The Prince George's enquirer and southern Maryland advertiser. (Upper Marlborough, Md.) 1882-1925, 1915-12-31
SOLVING THE PROBLEM
OF LAND MORTGAGES
How the German Farmers Secure Long
Term &Eoans Through Their Own
:. = Land Mortgage Associations.
IF. B. BOMBERGER,
AOrio1I1fura14C


,,. IF. B. BOMBERGER,
= Maryland Agricultural; College.
= The; Landsehaft, or Land Mortgage
Of: Germany lisa co-opera-
i've :. union of landholders within a
limited district for the purpose OF Sc
curing long time loans for its mem.
bers on their land by issuing bonds
against the collective value OF tho
lands Of the members. Anyone who
owns from ten to twenty-five acres OF
land within the district may become
member:- The association ELECTS It's
own ofHcers and. through an elective
Executive Committee and Audfttve
COMMITTEES. carries on its own AFFAIRS
but It is. always under the resulationt
and supervision Of the government.
: "A s1andholder wishing to borrow
money through the Landschaft. makes
his application setting forth the
AMOUNT !desired. and the use which he
Intends to make Of the money. The
title to his land II examined; and. II
It h; satisfactory he Is permitted to
borrow up to two-thirds Of the assessed
valuation Of his land. BY giving to the
Landschaft' q first mortgage on the
land for the amount he borrows. To
prevent fraud or. loss three separate
appraisafs Of the hand are made.
g The association Is not bank and
has NO supply Of funds on hand, it does
net. therefore. lend him the money d.
rsctly; but it issues to him mortgage
bonds Of an amount equal to the face
value Of the mortgage. These bonds
arc sold By the borrower himself. or.
moro usually. by the Association in
the open market. Thus the funds are
secured for the borrowers use.
-. Are Best OF Security.
This mortgage bond is secured by
all the property Of the Landschaft, Is
made payable to bearer and is trans
fefabfs at any time without endorse
ment.. Although these bonds do not
run Tor any definite length of time and
are not payable on demand. the Land
schaft may call them In and pay them
or at any time The amount of bonds
outstanding at any time cannot exceed
the amount of the mortgages held by
the Association. So careful is the
management of these Landschaften
and SO strict Is the governmental
/ supervision that, although the average
rate Of interest on thees bonds is very
/ low, ranging from go to 40, they are
regarded as the very best form Of in.
vestment for trust funds. savings
bank funds, etc. Thus on June IL.
1913, while German Government 40
bonds sold at So Landschaften 4To
bonds sold at 100; and on the same
date Government $50 bonds sold at
74S0 while Landschaften $50 bonds
sold ct $3.50" Each of these Land
schaften or Mortgage Associations IS
united with others to form a central
or Provincial Mortgage Union, the
function Of which Is to provide wider
market for the bonds.
|. Mortgage 10 Gradually Paid OF.
One Of the most valuable features
Of the loans secured through these AS
,soeiatienss is the gradual amortization
or cancellation Of the debt by means Of
small periodical payments make at the
|. are paid These small annual or semi.
annual payments. which range from
one-fourth to three-fourths of one per
cent, are obligatory upon the bor'
| rover. Thus on loan at 4 per cent.
q Of one per cent. is added for
amortization or cancellation and one
fourth per cent. is added to cover the
operating expenses of the Association.
making total Of ~5%. BY paying this
amount annually for from forty to
forty-dve years the whole loan will be
paid OF. In other words, the Land.
schaft requires the borrower. by max,
ing small payments, to accumulate q
sinking fund which will, in the term Of
years of the mortgage, amount to
enough to pay the principal debt. The
| longer the term of the mortgage the
lower will be the amortization fee.
Necessary Capital Easily Secured.
OF course, II the borrower desires at
any time to pay OF the loan before
| the mortgage Is due, he may do so.
The average length of time for which
| loans run In the Province of Saxony is
about twenty -fve years. In most cases
|. provision is made that when 1919 of
| the original loan Is amortized and ad.
| ditional loan for the same amount may
be made on the same land.
In each district Is a local officer of
the Landschaft, elected at their an
nual meeting. who assists members in
| getting loans and looks after the in.
| forests Of the Landschaft in the dis
| trict II borrower is misusing the
| money borrowed. this officer serves as
the agent Of the Landschaft in the
matter Of the foreclosure of tho mort
| gage. The expense Of operation of
| these Associations is exceedingly
4 NAH The result is !, that German
| farmers are able to secure ample CAPT.
| tai. yforr long terms; at small rates OF
Interest with the assurance that, SO
loRt assthe interest and small amort,
ization fee is paid, the principal debt
| il, slowly but surely being paid off.
The annual short courses at the Agri-
scultnEai college begin January 3. 1916.
Il