We do a lot of "recreational ranch/farm" loans to professionals who have weekend places. In the Appendix B Part II one section covers what is to be included as "loans to small farms". It says farmland includes all land known to be used or usable for agricultural purposes. Are we to report these type of loans $500k and less as SFL?

A-mouse:
This is somewhat off the subject, but in the final rule of the Appraisal regulation way back in 1994, lenders were cautioned against claiming recreational land as farm land in an attempt to use the business loan less than $1 million exemption to obtaining an appraisal. I would guess any land, other than desert or under water, is "usable" for agri-business, but loans to white collar folks for weekend use sure sounds like a recreational consumer loan to me.

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I'm tagging on to this thread. What about a loan for the purchase of vacant "farmland" by a doctor who plans on dividing and selling the property as lots? It isn't stated on the application, but I assume the lots will be for residential purposes. Yes, the loan is secured by farmland, but I can't see this as a farm loan.

There is a specific exclusion for loans for farm property construction and land development purposes. It sounds like your loan would fit within this exclusion. (Although I NEVER ASSUME!!! and always verify the facts before excluding anything). If it's not on the application, go back to the lender and get the details just to be sure.

Dawnie, thank you, but to clarify, do you mean there is an exclusion that would exempt it from being reported as a small farm loan?

Thank you.

Yes, in your call report instructions RC-C-4 Loans and Leases (06/01)

Under 1b, Secured by farmland, it specifically says Exclude loans for farm property construction and land development purposes (report in Schedule RC-C, part 1, item 1.a).