H.R. 6169 — Fair Credit for Farmers Act

This section provides a two-year deferral of principal and interest payments—from the date of enactment—on direct farm ownership, operating, or emergency loans (under the Consolidated Farm and Rural Development Act) to eligible borrowers (i.e., delinquent or financially distressed farmers or ranchers), excluding loans with terms of 12 months or less; extends the maturity date and repayment period of such deferred loans by two years; and authorizes exceeding applicable statutory maximum repayment periods by up to two years (e.g., 40 years under current law for farm ownership loans). The section further reduces the interest rate on all remaining principal of outstanding direct farm loans to eligible borrowers to 0.125% during the two-year deferral period (from rates limited to the average market yield on comparable U.S. obligations plus up to 1%, adjusted to the nearest one-eighth of 1%). Finally, the section requires lenders to waive guarantee fees on guaranteed farm loans to covered producers (i.e., limited resource, socially disadvantaged, beginning, or veteran farmers or ranchers) for at least two years from enactment, with authority for the Secretary of Agriculture to extend the waiver period by an additional 180 days.

This section inserts new section 375 in subtitle D of the Consolidated Farm and Rural Development Act (7 U.S.C. 1922 et seq.) to reform farmer program loans (i.e., direct and guaranteed farm ownership, operating, and microloans administered by the Farm Service Agency) and revises eligibility for direct farm ownership loans under section 302(b) (7 U.S.C. 1922(b)). New section 375 does the following: (1) Defines "adverse decision" (per 7 U.S.C. 6991) and "principal residence" (borrower's home plus up to 10 acres); (2) Requires determination letters for adverse decisions on farmer program loans, Farm Service Agency benefits, or the noninsured crop disaster assistance program (7 U.S.C. 7333) to include all known reasons, relevant regulations and handbook references, and online access instructions (to the maximum extent practicable), and prohibits reusing any unstated reason unless the applicant's circumstances have substantially changed; (3) Limits collateral for direct farmer program loans by (A) permitting a principal residence as security only if other assets are inadequate, (B) mandating partial release of the residence when other assets equal 100% of the remaining loan balance, (C) requiring liens for loan servicing up to 100% collateralization with the residence as the last resort, and (D) prohibiting security exceeding the loan amount; and (4) Prohibits any limitation on the number of years in which a borrower may close a farmer program loan. The section also applies these adverse decision requirements to the noninsured crop disaster assistance program and revises direct farm ownership loan eligibility to applicants with at least 1 year of substantial participation in farm or ranch management and business operations (replacing prior "sufficient training or farming experience" standard), with a waiver for qualified beginning farmers or ranchers who have a mentor relationship or other acceptable education or experience.

This section modifies National Appeals Division (NAD) hearing procedures for appeals of adverse USDA agency decisions (e.g., farm program denials). (1) It revises the burden of proof in evidentiary hearings from the appellant to the agency for appellants with adjusted gross income of not more than $300,000 in the previous year or as an average over the previous five years (previously, appellant bore the burden in all cases); (2) it requires agency heads implementing NAD final determinations to rely on the information used by NAD without conditioning implementation on additional information, except as specified in the decision letter.