclosure; and
(2) have farmed and resided on the land (with permitted absences of up to 12 months) for a specified time and meet certain income percentage requirements.
Provides that during such occupancy period the borrower shall have the right of first refusal.
States that such homestead rights shall be in addition to any State protections.
Directs the Secretary to modify delinquent FmHA loans to:
(1) avoid losses to the Secretary with priority consideration placed on principal and interest write-downs, and debt set-asides, or otherwise through primary loan service; and
(2) ensure that borrowers are able to continue farming and ranching operations.
Sets forth eligibility criteria, including:
(1) the delinquency must be due to circumstances beyond the borrower's control;
(2) good faith activity by the borrower, including a reasonable recovery plan; and
(3) a net recovery by the Government that will equal or exceed similar foreclosure recovery.
Sets forth restructuring determination provisions.
Directs the Secretary to:
(1) make the required loan calculations and notify the borrower within 60 days of receiving the restructuring request;
(2) if the application is appropriate, offer to restructure the loan within an additional 45 days; and
(3) if deemed inappropriate, notify the borrower within 15 days of such determination.
Authorizes up to ten-year shared appreciation arrangements (recapture of written-off amounts) as a precondition to loan restructuring.
Prohibits foreclosure of a loan that has been determined ineligible for restructuring until the borrower has been given an opportunity to appeal, or until such appeal has been exhausted.
Directs the Secretary to:
(1) establish county-wide target participation rates for minority farmers to receive loans to purchase or lease FmHA-held land; and
(2) report annually to the appropriate congressional committees.
Authorizes the Secretary, without reimbursement, to transfer to any Federal or State agency, for conservation purposes, FmHA-acquired land that is determined to be:
(1) surplus;
(2) of marginal agricultural value; and
(3) environmentally sensitive or of special importance.
Title VII - Agricultural Mortgage Secondary Market
Amends the Farm Credit Act of 1971 to establish a federally-chartered Federal Agricultural Mortgage Corporation to:
(1) develop uniform underwriting, security appraisal, and repayment standards for qualified loans;
(2) determine the eligibility of agricultural mortgage marketing facilities to contract with the Corporation for the guarantee of specific mortgage pools; and
(3) provide guarantees for the repayment of qualified loan pool principal and interest.
Requires the Corporation to issue standards for certification of agricultural mortgage marketing facilities.
Authorizes the Corporation to charge fees to cover administrative costs.
Title VIII - Miscellaneous
Amends the Omnibus Budget Reconciliation Act of 1986 to require the Secretary of Agriculture, before the sale of a portfolio of notes or other obligations, to:
(1) determine whether the issuer of any unsold note desires to purchase it; and
(2) if so, hold open for 30 days an offer to sell the note to the issuer at a price determined by the Secretary according to a certain procedure.
Prohibits the Secretary, as a condition of such sale, to require the issuer to purchase any other unsold notes or obligations as well.
Requires each production credit association and each Federal land bank association to elect a board of directors consisting of:
(1) U.S. citizens; and
(2) at least one member with no connection of any sort to the Farm Credit System. Amends the Food Security Act of 1985 to provide that land shall be considered planted to an agricultural commodity during a crop year, for conservation reserve placement eligibility, if an action of the Secretary prevented the land from being planted to the commodity during that crop year.
Revises ownership requirements under the conservation reserve program with respect to ownership changes due to foreclosure where the owner immediately before foreclosure exercises a right of redemption from the mortgage holder.
Requires the Secretary, with respect to highly erodible cropland placed in a conservation reserve, to make payments only to family farmers who purchase or lease such cropland and who enter into a contract with specified terms.
Prohibits Farm Credit System district board members from receiving during any year compensation exceeding $15,000 each.

House Republican Conference Summary

The summary below was written by the House Republican Conference, which is the caucus of Republicans in the House of Representatives.


No summary available.

House Democratic Caucus Summary

The House Democratic Caucus does not provide summaries of bills.

So, yes, we display the House Republican Conference’s summaries when available even if we do not have a Democratic summary available. That’s because we feel it is better to give you as much information as possible, even if we cannot provide every viewpoint.

We’ll be looking for a source of summaries from the other side in the meanwhile.

Use the comment space below for discussion of the merits of S. 1665 (100th) with other GovTrack users.
Your comments are not read by Congressional staff.

comments powered by Disqus