§5142 Reduction of Unpaid Principal

Summary

The Agriculture Secretary can lower how much a borrower still owes on a land loan down to the land’s current market value if three things are met: the land’s value fell by at least 25% since it was bought, the borrower has owned the land for at least 5 years, and the Secretary of the Interior finds the borrower does not have enough income to both pay the loan and run normal tribal government services. The land’s current value must come from an independent appraisal chosen by both the borrower and the Agriculture Secretary, and the borrower must pay for the appraisal. The Secretary’s decision can be appealed under the government’s farm and rural development appeal rules. A borrower may not apply for another reduction on the same loan for 5 years after a reduction.