# Lenders



## Vol (Jul 5, 2009)

Can your loan be called?

Regards, Mike

http://www.dtnprogressivefarmer.com/dtnag/common/link.do?symbolicName=/free/news/template1&paneContentId=5&paneParentId=70104&product=/ag/news/topstories&vendorReference=03c04f6a-bd64-4713-ac52-9066f87bb730


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## steve IN (Jan 13, 2010)

I have already seen a few operators who are starting to feel the wrath of bankers. Landlords getting nervous. Maybe an opportunity approaching


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## PaMike (Dec 7, 2013)

Bankers-The only people that lend you an umbrella when its sunny and ask for it back when it rains...


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## luke strawwalker (Jul 31, 2014)

PaMike said:


> Bankers-The only people that lend you an umbrella when its sunny and ask for it back when it rains...


And charge for the privilege... LOL

Only form of vermin lower than a lawyer... but still higher than a politician!!!

Later! OL J R


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## swmnhay (Jun 13, 2008)

The ones that are going to whine the most and blame the bankers are the ones that spent to much money when times were good instead of paying down debt.I will have no pity on the guys that went around paying high dollar rent or buying a high priced farm that in no way could pay for itself.

So instead of blaming the banker maybe they will have to tighten their belts and maybe sell the lake house or the camper,boat,jet skis,snowmobiles,etc.Probably can't sell the wife's new boobs.And the wife prly won't like the life style change so she will prly divorce him also and take 1/2 of what's left before the banker gets it.

The machinery dealers will have to come and get the eq the guy can't make the payments on.It's only a few hrs old as the guy traded all the time to keep up with the neighbors instead of getting it pd off.But it will be the dealers fault he can't make the payments.

Bankers are a nessisary evil but more often then not the guy created the mess he is in by himself,the banker didn't force him to spend the money.


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## Teslan (Aug 20, 2011)

It sounds like they are not calling loans with good assets and make their payments. But those that are leveraging themselves too high after taking a loan and against the loan agreements language. I think it's more to do with bad planning and being to risky on the part of the farmer. In the housing crisis around 2008 I saw many investment properties being foreclosed on. I just couldn't understand how an investment property was being foreclosed on. The owners should have only bought them if they cash flowed almost no matter what the market did to property values. As here average rent never went down. But many people got loans that didn't cash flow thinking that the property value would appreciate and they could sell in time. I lost alot of respect for a real estate agent I know when he lost 10 houses to foreclosure. The same thing can happen with farmers just like swmnhay said above. Take my brother in law. He and his brother took a million dollar loan. Using their farmland and other real estate as collateral. They really only needed $200,000 too operate. They bet the rest in the commodities market and lost. Now they face losing everything. Is that the lenders fault? Maybe the lender pushed it to hard or didn't do enough research on my brother in laws business plan, but more at fault is my brother in law. Though some of the details of my brother in laws plight might not be quite right as I'm hearing it third hand from my wife who is hearing it from her sister, who is mad at her husband.

I myself have a small operating loan this year that is at about $50,000. I needed it to start farming an additional 150 acres. Purchases included prepay fertilizer, seed, and an expensive repair on a pivot power line. I should be able to pay it all back by August. Though no payment is due until 2018. Although if I don't pay they will come take a tractor or my hay inventory (Actually I wish I could just trade them hay to pay it off. Better then selling to horsey people). If it comes to that it's what it is.


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## JD3430 (Jan 1, 2012)

swmnhay said:


> The ones that are going to whine the most and blame the bankers are the ones that spent to much money when times were good instead of paying down debt.I will have no pity on the guys that went around paying high dollar rent or buying a high priced farm that in no way could pay for itself.
> 
> So instead of blaming the banker maybe they will have to tighten their belts and maybe sell the lake house or the camper,boat,jet skis,snowmobiles,etc.Probably can't sell the wife's new boobs.And the wife prly won't like the life style change so she will prly divorce him also and take 1/2 of what's left before the banker gets it.
> 
> ...


True,

but notice loans can be called if the BANK does a poor job with it's own finances and feels the heat of making bad business decisions.

I remember my dad telling me a story long ago when he was building homes. Everything was humming along fine and the bank suddenly called his credit line loan. We lived like paupers. Good solid home, but 1 simple/cheap family vacation per year, no "toys" of any kind, no second homes and there were no personal items to sell to pay back the loan.

Turns out the bank was in bad financial position and called in many loans to save itself. He was able to pay the loan back and within a year, the bank was purchased by another local bank.

It's not always the borrowers fault.


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## swmnhay (Jun 13, 2008)

JD3430 said:


> True,
> 
> but notice loans can be called if the BANK does a poor job with it's own finances and feels the heat of making bad business decisions.
> 
> ...


I agree and sometimes you just wonder why banks do what they do.

In the 80's I had 3-1 asset to debt ratio and the loan was called.I just went to another bank.Why was the loan called?I don't know to this day how that would make the books better calling the loan.When on the other hand someone with a 2M debt with !M in assets would be wrote down to 500K to make it cash flow.

Now the ones that were wrote down are going to be the ones in trouble again.Or their kids.


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## IHCman (Aug 27, 2011)

Cy, so true what you said about the guys that got write offs in the 80s. Lots of big operations here got write offs during that time frame. Most of em are still in debt way over their heads. I know of a few that got debt wrote off and have now recently sold land for high prices in the last few years. I wish they'd have to pay back some of that money now that they're selling out for profit.

My Dad tells me lots of stories from that time. He milked cows then. FHA garnished his milk check, and as he told me his payments were always current with them but we damn near starved to death with what was left.


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## swmnhay (Jun 13, 2008)

IHCman said:


> . I know of a few that got debt wrote off and have now recently sold land for high prices in the last few years. I wish they'd have to pay back some of that money now that they're selling out for profit.


I know some of the debts were shelved and after so many yrs it was to be reapplyed to the loan after the guy got on his feet.I recall some screaming bloody murder that they didn't owe it anymore that it was wrote off.

So many different things happened to debtors in the 80's from at first when they foreclosed on alot to write offs and shelveing of loans.Some of it due to legislation that made it harder for the banks to foreclose and that it had to go threw mediation,etc.


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## deadmoose (Oct 30, 2011)

PaMike said:


> Bankers-The only people that lend you an umbrella when its sunny and ask for it back when it rains...


Kept you from getting burnt by the sun if you used it properly. 

Always easy to blame someone else.

Never thought of banks as "evil". Necessary or otherwise.


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## steve IN (Jan 13, 2010)

Shelving loans was an FmHA program called a Shared Appreciation Agreement (SAA). I believe it was work something like this. If your assets were worth $100,000 but your debt was $200,000 then $100,000 of debt was written down for a period of time, I believe 15 or 20 years. At the end of that time if your assts appreciated then you were to repay the write down up to the value of the appreciation. When they came due I remember hearing all the bitching in the farm papers and magazines about how dare the government want their money back.. I just paid every dime off that I owed by selling some land. They never offered me any option like that . Now I am going back into debt to pay the damn taxes to the government. Even had to change banks because I refuse to enroll in any FSA programs or crop insurance and my bank of over 20 years doesn't like that. Oh well there loss not mine.


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## luke strawwalker (Jul 31, 2014)

I subscribe to my Grandmother's school of thought on debt...

Grandpa started farming the family place in the early 50's after Great-Grandpa B had gotten too old to do it anymore, and had rented the farms to some other guys for a few years... Grandpa and Grandma had run the tourist-courts (what they called a motel back in the WWII days) for a few years for him after the war but wanted to move to the farm and start farming. Those years were pretty tough, and Grandma never ceased to remind him that "this farm was HER farm; it was HER Daddy's and she would inherit it, and it'd NEVER be "his"... SO, amidst selling insurance for extra income, he found a farm for sale in Shiner double the size of this one and bought it. Was a struggle to pay it off... They moved up there in '58 and tried growing cotton, but the sandy soil and 10 inches less rain a year meant that was a non-starter. Finally put it all in hay and paid for the farm selling hay to the auction barn and others, while still farming cotton and corn on this place here at Needville. In 64 they moved back to Needville so Grandma could help care for her elderly mother in town, along with her sister... Did a lot of custom work, baled hay on the Shiner place, grew cotton and corn here at Needville, and ran a few head of cows, slowly herd building. Things were good in the late 60's and 70's, but money was still tight. I remember as a youngster going to the bank with Grandpa while he negotiated his loans and stuff... Sometimes he had to pay off last years loan with a new loan, borrowing from Peter to pay Paul as it were... but he always seemed to manage.

The drilled a few gas wells on the farm here in the late 70's and early 80's, and after a few years, all the loans were paid off... I remember the day that Grandma and Grandpa got back from the bank and paying off the last loan... Her words ring in my ears to this day-- "the day we ever have to borrow another penny to farm is the day we hang it up for good!" The gas money was good for a few years before fading out-- Grandpa bought a new 6600 Ford and one of the first round balers in this part of the country, made some improvements and stuff... then sadly he got sick suddenly and passed away after only about 4 months in early 83, when I was 13... Within two years I was basically running the day to day operations of the farm myself, almost single-handedly (Dad worked at the nuke plant) and I moved in with Grandma... she handled the money and paperwork, and I did everything else... Dad helped a little with harvest and planting and loading cows, and that was it. She was so tight with dollar if you stuck a quarter in her butt she'd grind it down to a dime, but we managed... by the late 90's, prices for seed, chemicals, fertilizer, and fuel were through the roof, and prices were cheap for cotton and grains, and it was tougher to get the money together to put in a crop without borrowing, so we made the decision to use the "Freedom to Farm" gubmint program payments to fence the entire place here and quit row cropping and go all cattle... Don't regret it one bit... Cotton sold for 70 cents a pound back in the early 70's, and it's still averaging about 70 cents a pound now... we sold sorghum for $5/cwt back in the late 70's (before that idiot Carter and his grain embargo against the Russians collapsed the grain markets) and the last few years I grew sorghum I was getting $3.50/cwt. In the intervening two decades costs per acre for fertilizer, seed, and chemicals had easily quadrupled...

It's a good thing in some ways, and bad thing in others. I see my BIL and nephew expanding and growing, but also having to constantly sweat bullets over bankers and loans and operating expenses... I shudder even thinking about the kinds of money they deal with, and the level of debt they've taken on. I couldn't do it... don't have the tolerance or the nerves to deal with that... so we just stay in our little corner of the world doing our thing and make out the best we can... BUT, we don't have to worry about bankers calling in loans, obtaining lines of credit to operate, etc...

Works for me...

Later! OL J R


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## glasswrongsize (Sep 15, 2015)

I don't have a problem with banks at all. As with most of the hay men (and women) on this site, vastly different banking needs are represented.

I have nothing but high praise for mine. It is a small, financially sound, independent bank that does not sell their loans. I will not deal with a bank that sells my debt to someone that is unknown and physically unreachable by me.

Dad deals with a different bank that is basically the same way. A couple of years ago, his banker told him that he (the banker) would like to have my loan, offered a speculative interest rate of 1 full point less than mine, and mailed me a loan application. I calculated the closing cost, interest savings, etc and decided I could save a little money. Before I completed the application, I called my banker (yup, no computer "press 1 for Spanish". Just call and tell a human that I want to talk to Randy (name changed, but still a first name basis). I explained the offer and asked what he could do. I heard him pecking on the keyboard for a minute and came back and told me that he could offer me 3/4 point less than I currently had (1/4 point over speculated offer by the other bank). I asked him how much for closing cost, etc he said....wait for it.....he said, "it's already done. I just changed it". I never even left the house.

The other thing that separates me from a lot of bigger operators, I have a day job. There are quite a few of us on here that have a day job; if we use any of its proceeds for any farm expense, it's best to understand that we are still borrowing money to farm... from ourselves. I can consider myself lucky that I don't have to deal with banks too much, and some can consider themselves lucky that they don't have to clock-in "for the man" on a daily basis.

73, Mark


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## JD3430 (Jan 1, 2012)

I dont mean this in any way to be disparaging or insulting, but my guess is the bulk of HT members are relatively small time hay farmers 20-200 acre farmers. Sure theres some big ones, too.

The big timers here in MY area couldnt possibly conduct business without a very significant farmer/lender relationship.


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## PaMike (Dec 7, 2013)

My farming operation borrows money from my wife(and me). Talk about a tough lender. I did get approved to build a building/shop. I decided to get it done before she changes her mind.


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## JD3430 (Jan 1, 2012)

Yes I borrow from that bank to. 
Lol


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## Tater Salad (Jan 31, 2016)

I lived through the late 70's and early 80's......"rain on the scarecrow , Blood on the plow"...I saw Farmers 1st loose their equipment and then the banks couldn't understand how they could'nt make the mortgage....Everyone here is right, you have to have some leverage to operate effeciently , the lesson of the 70's/80's was ..."will it pay for itself" and "can I get out from under this and still have my base farm"...........I can still see my best friends Father in West Texas on his knees in tears as they took his equipment ....The bank raised his intrest rate 9% twice in a 3 month period , NO ONE can fight that ! and Our country was full of those tales......Just be careful...Myself ,I go to the FSA and JD Credit , at least they will bend over backwards to help you succeed. We don't have the small town AG lender anymore , These bankers are even more ruthless ! PROTECT THE HOME FARM !!!


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## swmnhay (Jun 13, 2008)

Here in the 80's most of the home town bankers tried to work with most farmers to the point of putting the bank under.

Production Credit Association,Federal Land Bank,Farm Credit,Agstar.Which are all the same are the ones that were harder to deal with when times got tough,low crop prices.They were also the ones with most lenient lending practices when times were good.


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## RockmartGA (Jun 29, 2011)

Credit is a lot like fire. Used correctly, it can be a wonderful thing. Incorrectly, it can destroy.


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## sixtyninegmc (Jul 20, 2011)

This thread was a good read for me right now, well timed. I have been wrestling with myself over a nice half section that is near me. I think I could have swung it, but it would have stretched us VERY thin. The temptation to try and make it back over the hump, get enough land to put the farm back solidly in the black after my partnership with my father failed, is very dangerous. It is good to hear stories from older, more experienced farmers to reassure me that paying down the home place, and getting it all cleared and planted before moving on, is not being overly cautious. Thanks guys.


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## Vol (Jul 5, 2009)

Makes me think of a old proverb that went something like this...."Oh how wise, how wise....he trusted his heart and not his eyes."

Regards, Mike


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