California Wetlands Information System

Debt Restructuring Program

Farmers Home Administration (FmHA) and U.S. Fish and Wildlife Service (FWS)


The Farmers Home Administration allows for reduction of borrower debt in exchange for permanent conservation easements on valuable habitat, including wetlands. The program applies only to FmHA loans. Wetlands placed in easements by farmers for FmHA debt reduction may be managed by the U.S. Fish and Wildlife Service.

How the program works

FmHA distinguishes between two types of borrowers for its debt reduction program: delinquent borrowers and current borrowers. For farmers who are delinquent on loan payments, the FmHA debt reduction program allows for readjustment of the debt in exchange for placing wetlands on their property in a permanent conservation easement. Upon receipt of a request for debt restructuring, the FmHA will appraise the property, identify the wetlands on the property, and consider reducing the debt based on the average per acre value of the farm. If the adjustment creates a positive cash flow and will pull the farmer from default, the FmHA will buy the easement and reduce the farmer's loan debt by the value of the wetland acres. If the reduction will not produce a positive cash flow, the FmHA cannot purchase the easement. For farmers whose payments are not delinquent, the debt can be reduced by placing a conservation easement on the property's wetlands, provided the reduction does not lower the debt by more than 33 percent. The value of the reduction is based on the average per acre value of the farm as determined by an appraisal of the entire property. Agreements for debt reduction through wetland easements for farmers who are not financially distressed can be made when the loan is granted, or any time thereafter. To be eligible for FmHA debt reduction easements, the loan must have been made by the FmHA.


Nationwide. Interested farmers should contact the Farmer Program of the Farmers Home Administration state office at (916) 668-2000.

This page is an exerpt from Options for Wetland Conservation: A Guide for California Landowners, a publication of the California State Coastal Commission. To obtain a copy of the guide or for more information about the Coastal Conservancy contact:

California State Coastal Conservancy
1330 Broadway, Suite 1100
Oakland, CA 94612
Phone: (510) 286-1015
FAX: (510) 286-0470



This file last modified on: Wednesday, November 27, 2002.
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