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1964 actual

1966 estimate

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Under proposed legislation, 1966.- Proposed legislation

Program and Financing (in thousands of dollars)-Continued would amend title V of the Housing Act of 1949 to provide

Identification code

1965 for a program of insured rural housing loans. The

05-0-4220-0-3-352

estimate insured loan program would be supported by the special assistance and secondary market facilities of the Federal

Financing-Continued National Mortgage Association. A $350 million level of

21.93 Unobligated balance available, start of insured housing loans is anticipated if the insured loan

year..

-205,591 - 144,207 -109,213 program becomes operative early in 1966. Families in 24.93 Unobligated balance available, end of

year...

144,207 109,213 103, 408 the lower income levels would require an estimated $300 million annually, and an estimated $50 million annually

New obligational authority.--. would be needed for other applicants. In addition to the $200 million in loans made from the proposed new fund for later sale, it is expected that approximately

Relation of obligations to expenditures: 10 Total obligations..

368,517 375,556 358,366 $150 million in loans from private sources will be insured 70 Receipts and other offsets (items annually. The Rural housing insurance fund would be

11-17)--

-307,133 – 340,562 - 352,561 used for the farm labor housing and rental housing for

71 the elderly loans presently insured through the Agricul

Obligations affecting expenditures.. 61,384 34,994 5,805

72.98 Start of year: tural credit insurance fund. Authority to insure rental

Obligated balance...

652 housing for the elderly loans through the Agricultural

Receivables in excess of obligations.. -4.603

-11.990 credit insurance fund will expire on September 30, 1965,

74.98 End of year:

-652 but extension of this program is being proposed. All of

Obligated balance..
Receivables in excess of obligations..

11,990 23,902 these loans would be made and serviced by the Farmers Home Administration.

90 Expenditures.

56,129 47,636 17,717

1964 actual

1965 estimate

Cash transactions:
DIRECT LOAN ACCOUNT

93 Gross expenditures.

360,849 385,556 367,366 94 Applicable receipts.

-304,720 -337,920 -349,649 Direct loans and advances under subtitles A and B, and advances under section 335(a) for which funds are not otherwise available, of the Consolidated Farmers Home Administration Act of 1961 (7

1 Balances of selected resources are identified on the statement of financial

condition. U.S.C. 1921), as amended, may be made from funds available in the Farmers Home Administration direct loan account as follows: real estate loans, [$60,000,000] $40,000,000; and operating loans,

Direct loan account. - This account was established on $300,000,000, of which $50,000,000 shall be placed in reserve to be October 16, 1961, pursuant to section 338(c) of the Conused only to the extent required during current fiscal year under solidated Farmers Home Administration Act of 1961. the then existing conditions for the expeditious and orderly conduct

Real estate and operating loans are made under the of the loan program. (Department of Agriculture and Related Agencies Appropriation Act, 1965.)

authorities of subtitle A and B of the act to farmers

and ranchers and to associations unable to obtain credit Program and Financing (in thousands of dollars)

from other sources at reasonable rates. Loans made Identification code

under these and similar prior authorities are reported

1966 05-60-4220-0-3-352

estimate

and accounted for in this account. In 1965, the total

available for loans, including a $50 million reserve for Program by activities:

operating loans, is $360 million. In 1966, it is proposed Operating costs, funded:

to carry out the estimated loan program of $340 million Interest on borrowings

12,019 13,000 16,000 througħ utilization of receipts to the Direct loan account Costs incident to security for loans.

25 Provision for losses on current receiv

representing collections on loans outstanding. No new ables.. 2,598 2,497 2,305 borrowing authorization is estimated for 1966.

In addition to the direct loans, farm ownership and Total operating costs, funded.... 14,642 15,497 18,305

soil and water loans advanced by private lenders will be Capital outlay, funded:

insured within the annual statutory insurance authority Real estate loans:

of $200 million for these purposes. Legislation is being Farm ownership loans.

35,900 55,000 19.000 Soil and water loans...

proposed to increase this insured loan authority to $300 12,173 15,000 30,000

million. Contingent liabilities for these insured loans Total real estate loans.

48,073 70,000 49,000 are reflected in the Agricultural credit insurance fund Operating loans..

297,944 300,000 300,000 schedules.
Judgments and collateral acquired...

197
59

61

Real estate loans-a. Farm ownership loans.-Direct Total capital outlay...

346,213

349,061 and insured loans are made to farmers and ranchers for

acquiring, enlarging, or improving farms, including farm program costs, funded.. 360.855 385,556 367,366 7,662 -10,000 -9,000

buildings; for financing land and water development, use 10

and conservation including recreational uses and facili368,517 375,556 358,366

ties; for forestry development; for refinancing existing 14

indebtedness; and for loan closing costs. Loans are conReceipts and reimbursables from non

fined to farms which are not larger than family farms.

A loan cannot exceed $60 thousand in any case. In addi1-261,965 -292,717-301,690

tion, the indebtedness against a farm or other security, -102 -150 -200 including the amount of the loan, cannot exceed $60 thou

-211 -200 -215 -44,834 -47,485-50,444

sand or the normal value of the farm and any additional -22 -10

-12 l security.

13 370,059

Total
Change in selected recources

Total obligations ....
Financing:

Federal sources:
Repayments on loans...
Proceeds from sale of acquired prop-

erty......
Payments of judgments..
Interest revenue.
Other revenue..
750-100-6312

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1966 estimate

1963 actual

1965 estimate

1966 estimate

b. Soil and water loans.—Direct and insured loans are

Operating program: made to farmers and ranchers and to associations for the Revenue..

44,856 47,495

50,456 effective development and utilization of water supplies and

Expense.

27,055 28, 408 30,929 for the improvement of farmland by soil and water con

Net operating income. serving facilities and practices. Loans to associations

17,801 19,087 19,527 also are made for shifts in land use including the develop- Nonoperating income or loss: ment of recreational facilities. There is no limitation on

Proceeds from sale of acquired property: the size of farms that may be improved with loans to indi

Cash..

100 150 200 vidual farmers. For loans to individuals, a loan cannot

Loans receivable..

433

300 300 exceed $60 thousand in any case; in addition the indebted- Total proceeds from sale.

533 450 500 ness against a farm or other security, including the amount

Net book value of assets sold..

-543 -460

-510 of the loan, cannot exceed $60 thousand or the normal value of the farm and any additional security. For loans

Net nonoperating loss.

-10 -10 -10 to associations, the unpaid principal indebtedness is

Net income for the year.

17,791 19,077 19,517 limited to $500 thousand in the case of a direct loan and Analysis of retained earnings: start of year.

25,648 43,439 62,516 $1 million in the case of an insured loan.

Retained earnings, end of year.

43,439 62,516

82,033
SOIL AND WATER LOANS
(Dollars in thousands)

Financial Condition (in thousands of dollars)
1964 actual 1965 estimate
Number Amount Number Amount Number Amount

1964
Number of applications... 3,216

5,000
5,000

actual
Direct loans:
To individuals.
389 $1.053 500 $1,250 800 $2.000

Assets:
To associations..-
132 13,947 135 13,750 300 28,000

Treasury balance..

200,988 144,859 97,223 79,506 Insured loans:

Accounts receivable, net.

31,047 33,460 36,102 39,014 To individuals..

511 3,349

650
4,000 650 4,000
Loans receivable, net..

846,639 918, 136 982,250 1,016,669
To associations.
229 30,221 320 41.000 320 41,000

Property acquired through fore-
Proposed legislation..

70 5,000
closure...

399
399 339

229 Land and improvements.

92
86
86

86 Farm ownership and soil and water loans are repayable

Judgments, net.

529 551

568 581 in not more than 40 years and bear interest not in excess

Total assets. of 5%. Insured loans are made through the Agri

1,079,694 1,097,491 1,116,568 1,136,085 cultural credit insurance fund with funds advanced by Liabilities:

Current...

8
private lenders. Annual payments of principal and

14
14

14 interest to lenders are fully guaranteed. The law pro

Government equity: vides that lenders can receive up to 4}% interest of the 5%

Interest-bearing capital: Start of paid by the borrower. The maximum return to lenders is

year..

597,959 597,959

59_597,959 597,959 currently established at 472%. The Government retains at least one-half of 1% of the interest as an insurance

597,959 597,959

597,959 597,959 premium. The Administration services these insured Non-interest-bearing capital..-- 456,079 456,079 456,079 foans, makes collections, and pays the lender.

Retained earnings..

25,648 43,439 62,516
Operating loans.-- Direct loans are made to farmers and
ranchers for paying costs incident to reorganizing a

Total Government equity... - 1.079,686 1,097,477 1,116,554 1,136,071
farming system for more profitable operations; for a
variety of essential farm operating expenses such as the

Analysis of Government Equity (in thousands of dollars)
purchase of livestock, farm equipment, feed, seed, fertil-
izer and farm supplies; for financing land and water

Undisbursed loan obligations'. 26,436 34,097 24,097
development, use and conservation including recreational Undisbursed obligations to pay

1 uses and facilities; for refinancing indebtedness; for other costs chargeable to borrowers 1

1 farm and home needs; and for loan closing costs. Loans

Unobligated balance.

205,591 144,207 109,213

Invested capital and earnings. 847,659 919,171 are confined to operators of not-larger-than-family farms. The outstanding principal loan balance for operating loans Total Government equity.... 1,079,686 1,097,477 1.116,554 1,136,071 is limited to $35 thousand. Loans bear interest at 5% and may be made for periods up to 7 years, but may be re

· The changes in these items are reflected on the program and financing schedule.

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End of year.

59_59

456,079 82,033

15,097

1

103,408 983,243 1,017,565

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1964 actual

1965 estimate

1966 estimate

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Identification code

1964 actual

1965 estimate

1966 estimate

Object Classification (in thousands of dollars)

Loans may be made outside of such areas to eligible

applicants who have suffered severe production losses not Identification code 05-60-4220-0-3-352

general to the area. Loans also may be made to previ

ously indebted borrowers to permit orderly repayment of 33.0 Investments and loans..

356,498 362,556 342,366

such indebtedness. 43.0 Interest and dividends.

12,019 13,000 16,000 Loans_(a) Emergency loans.--Emergency loans are

made at 3% interest to eligible farmers, ranchers, or 99.0 Total obligations.

368,517 375,556 358,366

oyster planters and to domestic corporations or partnerships engaged primarily in farming, ranching, or oyster planting. Loans are made for any authorized purposes

for which operating, farm ownership, or soil and water EMERGENCY CREDIT REVOLVING FUND

loans may be made by the Farmers Home Administration. Program and Financing (in thousands of dollars)

(b) Other loans.--Where necessary to protect the Government's investment, obligations are incurred in connec

tion with outstanding loans to provide for payment of 05-60-4104-0-3-352

such costs as taxes and insurance. Such advances are

charged to the borrowers' accounts.
Program by activities:
Operating costs, funded:

Administrative expenses.The principal administrative 1. Administrative expenses.

4,205 4,320 4,320 expenses are related to the loan programs of the Farmers 2. Interest and other expenses.

296 413 396 Home Administration. These expenses are estimated at

$4.3 million in 1965 and 1966. Administrative expenses Total operating costs, funded.-- 4,501 4,733 4,716

for the Office of the General Counsel are estimated at $22 Capital outlay, funded:

thousand in 1965 and 1966. 3. Loans made: Emergency loans.. 50,646 64,000 64,000

Financing the program.-No new budgetary authoriza4. Judgments and collateral acquired... 19

13

23

tion is required for 1966. A net loss of $4.4 million is Total capital outlay, funded..--- 50,665

55_
64,013

estimated on an accrual basis. Expenditures are esti

mated to exceed receipts by $5.9 million on a cash basis Total program costs, funded.. 55,166 68,746 68,739

due primarily to excess loans made over receipts during Change in selected resources

-479

the year. During 1966, the program will be wholly 10 Total obligations....

54,688 68,746 68,739

financed by receipts from operations of the revolving fund.

Operating results and financial condition.—Revenue for Financing:

1966, consisting principally of interest on loans, is esti14 Receipts and reimbursements from non

mated at $2.4 million, compared to expenses of $6.8 Federal sources: Repayments on loans...

-62,115 -49,139 -60,569 million, resulting in an estimated loss of $4.4 million. A Proceeds from sale of acquired prop

net loss of $4.8 million is estimated for 1965, and a net erty

-19

loss of $3.9 million resulted in 1964. Payments on judgments.

--49 --50 -50 Loans receivable, after allowance for losses, are expected Revenue..

-2,245 -1.992 -2,357 21.98 Unobligated balance available, start of

to amount to $75.6 million on June 30, 1966, as compared

–39, 447 –49,188 -31,623 to $74.3 million on June 30, 1965, and $61.6 million on 24.98 Unobligated balance available, end of

June 30, 1964. year.

49,188 31,623 25,860 The Government investment at June 30, 1966, is exNew obligational authority

pected to be $102.8 million consisting of $205.8 million appropriated and donated, less a deficit of $103 million.

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This fund is authorized by subtitle C of the Consolidated

Net loss for the year. Farmers Home Administration Act of 1961, to finance Analysis of deficit:

Deficit, start of year. emergency loans in areas where agricultural credit is not readily available because of natural disasters. Loans are Deficit, end of generally confined to areas designated as emergency areas.

--89,920 -93,816 | -98,629

year.

-93,816 | -98,629 –103.059

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Interest revenue.

Fees and other revenues..

25.47 Unobligated balance lapsing (net repayment of borrowings from Treasury).. New obligational authority (authorization to spend public debt receipts) (permanent indefinite).

580

3

576 6.8

$6,801

2

2

9.2

$9,228

1964 actual

3.743

703 122,470 49,060

40,020 18

216.014

es

-146 -4,229 -2,555

-5

est

99.0

Total obligations..

54,688

68,746

68,739

45,156

14 5

6

700 2,296 358

3,354

219,368
1.168
220,536 27

26

27

-3,381
-6,367

-118,675 -21

-40,020 -6

1

1964 actual

1965 estimate

1966 estimate

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Program and Financing (in thousands of dollars)-Continued

Financing.–Net repayments to the Treasury in 1966

are estimated at $11.8 million and in 1965 at $16 million. Identification code 05-60-4140-0-3-352

Operating results and retained earnings.---Total revenue,

consisting principally of loan insurance charges is estimated Relation of obligations to expenditures:

at $8.8 million in 1966, an increase of about $1.2 million 10 Total obligations...

220,536 271,692 316,452 from 1965. 70 Receipts and other offsets (items 11-17).-175,379 -290,106 -326,968 Outstanding loans receivable of $72.4 million are

estimated at June 30, 1966. Retained earnings, available 71 Obligations affecting expenditures.- 45, 157 -18,414 -10,516 Obligated balance, start of year:

to cover future losses, are estimated to be $20.7 million at 72.98 Fund balance....

3,138 3,577 2,931 the end of 1966. These earnings, when added to the $1 72.47 Authorization to spend public debt

million appropriation and estimated borrowings of $52.8 receipts...

998 3,254 815 Obligated balance, end of year:

million from the Treasury, represent a $74.5 million 74.98 Fund balance....

-3,577 -2,931 -2,931

Government investment. 74.47 Authorization to spend public debt

Legislation will be proposed for establishing a Rural receipts..... -3,254 -815 -2.145 housing insurance fund which will be used to insure the

farm labor housing and rental housing for the elderly loans 90 Expenditures.

42,461 -15,329 -11,846

presently insured through this fund.

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93 94

Cash transactions:

Gross expenditures.
Applicable receipts.

218, 167 274,389 314,470 -175,706 -289,718 -326,316

POSITION WITH RESPECT TO INSURANCE AUTHORITIES

[In thousands of dollars)

1964 actual 1965 estimate 1966 estimate Farm ownership and soil and water

loans: Annual insurance authority----- 200,000 200,000 200,000

! Balances of selected resources are identified on the statement of financial condition.

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This fund is used to insure farm ownership loans, soil and water loans, farm labor housing loans and loans for rental housing for the elderly, as authorized by subtitle A of the Consolidated Farmers Home Administration Act of 1961, and sections 514 and 515(b) of title V of the Housing Act of 1949. The insurance endorsement on each insured loan includes an agreement by the Government to purchase the loan after a specified initial period of not less than 3 years, at the holder's option. The initial fund of $1 million is supplemented by loan insurance charges collected from insured loan borrowers and by borrowing from the Secretary of the Treasury: A portion of such loan insurance charges equal to at least onehalf of 1% of the outstanding principal obligations must be deposited to the fund to cover losses. The remainder of such charges may be used for administrative expenses. Loans other than farm labor housing loans may be made directly from the fund from available receipts or borrowings from the Treasury for the purpose of acquiring blocks of loans if there is reasonable assurance that the loans can be sold to investors without undue delay. With respect to loans made from this fund, not more than $25 million for farm ownership and soil and water loans and not more than $10 million for loans for rental housing for the elderly may be held in the fund at any one time. Interest paid the Secretary of the Treasury on borrowings is based on the current average market yield of outstanding marketable obligations of the United States having maturities comparable to the notes issued for borrowings from the Treasury for operation of the fund.

Budget program.-Capital outlay is estimated at $308.7 million in 1966, an increase of $39 million over 1965 and an increase of $92.7 million over 1964. Included in capital outlay is $147.7 million in 1965 and $153.2 million in 1966 for making loans from the fund which will later be sold on an insured basis. The increase in 1965 and 1966 in sale of loans from the fund is expected to result from the relatively favorable market for insured loans. Insured loans outstanding which are contingent liabilities against the insurance fund are expected to increase from $578.3 million on June 30, 1964, to approximately $788 million at June 30, 1965, and to $968 million by June 30,

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1966.

16,238

18,553

20,726

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