Despite gloomy reports about the nation’s mortgage crisis, folks like Palisade’s Diane and John Cox are sitting pretty.
Thanks to old-fashioned lending practices by the Cox’s lending company, Farm Credit Services, the peach growers for the third year in a row have been reimbursed about one-third of their yearly mortgage interest payments.
Farm Credit Services, a customer-owned cooperative with offices in three Colorado cities, including Grand Junction, offers home and farm mortgages to farmers, ranchers and rural dwellers. In profitable years, it gives back dividends to its customers.
And because the government-sponsored program that started in 1916 holds potential borrowers to high credit standards, it has largely escaped the recent subprime mortgage fiasco, which saddled some borrowers with loans they were unable to repay.
With about $1.1 billion in loans in Colorado, only two loans to the tune of a little more than $1 million are in foreclosure, said Mike Flesher, the company’s vice president and corporate secretary.
“There’s a reason why our portfolio is as clean as it is,” he said. “Other lenders were making loans to individuals who didn’t meet our credit standards. ... Now look at the mess they’ve got.”
Flesher said some borrowers strapped with high-interest loans or adjustable-rate loans have approached Farm Credit to ask the cooperative to take over those loans. However, potential borrowers still must meet the program’s strict credit guidelines, which include asking for proof of income, tax records and equity, and usually a 30 percent down payment.
“A lot of companies wavered a lot on down payments. They did a miserable job on verifying income requirements,” Flesher said. “We’ve always tried to verify everything, all of those things that lenders ought to be doing. If it’s a good, solid loan, it’s not just what’s good for a bank, it’s what’s good for customers. What we do here is not rocket science.”
Flesher said the program does offer some of the riskier loans, such as adjustable-rate mortgages, in which interest payments can balloon years after the mortgage papers are signed. But such loans are made only after making a point to fully educate borrowers on terms of the loans, he said.
Farm Credit’s nationwide loan delinquency rate is a miniscule 0.034 percent, he said.
Flesher admitted business is good because the agriculture business is thriving. If times were tougher, as they were in the 1980s, “things would look a little differently,” he said.
“We are extremely blessed,” he said. “It’s funny how the worm has turned, and more and more banks are unable to make new loans because of the loose and fast, greedy decisions that were made.”
Farm Credit Services, the nation’s largest agricultural lending source, finances:
• $167 billion in loans nationwide.
• $232 million in loans on the Western Slope.
• About one-third of all agriculture loans in the United States.
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