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The Enhancing Credit Opportunities in Rural America (ECORA) Act is showing promise as a farmer-friendly measure and has strong support from lending and other financial organizations.
For example, in a press release, the Independent Community Bankers of America strongly expressed the introduction by the Senate of the ECORA Act (p. 2202 / HR 1977) that would exempt interest income from agricultural real estate and rural mortgage loans from taxing community banks that charge lending rates lower and serve these borrowers more efficiently.
Senator Jerry Moran, R-Kan., Introduced the bill to the Senate after the House of Representatives was introduced earlier this year by Reps Ron Kind, D-Wis. And Randy Feenstra, R-Iowa.
“This important piece of legislation will help maintain and revitalize the rural economy hit by the COVID-19 pandemic, while also providing benefits to community bank lenders that they can pass on to their customers, much like other rural loan providers,” said ICBA President and CEO Rebeca Romero Rainey.
With rural America and the agricultural sector facing ongoing challenges, ECORA will:
- Loans secured by agricultural property tax exempt.
- Provide similar interest rate relief on loans backed by rural single-family homes that are the borrower’s primary residence in cities with fewer than 2,500 residents.
- Support those looking to stay on the farm or take out a home loan in rural communities by providing borrowers with better interest rates and loan terms.
- Allow community banks more flexibility to work with farmers who may have difficulty servicing their debts.
- Give lenders a strong incentive to stay in the rural agricultural and housing market, thereby encouraging local economic activity.
The American Bankers Association also supports the move, stating, “By abolishing this taxation, the cost of lending to farm and ranch properties will be reduced and the savings passed on to farm and ranch customers. It is estimated that ECORA could cut the average interest rate on a farm and ranch home loan by 21 percent. ECORA offers a simple solution to help farmers and ranchers in this time of low agricultural incomes without creating new government payments or programs. “
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