United States v. Chappell

Ronald and Susan Chappell (defendants) borrowed $92,000 from the Farmers Home Administration, later succeeded by the Farm Service Agency (FSA) (plaintiff), a federal agency, to buy a dairy farm secured by a mortgage. The farm suffered serious problems -- sick cattle, structural and utility issues, and declining dairy profitability -- leading to cash-flow trouble; the agency helped by covering taxes and advancing funds through a 1988 refinanced mortgage. The Chappells stopped making payments that same year, and the agency waited roughly three-and-a-half years before accelerating the debt, then about another year passed before the Chappells abandoned the property, and the agency waited an additional 18 months before foreclosing. By the time of foreclosure, the property had deteriorated substantially and the local real estate market had also declined sharply; the sale brought only $40,000, leaving a deficiency of about $140,000, which the FSA sued to recover.