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News ReleaseFarm Credit Administration
1501 Farm Credit Drive
McLean, Virginia 22102-5090


Printer Friendly Version =>NR 09-17 (11-12-09).pdf BL0-61 Rural Housing Mortgage-Backed Securities.pdf


For Immediate Release
NR 09-17 (11-12-09)
Contact: Michael A. Stokke or Christine Quinn, 703-883-4056
E-mail: info-line@fca.gov
Web site: www.fca.gov


FCA Board Authorizes FCS Banks to Hold Certain Rural Housing Mortgage-Backed Securities as Mission-Related Investments

McLEAN, Va., November 12, 2009 — The Farm Credit Administration (FCA) Board today authorized Farm Credit System (FCS or System) banks to hold certain rural housing mortgage-backed securities (RHMS) as mission-related investments. These securities must be backed by eligible rural home loans originated by System associations. The FCA Board approved a bookletter outlining this authority.

Under existing regulations, System banks are permitted to have System-originated rural home loans securitized and guaranteed by Ginnie Mae, Fannie Mae, or Freddie Mac. This new authorization would permit the System banks to treat these RHMS as mission-related investments.

RHMS backed by eligible rural home loans originated by System associations advance the System’s mission by addressing the liquidity needs in the rural housing mortgage market.

Reports on Agricultural Credit Markets and FCA Management Services

In other business, the Board received a report on agricultural credit markets from staff. The report included a review of the supply and demand for credit in the overall credit industry and then focused on trends in agricultural lending, where overall loan growth in 2009 has been flat for major lenders such as the FCS and commercial banks. On the other hand, direct and guaranteed loans through USDA’s Farm Service Agency are increasing. Lenders have tightened loan underwriting practices as agricultural loan performance has declined. In addition, farmland prices overall have declined slightly.

The Board also heard a quarterly report by the Office of Management Services (OMS). The OMS report discussed the agency’s budget status through September 30, 2009. OMS provided an update on FCA’s talent retention, recruiting, and employee satisfaction. In addition, OMS provided an overview of the agency’s loan database project, agency collaboration initiatives, and continuity plans.

Enforcement Action Implemented

On September 24, FCA entered into a supervisory agreement with an agricultural credit association (ACA) that requires the ACA to take actions to address issues identified previously in FCA's examinations.

Notational Votes

Since the FCA Board meeting on October 15, four notational votes have occurred. Notational votes are actions taken by the FCA Board between Board meetings.
  1. On October 28, the Board gave preliminary approval with conditions for the proposed plan of merger of Farm Credit of Western New York, ACA, and its subsidiaries into First Pioneer Farm Credit, ACA, and its subsidiaries, and the disclosure of information to stockholders. The name of the continuing association will be Farm Credit East, ACA. If certain conditions are met, the merger will be effective January 1, 2010.
  2. On November 3, the Board voted to change the date of its November 2010 regularly scheduled meeting from November 11, which is a federal holiday, to November 10.
  3. On November 6, the Board approved Regulatory Enforcement Committee recommendation 09-02 to pursue a formal supervisory action concerning an FCS institution.
  4. On November 10, the Board voted to approve the reprogramming of funds to pay for relocation expenses for the newly appointed Board member. The action will have no impact on the overall FY 2010 FCA budget.

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The Farm Credit Administration is the safety and soundness regulator of the cooperative Farm Credit System and the Federal Agricultural Mortgage Corporation (Farmer Mac). FCA charters, regulates, and examines the 101 banks, associations, and service corporations of the Farm Credit System, which makes loans to agricultural producers and their cooperatives nationwide. FCA also examines and regulates Farmer Mac, which provides a secondary market for agricultural real estate and rural housing mortgage loans. Members of the FCA Board are Leland A. Strom, Chairman and CEO; Nancy C. Pellett; and Kenneth A. Spearman. Note: FCA news releases are available on the Web at www.fca.gov.