Direct Farm Loan Application National Processing Times Were Longer for Hispanic Farmers than for Non-Hispanic Farmers but Were Shorter in Most States with Large Numbers of Hispanic Borrowers

Although the average direct loan application processing time was longer for Hispanic farmers than for non-Hispanic farmers during fiscal years 2000 and 2001, over 90 percent of loan applications from Hispanic farmers (and 94 percent from non-Hispanic farmers) were processed within the agency’s 60-day requirement. During fiscal year 2000 and 2001, the national average processing time for direct loans from Hispanic farmers was 20 days—4 days longer than for non-Hispanic farmers—but well within FSA’s 60-day requirement. However, the loan approval rate for Hispanic farmers was lower than for non-Hispanic farmers during this 2-year period—83 and 90 percent, respectively. In cases where individuals file an administrative discrimination complaint with USDA’s OCR, agency policy is to automatically issue a stay of adverse action—including foreclosures—until the complaint has been resolved. The department has not issued stays of foreclosure in either of these lawsuits. To put these figures into context, during this period, FSA foreclosed on approximately 600 borrowers, 16 (or 3 percent) of whom were Hispanic. Office of Civil Rights’ Problems with Processing Discrimination Complaints Persist

Despite implementing many improvements recommended by USDA’s Inspector General and task forces, OCR has only made modest progress in its timely processing of complaints. Specifically, USDA’s internal requirements direct OCR to complete its investigative reports within 180 days after accepting a discrimination complaint. Conclusions

The purpose of USDA’s direct loan program is to provide loans to farmers who are unable to obtain private commercial credit. However, unless OCR reduces the time it takes to process complaints, the inventory will expand once again. 4.
Why GAO Did This Study

The Farm Service Agency (FSA) runs a direct loan program that provides loans to farmers who are unable to obtain private commercial credit to buy and operate farms. FSA is required to administer this program in a fair, unbiased manner.

What GAO Found

GAO found that during fiscal years 2000 and 2001, FSA averaged 4 days longer to process loan applications from Hispanic farmers than it did for non-Hispanic farmers: 20 days versus 16 days. However, the processing times in three of the four states with the highest number of Hispanic borrowers was faster that it was for non-Hispanic borrowers in those states. FSA's direct loan approval rate was somewhat lower for Hispanic farmers than for non-Hispanic farmers nationwide--83 and 90 percent, respectively. The Department of Agriculture's (USDA) policies for staying foreclosures when discrimination has been alleged depend on the method used to lodge complaints. When an individual has a discrimination complaint accepted by USDA's Office of Civil Rights (OCR), FSA's policy is to automatically issue a stay of foreclosure until the complaint has been resolved. A GAO survey revealed that during fiscal years 2000 and 2001, FSA foreclosed on the loans of 600 borrowers nationwide. Although Hispanic farmers make up 4 percent of the agency's direct loan portfolio, 3 percent of these foreclosures involved Hispanic farmers. OCR has made modest progress in the length of time it takes to process discrimination complaints. USDA requirements direct OCR to complete its processing up through the investigative phase of complaints within 180 days of acceptance. It does not, however, have a time requirement for all of the phases of complaint processing.