6/15/2021 - Recently, a federal judge issued a preliminary injunction that halts the United States Department of Agriculture (USDA) from making debt relief payments under Section 1005 of the American Rescue Plan Act. As a result, borrowers may have questions surrounding next steps:
About Section 1005 of the American Rescue Plan Act:
- The American Rescue Plan program responds to decades of well-documented discrimination against socially disadvantaged farmers and ranchers by USDA.
- The American Rescue Plan sought to address discrimination by giving USDA new tools and resources. The law provides USDA direction to deliver debt relief to socially disadvantaged farmers and ranchers who hold a qualifying farm loan.
- The American Rescue Plan also provides additional money and direction to USDA to begin a long-term effort to advance equity and remove systemic discrimination from its programs; part of this long-term effort will be led by an independent equity commission.
How does this order affect debt relief?
- USDA will continue to educate borrowers about the program.
- Borrowers should continue to submit paperwork (signed offer letters) and USDA will continue to accept these letters and process them. USDA will be prepared to provide the debt relief authorized by Congress at the earliest opportunity, depending on the ongoing litigation.
- The payment timeline will be updated as we received updates regarding this litigation. When we announced the payment process, we expected that once FSA received a signed offer letter, it would take FSA approximately 3 weeks to pay off a loan and issue a payment to a borrower.
Should borrowers continue to make payments on loans?
- Borrowers have options.
- USDA is not taking any adverse actions on any eligible borrower who does not make payments on eligible Direct or Storage Facility Loans. Alternately, you may continue to make payments; there is currently no consequence if you elect not to do so.
- For FSA Guaranteed Loans, borrowers should make all regularly scheduled payments as agreed to with your lender.
- Debt relief payments will still be calculated based on the amount owed on January 1, 2021. Direct borrowers will be reimbursed for any payments made after January 1, 2021.
- FSA has suspended all foreclosure, debt collection and other adverse actions for direct loans for all borrowers during the pandemic and has encouraged lenders with guaranteed loans to follow suit. We expect no adverse actions.
To learn more about the loan payments to socially disadvantaged farmers and ranchers, visit www.farmers.gov/americanrescueplan.