Pursuant to a congressional request, GAO reviewed the: (1) Farmers Home Administration's (FmHA) single-family housing loan program, focusing on the merits of allowing borrowers to refinance their direct and guaranteed loans at lower interest rates. GAO found that: (1) as of September 30, 1994, the FmHA loan portfolio contained about 765,000 direct loans for single-family housing with an outstanding principal balance of $18.6 billion; (2) from 1991 through 1994, FmHA guaranteed an additional 25,000 housing loans totalling about $1.5 billion; (3) although the majority of FmHA direct loan borrowers would not benefit from loan refinancing because they receive substantial subsidies, low interest rates, or both, many nonsubsidized direct loan borrowers would benefit from refinancing; (4) refinancing in the FmHA loan program will require legislative changes; (5) lowering borrowers' interest rates through the direct or guaranteed loan program would help FmHA promote successful homeownership and meet its requirement to graduate direct loan borrowers to private credit; (6) allowing FmHA borrowers to refinance their loans would help many moderate-income borrowers who are both ineligible for subsidies and unable to graduate to nonguaranteed private credit; (7) although the Department of the Treasury would receive immediate revenues from FmHA loan refinancing, it would forgo future revenues from mortgage payments; and (8) refinancing would reduce FmHA loan servicing costs because banks would be charged with administering and servicing loans previously administered by FmHA local county offices.