AGM
- Federal Agricultural Mortgage Corporation
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Overview
Company Summary
Federal Agricultural Mortgage Corporation, commonly known as Farmer Mac, is a unique American financial institution operating in the agricultural sector. Established by Congress in 1988, AGM was designed to provide a secondary market for agricultural real estate loans, rural housing mortgage loans, and other agricultural loans.
AGM acts as a government-sponsored enterprise (GSE), similar to Fannie Mae and Freddie Mac, but with a specific focus on the agricultural industry. The company's primary function is to enhance the availability and affordability of credit to farmers, ranchers, rural homeowners, and other agricultural borrowers.
AGM accomplishes its mission through two main activities:
1. Loan Purchasing: AGM purchases agricultural loans from financial institutions such as banks, credit unions, and other lenders. These loans can include mortgages secured by farmland, rural housing loans, loans related to agricultural infrastructure, or loans for farm-related businesses. By purchasing these loans, AGM provides liquidity to the originating lenders, which allows them to make new loans to other agricultural borrowers.
2. Loan Guarantees: AGM provides guarantees on securities collateralized by eligible agricultural loans. This activity helps lenders diversify their risks, making it easier for them to provide financing to farmers and other agricultural borrowers. In this way, AGM indirectly encourages financial institutions to provide loans to the agricultural sector while minimizing their exposure to credit risk.
By participating in both loan purchasing and loan guarantee operations, AGM aims to improve agricultural credit availability, lower borrowing costs, and promote stability and efficiency in the agricultural mortgage market. This, in turn, facilitates capital flow to the agricultural sector, supporting productivity, growth, and long-term economic sustainability of rural areas in the United States.