The Richmond Virginian. (Richmond, Va.) 1910-1920, 1916-07-30

equipment. fertilizers and live stock
necessary for the proper and reason
able operation OF the mortgaged farm.
the term equipment" 10 be defined
by the Federal Farm Loan Board
tc) To provide buildings and for
the Improvement Of farm lands; the
terms improvement to he defined by
the Federal Farm Loan Board
I'D To liquidate Indebtedness Of the
owner of the land mortgaEed. existing
al The time Of the organization OF the
first national farm loan association es-
tablished in or for the county in wnicn
The land mortgaged IS situated or IN
debtedness subsequently incurred for
one OF the purposes mentioned in this
section.
Loans may be made only on frst
mortgages on farm lands.
Only those who own and cultivate
farm land or are about to- own and
cultivate such land are entitled TO Dor
row.
No one can borrow save for the pur-
poses stated in the act. and those who
after borrowing do not use the money
for the purposes specified IN the mort
gage are liable to have their loans re-
treasurer OF each association is re-
qu.red TO report any diversion of boz
rowed money from the purposes stated
III the mortgages.
No individual can borrow more than
$40 900 or less than 500.
No loan may be made for mora
than 80 per cent of the value or he
land mor'gag~d and 90 per ,ant of
the value of the permanent .Fsu' ed
improvements upon il.
The loan must run for not less Than
b. Arfy
Every mortgage must provide for
the repayment OF the loan under an
amortization plan by means OF iixei
mum Der OF annual or semi annual in
sediments sufficient 10 meet all inter-
est and pay off the debt by the enf
of the term of the loan. The Install
ments required will be those prelish%d
in amortization tables to be prepared
by the Farm Loan Board.
The bank Is given power to protect
itself in case OF default by re >alling
the loan in whole or in part, or ak
Ing other necessary action,
The Interest Rate Paid by Borr over.
No Federal land bank is permitted
to charge more than 6 per cent PEI
annum on its farm mortgage loans,
and in no case shall the interest
charged on farm mortgages exceed
by more than per cent the ra e paid
on the last issue OF bonds.
For example, II the bank pays only
per cent on an issue OF bonds. II
cannot charge more than s per cent
for the next farm loans II makes.
Out of this margin of not TO ex-
coed 1 per cent. together with such
amounts as il can earn on its paid
in cash capital. the bank MIST set
ASIDE certain reserves AMI meat all
"a balance n nrNf-
its can be distributed as dividends to
the loan associations or other stock
holders The loans associations, fro'a
thel, bank dividends, after setting
aside the required reserves ana meet
ing expenses, can declare association
dividends to their members. In this
way the profits. IL any. will be dis
tributed among the borrowers and
will. to that extent. reduce the amount
OF interest actually paid by them.
Restriction on Fcess and Commissions
The Federal land banks are spcci-
fieally prohibited from charging. Ia
connection with making a loan, any
fees or commissions which arc not
authorized by the Farm Loan Boart.
The authorized fees need not be paid
In advance. but may be made part OF
the loan.
Amortization Plan Of Repaytnr Loans,
II mas been said that all loans are
to be repaid on the amortization. plan.
This plan calls for a number OF nxed
annual or semi-annual payments
which include not only all interest and
charges due the bank, bu- the prin-
opal as we'll. These payments are
So calculated as TO extinguish the debt
IN a given number of years. After i've
year. the borrower has the right OF
any interest date to make additional
payments on the principal In SUMS OF
$25 or any multiple thereof. thus dis
charging the debt more quickly.
After a Federal land hank has
loaned on irst mortgage $4,000, IL
can obtain permission from the Farm
Loan Board to issue $50. 900 in farm
loan bonds based on these mortgages.
sell such bonds in the open markst.
and use the money thus obtained to
lend on other mortgages.
This proccss OF lending on mortgages
and selling bonds In issues OF $4,000
may b. repeated until bonds to the
amount Of twenty times ths banks
pai4rnp capital arc outstandipg. r
Noch AonlS Qno014 AaNo cir ~ ~.