Dispute Over USDA Loan Terms
Leads To Some Nasty Surprises

HELENA, Mont. —(AP)— Clarice Stahl, a widow with a farm near Saco, was surprised when the federal Farm Service Agency demanded $75,000 earlier this year in connection with the 1989 renegotiation of her mortgage.

With prices for wheat and cattle in the cellar, she doesn't have $75,000, and she fears she will lose the farm.

``I'm the widow who is on the end of it here, and I'm concerned about what I'm going to do,'' said Mrs. Stahl, who is in her 70s and entered the loan agreement with her late husband.

She is among 10,600 U.S. farmers who got partial writeoffs of federal loans over the last decade to help them avoid foreclosure and continue farming.

The Farm Service Agency says that in return, it expected that after 10 years the borrowers would pay back what was written off, or half of their farms' gain in value, whichever was less.

Some borrowers dispute that interpretation, saying their understanding was that the payback was required only if they got out of farming during the 10 years. By their interpretation, staying in farming the full 10 years means the writeoff should be extinguished, not due and payable.

Until now, the differing interpretations didn't matter. But for Mrs. Stahl and many of the 4200 other U.S. farmers who signed ``shared appreciation agreements'' in 1989, when they were first offered, the 10-year mark has arrived and the disputed wording could decide whether they can keep their farms.

Mrs. Stahl is not alone in being unable to produce the cash in this time of low prices for beef, wheat and other commodities, nor in questioning the property appraisals performed by private appraisers with government contracts.

She was notified her cattle and grain farm gained $150,000 in value over the decade, and based on that, the Farm Service Agency wanted $75,000. Unable to make a lump-sum payment, she looked into the agency's plan that allows payments spread over 25 years, and was found ineligible.

For now, the Farm Service Agency has granted a one-year extension on repayment, but that is hardly relief, said Dennis Garsjo of Glasgow, Mrs. Stahl's financial adviser.

``A year from now she'll be in the same situation, because she still won't be able to write a check for $75,000, plus five percent interest,'' Garsjo said.

Extensions that may be renewed up to three years are one way the Farm Service Agency is trying to help the indebted farmers as they struggle through a swale in the agricultural economy, said Bob Zimmerman, senior loan officer at the agency's offices in Washington, D.C.

Farmers also could get a bit of a break under a proposed rule change and a bill sponsored by Sen. Conrad Burns, R-Mont. Both would require that appraisals of farms exclude capital investment, such as equipment purchases, made during the 10 years.

Officials say that in calling for payment, they are simply carrying out requirements of the law.

``This (obligation to pay) went with the territory,'' Zimmerman said. ``... Although the commodity prices have been difficult these last years, the agreements have to be dealt with nevertheless.''

In no case is a borrower asked to pay the government more than was written off, Zimmerman said. In the unlikely event that a borrower's property value did not rise, no money is due.

To a farmer who was on the ropes and searching for a way to save the family business, the 10-year span before payments came due probably seemed long enough to turn a troubled farming operation around, Zimmerman said.

``Ten years seems like a long time,'' he said. ``But all of a sudden, it's tomorrow.''

Mrs. Stahl's son, Wayne Stahl, said the claim that she owes $75,000 came as a surprise after years of faithful payments on the remainder of the farm mortgage.

Stahl said members of the family believed that a writeoff was indeed a writeoff, and that if they continued to farm the land, nothing in the contract required the kind of payment now being sought.

``Certainly there was a lot of material presented at one time,'' Zimmerman responded. Some borrowers may not have fully grasped the obligations they were taking on, he said, but he disagreed with those who say the contract language is ambiguous and unenforceable.