Looking for “sound, adequate and constructive credit (Farm Credit Act §2001)” for that luxury beach house or vacation property? Then Farm Credit might be the place for you!
This advertisement for a “boat, airplane, condominium, second home on the beach or that mountain retreat you’ve always wanted,” is startling enough, but Farm Credit has become much more brazen in its contortion of its mission.
Let’s home in on that “second home on the beach” enticement. If you’re a Farm Credit lender trying to ensnare some wealthy client, what sounds better than offering financing for a home on the beach? It’s as easy as going to FindFarmCredit.com, selecting “Beachfront Property” under the “Property Type” menu. From there, you can find:
- A nearly $2 million beach house on 1 acre in Bolivar Peninsula, Texas (pop. 2,417). “This three bedroom, four and one-half bath beach house is complete with all the fine finishings. You will be in awe from the moment you walk through the door.”
- A $4.5 million oceanfront house on 42 acres in Harmony, California(pop. 18). “The design incorporates an enclosed 2000 sqft courtyard which looks through glass walls to the open ocean. Watch the sunsets falling over the crashing waves from the cloistered gardens.”
- A $2.25 million beach house in Point Roberts, Washington (pop. 1,314). “2,633 sq. ft. home with 3 bedrooms, each with a full ensuite over looking the Strait of Georgia. 96 feet of beachfront access that includes tideland rights.”
- A $5.9 million beachfront property on 23 acres in Blaine, Washington (pop. 5,607). “2 office suites with 5 large bedrooms makes this 11,966 sf home the cornerstone of a perfect gated compound. Thoughtfully placed on 23+ acres with 800+/- of waterfront & views to San Juans & the Canadian Gulf Islands, this gracious home exudes luxury; spectacular finishes & materials curated from around the globe. Attached caretaker quarters, delightful gardens & amazing beach. Easy access to international airport, world class marina, golf, dining & more.”
- A $25 million property on only 2 acres in Pebble Beach, California(pop. 4,071). “The Monterey Colonial main home, Casa Cypress, is approximately 6,900 square feet and adjacent to it is Otter Cottage, a 481 square foot, beach guest house. The magnificent, approximately 1.7-acre lot includes your own small private beach, depending on the tide, along the shores of Cypress Point.”
This list is not exhaustive, and is only a sampling of what you can find by accessing FindFarmCredit.com. This is the real meaning of “nonagricultural purposes.” When Farm Credit’s proponents insist that “nonagricultural purposes” means anything vaguely related to rural living, know that this is what the term really encompasses.
Some of these properties do not meet the lax criteria for house loans. Some are in locations with a population greater than 2,500, no longer qualifying as rural. Nor are these properties “single-family, moderate-priced dwellings…not inconsistent with the general quality and standards of housing existing in, or planned or recommended for, the rural area where it is located” (Farm Credit Act §2075).
Some of these properties appear to be in violation of the law. Worse, some of them appear to be permitted by law, or at least by loophole. But if they are, then there clearly needs to be significant reform of lending standards. It’s unconscionable for taxpayers to give backing to a GSE offering financing for these properties.
At the very least, there needs to be swift, concerted enforcement action to prevent this advertising, and to prevent any unlawful loans arising from them. But if some of the properties are eligible for financing, then Congress needs to review why government-sponsored, taxpayer-backed loans for beachfront properties are legal and acceptable. It is offensive for taxpayers to bear this burden. Oversight, enforcement and reform: that’s the least taxpayers can ask for.