Q & A from Zone Meetings
Three of the 4 zone meetings are done. Below are some responses we have received from Chris Beyerhelm on questions that were asked at the zone meetings.
1. Can the maximum interest rate for guaranteed loans be posted monthly along with the other interest rates?
RESPONSE. The 3-Month LIBOR and 5-year Treasury Rate links are available on FSA's guaranteed web page and also in GLS. These links provide current and historical interest rates for each of these indices, and are readily available to view. Since the 3-Month LIBOR and 5-Yr Treasury rates may change daily, posting interest rates for each of these indices along with direct loan interest rates would not be practical.
The National Office has been monitoring interest rates being charged and our analysis indicates lenders are complying with the new interest rate procedures. A future amendment to 2-FLP will only require Agency personnel to review the interest rates at time of lender review, rather than at loan closing or restructuring.
2. In DLS the county office has to process a waiver of borrower training EVERY time they process a loan-once it is waived why does the county office have to get a request for waivers from the borrower and process it in DLS every time?
RESPONSE. The borrower training requirements are statutory and we have been advised by OGC that a borrower training decision must be made on every loan request. However, this should not require any additional input from the customer or time consuming activities by the loan officer. Once the required documentation has been provided by the customer and the initial decision to waive borrower training made, each subsequent year should be a "check the box" in DLS exercise. The National office will look to revise the request for waiver form so it will apply to multiple years thus alleviating the need for its collection each year.
3. Can loan approval limits for guaranteed loans float with the annual increase in guaranteed loan limit amount?
RESPONSE. Yes, they could but given the relatively small increase in loans limits each year it would get difficult to keep up with. As an alternative, handbook language now gives states the ability to increase loan approval limits based on credit quality evaluations. To date, very few states have elected to increase loan approval authority. If, in the future, the guaranteed loan limit increases substantially, we will look at this issue again.
4. PLP lenders agreements were supposed to be changed by the national office to add the maximum interest rate language -why haven't county offices seen these changes ?
RESPONSE. As PLP lenders submit their Credit Management Systems (CMS) for amendments or renewal, the CMS is being updated to include maximum interest rate language including their risk-based pricing practices - if lender uses risk-based pricing to determine interest rates for their customers. If you have not seen any changes, it is because the lender's 2201 has not come up for renewal yet.
5. If we finance a pivot irrigation system on rented land and have to drill a well, can we use other collateral to cover the well part rather than try and get a 7 year land lease ?
RESPONSE. Yes, instead of getting a multiyear lease to address only the collateral issue the loan office could use other collateral. However, the bigger question is about ensuring the applicant have a lease duration to ensure use of the improvement over its useful life or to ensure that the applicant receives compensation for any remaining economic life upon termination of the lease. This requirement protects the borrowers' resources and is a good business practice. For example: if a loan officer ran a cash flow with irrigation and without irrigation and the difference in the irrigation cash flow (extra profit) was more than enough to cover the cost of the well over the life of the existing lease (three years), then it would be in everyone best interests. However, if the increased profit was insufficient to cover the cost of the well over the existing lease period, then an extended lease period would have to be established.
6. What is the status of updating the FLOT training book and test especially with changes in the farm bill?
Response: PDEED received updates from LMD and LSPMD to the program area tests, comprehensive test, and FLOT manuals between November 2013 and January 2014, just prior to the passage of the Farm Bill. LDM and LSPMD will be asked to complete another review to identify any additional updates required as a result of the Farm Bill. The target date for releasing the updated training is June 2014; however, prior to releasing any updates, a realistic projection of implementation dates for Farm Bill provisions that are not effective immediately will be needed to determine if these changes should be addressed as part of the required updates. If so, the release date may be delayed. (NOTES: 1. All updates to the training manual must be completed by PDEED staff. PDEED must coordinate test updates with EMSO prior to making the updates available. 2. DAFLP will have a minimum of three Farm Bill effective dates - immediate, final rule, and proposed/final rule - which will complicate completion of needed updates.)
7. Who will be the final approval official in FBP for FSFL loans (not the credit evaluation piece but the approving official to obligate funds)?
Response: For FSFL loans, the agency employee delegated FLP loan approval authority official will document their recommendation on the credit presentation form, select a status of "Recommend Approval" or "Recommend Decline" and provide the form to the County Committee, State Committee, or SED, as appropriate, for their approval. Once the County Committee, State Committee, or SED has either approved or denied the loan, the FLP loan approval official will select the "Approved" or "Declined" status, and document in the text box that the final determination was made by the County Committee, State Committee, or SED, on (date). The official final approval official will remain the County Committee, State Committee, or SED.
8. Can you verify that PTs and loan officers will get training in the business file part of MIDAS?
Response: FLP will work closely with DAFO and the MIDAS team to ensure all FSA employees that use SCIMS receive appropriate training when Business Partner is fully implemented in release 2.0. (Final decisions have not yet been made regarding the format for the training (AgLearn, Train-the-Trainer, etc.). It is likely the DAFO will work with SED's to identify the employees that should be trained and DAFLP will ensure DAFO includes appropriate FLP staff.
9. It seems like the new 2045 and 2040 require more work rather than less?
Response: The intent of the new 2045 and 2040 forms was to lessen the workload related to tracking normal and basic security. Apparently somewhere in the roll out of these forms there have been some misunderstandings of how they are to be used by the field and some errors on the NO part on how the forms were designed. Currently NO staff is working closely with NACS membership to clarify and revise handbook language and forms to better represent the intent of these changes.
10. Field is asking for a national policy on multiple year subordinations.
Response: The current handbook language authorizes the use of multi-year subordinations but requires individual states to issues state supplements to implement because of differing laws. Consequently, the National Office cannot issue direction covering all of the different state situations but will contact the Farm Loan Chiefs and encourage them to issue state supplements to allow multi-year subordinations.
11. What is the status of the Minority Farm Registry ?
Response: MFR was transferred back to the Department on September 30th. OAO is now responsible for processing all MFR registrations and sending participants applicable USDA announcements and event information. However, in accordance with the guidance outlined in Handbook 22-AO, Subpar. 41, employees will continue to promote sign up, as all USDA agencies are charged with that role. FSA no longer processes the registrations and are not the records holding office. An amendment to 22-AO is in the clearance process now to provide the new OAO address that registrations should be mailed to and additional guidance/templates to assist county offices.
NACS thanks Chris for taking time to provide us with the responses to the questions. The questions and the responses are representative of what can be accomplished when we have opportunities for face to face meetings with leadership.
Have an Unbelievable Day
Allen D. Hall
Men who have attained things worth having in this world have worked while others idled, have persevered when others gave up in despair, have practiced early in life the valuable habits of self denial, industry, and singleness of purpose. - Grenville Kleiser
Denise is a Farm Loan Manager from Nebraska. She was elected NACS President at the June 2018 Convention.