What exactly is the Farmers Home Administration (FHA)?
Farmers Home Administration (FmHA) was a defunct USDA entity that financed and insured loans for rural families and farmers. Through housing, utility, commercial, and community development initiatives, the FmHA offered finance and technical help.
Farmers Home Administration (FHA) loans
In 1946, Congress created the Farmers Home Administration to give loans and subsidies to help families reestablish self-sufficient farming after the Great Depression. Congress expanded the FmHA’s scope to finance general water projects and rural non-farmer housing 1961.
FmHA is now USDA Rural Development after many rebrandings.
Historical Farmers Home Administration (FHA) Issues
By the 1990s, some members of Congress were worried about FmHA loan defaults and the agency’s high losses due to inadequate lending policies. Congress ordered the GAO to review the FmHA in 1992, which found many issues.
Most importantly, the audit indicated that almost $14 billion (70%) of the FmHA direct loan portfolio was in danger of default due to delinquent borrowers or those whose payments were rescheduled due to repayment issues. That year, FmHA predicted $1.2 billion in losses, or 28% of its guaranteed credit program.
The GAO also found numerous field lending officials violated FmHA loan-making and loan-servicing criteria to protect government financial interests.
The GAO also discovered that by Sept. 30, 1991, the FmHA had bought 3,100 farms from non-repaying debtors. The GAO found that FmHA management shortcomings, such as poor information systems and financial controls, caused long-standing loan management issues.
Farmer Home Administration closure
The Agriculture Reorganization Act of 1994 disbanded the FmHA in October 1995. The USDA Farm Service Agency took over its duties. After earlier reorganizations, USDA Rural Development took up these tasks.
What did FmHA do?
In 1946, the Farmers Home Administration (FmHA) guaranteed loans for rural families and farmers. It oversaw credit and technical support programs for housing, utility, commercial, and community development. USDA Rural Development handles them.
Why did FmHA end?
Congress requested a GAO inquiry in 1992 after many FmHA loans failed. Many issues connected to poor lending were uncovered. The FmHA was abolished in 1994 and transferred to the USDA Farm Service Agency and then to USDA Rural Development.
Conclusion
- After the Great Depression, the government founded the Farmers Home Administration (FmHA) to lend to farmers and rural communities.
- It’s now USDA Rural Development.
- The FmHA failed by the 1990s owing to poor lending, according to the GAO.
- October 1994 saw the FmHA disband, and its tasks moved to another USDA department.
