FARM SECURITY ADMINISTRATION

As administrative actions were taken to carry out the Farm Tenant Act, on September 1, 1937, the Resettlement Administration was renamed the Farm Security Administration (FSA).

For the ensuing 9 years, FSA carried on supervised credit programs with farm and home counseling by county office staff. The success of a large percentage of these borrowers helped strengthen family farm agriculture and helped the Nation meet its awesome food-producing challenges in World War II. By 1941 the FSA had made more than 13,000 loans to tenant families for the purchase of farms.

In 1942, FSA was given full responsibility for the water facilities program in the 17 western States.

FARMERS HOME ADMINISTRATION

By 1946, it was generally conceded both in and out of Congress and within the Agency itself that a restructuring of FSA was necessary; that some old Resettlement programs were no longer justified, others could be improved, and new programs would be needed in the postwar period.

Accordingly, in August 1946, Congress passed the Farmers Home Administration Act. This measure, which took effect in 1947, reconstituted FSA under the new name Farmers Home Administration.

Until 1974, Farmers Home Administration was commonly
referred to as "FHA," and often confused with other
agencies with the same initials, including the Federal
Housing Administration and Federal Highway Administration
In April 1974, USDA formally adopted "FmHA" as the Agency's
distinguishing acronym.

Combined in the new FmHA were some programs of FSA and the Emergency Crop and Feed Loan program. The latter, a service in short-term feed-seed-fertilizer loans to farmers in designated hardship areas, had been originated through USDA in 1918, and carried on during 1933-46 through Production Credit Associations of the Farm Credit Administration's agricultural credit system.

The Farmers Home Administration Act also gave FmHA new authority to insure loans made by banks, other agencies and private individuals, as well as to make direct Government loans. The Act brought an end to Rural Rehabilitation loans, of which over 3 million had been made since 1935 by the Resettlement and Farm Security Administrations. They totaled over $1 billion.

In its first 3 years, FmHA confined its operations to development of supervised farm ownership and farm operating loan programs, and to water facilities projects in the 17 western States.

EXPANSION OF FmHA SERVICES

The first of many additions to FmHA's portfolio of services, all made available to rural people through the well-established system of FmHA county offices came in 1949. These are highlights of the Congressional acts (1949 through 1980) that have molded FmHA's wide variety of services.

The Federal Housing Act of 1949 gave FmHA authority to make housing loans to farmers as a part of the national housing program. The Disaster Loan Act of 1949 originated the special emergency farm loan for recovery from losses inflicted by natural disaster.

The Water Facilities Act was amended in 1954 to apply nationwide, rather than limited to the 17 western States, and to let farm area water systems take on nonfarm customers in rural communities.

Rural development was given Federal program status by USDA administrative action in 1955. FmHA's first involvement was a pilot program of loans to small farmers who could not qualify for regular FmHA loans.

In 1959, FmHA began to make loans to local organizations covering the local share of cost in small watershed projects under Public Law 566.

Major overhauling and expansion of FmHA authorities came with passage of the Consolidated Farmers Home Administration Act of 1961. Its principal provisions:

raised limits on farmer loans to $60,000 for farm ownership, replacing a formula whereby each county's limit had been the average value of its family farms; and from $20,000 to $35,000 for farm operating purposes.

opened up the water system program to general rural population, including incorporated towns of up to 2,500. The loan limit on a project (previously $250,000) was raised to $500,000 for a direct FmHA loan, $1 million for an insured loan.

Also in 1961, the Federal Housing Act was amended to make nonfarm rural residents eligible for FmHA's direct housing loans. This new jurisdiction in rural housing extended to towns of up to 2,500 population.

Still more expansion of FmHA services came in 1962. The Senior Citizens Housing Act set up loans for low-rent apartment projects designed to meet the needs of people age 62 and over. This type housing was acutely lacking in rural communities.

Amendments to the Farmers Home Administration Act authorized loans for shift in land use to outdoor recreational facilities built primarily to benefit rural people. The agency began to make loans to family farmers to set up

farm based recreation and other nonagricultural enterprises that would add to family income, and for association grazing ranges where family farmers and ranchers share the use of more grazing land for livestock production.

A pilot program for rural renewal, delegated to FmHA, launched experiments in several States to develop better community facilities, improve homesites and better housing, and to attract new industry to underdeveloped rural areas. Rural renewal was discontinued as an experimental program in 1969.

FmHA also was authorized in 1962 to make loans covering local project costs in areas designated for benefits of a resource, conservation, and development program which, like the small watershed program, is supervised by USDA's Soil Conservation Service.

The Economic Opportunity Act of 1964 established loans to low-income rural people for small farm improvements or nonfarm enterprises that would add to family income. FmHA performed the lending through its county offices with funds provided by the Office of Economic Opportunity until 1971. The Agency made nearly 65,000 loans totaling $109.3 million to individuals and 1,476 loans totaling $21 million to cooperatives.

EXPANSION OF PROGRAMS TO PRESENT LEVELS

The expansion of old programs and enactment of new ones during the first 4 years of the 1960s raised FmHA's total loan and grant volume from the $300 million level of fiscal year 1960 to $750 million in fiscal year 1965.

Rural housing was changed from a program of direct loans to one primarily of insured loans, and population limit on towns served through FmHA was raised from 2,500 to 5,500. This opened the way for the greatly increased housing services for rural people.

In 1966, senior citizens and younger low-income families became eligible for FmHA rural housing loans or tenancy in rural rental housing.

In 1968, an overhauling of the Housing Act of 1949 established the interest-supplement housing loan program. It enabled some low-income families to pay as little as 1 percent interest, and provided for subsidized loans to developers of low-priced rental housing for low-income families and senior citizens. New programs also were enacted in 1968 for rural homesite development loans and for grants toward support of "self-help" home building group projects. Grants of up to 90 percent, as well as loans, were authorized for farm labor housing projects.

The Housing Act of 1970 raised the population limit to 10,000 for a rural community where FmHA housing loans may be made.

Rural towns

In 1965 the water facilities loan program was transformed into a loan-and-grant program for both water and waste disposal systems. of up to 5,500 were made eligible to be included in FmHA-financed projects, and the limit on FmHA financing of a project was raised to $4 million.

Congress in 1968 abolished a statutory annual ceiling of $450 million on FmHA insured loan authority for farm ownership and community facilities combined, and raised the national total authorization for water-waste disposal grants from $50 million to $100 million a year. In 1970, legislation was passed to remove technical barriers to the use of investor's FmHA-insured funds, rather than direct appropriated funds, for loans to tax-exempt public bodies such as municipalities and public service districts. That year marked the beginning of a period of rapid growth and increased service to small towns.

In farm credit programs, the agency took action in 1970 to increase its cooperation with other lenders in jointly serving farm borrowers, with FmHA taking a second lien when the same security is mortgaged both for the FmHA and other lender's loans. In 1971, the limit on a farm ownership loan secured by a mortgage on real estate was raised from $60,000 to $100,000.

The Rural Development Act of 1972 enacted August 20, 1972, gave USDA primary responsibility for Federal activities in support of rural development and established an Assistant Secretary for Rural Development to coordinate this effort through the programs and expertise of FmHA, Rural Electrification Administration (REA), and the Rural Development Service (RDS) which was merged with FmHA in 1977.

In its other principal provisions affecting FmHA, the act

Authorized FmHA to guarantee loans made by commercial lenders for
farming, for housing, and for rural business and industry including
enterprises in cities of up to 50,000 population.

Abolished the $4 million per project limit on FmHA financing of water and waste disposal systems, increased the national grant authorization for water and waste disposal to $300 million a year, and raised the population limit on towns included in FmHA-financed systems to 10,000.

Authorized FmHA loans for other kinds of essential community facilities
such as fire departments, community halls, hospitals, nursing homes,
and public recreation facilities.

Authorized FmHA grants to improve rural industrial sites.

* Authorized FmHA to make investor-funded insured loans for farm
operating purposes, and raised the limit on a farm operating loan
from $35,000 to $50,000.

Authorized youth loans to rural young people under age 21 for farm or nonfarm income-producing enterprises supervised through schools or organizations, such as in 4-H Club and Future Farmers of America programs.

* Set $225,000 as the maximum permissible debt against farm property on which FmHA and a cooperating lender may simultaneously hold liens. This enabled FmHA to participate in larger loans up to its limit of $100,000 to family farmers and ranchers.

The emergency loan program to help farmers recover from natural disaster underwent a short-lived expansion in 1972. An act of Congress, stimulated by the Hurricane Agnes disaster in northeastern States, liberalized emergency loan terms nationwide and decreed nonrepayment of the first $5,000 to cover actual loss. After the cost mounted to about $550 million within a few months, the program was suspended, and Congress in 1973 returned emergency loans to a fully repayable basis. Legislation in 1975 established separate categories of disaster emergency loans to cover losses and to finance resumption of farm production operations. Under the Small Business Development Act of 1980, FmHA was given authority to make unsubsidized emergency loans to farmers who are able to get credit from commercial lenders. The law limits loans to these credit-worthy borrowers for actual loss only.

A special Emergency Livestock Credit Act for FmHA guarantee of commercial lenders' loans to livestock and poultry producers in financial distress was enacted July 25, 1974. The program expired September 30, 1979. Under terms of the program, FmHA guaranteed a maximum $350,000 of commercial credit for an eligible borrower. Loan guarantees totaling $1.5 billion of principal outstanding were authorized. About $1 billion of this credit was used by farmers and lenders.

Under amendment of the National Housing Act passed in 1974, FmHA in 1976 introduced its housing loans into towns of 10,000 to 20,000 population that are outside Standard Metropolitan Statistical Areas (SMSA's) and certified by the Secretaries of Agriculture and Housing & Urban Development (HUD) to be lacking in mortgage money from other sources. Later in 1976, Congress revised the criteria for serving the larger non-SMSA communities by specifying that consideration be based on shortage of mortgage loan funds for families of low and moderate income. Housing Act amendments of 1974 also authorized extension of FmHA housing loan services to U.S. island territories, including trust territories in the Pacific (service was initiated on Guam in 1976 and other islands in 1977), and eventual lending on mobile homes and condominium housing (not implemented as of 1980).

The guarantee of commercial lenders' housing loans to families of moderate income was implemented in January 1977 under authorities provided in the Housing and Rural Development acts. However, under the Housing Act amendment of 1977, guarantee of housing loans was limited to the service of above-moderate-income families. In 1977, FmHA also implemented grants to very-low-income senior citizens for repair of badly deficient houses, and an authority under housing legislation of 1974 to provide rental assistance supplementing rent paid by low-income tenants of FmHA-financed rental housing.