RESTRUCTURING
Guaranteed Operating loans (OL) can be restructured for up to 15 years from the date of restructure. Principal and unpaid interest can be combined and rescheduled for up to 15 years. Line of Credit (LOC) loans can be restructured for up to 7 years from the date of restructure.

REAMORTIZATION
Farm Ownership (FO) loans can be restructured for up to 40 years from the original loan date. Principal and unpaid interest can be combined and reamortized.

INTEREST RATE REDUCTION
Lenders are authorized to reduce interest rates on loans if the lender determines it is an appropriate action to take.

DEFERRAL
Lenders can defer loan payments for up to 5 years. All of the principal and a portion of the interest may be deferred. However, a partial interest payment must always be received.

INTEREST ASSISTANCE
Lenders can make application for interest rate assistance. If eligible, a loan will receive a 4 percent subsidy in the form of a payment from FSA to the lender, effectively reducing the borrower's rate by 4 percent. Interest Assistance is subject to funding availability.

• All guaranteed loans made prior to October 1, 1991, may receive the interest assistance for servicing purposes.

• For loans made on or after October 1, 1991, only Guaranteed Operating Loans and Guaranteed Line Of Credit loans that were initially made with interest assistance are eligible to receive it for servicing purposes.

• Beginning October 1, 1991, new Farm Ownership loans cannot receive interest assistance and also cannot receive interest for servicing purposes.

DEBT WRITEDOWN
With FSA concurrence, lenders can writedown debt to the present value, as long as that value is greater than or equal to the loan collateral recovery value. FSA will compensate the lender for the loss incurred as a result of the writedown in proportion to the guaranteed percentage of the loan. (Example: If the loan is guaranteed at 90 percent, FSA will pay the lender 90 percent of the amount written down.)

Please note that once a loan has been written down, the borrower's future guaranteed loan eligibility will be limited to annual Operating Loans only.

All FSA guaranteed loans can receive writedown consideration. FSA form 1980-88 Farm Credit Programs Guaranteed Writedown Worksheet (available in all FSA County Offices) is used by lenders to calculate the writedown.

Steps bankers should take to prepare for a writedown:

• The lender determines the net recovery value of the collateral, taking into consideration prior liens and any expected liquidation cost and expected income to be received from the property during projected holding periods.
• For loans that include real estate as collateral, the lender will execute a shared appreciation agreement with the borrower, that will entitle the lender to collect 75 percent of any positive appreciation in the market value of the real estate between the date of the agreement and either the expiration date of the agreement or the date the loan is paid in full, the borrower ceases farming or transfers title, if this event occurs 4 years or less from the date of the agreement. If any of these events occurs after 4 years from the date of the agreement, but before the expiration of the agreement, the lender will be entitled to collect 50 percent of any positive appreciation in the market value of the real estate.

For more information about these servicing options, you can find detailed descriptions in USDA, FSA Procedure Manuals (available in all FSA County Offices) in sections 1980(B).124 and 1980 (B).125.

Bankers are advised that they must seek prior written approval from local Farm Service Agency officials before implementing any of these servicing options. Also note- if the guaranteed portion of the loan has been sold, bankers will have to either buy the loan back, or seek the approval from the holder (buyer) before any of the above servicing options can be exercised.