Senators Say Agency Allowed Too Little Time for Response : Offer of Farm Loan Restructuring Ignored by Many

Just under half of the farmers who are delinquent on federal loans totaling $8 billion responded to notices giving them the chance to seek restructuring of the loans, officials said Tuesday.

The figures were disclosed at a Senate hearing in which senators accused the Farmers Home Administration of demanding too much information from farmers and giving them too little time--45 days--to complete the work and ask for restructuring.

The government faced a barrage of criticism when it mailed the delinquency notices in mid-November. Failure to respond to the notices could trigger acceleration of loan collection and become the first step toward liquidation.

Neal Sox Johnson, acting administrator of the Farm Home Administration, said the agency does not have “a breakdown at this point of the reason” why more than half of the notices drew no response. The deadline for most borrowers to reply has passed.

Some to Get 2nd Chance

Johnson said that 70,747 notices were mailed and that 34,719 requests were made for loan services.

Some borrowers will be given a second chance to respond, Johnson said. A new set of notices is being mailed to borrowers whose original notices were returned as undeliverable. The original notices were sent by certified mail while the new notices will go as regular mail.

Sen. David Boren (D-Okla.), chairman of the Senate Agriculture Committee’s credit subcommittee, and two other senators said the farm agency should relax its standards of how much material borrowers had to submit to be in compliance. Boren repeatedly said the 1987 farm credit law only requires farmers to ask for consideration.

“These forms are not in the law,” Boren said, referring to the documents that the agency said had to be completed within 45 days.

Johnson said the responses indicated that farmers who wanted to remain in farming had little trouble making a “good faith” effort to respond. In late December, the agency said that only three documents had to be submitted before the deadline and that supporting documents could be filed later.

Excluding bankruptcy cases, loan acceleration cases and collection-only accounts, there were 27,696 replies from the 46,427 farmers “who . . . presumably still desire to stay in the farming business,” Johnson said.

Some Responses Incomplete

Of those, 24,495 were “sufficiently complete” for processing, Johnson said, but 3,201 were not.

“The latter will be considered as failing to meet the requirements for the complete loan servicing package and will be offered the lease back-buy back or homestead protection package,” he said.