As I pointed out, on water and sewer grants the amount frozen at the direction of the Office of Management and Budget is $56 million. I also take note at this time for the record of other reserves due to a large carry-over of funds from the preceding year as follows: Rural housing for domestic farm labor, $1,266,980.

Mutual and self-help housing, $45,000.

Self-help housing, land development fund, $400,000.

At this point, too, I would like to insert pages 118 to 180 of volume 3 of the justification material.

(The pages follow :)

FARMERS HOME ADMINISTRATION

Purpose Statement

The Farmers Home Administration, established November 1, 1946, by the Farmers Home Administration Act of 1946, conducts the following activities:

1.

Farm ownership loans. Loans are made to farmers and ranchers for acquiring, enlarging, or improving farms, including dwellings and farm buildings; land and water development, use and conservation; forestry development; recreational facilities; the development of nonfarm enterprises on farms; refinancing indebtedness, and for loan closing costs. Loans are limited to farms which are not larger than family farms and cannot exceed the normal value of the farm or $100,000, whichever is the lesser. The loan limitation includes the unpaid indebtedness against the farm or other security. Loans are repayable in not more than 40 years and bear interest not in excess of 5 percent. Insured loans are made with funds advanced by private lenders and payments of principal and interest to the lenders are fully guaranteed. The Administration services these insured loans, makes collections, and pays the lender.

2. Recreation loans. Loans are made to farmers and ranchers for converting all or a portion of the farms or ranches they own or operate to outdoor income-producing recreation enterprises which will supplement or supplant farm income and permit carrying on sound and successful operations. Recreation loans to individuals are insured on the same basis as insured farm ownership loans.

3.

4.

5.

6.

Soil and water loans to individuals. Loans are made to farmers, ranchers, and non-operator owners for land and water development, use and conservation. Direct land conservation and development loans are made in the Appalachian region to establish and carry out land stabilization, conservation and erosion control practices. Loans may be made on farms of any size. A loan cannot exceed the normal value of the farm or $100,000, whichever is the lesser. The loan limitation includes the unpaid indebtedness against the farm or other security. Loans are repayable in not more than 40 years and bear interest not in excess of 5 percent. Soil and water loans to individuals are insured on the same basis as insured farm ownership loans.

Loans to associations. Loans are made to public and nonprofit associations for the effective development and utilization of water supply and waste disposal systems and for the improvement of land by soil and water conserving facilities and practices. Loans to associations may also be made for shifts in land use, including grazing, the development of recreational facilities and for irrigation development. Loans to associations are authorized in designated areas to repair or replace certain public facilities damaged or destroyed by a major disaster. Association loans may be made to serve residents of open country and rural towns and villages of not more than 5,500 population, which are not part of an urban area. The unpaid principal indebtedness of a loan, together with the amount of any grant assistance, is limited to $4,000,000. Loans are repayable in not more than 40 years and bear interest not in excess of 5 percent. Association loans are insured on the same basis as insured farm ownership loans.

Indian tribe land acquisition loans. Loans are made to qualified Indian tribes or tribal corporations to acquire land or interests in land within the tribes' reservation or Alaskan Indian community, as determined by the Secretary of the Interior. These loans are insured on the same basis as insured farm ownership loans.

Grants for the preparation of comprehensive plans which coordinate the develop ment of water and waste disposal systems in rural areas. Planning grants may be made to public bodies such as counties, townships, planning commissions, and similar units of government, and such other agencies as may have authority to

prejete suck offiesel computiens.ve pleas. The amount of each grant will be limited to the actual expense for the preparation of the plan which is outside the normal budget of the recipient organization.

7. Grants for water and waste disposal development. Development grants are made to associations, including corporations operating on a nonprofit basis, municipalities, and similar organizations, generally designated as public or quasi-public agencies, that propose projects for the development, storage, treatment, purification, and distribution of domestic water or the collections, treatment, or disposal of waste in rural areas. Development grants to associations also are authorized in designated areas, under limited conditions, to repair or replace certain public facilities damaged or destroyed by a major disaster. Grants may not exceed 50 percent of the development cost of the projects and supplement other funds borrowed or furnished by applicants to pay development costs. No grant may be made which, together with any unpaid principal loan indebtedness of any association owed to the Farmers Home Administration, would exceed $4,000,000 at any one time.

8. Operating loans. Loans are made to farmers and ranchers for costs incident to reorganizing a farming system for more profitable operations; for a variety of essential farm expenses such as purchase of livestock, farm equipment, feed, seed, fertilizer, farm supplies, and other essential operating expenses, including cash rent, and costs incident to the production and harvesting of forestry products; for financing land and water development, use and conservation; for recreational uses and facilities; for costs incident to nonfarm enterprises on farms; for refinancing indebtedness; for other farm and home needs; and for loan closing costs. Loans are confined to operators of not larger than family farms. The outstanding principal loan balance for operating loans is limited to $35,000. Loans bear interest at a rate based on the average rate paid by the U. S. Treasury on obligations with a similar maturity period. The rate for the 1971 fiscal year is 7-7/8 percent. Loans may be scheduled for payment over periods from 1 to 7 years depending on loan purposes. In some situations, they may be renewed for not more than 5 additional years.

Loans are secured by crop and chattel liens and, when

necessary, by real estate mortgages.

9. Emergency loans. Loans are made in designated areas where a natural disaster has caused a general need for agricultural credit which cannot be met for temporary periods by private, cooperative, or other responsible sources, including the Farmers Home Administration in its regular loan programs. Emergency loans are made to eligible established farmers, ranchers or oyster planters, and to private domestic corporations or partnerships engaged primarily in farming, ranching or oyster planting. Emergency loans are made primarily for financing farm operating needs, family living expenses, and a number of closely related purposes. Loans bear interest at a rate not in excess of 6 percent and are repayable over periods not longer than regular loans made by the Farmers Home Administration for similar purposes. Loans may be made outside of designated emergency areas under certain conditions to persons or corporations who have suffered severe production losses not general to the area as a result of a natural disaster, or to persons who are indebted for emergency loans made under prior authorities. Public Law 91-606, approved December 31, 1970, authorized loans in areas where the President has declared a major disaster, with special provisions for refinancing real estate debts under restricted conditions, for cancellation of a portion of principal up to $2,500, and for deferment of interest and principal payments up to three years on loans for other than operating expenses.

10. Rural housing loans. Insured and direct building loans to individuals are made to enable eligible applicante in rural areas to construct, improve, alter, repair or replace dwellings and essential farm service buildings. Loans may include funds to buy a house, building site and farm service buildings. If the borrowers are persons of low or moderate incomes, and if their need for

11.

necessary housing cannot be met with financial assistance from other sources, including assistance available under section 235 of the National Housing Act, the insured loans made by the Farmers Home Administration in fiscal year 1971 will bear interest at 7- percent with provision for interest credits up to 6- percent under certain circumstances. Such loans may not exceed amounts necessary to provide adequate housing, modest in size, design and cost. Insured loans to persons other than those of low or moderate income were made in fiscal year 1970 at a rate of 8-4 percent interest plus a 1⁄2 of one percent insurance charge. Insured and direct building loans are made to farm owners, owners of other real estate in rural areas, others who are or will become rural residents, and long-term farm leaseholders. These loans are repayable in not more than 33 years. Loans are limited to rural areas which include towns, villages or other rural places with a population up to 10,000 inhabitants.

Insured rural housing loans are made with funds advanced by private lenders and payments of principal and interest to the lenders are fully guaranteed. The Administration services these insured loans, makes collections and pays the

lender.

The Farmers Home Administration, under authority delegated by the Department of Housing and Urban Development, helps to develop the insured interest supplement loans of the Federal Housing Administration when these loans are made in rural areas.

There are three types of direct rural housing loans to individuals to which interest credits do not apply:

(1)

Natural disaster loans are made at not in excess of 6 percent interest for not more than 33 years to provide for repair or replacement of farm or rural dwellings, farm service buildings and related facilities damaged by a natural disaster.

(2) Small buildings loans of $1,000 or less are made at 7- percent interest in fiscal year 1971 for not more than 10 years if a local lender is not available to make the loan on an insured basis.

(3) Repair and improvement loans of $2,500 or less are made at one percent interest for not more than 10 years only to very low-income families who are owners of farms or nonfarm rural property to repair or improve their dwellings and essential farm buildings in order to make them safe and sanitary or to remove health hazards to the families or the community. Such loans which involve water supply, septic tanks, or bathroom and kitchen plumbing facilities may be made in amounts not in excess of $3,500.

Insured rural rental and cooperative housing loans. Insured loans are made to individuals, corporations, associations, trusts, or partnerships to provide moderate cost rental or cooperative housing and related facilities for elderly persons and other persons of low or moderate income in rural areas. These loans are repayable in not more than 50 years and bear interest in fiscal year 1971 at 7- percent with provision for interest credits up to 6-4 percent under certain circumstances. These loans are made only if the need for necessary housing cannot be met with financial assistance from other sources, including assistance available under section 236 of the National Housing Act. No loan may exceed $750,000. Loans are limited to rural areas which includes towns, villages or other rural places with a population up to 10,000 inhabitants. Rural rental and cooperative housing loans are insured on the same basis as insured housing loans to individuals. The Farmers Home Administration, under authority delegated by the Department of Housing and Urban Development, will help to develop the insured interest supplement loans of the Federal Housing Administration when these loans are made in rural areas.

12.

13.

14.

15.

16.

17.

18.

Direct rural rental and cooperative housing loans. Direct loans are made to private nonprofit corporations and consumer cooperatives to provide modest cost rental or cooperative housing and related facilities for elderly persons with low or moderate income or other persons of low income in rural areas. These direct loans are repayable in not more than 50 years and bear interest at a rate of 3 percent. No loan may exceed $750,000. Loans are currently limited to indebted borrowers.

Farm labor housing loans. Insured loans are made to a farm owner or to a broad-based public or private nonprofit organization or to a nonprofit organization of farm workers to provide modest living quarters, basic household furnishings, and related facilities, including land necessary for an adequate site, for domestic farm labor. These loans, which are made with funds advanced by private lenders, are repayable in not more than 33 years and bear interest not in excess of 1 percent. Farm labor housing loans are insured on the same basis as insured rural housing loans to individuals.

Financial assistance to a broad-based public or private nonprofit organizations or to a nonprofit organization of farm workers for low-rent housing and related facilities for domestic farm labor. Grant assistance, not to exceed 90 percent of the total development costs, may be provided for new structures or rehabilitation of existing buildings suitable for dwelling use by domestic farm labor. Funds also may be used for essential related facilities such as dining halls, community rooms or buildings, infirmaries or other essential services, including basic household furnishings.

Financial assistance to local organizations to promote mutual or self-help housing. These grants are especially designed to aid the development of comprehensive plans to permit an expansion of mutual or self-help housing programs under which groups of families build their own homes by mutually exchanging labor.

Loans for purchase and development of land to be subdivided into building sites and sold on a nonprofit basis to low-income families or to organizations for rental or cooperative housing. Site loans are insured on the same basis as insured housing loans to organizations. Direct site loans are made at 3 percent interest for a two-year period to develop building sites for sale in connection with self-help projects. Insured loans are made at 7- percent interest in fiscal year 1971 for a two-year period.

Watershed works of improvement and flood prevention loans to sponsors of projects approved for operation by the Soil Conservation Service. Direct loans are made to local organizations for installing, repairing or improving works of improvement and water storage facilities, purchasing sites or rights-ofway and for related costs. Watershed works of improvement and flood prevention loans are repayable in not more than 50 years at an interest rate based on the average rate paid by the U. S. Treasury on obligations of similar maturity. The rate for the 1971 fiscal year is 3.463 percent. Total loans outstanding on any one project may not exceed $5,000,000.

Resource conservation and development loans to sponsors of projects approved for operation by the Soil Conservation Service. Direct loans are made to local organizations and individuals for planned conservation measures and works of improvement as specified in approved work plans. Resource conservation and development loans are repayable in not more than 30 years, with repayment of principal and interest deferred up to 5 years, if necessary. Loans bear interest at a rate based on the average rate paid by the U. s. Treasury on obligations of similar maturity. The rate for the 1971 fiscal year is 3.463 percent.