The American Bankers Association is lobbying Congress for modifications to Farmer Mac and a government-backed loan program run by the Agriculture Department.

The trade group believes the modifications to the Federal Agricultural Mortgage Corp., or Farmer Mac, and the department's guaranteed loan program would free up more credit to rural communities.

"Farmer Mac has been approved for several years and it really hasn't been used effectively," said Darcy L. Myers, chairman of the trade group's agricultural bankers committee and vice president of Norwest Bank in Denver. "I think these changes would make it more user friendly."

Mr. Myers, who recently testified before the Senate Agriculture Committee on the issues, recommended three main changes to Farmer Mac, which Congress formed in 1987 to be a source of long-term agricultural loans for farmers and ranchers and to stimulate competition among lenders.

Farmer Mac should be able to pool its own loans, like the secondary mortgage markets do, he said. Further, a 10% loan subordination that originating banks must hold should be eliminated and the agency's capital transition period should be extended, he said.

The trade group also suggested improvements to the Department of Agriculture's guaranteed lending program for riskier loans, including a shorter documentation program for smaller guarantees like the Small Business Administration has.

The ABA said ag lenders also would benefit from final regulations on USDA's Preferred Certified Lenders Program and if the department raised its threshold for real estate appraisals and guaranteed loans of up to $250,000 to match federal banking regulations.

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