Transcripts

MARY LOZIER: From a battered mailbox that says Oak Valley Farm, a long lane leads back across the fields to a white farmhouse, red barn, and gray silo. Down in the valley, it's dark early morning. And Myrna and Don Jordahl and their son Stephan are beginning the milking.

[COW MOWS]

The cows are herded into the barn and filed into their places. Soon, the rhythmic sound of the milking machine fills the barn. Myrna and Don Jordahl have been milking cows all their adult lives on this farm for 12 years. But although the milking goes on morning and evening, the Jordahls don't know how much longer it will continue.

The Farmers Home Administration is in the first stages of foreclosure proceedings against the Jordahls. Since March, the family has gotten no money from selling their milk because Farmers Home is claiming all their farm income.

The Jordahls refused to sell their cows or leave their land. So the two sides are at a standoff. Myrna Jordahl says the family will hold out as long as they can.

MYRNA JORDAHL: We'll hope if he's interested-- if our son's interested in farming, he can farm. And then we're not ready to just kick it out, yet. We're 50. He's 48. So we're not exactly ready to retire.

But it's extremely difficult trying to farm under these conditions. I mean, if you call this, this is not farming. We're milking cows, and doing crops, and that. But you can't call that farming.

MARY LOZIER: The Farmers Home Administration cannot force the Jordahls off their land because there is a federal court order prohibiting foreclosures and liquidations for all Farmers Home borrowers. A North Dakota judge has ruled that until Farmers Home changes some of its procedures to better inform borrowers of their rights, the agency cannot proceed with foreclosures.

So the Jordahl and 78,000 other Farmers Home borrowers facing foreclosure remain on their land. The Jordahl say they aren't selling out till the FMHA forces them to.

MYRNA JORDAHL: We went to the FMHA office. At that time, I think we kind of set the tone a little bit. He says, well, if you go out of business, you're going to have a sale. And you're going to set it up. And Don says, no, I'm not going to set nothing up. If you want it, you come and get it.

MARY LOZIER: The odds are that Farmers Home will not proceed with a foreclosure against the Jordahls. Instead, it is much more likely the Jordahls will eventually sell out or go bankrupt. James Massey is an attorney with Farmers Legal Action, a group that has initiated a number of lawsuits against the FMHA.

JAMES MASSEY: When you cut off the income stream to a farmer and cut off their credit, you really don't have to foreclose. You just starve them out. And most creditors know that.

And Farmers Homes certainly knows that. And eventually, people are just going to give up and walk off the farm.

MARY LOZIER: Under debt restructuring agreements worked out by many farm lenders, banks have agreed to forgive some of the debt owed by farmers because, in many cases, it is cheaper for the lender to write off some losses and continue lending to the same farmer than it would be to foreclose and sell land and machinery at today's reduced prices. The Jordahls hope the FMHA will agree to forgive some of their debt.

MYRNA JORDAHL: By this time, our debt has snowballed and so horrendous that without a debt forgiveness, we might as well forget it.

MARY LOZIER: The Jordahls have signed on as part of a class action lawsuit seeking to force farmers home to restructure loans when restructuring would be cheaper for the agency than foreclosing. FMHA officials refused to comment on the Jordahls case because of the lawsuit.

But the Minnesota director of the FMHA Russ Bjorhus says the agency is doing everything it can to work with troubled borrowers.

RUSS BJORHUS: But there are some cases that are so severe and the debt is so huge that we cannot continue to service those loans with additional loans and that we have no means to continue with a loan that that's severely and deep in debt. But Farmers Home has used every tool that it has to try to help and stay with the farmer that has a reasonable chance of succeeding.

MARY LOZIER: Farmers Home has reduced interest rates, spread out payments over longer periods of time, and even deferred payments for up to three years. But the one tool it does not have is debt forgiveness. Bjorhus says the only way an FMHA borrower can have debts forgiven is to sell out or turn over all secured assets.

If that doesn't cover the bill, the agency will forgive the difference. The FMHA's official position is that forgiving debt would set a bad precedent for other federal agencies. But attorney James Massey says the FMHA's refusal to forgive debt is causing needless suffering.

JAMES MASSEY: Farmers Home stands alone as the one creditor, major farm creditor out there that absolutely refuses to negotiate in good faith in a commercially reasonable way. They are spending taxpayer dollars, years of my dollars and my client's dollars to force people into liquidation, to force people into bankruptcy.

When if they would look at their regulations from a reasonable standpoint, they could work these things out without all this trauma and all this money being spent.

MARY LOZIER: Meanwhile, morning and evening, the Jordahls continue to milk. They do odd jobs to pay for day to day expenses and have borrowed heavily from relatives. The family managed to put in a crop last spring.

So for now, their cows have enough to eat. Putting in a crop next spring will be more difficult. Despite his family's struggle, 19-year-old Stephan Jordahl says he still hopes to farm the same land some day.

STEPHAN JORDAHL: I don't want to go in a big city or anything because small town is where I've always lived. I'd like to be able to have a good farm and live comfortably here.

This would be great if I could live here, be the best. You know, I know what this place is like and the valley. And that is all nice. And the caves, and the deer, and just all the pasture, and the whole works is all nice land. It's pretty.

MARY LOZIER: In Rushford, Minnesota, I'm Mary Lozier.