Milford chronicle., 1916-09-08


money with which to pay for his asso
citation stock he may borrow the price
Of that stock as a part Of the loan OIL
his farm land.
Under this plan, then, every borrower
must be a stockholder in his local asso
ciation and every association a stock
holder In its district bank Each stock.
holder 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 as
sociation before obtaining loan must
first fill out an application blank sup
piled to the loan association by the
federal farm loan board. This applica-
ton blank and other necessary papers
will then be referred to a loan commit
tee of the association, which must ap-
praise the property offered as security
Such application as is approved by the
loan committee is then forwarded to
the federal land bank and must be in
vestigated and reported on by a sal
aried appraiser oe the bank before the
loan is granted. This appraiser is re-
! Quired to Investigate the solvency and
character of the prospective borrower
as well as the value Of his land. When
a loan is granted the amount is for
warded to the borrower through the
loan association.
The act specifically defines the pur-
poses for which loans may be obtained
These are:
(a) To provide for the purchase Of land
for agricultural use.
(b) To provide for the purchase of equip
ment. fertilizers and live stock necessary
for the proper and reasonable operation
OF tine mOrtgaged farm. the term equip
ment to be defined by the federal farm
loan board
(c) To provide buildings and for the i'm |
provement of farm lands. the term ''im- |
provement" to be defined by the federal 4
farm loan board.
I'd To liquidate Indebtedness Of the own /
er of the land mortgaged existing at the |
time OF the organization Of the first ma
tional farm loan association established I'm
or for the county in which the land mort
gagged is situated or Indebtedness subse-
quently incurred for one of the purposes
mentioned I'm 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 cul-
tivate such land are entitled to borrow.
No one can borrow save for the pur-
poses stated in the act. and those who
after borrowing do not use the money
for the purposes specified in the mort
gage are liable to have their loans re-
luced or recalled. The secretary-treas-
lrer Of each association is required to
report any diversion Of borrowed mon
~ from the purposes stated in the
mortgages.
No individual can borrow more than
10000 or less than 500.
No loan may be made for more than
- per cent Of the value Of the land !
nOrtgaged and 20 per cent Of the value /,
# the permanent insured improve
nents upon 1t.
The loan must run for not less than :.
i've and not more than forty years.
Every mortgage must provide for the i,
of the loan under an amor .
lzatiOn plan by means Of fixed num- !,
er Of annual or semiannual install "
lents sufficient to meet all interest
nd pay Off the debt by the end Of the !"
arm Of the loan. The installments re- u
uired win be those published in amor a.
zation tables to be prepared by the y
arm loan board. D.
he Interest Rate Paid by the Bor- N.
rover. l.,
No federal land bank is permitted to cc.
large more than per cent per annum ~,
its farm mortgage loans. and in no nd
Use shall the interest charged on farm IN
ortgages exceed by more than per tb
mt the rate paid on the last issue Of Il,
,nds. -
For example, if the bank pays only ! nm
II cent on an issue Of bonds. it can a.
It charge more than per cent for the 81,
lxt farm loans it makes.
Out Of this margin Of not to exceed
per cent, together with such amounts Ic'
it can earn on its paid in cash cap lal
Il, the bank must set aside certain re- .li'
rves and meet all its expenses. ANY Joi
lance or net profits can be distrib- .n'
ed as dividends to the loan associ- iiis
ions or other stockholders. The loan mo
sociations from their bank dividends. loa
ter setting aside the required re- cal
,ves and meeting expenses, can de are
re association dividends to their era
imbers. In this way the profits. II me
y, will be distributed among the bor- ass
vera and will to that extent reduce
, amount Of interest actually paid by
IN. I
he federal land banks are specifical- boa
prohibited from charging in connec- cry
q with making a loan any fees or ban
omissions which are not authorized | pro-
the farm loan board. The author for
] fees need not be paid in advance. ferc
may be made part Of the loan. nny
ortization Plan Of Repaying Loans. bon
has been said that all loans are to gnir
repaid on the amortization plan 2thc
s plan calls for a number Of fixed Tory
ual or semiannual payments which H'
ude not only all interest and men
rges due the bank, but the prin- fion'
4 as well. These payments are so frau
.ulated as to extinguish the debt in othe