Cresco plain dealer. (Cresco, Howard County, Iowa) 1913-1945, 1916-08-18
rrevi es System Fer
Len ding Money on
Farm Lands at Rea-
son.b-e Interest For
Relatively Long Pc
ricds - Amortization
Plan For Easy Repay
ment Prescribed ~

trust by the bank as security for th
loans it makes through the association
II prospective borrower has n
money with which to pay for his ass
citation stock he may borrow the pric
Of that stock as part Of the loan o
his farm land.
Under this plan, then, every borrowe
must be a stakeholder in his local assc
citation and every association a stock
holder in its district bank. Each stock
| holder In an association is liable 70
the acts Of that association up to twic
the amount Of his stock.
How Loans Are Obtained.
A member Of national farm loan as
ISOLATION before obtaining loan mus
first fill out an application blank sup
piled to the loan association by thu
federal farm loan board. This applica
ton blank and other necessary papers
will then be referred to 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 sal.
aired appraiser Of 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
loan is granted the amount IL for
l~I 81 h. ~.
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 the mortgaged farm. the term equip
ment" to be defined by the federal farm
loan board
(c) To provide buildings and for tho i'm
provement Of farm lands, the term 'im-
provement" to be defined by the federal
farm loan board.
(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 in
or for the county In which the land mort
gagged is situated or Indebtedness subse-
quently incurred for one of the purposes
mentioned in this section.
Loans may be made only on first
on farm land.
Only those who own and cultivate
farm land or are about to own and cul-
Livate 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
'or 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
'eport any diversion of borrowed mon.
" from the purposes stated in the
No individual can borrow more than
10000 or less than 800.
No loan may be made for more than
10 per cent Of the value Of the land
and 20 per cent Of the value
II 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 !,
repayment Of the loan under an amor
ization plan by means Of fixed num- !
Der Of annual or semiannual install i
nents sufficient to meet all interest
md pay OF the debt by the end Of the !
ERIN Of the loan. The installments re- |
luired will be those published in amor
ization tables to be prepared by the !
arm loan board.
The Interest Rate Paid by the Dor.
rover.
No federal land bank is permitted to
barge more than 9 per cent per annum
n its farm mortgage loans, and in no
ase shall the interest charged on farm
mortgages exceed by more than per
ent the rate paid on the last issue of
'onds.
For example, If the bank pays only i
YER cent on an issue Of bonds, it can
ot charge more than 8 per cent for the
ext farm loans it makes.
Out of this margin Of not to exceed
per cent, together with such amounts
8 1t can earn on its paid in cash cap
tai, the bank must set aside certain re-
erves and meet all its expenses. Any
alance or net profits can be distrib-
ted as dividends to the loan associ-
tons or other stockholders. The loan
from their bank dividends,
fter setting aside the required re-
erves and meeting expenses, can de-
lare association dividends to their
lembers. In this way the profits. II
ny, will he distributed among the Dor
overs and will to that extent reduce
he amount OF interest actually paid by
hem.
The federal land banks are specifical-
: prohibited from charging In connec-
on with making a loan any fees or
which are not authorized
Y the farm loan board. The author
ed fees need not be paid In advance,
ut may be made part Of the loan.
Plan Of Rspayins Loans.