The Topeka state journal. [volume] (Topeka, Kansas) 1892-1980, 1916-07-21

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 mortsaged 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
"(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 associa-
ton established in or for the county
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
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 or
borrowed money from the purposes
stated in the mortgages.
No Individual can borrow more than
$40, 900 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 value of the permanent insured
improvements upon it.
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 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 INSTALL
ments 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.
The Interest Rate Paid by Borrower.
No federal land bank is permitted
to charge more than per cent per
annum on its farm mortgage loans,
and in no case shall the interest
charged on farm mortgages exceed
paid on the last issue of bonds.
For example, If the bank pays only
per cent on an issue of bonds, it can
not charge more than 5 per cent for
the next farm loans it makes.
Out of this margin of not to ex-
ceed l 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 meeting ex-
penses, can declare association divi-
dends 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
actually paid by them.
Restriction on Fees and Commissions
The federal land banks are specifi-
cally prohibited from charging in con-
nection with making a loan any fees
or commissions which are not author
lied by the farm loan board. The
authorized fees need not be paid in
advance. but may be made part of
1 the loan.
Amortization Plan of Repaying Loans
| 1t has been said that all loans are
to be repaid on the amortization plan.
This plan calls for number of fixed
annual or semi-annual payments,
| Continued on Page Two.)