WASHINGTON–Citing the ongoing COVID-19 crisis, the U.S. Department of Agriculture has announced the temporary suspension of past-due debt collections and foreclosures for distressed borrowers under the Farm Storage Facility Loan and the Direct Farm Loan programs administered by the Farm Service Agency.
While most credit unions do not engage in significant or even modest agriculture lending, some CUs specialize in ag loans and have large portfolios that will be affected by the Agriculture Department announcement.
The USDA said it will temporarily suspend nonjudicial foreclosures, debt offsets or wage garnishments, and referral of foreclosures to the Department of Justice, and will further work with the U.S. Attorney’s Office to stop judicial foreclosures and evictions on accounts that were previously referred to the DoJ.
In addition, the USDA said it has extended deadlines for producers to respond to loan servicing actions, including loan deferral consideration for financially distressed and delinquent borrowers. In addition, for the guaranteed loan program, flexibilities have been made available to lenders to assist in servicing their customers.
According to USDA data, more than 12,000 borrowers — approximately 10% of all borrowers — are eligible for the relief. Overall, FSA has lending relationships with more than 129,000 farmers, ranchers and producers.
‘Relief & Support’
“USDA and the Biden administration are committed to bringing relief and support to farmers, ranchers and producers of all backgrounds and financial status, including by ensuring producers have access to temporary debt relief,” said Robert Bonnie, deputy chief of staff, Office of the Secretary, in a statement. “Not only is USDA suspending the pipeline of adverse actions that can lead to foreclosure and debt collection, we are also working with the Departments of Justice and Treasury to suspend any actions already referred to the applicable agency. Additionally, we are evaluating ways to improve and address farm-related debt with the intent to keep farmers on their farms earning living expenses, providing for emergency needs and maintaining cash flow.”
The temporary suspension is in place until further notice and is expected to continue while the national COVID-19 disaster declaration is in place, USDA said.