Gilpin observer., 1916-09-07


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first fill out an application blank sup
piled to the loan association by the
Federal Farm Loan board. This ap-
plication blank and other necessary
papers will then be referred to loan
committee of the association which
must nppraise the property offered as
security. Such application as is ap-
proved by the loan committee is then
forwarded to the Federal land bank
and must be investigated and report
ed on by u salaried appraiser of the
bank before the loan is granted. This
appraiser is required to investigate
the solvency and character of the pro-
spective borrower as well as the value
of his land. When loan is granted
the amount Is forwarded to the bor-
rover through the loan association.
Conditions Are Imposed.
The act specifically defines the pur-
poses for which loans may be OBJ
tanned. 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
fba Ea1arul Eurr,, nnr hnnrI
"(d) To liquidate Indebtedness of
the owner of the land mortgaged, ex-
listing ut 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 sit
uated, or Indebtedness subsequently
incurred for one of the purposes men,
toned in this section"
Loans may be made only on first
mortgages on farm land.
Only those who own and cultivate
fnrm land or are about to own and
cultivate such land are entitled to
borrow.
No individual can borrow more than
$4,000 or less than 500.
No loan may be made for more than
SO per cent of the value of the land
mOrtgaged and 20 per cent of the val
ne of the permanent insured improve
ments upon 1t.
The loan must run for not less than
five and not more than forty 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
stullments sufficient to meet all inter-
est and pay Off the debt by the end
of the term of the lonn. The INSTALL
ments required will be those pub
lished In amortization tables to be
prepared by the Farm Loan board. Z
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.
Interest Rate Restricted.
No federal land bank Is permitted
to charge more than 9 per cent per
nnnum on Its farm mortgage loans,
and In no cnse 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
A per cent on an issue of bonds, Il.
cannot charge more than 8 per cent
for the next farm loans it makes.
Out of this margin of not to exceed
per cent, together with such amounts
as 1t can earn on its paid-in cash cap
ital. the bank must set aside certain
reserves and meet all Its expenses.
Any balance or net profits can be dis
tributed as dividends to the loan as
sociations or other stockholders. The
loan associations, from their bank divi-
dends, after setting aside the required
reserves and meeting expenses, can de-
clare association dividends to their
members. In this way the profits, If