The Glasgow courier., 1916-07-28

p
warded to the borrower through the.
loan association.
The act specifically defines the pur-
poses for which loans may be obtain
ed. 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 reason
able operation of the mortgaged 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.
I'D To liquidate indebtedness of the
owner of the land mortgaged, exist
ing at the time of the organization
of the first national farm loan asso-
citation established in and for the
county in which the land mortgaged is
situated, or indebtedness subsequent
ly incurred for one of the purposes
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
purpose, stated in the act, and those
who after borrowing do not use the
money for the purposes specified in
the mortgage are liable to have 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 individual can borrow more than
$4,000 or less than $10O.
No loan may be made for more than
so per cent Of the value Of the land
mortgaged and 20 per cent of the
value of the permanent insured i'm
provements upon it.
The loan must run for not less than
5 and not more than 40 years.
Every mortgage must provide for
the repayment of the loan under an
amortization plan by means of fixed
number of annual or semi-annual in
stallments sufficient to meet all in
terest and pay off the debt by the
end of the term of the loan. The in
stallments required will be those pub
lished in amortization tables to be
prepared by the Farm Loan Board.
The bank is given power to pro-
tect itself in case of default by recall
ing the loan in whole or in part, or
taking other necessary action.
No Federal land bank is permitted
to charge more than 6 per cent per
annum on its farm-mortgage loans,
and in no case shall the interest charg-
ed on farm mortgages exceed by more
than per cent the rate paid on the
last issue of bonds.
For example, if the bank pays only
1 per ent on an issue of bonds, it car
not charge more than 5 per cent fol-
the next farm loans it makes.
/ Out Of this margin of not to ex.
ceed 2 per cent, together with sucf
amounts as it can earn on its paid-ir
cash capital, the bank must set aside
certain reserves and meet all it's ex
penses. Any balance or net profit
can be distributed as dividends to tn
loan associations or other stockhold
ers. The loan associations, from thei
bank dividends, after setting asid
the required reserves and meeting ex
penses, can declare association divi
dends to their members. In thi
way the profits, if any, will be distri
buted among the borrowers and will
to that extent, reduce the amount o
interest actually paid by them.
The Federal land banks are speci
, fcally prohibited from charging, i
4 connection with making loan, an
fees or commissions which are no
: authorized by the Farm Loan Boare
= The authorized fees need not be pal
r in advance, but may be made part q
the loan.
s 1t has been said that all loans ar
$ to be repaid on the amortization plal
8 This plan calls for number Of fixe
n annual or semi-annual payment
e include not only all interest an
n charges due the bank, but the pril
e cipal as we'll. These payments Al
T. so calculated Jas to extinguish II
n debt in a given number Of years. A
ter five years the borrower has th
: right on any interest date to make az
IS ditional payments on the principal
i sums of $25 ar any multiple thereo
<. thus discharging the debt more quicl