THE FOLLOWING RESOLUTIONS ARE RECOMMENDED FOR ADOPTION:

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1 Building Rural America National Association of Credit Specialists of the USDA Farm Service Agency Farm Loan Program Committee THE FARM LOAN PROGRAM COMMITTEE MET AT THE CROWNE PLAZA HOTEL IN ROSEMONT, IL ON JUNE 28 JULY 2, 2014, TO REVIEW RESOLUTIONS SUBMITTED BY THE MEMBERSHIP. THE FOLLOWING RESOLUTIONS ARE RECOMMENDED FOR ADOPTION: Resolution 1 CONCERN: Our performance is currently based on a few things that are beyond our control, such as loan processing times being counted from the date the application is received to the date of first disposition. I think this should be separated into two goals: 1. The county office notifying the borrower within the required timeframes for obtaining a complete application. 2. Processing days from the date the application is complete until the final disposition is made. The county office should be measured on what we can control, not on the applicant s ability to return information. Measuring the county office from the time we receive an application, not the complete date, is unfair and can cause miscommunication and heartache between FSA and the farmers we are here to serve. For example: the county office does not want to take an application because it is not complete because they fear repercussions for not meeting their goals. The applicant could misinterpret that the county office seems as though they really do not want to help them or that they are discriminatory. PROPOSED SOLUTION: Change the how the FLPRA goal measures a county offices success by breaking it down to two goals. 1. Application receive and notification to applicant of completeness and follow up. 2. The time it takes to process an application from the date application is complete to final decision which is in the county offices control. Do not measure us on the applicant ability to get us the information. Measure us on what we do with the information and how we inform the applicant. Resolution 2 CONCERN: We are required to send Exhibit 21 every year to remind borrowers of the term limits on loans and the graduation requirements. The time and expense to prepare and mail these letters is ineffective use of agency resources.

2 OL and FO term limits are discussed when loans are made. FSA is required to request current financial information every 2 years for graduation review and classification which is a frequent reminder. PROPOSED SOLUTION: Eliminate 4-FLP Par 46D and Exhibit 21. Add statements on term limits to FSA-2313 "Notification of Loan Approval and Borrower Responsibilities". Resolution 3 CONCERN: 1-FLP Exhibit 15, does not address how to change borrowers when wrong applicant was put as primary borrower. It would be time consuming to recreate information already input to FBP. PROPOSED SOLUTION: The addition of instructions on how and when to use "Change SCIMS Customer" in 1- FLP Exhibit 15 would be helpful. Resolution 4 CONCERN: Some RE appraisers are not following the terms of their contracts. FSA appraisals are taking longer than other lender appraisals and are more expensive. PROPOSED SOLUTION: The National Office should define the terms of the appraisal contracts and define what enforcement action can be taken for non performance. Resolution 5 CONCERN: Directions that accompany form FSA-2489 Assumption Agreement are not clear and there are not adequate references and instructions listed. Specifically when filling out Part 9. The instructions only vaguely specify which option is to be used. When interest is compounded in Block A and when it is not Block B. Also, more specific information and guidance is needed in 4-FLP Par 250B for Final Processing. PROPOSED SOLUTION: In the instructions for FSA-2489 Assumption Agreement, more information should be given to determine which field should be used for either a Full Assumption/or Assumption with Capitalization of Interest and Partial Assumption or No Capitalization of Interest. Instructions for new rates/new terms and same rates/same terms are also needed. Update is needed to 4-FLP Par 250B with the section from the DLS user guide or at least references to it about transfers and assumptions. Give a detailed list of steps to use to complete the process. Resolution 6

3 CONCERN: Suggested improvements to the Farm Business Plan are not being acted on due to inadequate N/O Budget. PROPOSED SOLUTION: A task force of FLP employees meet with the National Office and Web Equity designers to develop enhancements for the Farm Business Plan. The enhancements would improve and benefit the Web Equity product and be funded by Web Equity. Resolution 7 CONCERN: 4 FLP Paragraph 231 B states "When a transfer is not required under Part 9, and existing party is requesting a release on FSA-2080, it must be submitted to the local FSA office detailing which member wants to be released from liability and which member will remain liable for the debt." Form FSA-2080 Release from Personal Liability does not appear to be a form that the borrower can fill out and provide this information. The form has no place for the borrower signature to request the release. The forms instructions state it is to be use by agency personnel to document the release of individually liable parties when the debt will remain with other already liable parties or when the debt is transferred to other parties as evidenced by assumption agreements. It is to be completed and signed when the release of liability is approved. PROPOSED SOLUTION: Delete on FSA-2080 from paragraph 231B. As this clarifies that the borrower will not sign the FSA Resolution 8 CONCERN: 3 FLP, Par 472C states the Agency will provide written notification of required training or waiver of training. In the FSA-2313, Requirements and Comments section, indicate whether training is waived or required for each loan approved. If training is required, include the names of approved vendors in the Requirements and Comments section. The requirement of notification of decision regarding borrower training is very easy to forget to include in this section. PROPOSED SOLUTION: Make the borrower training decision a separate item number in section A of FSA Include for each, production management and financial management, a box to check for waived or required. After the required section, have a fillable section to include the approved vendor s name. Resolution 9 CONCERN: Procedure requires verification of all non-farm income relied up on for repayment. However on the FSA 2330 Microloan Application, there is no place for the applicant to list the employer information for their non-farm employment. PROPOSED SOLUTION: Revise the FSA 2330 to have a location for the applicant to list their non-farm employer and address.

4 Resolution 10 CONCERN: There is no place on the Preferred Lender Application (Form FSA-2212) for the lender to put their Tax ID Number. It is hard to find these numbers if it is a bank you do not usually deal with in GLS. If the ID number was on the application it would cut down on input errors. PROPOSED SOLUTION: Add a space on Form FSA-2212 for the Lender to put their Tax Id Number. Resolution 11 CONCERN: The new FSA-2040 and FSA-2045 fail to meet the needs of supervised credit for security accounting and disposition. Problems with the new forms include: 1. Requirement to have new ones in place before the end of the planning period. For most this is Dec. 31 of each year. To have all the chattel secured borrowers plans and a new FSA-2040 completed before the end of the year is nearly impossible. The previous version allowed it to continue until the new one was made. 2. The FSA-2040 outlines a specified amount to be released prior to FSA payment but the format of the FSA-2045 does not have anyway to keep track of the amount released as it will be co-mingled with every other security type that has been released. 3. The FSA-2040 and FSA-2045 do not allow planned amounts for sales of such things as cull breeding stock or equipment trades to be included on the form. The lack of cull breeding stock planned quantities to be sold makes more difficult the accounting for and maintenance of the base herd. 4. The FSA-2045 essentially requires a double entry system for the cull breeding livestock thereby increasing the amount of time necessary to record the transaction. 5. Instructions provided with the FSA-2045 indicate pounds of milk sold each month should be posted to the form. In most cases a dairy assignment is taken and the posting of the milk pounds monthly serves no constructive purpose. PROPOSED SOLUTION: Discontinue use of the revised FSA-2040 and abolish the FSA Revert to the FSA-2040 that was used prior to the revision of This system allowed for the borrower and the Agency to account for the security dispositions, plan for the security dispositions, and ensure the borrower knew what was necessary and allowed to maintain basic breeding stock herds. It also allowed for pre-approved machinery trade transactions. This form also allowed the process to continue until the new form was made to take it's place. Resolution 12 CONCERN: The FSA-2103 Direct Loan Making File Review Questionnaire used for credit quality reviews is not sufficient for this review as it does not sufficiently encompass actions that should have taken place for this loan to be approved and closed.

5 PROPOSED SOLUTION: Revise the FSA-2103 to address the overall quality of the loan: eligibility, security, completeness of required forms with signatures, was the required collateral taken, all environmental regulations followed and items of this nature. Resolution 13 CONCERN: I recommend that the FSA-2129 and the instructions for completion of the form be revised by combining items 2A and 2B into one question. As stated in Item 2A (Note): One objective of the ML application process is a reduction of paperwork burden on staff and streamlining of application processing. Having to input the same information in two different sections of the FBP is repetitive and counterproductive. Attached are two documents regarding the completion of the Initial Assessment on a microloan. The first attachment is a summary of the CFR references found in paragraph 222 of 1- FLP that addresses the narrative requirements for a Microloan. The second attachment is the Elements and Instructions for completing Items 2A and 2B of the FSA PROPOSED SOLUTION: 1. Item 2A of the FSA-2129 is amended to state that if the ML narrative elements are addressed in the narrative or the Farm Assessment areas of the credit presentation the reviewer will answer Yes. If not, the reviewer will answer No. 2. Item 2B of the FSA-2129 be removed. Respectfully submitted by the 2013/2014 Farm Loan Program Committee, Clif Rasmussen, Zone A Chairperson Jason Issac, Zone C Denise Lickteig, Zone B Danny Lindsey, Zone D