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Funds for program operations:

Funds expended:

Loans made by the fund

Purchase of loans and certifi- :

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: Irrig.:Resource: & : Cons. & Loans: tion : Drain.: : Loans Loans

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Dev.

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Flood &: Indian: Emergency: Live-:Economic : Inac-: Total : Water : Land Disaster: Stock: Emergency:tive: Loans : Loans Loans : Loans : Loans: Loans :Loans:

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:1,420,000:1,472,523:47, 100: 4,800: 120: 7,400:

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cates of beneficial ownership: 289,364: 356,398: 3,700: 3,171: 5,197: 352: Collections disbursed to

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:4,926,920

88: 880,865

30,000

: 2,556,498

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:1,973,287:2,406,053:84,836: 17,102: 16,616: 10,160:

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Payment of interest on loans . : 248,810: 396,485:22,733:

2,960: 3,700: 1,110: 6,444:

740:

3,700:

7,697:

1,611:

1,074:

5,549:

Sale of cert. of benef. owner..:

349,474: 538,042:17,750: 692:

461:

691:

461:

922:

6,034: 22,049: 22,457:3,192,215:13,826:

1,110:1,977,280:

6,265: 698,816: 4,149: 645,466:

722,643:

88:8,487,366

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Collections received for

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investors .....

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398:

22,252:

152:

1,075: 780:

72:

92:

115:

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64:

Insurance premiums and guarantee fees

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: 132:

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303: 2,469: 9,267: 323: 1,431,563:1,222,019:57,608: 11,334: 12,811:

163:

173:

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OUTLAYS

541,724:1,184,034:27,228: 5,768. 3,805: 6,644:

3,548: 11,673: 10,792: -138,369:13,836-1,031,245:

855 26,660

:7,847,750

88: 639,616

The following schedule presents an analysis of change in the cash position of the fund.

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As of September 30, 1982, the principal amount of contingent liabilities under

insurance programs is estimated to be $25,541,984 million.

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The interest subsidy associated with the FY 1982 total program level is estimated to be $428,347,648 over the first five years.

The fiscal year 1982 farm loan program proposals reflect a shift in funding emphasis from emergency loans to the recurring farm ownership and farm operating loans. This shift is consistent with implementation of the expanded crop insurance program in the Federal Crop Insurance Corporation (FCIC).

EXPLANATION OF PROGRAM

This fund is used to insure or guarantee farm ownership, recreation, soil and water, farm operating and emergency loans to individuals, as well as the following types of loans to associations: irrigation and drainage, grazing, Indian tribe land acquisition, watershed protection, flood prevention, and resource conservation and development.

Loans may be made by the fund from available receipts or borrowings from the Treasury. Loans made by the fund are held in a pool as security for certificates of beneficial ownership which are sold primarily to the Federal Financing Bank. FmHA is also authorized to provide financial assistance to borrowers by guaranteeing loans made by private lenders having a contract of guarantee from FmHA as approved by the Secretary.

Public Law 92-419, approved August 30, 1972, abolished the Farmers Home Administration Direct Loan Account and the Emergency Credit Revolving Fund and provided for transfer of the assets and liabilities of, and authorizations applicable to, these accounts to the Agricultural Credit Insurance Fund. It also provided for transfer from the Agricultural Credit Insurance Fund to the Rural Development Insurance Fund of the assets and liabilities of the Agricultural Credit Insurance Fund applicable to loans for water systems and waste disposal facilities.

Real Estate Loans to Individuals

Subtitle A of the Consolidated Farm and Rural Development Act contains the authorizations for farm ownership loans, recreation loans to individuals, and soil and water loans to individuals. Soil and water and recreation loans to individuals are each contained as a separate type of loan because the law sets forth eligibility requirements for these loans that differ somewhat from the eligibility requirements for farm ownership loans. In most respects, however, soil and water and recreation loans to individuals and farm ownership loans to individuals are subject to similar authorizations and limitations but not purposes.

Farm Ownership Loans. Farm ownership loans accompanied by supervisory assistance in farm and financial management are needed to preserve and improve the family farm pattern of American agriculture and to strengthen the economy of rural communities.

Farm ownership loans are used for:

1.

In many

Maintaining family farms: Owner-operators of this group of farms who are eligible for Toans continue to need farm ownership loan assistance. cases this assistance will be needed to help families restructure their debts. Others need to utilize their real estate equities to refinance heavy short-term debts. In some instances the owner-operators need real estate credit and assistance to make further adjustments in their operations, comply with local sanitation and pollution abatement requirements, keep up with advances in agricultural technology, better utilize their land and. labor resources and meet changing market requirements.

Farm ownership loans are also available to finance income producing recreational enterprises or other nonfarm enterprises.

2. Purchase and development of farms: One of the functions of the farm ownership loan program is to assist farmers in the purchase and enlargement of farms. Applicants eligible for these loans need assistance in combining small tracts of land, making basic soil improvements, establishing permanent

pastures, improving or constructing dwellings and essential farm buildings, adding a nonfarm enterprise and taking other measures to increase the efficiency and income-producing capacity of their holdings.

Farm ownership loans are made to eligible individuals who (1) are U.S. citizens or aliens lawfully admitted to the United States for permanent residence, (2) have either training or farm experience or other training or experience which is determined to be sufficient to assure reasonable prospects of success in the proposed operation, (3) are or will become owner-operators of not larger than family farms, and (4) are unable to obtain sufficient credit elsewhere to finance their actual needs at reasonable rates and terms, taking into consideration prevailing private and cooperative rates and terms in the community in or near which the applicant resides for loans for similar purposes and periods of time.

Loans are made for 40 years or less. An insured loan may not exceed $200,000 and a guaranteed loan may not exceed $300,000. The borrower is charged not more than the cost of money interest rate for insured loans except for low-income limited resource borrowers who may initially be charged a lower interest rate. The interest rate for guaranteed loans is negotiated by the lender and the borrower.

Recreation Loans. Recreation loans are made to individuals, cooperatives, corporations or partnerships that are engaged in farming either as a tenant or owner, at the time the application is filed. The loan limit is $200,000 for an insured loan and $300,000 for a guaranteed loan. The repayment period may be

up to 40 years. Funds may be used to convert all or a portion of the farm to an outdoor income-producing enterprise which will supplement or supplant farm income. The operation is not limited to a family size operation after the loan

is made.

Soil and Water Loans. Soil and water loans are made to individuals, Cooperatives, corporations or partnerships that will operate a farm, either as a tenant or owner, after the loan is made. Applicants must be unable to obtain sufficient credit elsewhere to finance actual needs at reasonable rates and terms prevailing in the community where the farm is located.

Soil and water loans to individuals may be made for land and water development, use and conservation including pollution control and energy saving measures.

Loans to Associations and Groups

Subtitle A of the Consolidated Farm and Rural Development Act contains the authorizations for association loans and Indian tribe land acquisition loans. The following types of association loans authorized under subtitle A are currently made from the Agricultural Credit Insurance Fund: irrigation and drainage, grazing and Indian tribe land acquisition loans. In addition, watershed works of improvement and flood prevention loans are made to associations under the Watershed Protection Act, as amended (Public Law 83-566) and resource conservation and development loans are made to associations under section 102 of Public Law 87-703, and other existing Department authorities. Irrigation and Drainage Loans. Irrigation and drainage loans are made to organizations primarily composed of farmers, ranchers, certain Indian tribes, and other rural residents for projects which include: the application or establishment of soil conservation practices; the construction, improvement, or enlargement of facilities for drainage and the conservation, development, use or control of water, primarily serving farmers and other rural residents. These loans are made at no less than the cost of money interest rate for 40 years or less.

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