USDA Temporarily Suspends Debt Collection and Other Farm Loan Activity Due to COVID-19
LINCOLN, Neb. (KOLN) – Due to the national public health emergency caused by the 2019 coronavirus disease, the United States Department of Agriculture on Monday announced the temporary suspension of overdue debt collections and foreclosures for distressed borrowers in the loan framework for agricultural storage facilities and direct agricultural loan programs administered by the Farm Service Agency. The USDA will temporarily suspend non-judicial foreclosures, debt set-offs or wage garnishments, and return the foreclosures to the Department of Justice. USDA will work with the United States Attorney’s Office to stop court foreclosures and evictions on accounts that were previously referred to the Department of Justice.
In addition, the USDA has extended the timeframes for producers to respond to loan management actions, including the counterpart of the deferral of loans for financially distressed and delinquent borrowers. In addition, for the secured loan program, flexibilities have been made available to lenders to help them serve their clients.
Monday’s announcement by the USDA expands on previous actions taken by the department to reduce financial difficulties. According to USDA data, more than 12,000 borrowers, or about 10% of all borrowers, are eligible for the relief announced on Monday. Overall, FSA lends to more than 129,000 farmers, ranchers and producers.
“The USDA and the Biden administration are committed to providing relief and support to farmers, ranchers and producers from all walks of life and of all financial backgrounds, including ensuring that producers have access to temporary debt relief,” he said. said Robert Bonnie, Deputy Chief of Staff, Office of the Secretary. “Not only is the USDA suspending the pipeline of adverse actions that could lead to foreclosure and debt collection, we are also working with the Justice and Treasury Departments to suspend all actions already referred to the applicable agency. Additionally, we are evaluating ways to improve and address agriculture-related debt with the goal of keeping farmers on their farms to earn a living, meet emergency needs, and maintain cash flow. “
The temporary suspension is in effect until further notice and is expected to continue as long as the national COVID-19 disaster declaration is in place.
The USDA Farm Service Agency offers several different loans to growers, which fall into two main categories:
- Secured loans are made and managed by commercial lenders, such as banks, the farm credit system, credit unions, and other non-traditional lenders. FSA guarantees the lender’s loan against loss, up to 95%.
- Direct loans are made and managed by the FSA using funds from the federal government.
The most common types of loans are farm property, farm, and farm storage loans, with microloans for each:
- Farm property: helps producers buy or expand a farm or ranch, construct a new building or improve an existing farm or ranch building, pay closing costs and pay for conservation and protection of soil and water.
- Farm: Helps producers buy livestock and equipment and pay for minor property repairs and annual operating expenses.
- Agricultural storage facilities Loans are made directly to producers for the construction of cold or dry warehouses and include handling equipment and mobile storage such as refrigerated trucks.
- Microloans: Direct farm ownership loans, farm loans, and farm storage facility loans have a shortened application process and reduced paperwork designed to meet the needs of smaller, non-traditional and niche farms.
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