Farmers Who Fought the Feds Harvested Big Trouble : Policy: North Dakota couple were among plaintiffs in suit that changed loan foreclosure practices. ‘It practically ruined us,’ wife says.

Russ and Anna Folmer don’t regret their fight against what farmers labeled the coldhearted lending policies of the federal government.

But a decade later, would the Folmers do it again?

Probably not.

The Folmers were among the nine original plaintiffs in a 1983 class-action lawsuit--affecting 250,000 farmers in 45 states--that forced a temporary moratorium on loan foreclosures by the federal Farmers Home Administration.

The suit contended that FmHA, known as the farmers’ lender of last resort, was unfair to farmers being forced off their land by prices, weather and other circumstances beyond their control.

Russ Folmer, who operates a dairy farm near Wing in central North Dakota, remembers the night the farmers won their case.

“I got calls all night long from farmers all over (the) country, thanking me for standing up for them,” he said.

But his wife doesn’t like to talk about those days, much less think about reliving them. The stress on her and her family was almost too much.

“If it helped somebody else, it was good, but it practically ruined us,” Anna Folmer said. “In fact, I think we’re the only ones of nine involved in the lawsuit who are still farming.

“I’d never go through it again,” she said. “It just wrecked our lives.”

The lawsuit brought by the nine North Dakota plaintiffs maintained that FmHA was ignoring its obligation to help struggling farmers.

U.S. District Judge Bruce Van Sickle in Bismarck agreed, ordering the agency to let delinquent borrowers defer loan payments if they were financially strapped due to uncontrollable circumstances, such as a drought. The judge also said FmHA had to grant hearings to borrowers before it could foreclose or demand immediate repayment of a loan.

Van Sickle also stipulated that the hearings take place before an independent mediator. Sarah Vogel, the lead attorney in the case and now North Dakota’s agricultural commissioner, said farmers won less than 10% of their appeals when hearings were FmHA-held. Under independent mediators, more than a third of the appeals are decided in their favor.

“Somehow, somewhere, the emphasis had changed,” Van Sickle said of the FmHA, recalling his ruling. “There had developed a callousness about their mission.”

Courts had ruled that the agency had a social obligation to help farmers work their way out of debt, but by taking administrative shortcuts, Van Sickle said, “FmHA was denying to farmers certain privileges or program steps, which might or might not be helpful, but to which they were entitled.”

The judge’s decision didn’t end farmers’ problems, however.

The agency appealed, and the case dragged on for five years before being upheld by a circuit court.

“My expectation was that the FmHA would change its procedures and resume foreclosures under a fair system,” Vogel said. “Instead, they decided to fight it for five years. They didn’t foreclose. But they wouldn’t change their lending practices.”

Elected agriculture commissioner in 1988, Vogel had barely moved into her office when the five-year backlog of foreclosures hit the mediation program she had worked to establish.

“It was awful,” she said. “We had 2,600 clients in a six-month span. It meant working 20 hours a day for a solid year.”

In a normal year, 900 to 1,000 North Dakota farmers apply for mediation.

More definite guidelines for handling loans make the process easier for the FmHA, “but it’s removed a lot of discretion on the part of county loan supervisors,” said agency loan specialist Rod Hogan. “Whether that’s good or bad, I can’t say.”

And not all farmers feel the new system is fair, Hogan said.

“Take two farmers with the same size farm,” he said. “Say one tightened his belt and made it through the tough years. The other wasn’t as conservative. Five years down the road, when prices are depressed, the first one is current and the other is sadly delinquent.”

The farmer whose loans are delinquent may qualify for a write-down, Hogan said, “and the one who made things work feels like he got the short end of the stick because he didn’t buy that new car or didn’t take that vacation.”

The lawsuit’s effect on the farm economy is uncertain. “It didn’t increase the price of milk or the price of wheat,” Vogel said.

But Agriculture Secretary Mike Espy’s proposal that all federal farm loans be handled by a single appeals office is a sign of what it did accomplish, she said.

“Ten years ago,” Vogel said, “the secretary of agriculture fought tooth and nail to keep from giving farmers independent hearings. What they found out, though, is that it works.”

She credits people like the Folmers for helping make the change.

“It was a brave thing for them to do,” she said. “They let themselves be used so other people would have a fairer process.”