The Palatka news and advertiser., 1916-08-04

ton stockholder in its district bank
Each stockholder in an association is
liable for the acts of that association
up to twice the amount of his stock.
How Loans Are Obtained,
A member of a national farm loan
association, before obtaining a loan,
must first fill out an application blank
supplied to the loan association bv
the Federal Farm Loan Board. This,
application blank and other necessary
papers will then be referred to a loan
committee of the association when
must appraise the property offered as
security. Such application as is an
proved by the loan committee is then
forwarded to the Federal land bank
and must be investigated and report
ed on by a salaried appraiser of the
bank before the loan is granted. This
appraiser is required to investigate
the solVcncy and character of the
prospective borrower as well as the
value of his land. When q loan is
granted the amount is forwarded to
the borrower through the loan asso-
citation.
Conditions Under Which Loans May
Be Obtained.
The act specifically defines the pur-
pose for which loans may be OBJ
tanned. These are:
GAY 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 mortaged
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 define
the Federal Farm Loan Board.
(d) To liquidate Indebtedness of
the owner of the land mortgaged, ex-
isting at the time of the organization
Of the first national farm loan asso-
citation established in or for the coun-
ty 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
purposes 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 $100
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
improvements 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 fix
eded number of annual or semiannual
instalIments sufficient to meet all in
terest and pay off the debt by the end
Of the term of the loan. The in
staIlments required will be those
published 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 re-
calling the loan in whole or in part, or
taking other necessary action.
The Interest Rate Paid by the
Borrower.
No Federal land bank is permitted
to charge more than 6 per cent per
annum on it's farm-mortgage loans,
and in no case shall the interest
charged on farm mortgages exceed
by more than l per cent the rate paid
on the last issue of bonds.
For example, if the bank pays only
4 per cent 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 eX-
ceed 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 meet