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How Agriculture Land Mortgage Loan Have Changed in this Decade

For years farmers have depended on agricultural land mortgage loans to help them with their financing needs. Things aren’t different now.

There are so many loan options available, ranging from short term farm loans to Ag land purchase loans and agricultural land loans.

However, the application and loan process wasn’t like this about a decade ago. Numerous changes have taken place in the agricultural land mortgage loan niche over the past few years.

Amount of paperwork

The increase in the amount of paperwork involved in acquiring loans is the most marked difference.

All that was once necessary for operating a farm loan were a single loan application form, a signed mortgage, and a checkbook. The agricultural land loan process was also quite similar, with perhaps a few more papers.

However, things have changed now.

 Now both farm and agricultural land loans need so many papers.

There is now an application, financial statement, credit report, W2s for two years, bank statements, tax returns for three years, title company work, and many more papers.

That’s why agricultural banks now need to hire more people to handle this amount of paperwork.

Changes in priorities

Borrowers were once considered the most essential to agricultural lending banks. All banks needed were the customer’s honesty, ability, and credibility.

However, things aren’t like that anymore.

The bank no longer considers the borrower’s ability and desire for repaying the loan. They only focus on their paperwork, answers, and what they feel are the right answers for loan approval.

Well, the banks aren’t to be blamed for this.

The banks had no option but to adopt this policy after some dishonest borrowers and attorneys who managed to successfully not pay back loans.

Every time some borrower or attorney conned a bank, they kept adding a new piece of paper for borrowers to fill up and sign.  The successive adding of documents led to the extensive paperwork you have to fill out now while applying for agriculture land mortgage loans.

Implementation of Farmer Mac

The Federal Land Bank and some insurance companies used to finance most long term agricultural land loans. It was the farming crisis in the last 80s that lead to the start of Farmer Mac to help secure and sell Ag land purchase loans. Farmer Mac worked just like Fanny May worked with home loans.

The Federal Land Bank is today Farm Credit Services that offers long term agricultural land loans with Farmer Mac and other insurance companies.

Changes in loan security

It was easy to get enough security for farmland loans because it was provided through agricultural land. However, getting security for loans is now relatively difficult.

It’s because farmers don’t just need financing for land. They also need financing for machinery, livestock, and growing crops. Unlike other vehicles, agricultural equipment doesn’t have titles. They instead have serial numbers posted on the equipment.

Agriculture land mortgage loans may have changed over the decade. However, they still serve the same important role and purpose in the agricultural industry. Please visit here for more details: https://unitedfarmmortgage.com/agricultural-loans