Webster City freeman. [volume] (Webster City, Hamilton County, Iowa) 1884-1946, 1917-02-20

we are waiting until the blaze shall
have become a conflagration.
IOWA AND FARM LOAN BANKS.
mes-Republican: An expert told
the farmers at the Ames short course
that the new farm loan banks were
not intended TO do much for Iowa
farmers who now enjoyed exceed
ingly low rates of interest and there
fore he did not expect to see many
such banks organized in Iowa.
1t is true that cooperation loan
associations can not do much for
farmers who can get 5 per cent
money from life insurance compan-
les upon their lands as security but
the farm loan bank has already done
something for the Iowa farmer
which the expert at Ames did not
mention. 1t has. produced the ten
and twenty year amortization mort
gage loan now offered by insurance
companies in anticipation of COM
petition from the farm loan banks.
The long time amortization mort
gage is one that is paid off in fixed
and usually equal annual INSTALL
ments. Instead Of leaving the prin-
cpal to be paid in lump sum when
the loan comes due the amortization
loan never comes due. If it is issu-
ed on the twenty year plan the bor-
rover signs twenty notes coming due
one each year and the amount Of
those notes is fixed by an amortiza-
ton table at such a figure that the
insurance company receives it's prin-
cipal back in twenty payments plus
a low rate of interest for the aver
age time it's money has been loan
ed. The borrower gets credit for in
terest stopped on all payments to-
ward principal and at the end of the
contract there is no new loan to be
made or new commissions for the
entire loan has been paid and the
mortgage is cancelled.
The amortization loan like the
building and loan plan in the towns
has great merit in that it provides
for the payment Of principal in easy
payments. Many a person has be-
come the proud possessor of a home
on the building and loan plan be-
cause he made payments upon the
principal monthly who never could
have accumulated $4,000 in one
lump sum for payment of his loan.
Likewise many farmer has renew
ed his farm mortgage throughout a
lifetime, paying commission and
high rates of interest only to lose his
farm in the end or perhaps be saved
only by sale of his land at advanced
prices who could have been debt free
had he started paying off his mort
gage on the twenty payment plan.
The. prospect of competition with
farm loan banks has produced the
long time amortization loan now of.
fered by insurance companies and
that is an improved form of farm
credit.
| The next aid will come through
incorporated companies to deal in
second mortgages. Insurance con-
panies, as rule, do not loan as
much as farmer needs nor as much
as his land is really entitled as Sc
curity. Mortgage experts, who
Know the real value of land, will
pool these second securities, invest
a large amount of their own capital
| in them for additional safety and
then guarantee them by issuing their
own mortgage certificates or bonds
| to investors. The investors will buy
1.-THE bonds in convenient denomina-
ltions while the bonds will be paid
by the mortgage companies and will
be secured by deposit of second mort
cages upon safe farms. This is the
common practice in public finance