Mr. WHITTEN. We have now the Farmers Home Administration witnesses. JUSTIFICATION OF THE ESTIMATES We might have, in connection with Farmers Home Administration, pages 299 and 303 through 325 of the justifications included in the record at this point. (The material referred to follows:) Loan authorizations Appropriation act, 1959, and base for 1960_‒‒‒‒ Budget estimate, 1960.. Decrease..-. 1 $209, 500, 000 173, 000, 000 -36, 500, 000 SUMMARY OF DECREASES, 1960 Decrease in borrowing authorization for farm ownership loans___ Decrease in borrowing authorization for soil and water con- -12,000,000 -20, 000, 000 -4,500,000 NOTE. In addition, a decrease of $48,000,000 is estimated in obligations for farm housing loans. Estimated loans totaling $12,000,000 will be financed from balances carried over from 1959 of the $450,000,000 authorization provided in Public Law 1020, 84th Cong. Project statement (on an available funds basis) In addition, contingency fund of $20,000,000 is available for farm ownership and farm operating loans of which not to exceed $5,000,000 may be used for farm ownership loans. Proposed supplemental, 1959 for Pay Act costs-- Transferred from farm tenant-mortgage insurance fund.... $29, 089,500 2, 210, 500 1,000,000 DIRECT AND INSURED FARM OWNERSHIP LOANS A total of $24 million was authorized in 1958 for direct farm ownership loans. Of the total amount authorized, $2,495,670 was allocated exclusively for loans on reclamation projects and to entrymen on unpatented public lands. The remaining $21,504,330 was made available among the States and Territories in accordance with the statutory formula for the distribution of funds based on farm population and prevalence of tenancy. The appropriation act for 1959 provides for borrowing $24 million from the Secretary of the Treasury for direct farm ownership loans. In addition, the act further provides a contingency borrowing authorization of $20 million of which not to exceed $5 million may be used for direct farm ownership loans. Not more than $2,500,000 of the total available is authorized to be distributed to States and Territories without regard to farm population and prevalence of tenancy for loans on reclamation projects and to entrymen on unpatented public land. There was an extreme shortage of funds from private lenders for insured loans during the early months of fiscal year 1958. However, in the latter months starting with March 1958, funds became available in ample quantity and from numerous investors so that no loan was held up because of lack of insured loan funds. During the early months of fiscal year 1959, ample funds were still available, but starting about September 15, 1958 funds again became scarce due to the relatively low interest return. More ample funds are anticipated during the last half of 1959 and in 1960 based on an increase in the interest return to lenders from 3 to 4 percent and an increase in the charge to the borrower from 42 to 5 percent. 1. Use of loan funds The provision included under Public Law 878, approved August 1, 1956, which authorized the making of loans primarily for refinancing has been used less extensively than originally anticipated although the authority has been most helpful in assisting owners to retain their farms. About $18,100,000 in 1957 and $14,100,000 in 1958 was loaned for this purpose. This is respectively about 24 percent and 28 percent of the total dollar volume of loans in these years. The percent of funds for this purpose in 1959 is expected to be less. The authority expires on June 30, 1959. There was no significant difference in 1958 over 1957 in the comparative use of funds for family-type and less than family-type loans. Number and amount of loans on family-type farms and less than family-type farms made during 1957, 1958, and estimated for 1959 INITIAL LOANS ON FAMILY-TYPE FARMS TOTAL FAMILY-TYPE AND LESS-THAN-FAMILY-TYPE FARMS A total of 22,533 applications for new farm ownership loans were received in 1958. At the end of the year, 12,471 applications were on hand. About 64 per cent of the applications on hand were from individuals who appeared to qualify only for direct loans because of a 90-percent limitation on insured loans. During 1959 the same policy will be followed with respect to veterans' preference as in 1958. Veterans will continue to receive preference as set forth in the statute, but State offices will not be required to hold up loanmaking entirely at times during the year anticipating veteran applications and the development of veteran loan dockets. 3. Loans A. Direct loans.-Since inception of the program in 1938 to June 30, 1958, approximately 69,501 loans for more than $525,605,785 have been made. This number and amount does not include noncash loans previously made in the liquidation of rural rehabilitation project properties which are also included as farm ownership loans on the loan accounts of the administration. In the 1958 fiscal year, initial loans were made to 1,515 families in the amount of $21,632,508, including 128 loans in the amount of $2,431,640 made to settlers on reclamation projects. Subsequent loans to existing borrowers and loan cost items accounted for the balance of $2,365,578. Direct initial loan activity under the distribution formula and for reclamation projects INITIAL LOANS UNDER DISTRIBUTION FORMULA B. Insured loans.-During 1958, insured loan activity totaled $26,270,172 not including $846,764 used to refinance existing insured indebtedness when a subsequent loan was being made. Insured farm ownership loans in 1959 are estimated to total $42 million compared to $26,270,172 in 1958. Insured initial loan activity, 1948 through 1958 1948. 1949 1950. 1951. 1952. 1953. 1954. 1955. 1956. 1957 1958. Total direct and insured initial and subsequent farm ownership loans 4. Loan repayments A. Direct loans. From the inception of the farm ownership program in 1938 through March 31, 1958, a total of 76,086 families had been advanced $551,016,285 (these amounts include noncash loans previously made in the liquidation of rural rehabilitation projects properties which are also included as farm ownership loans on the loan accounts of the Administration, and other noncash loans resulting from the sale to approved applicants of properties received through liquidation of other loans) for the purchase, enlargement and development of farms including the refinancing of existing indebtedness. Principal payments of $309,490,948 and interest payments of $99,110,998 had been made. In addition, principal writeoffs totaled $2,270,670 and judgments were $490,388. As of March 31, 1958, cumulative scheduled installments of $88,071,494 were due from 31,540 individuals with outstanding loan balances, but regular principal and interest payments made on these installments were $92,077,539 which was 5 percent, or $4,006,045 more than required on a schedule amortization basis. An additional $9,240,134 in refunds and extra payments not applied to scheduled installments were credited to these borrowers' accounts. On the same date, 16,134 borrowers were $9,291,534 ahead of schedule, an average of $576 each; 8,886 were on schedule; and 6,520 were behind schedule $5,285,489, an average of $811. A total of 44,546 of the 76,086 families who had received loans had paid their loans in full as of March 31, 1958. Of this number 27,163, or about 61 percent, continued to operate the farms acquired or improved through this program. The remaining 17,383 fully satisfied their accounts but no longer operated the farms. See table V for distribution by States. B. Insured loans.—As of March 31, 1958, $182,580,182 had been advanced under the insured mortgage program to 17,685 farm families for the purchase, enlarge ́ment and development of farms including the refinancing of existing indebtedness. Payments by insured loan borrowers totaled $56,936,943 as of the same date. Of this amount, $33,165,995 represented principal payments, $17,774,108 payments on interest, and $5,996,840 payments to the mortgage insurance fund. As of March 31, 1958, 2,516 borrowers had paid their loans in full. Of those with unpaid balances, 7,409 were ahead of schedule, 5,590 were on schedule, and 2,170 were behind schedule. See table VI for distribution by States. 5. Progress of borrowers Records from 2,241 borrowers with accounts outstanding in 1958 who received loans in 1952 showed gross cash income increasing since the year before acceptance from $5,016 to $8,145. Net worth of these borrowers increased from $8,850 to $10,862, and value of livestock and equipment increased from $5,788 to $7,197. |