USDA Provides $208 Million to Prevent Guaranteed Borrower Foreclosures and Assist Emergency Loan Borrowers
- Author: Marion Harris
- Posted: 2024-08-03
The U.S. Department of Agriculture (USDA) has announced a significant financial assistance program, providing around $208 million to help prevent foreclosures among qualifying farm and emergency loan borrowers.
This initiative, made possible by the Inflation Reduction Act, supports distressed borrowers and reinforces President Biden's Investing in America agenda. The program aims to keep farmers on their farms, improve loan servicing, and provide long-term stability in the agricultural industry.
Preventing Foreclosures
To mitigate the risk of foreclosures, the USDA will allocate approximately $80 million to cover delinquencies for about 210 borrowers. These borrowers have guaranteed loans that were flagged for liquidation as of November 30, 2023.
Additionally, the agency will provide approximately $128 million to assist approximately 1,120 borrowers with outstanding direct Emergency Loans as of the same date.
The USDA will address distressed borrowers currently in bankruptcy through a case-by-case review process, ensuring fair treatment and access to financial aid.
A Different Course
Agriculture Secretary Tom Vilsack highlights the USDA's commitment to farmers, especially in comparison to the farm financial crisis of the 1980s.
Vilsack emphasizes the agency's efforts to implement credit reforms, encouraging lenders and borrowers to work together with local offices and cooperators to explore all available flexibilities before considering foreclosures or liquidation.
The Inflation Reduction Act serves as a turning point in improving support for farmers during difficult times.
Ongoing Assistance
Since the Inflation Reduction Act was signed into law in August 2022, the USDA's Farm Service Agency (FSA) has provided approximately $1.7 billion in immediate assistance to over 30,000 distressed borrowers.
This ongoing effort aims to enable borrowers to continue farming, remove barriers preventing their return to agricultural activities, and enhance the borrowing and loan servicing processes.
The USDA is constantly developing additional options to prevent avoidable guaranteed loan foreclosures.
Individual Assistance Requests
Apart from the announced assistance, the FSA continues to accept individual assistance requests from direct loan borrowers facing cash flow issues or those who have taken extraordinary measures to avoid delinquency.
Distressed borrowers who missed recent installments or are unable to make upcoming scheduled payments on qualifying direct farm loans can request assistance.
The FSA office can be visited in person or requests can be submitted electronically through farmers.gov until December 31, 2023.
Important Tax Information
Payments provided to borrowers and applied to FSA farm loan accounts will be reported to the Internal Revenue Service. While borrowers will receive a 1099 form from the agency, it is essential to note that payments exceeding $600 will be subject to federal and state income taxes.
The USDA recommends consulting a tax professional for advice on tax implications related to the Inflation Reduction Act assistance. Further tax-related resources are available at farmers.gov/taxes.
Conclusion
The USDA's commitment to providing financial assistance to distressed farm and emergency loan borrowers underscores its dedication to supporting the agricultural sector. By preventing foreclosures and assisting borrowers facing financial challenges, the agency aims to promote long-term stability and success in American farming.
The assistance programs introduced under the Inflation Reduction Act reinforce the USDA's transformational approach to create a resilient food system, ensure equitable access to nutritious food, and foster a sustainable future for farmers across the nation.
