The gazette-times. [volume] (Heppner, Or.) 1912-1925, 1916-08-17

10 the Federal land bank and must
be investigated and reported on by
salaried appraiser OF the bank be-
fore the loan is granted. This ap-
praiser is required to investigate the
solyency and character of the pros
pective borrower as we'll as the
value of his land. When a loan is
granted the amount is forwarded TO
the borrower through the loan as
sociation.
Conditions Under Which Loans May
BE Obtained.
The act specifically defines the
purposes for which loans may be
obtained. These are:
(a) To provide for the purchase
of land for agricultural uses.
(b) To provide for the purchase
of equipment, fertilizers, and live
stock necessary for the proper and
reasonable operation of the mort
gagged farm the term equipment"
to be defined by the Federal Farm
Loan Board.
(c) To provide buildings and for
the improvement of farm lands; the
term improvement to be defined
by the Federal Farm Loan Board.
(d) To liquidate Indebtedness of
the owner of the land mortgaged ex-
isting at the time of the organiza-
ton of the first national farm loan
association established in or for the
county in which the land mortgaged
is situated, or Indebtedness subse-
Quently incurred for one of the pur-
poses mentioned in this section.
Loans may be made only on first
mortgages on farm land.
Only those who own and cultivate
farm land or are about TO own and
cultivate such land are entitled to
borrow.
No one can borrow save for the
purposes stated in the act, and those
who after borrowing do not use the
money for the purposes specified in
he mortgage are Liable 20 nave their
loans reduced or recalled. The Sec
retary treasurer of each association
is required to report any diversion of
borrowed money from the purposes
stated in the mortgages.
| No loan may be made for more
than $4,000 or less than s10O
land mortgaged and 20 per cent of
the value of the permanent insured
improvements upon it.
The loan must run for not less
than and not more than 10 years.
Every mortgage must provide for
the repayment of the loan under an
amortization plan by means of fixed
number of annual or semiannual in
stallments sufficient to meet all in
terest and pay off the debt by the end
of the term of the loan. The Install
ments required will be those publish
ed in amortization tables to be pre-
pared by the Farm Loan Board.
The bank is given power to protect
itself in case of default by recalling
the loan in whole or in part, or taking
other necessary action.
The Interest Rate Paid by the Bor.
No Federal land bank is permitted
to charge more than per cent per
annum on its farm-mortgage loans
and in no case shall the interest
charged on farm mortgages exceed by
more than l percent the rate paid on
the last issue of bonds.
For example, if the bank pays only
percent on an issue of bonds, it can
not charge more than per cent for
the next farm loans it makes.
Out of this margin of not to exceed
per cent, together with such
amounts as it can earn on its paid-in
cash capital, the bank must set aside
certain reserves and meet all its ex-
penses. Any balance or net profits
can be distributed as dividends to the
loan associations or other stockhold-
ers. The loan associations, from their
bank dividends, after setting aside
the required reserves and meeting ex-
penses, can declare association divi-
dends to their members In this wav
the profits, if any, will be distributed
among the borrowers and will, to that
extent, reduce the amount of interest
actually paid by them.
Restrictions on Fees and Commissions
The Federal land banks are specif-
ically prohibited from charging, in
connection with making a loan, any
fees or commissions which are not
authorized by the Farm Loan Board.
The authorized fees need not be paid
In advance, but may be made part of
the loan.
Amortization Plan of Repaying Loans
1t has been said that all loans are
to be repaid on the amortization plan
This plan calls for a number of fixed
annual or semiapuual payments,
which include not only ali interest
and charges due the bank, but the
principal as we'll. These payments
are so calculated as to extinguish the
debt in given number Of years. At
ter five years the borrower has the
right on any interest date to make ad-
ditional payments on the principal in
sums Of $25 Of any multiple thereof, |