FSA Proposes Expansion of Beginning Farmer and Rancher Land Contract Program.Beginning Farmer Land Contract Program to Launch in 2012. Beginning Farmer Land Contract Guarantee Program Launches.The latest news and analysis about Land Contract Guarantees and other loan programs can be found on NSAC’s blog, including via the following posts: Interested parties should contact their local FSA office for more information. Information about the Land Contract Guarantee Program is available in this USDA Fact Sheet. They were able to secure a 10-year guarantee under the prompt payment provision, which allowed one generation of farmers to pass down a part of their farming operation to the next generation. In, Wisconsin, the program helped a young farming couple purchase an existing dairy operation that was owned by a family member. Together, these guarantees have financed the transfer of $342,950 in farmland real estate to beginning and socially disadvantaged farmers. Since 2012 (when this program first launched nationwide), FSA has provided two loan guarantees: one in Wisconsin and one in Oregon. Contact your local FSA office for more information. Be unable to obtain sufficient credit elsewhere without a guarantee to finance actual needs at reasonable rates or terms.Īdditionally, the seller must also meet eligibility criteria established by FSA.Own or operate the farm or ranch when the contract is complete.Have an acceptable credit history demonstrated by satisfactory debt repayment.Be a beginning or socially disadvantaged farmer or rancher.To be eligible for a loan guarantee, the buyer of the farm or ranch must: Under the Standard Guarantee option, the seller is protecting him or herself against the possibility that the value of the farm may have sharply declined between the time the contract was entered and any default by the buyer. In that circumstance, the buyer would then try to restructure the debt and obtain an approved repayment plan. Under the Prompt Payment Guarantee option, if the new farmer/buyer does not pay an annual installment due on the contract or pays only part of an installment, FSA provides the scheduled payment or the unpaid portion to the seller through an escrow agent after the seller unsuccessfully attempts collection. The buyer of the farm or ranch must contribute at least five percent as a down payment for the land. The purchase price or appraised value of the farm or ranch that is the subject of the contract sale cannot be greater than $500,000. Standard Guarantee plan that covers an amount equal to 90 percent of the outstanding principle of the loan provided the seller has a servicing agent.įor either option, the loan guarantee stays in effect for 10 years.Prompt Payment Guarantee that covers up to the amount of three annual installments plus the cost of real estate taxes and insurance.The Land Contract Guarantee Program is structured to provide the seller of the farm or ranch one of two choices, a: It provides the seller with a federal guarantee much like that available to commercial banks and other lenders. The program is designed to encourage private “land contract” sales by providing a degree of protection to the retiring farmer whose retirement savings is often in the land and farm itself. For the purpose of this program USDA defines these farmer groups collectively as “socially disadvantaged” farmers or ranchers. Department of Agriculture’s (USDA) Farm Service Agency (FSA), provides federal loan guarantees to retiring farmers who self-finance the sale of their land to beginning farmers, farmers of color, and women farmers. The Land Contract Guarantee Program, administered by the U.S. Program History, Funding, and Farm Bill Changes: Learn about important policy changes and funding levels provided by the Farm Bill.How to Apply and Program Resources: Learn more about the application process and where to find more information.
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