Farm Credit Assistance Act of 1986

Farm Credit Assistance Act of 1986 - Title I: Agricultural Loan Interest Subsidy Program - Directs the Secretary of Agriculture to establish a Federal-State-Lender cooperative agricultural loan interest subsidy program to run through September 30, 1987.

Sets forth borrower eligibility criteria, including a prohibition on borrowers who produce commodities on highly erodible land or converted wetland.

Provides that, with regard to such program, the interest rate shall be written down as follows: (1) two percentage points shall be paid by the Federal Government; (2) between one and two percentage points may be paid by a State; and (3) one percent of interest or at least 15 percent of the principal shall be canceled by the lender.

Sets maximum aggregate loan principal at $400,000 for an individual and $600,000 for a family corporation or partnership.

Authorizes FY 1986 through 1989 program appropriations. Limits maximum aggregate fiscal year payments to $600,000,000.

Requires States to submit a program plan to the Secretary of Agriculture for approval. Sets forth plan requirements, including the designation of a State administering agency.

Title II: Farm Credit System Institution Borrowers - Subtitle A: Farm Credit System Loan Restructuring Program - Requires a Farm Credit System (System) institution to restructure, rather than foreclose, a loan to an eligible borrower if foreclosure costs equal or exceed restructuring costs. Sets forth borrower eligibility criteria and related appeal procedures.

Requires the Capital Corporation to reimburse an institution for the amount of principal due on loans reduced by the institution if necessary to avoid insolvency or liquidation.

Requires the Chairman of the Farm Credit Administration Board to submit a program report to the Congress within 270 days.

Subtitle B: Farm Credit System Reform - Amends the Farm Credit Act of 1971 to require System institutions to provide borrowers with access to appraisals.

Encourages System institutions to permit foreclosed borrowers to retain possession of their principal residences and a reasonable amount of adjoining land.

Prohibits a System institution from raising the interest rate on a loan that has been reclassified as a risk or problem loan.

Directs the Farm Credit Administration to make periodic determinations of System financial assistance needs.

Limits System institution operating expenses to one percent above the average cost of System-issued bonds.

Directs the Farm Credit Administration to issue regulations regarding the disposition and leasing of acquired farmland. Directs System institutions to give sale or lease priority to family-sized farms and to original owners or operators.

Requires a borrower to buy System stock in order to be eligible to obtain a loan or to purchase by installment System-held farmland.

Title III: Farmers Home Administration Borrowers - Requires the Secretary of Agriculture to restructure, rather than foreclose, a loan made under the Consolidated Farm and Rural Development Act if foreclosure costs equal or exceed restructuring costs. Sets forth borrower eligibility criteria and related appeal procedures.

Prohibits the Secretary from requiring additional loan collateral if the borrower is current in the payment of principal or interest.

Directs the Secretary to submit a program report to the Congress within 270 days.

Amends the Consolidated Farm and Rural Development Act to authorize loans to farmers and ranchers for alternate crop production (as defined by this Act).

Title IV: Miscellaneous Provisions - Provides for the establishment of an Inter-Agency Agricultural Task Force to assist commercial agricultural banks and borrowers to resolve present economic problems and to facilitate commercial bank lending to agriculture in the future. Requires semiannual reports to the appropriate congressional committees.

Authorizes appropriations.

Requires that no less than $30,000,000 nor more than $35,000,000 of specified funds appropriated for the interest rate reduction program be used to fund the interest-rate buy-down program authorized under this Act for FY 1986.