Pullman herald. [volume] (Pullman, W.T. [Wash.]) 1888-1989, 1916-07-28

to the federal land bank and must
be investigated and reported on by
a salaried appraiser of the bank be-
fore the loan is granted. This ap-
praiser is required to investigate the
solvency and character of the pros
pective borrower as well as the value
of his land When a loan is grant
ed the amount is forwarGe to the
borrower through the loan associa,
ton.
Conditions Under Which Loans May
BE Obtained From Federal
Land Banks
The act specifically defines the
purposes for which loans may be OBJ
tanned. These are:
'(a) TO provide for the purchase
OF land for agricultural use
"lb) 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 land
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 liqudate Indebtedness of
the owner of the land mortgaged.
existing at the time OF the organi-
zation of the first national farm loan
| association established in or for the
county in which the land mortga gcd
! 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
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 500.
No loan may be made for more
than 30 per cent of the value of the
land mortgaged and 30 per cent of
the value of the permanent insured
improvements upon it.
The loan must run for not less
than five 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 installments sufficient to
meet all interest and pay the debt
by the end of the term of the loan.
The 1nstallments 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.
Interest Rate Paid by Borrower
No federal land bank is permitted
to charge more than six per cent per
annum on its farm mortgage loans,
and in no case shall the interest
charged on farm mortgages exceed
by more than one per cent the rate
paid on the last issue of bonds.
For example, if the bank pays
| only four per cent on an issue of
bonds, it can not charge more than
five per cent for the next farm loans
| it makes.
Out of this margin of not to ex-
coed one 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 expenses Any balance or net
profits can be distributed as diyi-
| dends to the loan associations or
| other stockholders, The loan asso-
Citations, from their bank dividends,
after setting aside the required re-
serves and meeting expenses. can de-
clare association dividends to their
| members. In this way the profits, if
any, will be distributed among the
borrowers and will, to that extent
reduce the amount of interest actu-
ally paid by them
Restriction on Fees and Commissions
| The federal land banks are specifi-
| cally prohibited from charging in
connection with making a loan any