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Agency Error Turns Dream Into a Nightmare : Misunderstanding Over Foreclosure Letter Sends Couple Into Battle With Government Bureau to Save Their Farm

November 27, 1987|TIA GINDICK

PASO ROBLES, Calif. — Ed and Sandra Bennett have always wanted a piece of the American dream, though they've never thought it would come easy. Still, give them a place in the country, somewhere nice to raise their children, a situation where Ed could build something for himself--and they'd make it work.

So 15 years ago, the Bennetts left their life in New York City, driving west until they reached San Luis Obispo where the air was clean and employment could be found. They did without vacations, new clothes, a car, even if that meant Ed had to walk the two miles to his job in a nursery every day.

And when they were finally able to acquire a piece of property, 80 acres on an oak-dotted hill about 15 minutes out of Paso Robles, they accustomed themselves to doing without the most basic amenities--electricity, indoor plumbing and water--for three years while they built a house. They also refined their dream. They decided to convert a backyard hobby into a money-making occupation. They would raise rabbits--and given their willingness to work hard, plus a little capital, Sandy's Gourmet Rabbits could become the premier supplier of rabbit meat on the Central Coast.

Now, they say, everything they've worked and sacrificed for is in jeopardy because of a bureaucratic error and that bureaucracy's subsequent refusal to rectify the mistake.

The Farmers Home Administration has never gotten good press. It's been pegged the nation's agricultural lender of last resort, the place you go when all others have turned you down. The FmHA has been typecast as the bad guys in recent American farm crises.

It was an FmHA foreclosure policy that inspired the movie "Country," starring Jessica Lange. The film's epilogue noted that because of situations like the one in the movie, there had been a court injunction placing a moratorium on all FmHA foreclosures. Ironically, that moratorium led to the particular paper work that got the Bennetts in the jam they're in today. Another injunction, this one instigated in June, 1987, has once again put a moratorium on all FmHA foreclosures--including the Bennetts.

On the subject of Ed and Sandra Bennett, California FmHA head Richard Mallory admits he gets "just a bit worked up." The Bennetts, he said, "have dragged us through the mud."

There was a bureaucratic error, he concedes, but the Bennetts are "making a big deal out of this because they want us to pay for damages."

What follows is a calamity of communication and miscommunication, of bureaucrats assuming that they're being understood and their client perceiving something completely different and assuming that their perception is correct. It is a saga that is not yet ended. And when it is resolved, it will cost someone--either the American taxpayers as a whole or one hard-working American couple--a lot of money.

On the face of it, the Bennetts' problem looks like a simple little mix-up. In January, 1986, the couple, who've borrowed a total of $211,000 (not including interest) since September, 1981, and repaid $11,067, received a routine notice that one of their loans was due. Six weeks later, they received a certified letter with the "Notice of Intent to Take Adverse Action," a then-new procedure with which the FmHA hoped to collect on delinquent loans.

Now the crux of the problem: When a loan is due, there is a one-year grace period in which to pay it or have it rescheduled. If a Notice of Intent to Take Adverse Action was to be sent to the Bennetts, it should have come after Jan. 1, 1987.

But the Bennetts took the Notice at face value, accepting that they were delinquent and unless something was done, foreclosure was imminent. They met with their loan officer, George Dones, at the Arroyo Grande office of the FmHA and applied to have their loan rescheduled or consolidated. The local office denied the request and the Bennetts appealed.

Until this point, nobody had told the Bennetts that they had the one-year grace period and that the notice had been sent out in error. Nor did anyone make it clear that a Notice of Intent to Take Adverse Action is not necessarily the beginning of foreclosure proceedings, but rather a procedure designed to push the delinquent borrower into getting his financial act together.

The appeal was handled by Robert Anderson, director of the FmHA district office in Stockton, and he compounded the Bennetts' confusion. In his judgment letter dated Aug. 29, 1986, he informed the couple--who were hearing this for the first time--that the Notice of Intent to Take Adverse Action had been sent in error. However, he wrote, he was still denying their request for rescheduling.

Further, he stated in the letter to the Bennetts that they had until Dec. 31, 1986, to "work out your financial problems with the County Office. At which time they will be required by procedure to initiate foreclosure action."

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