Morris tribune., 1917-02-09
Provides System For
Lending Money on
Farm Lands at Rea-
scnab,e Interest For
Relatively Long Pc
RODS - Amortization =,
Plan For Easy Repay
ment Prescribed e

loans IL makes through the association.
If a prospective borrower has no
money with which to pay for his asso-
citation stock he may borrow the price
of that stock as a part Of the loan on
his farm land.
Under this plan, then, every borrower
must be a stakeholder in his local asso-
citation and every association a stock
holder In it's 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
ISOLATION before obtaining a 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 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
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 we'll as the value Of his land When
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.
Cb) 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 the i'm
provement of farm lands, the term "in-
provement" to be defined by the federal
farm loan board.
(d) To Iiquidate Indebtedness of the own
er OF the land mortgaged existing at the
time of the organization Of the first ma
tionaI 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
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
duced or recalled. The secretary
urer Of each association Is required to
report any diversion of borrowed mon
ey 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
50 per cent of the value Of the land
mortgaged and 20 per cent Of the value
Of the permanent insured improve,
ments 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 amor
tization plan by means Of a fixed num-
Der Of annual or semiannual install
ments sufficient to meet all interest
and pay off the debt by the end Of the
term Of the loan. The installments re
quired will be those published in amor
tizatiOn tables to be prepared by the
farm loan board.
The Interest Rate Paid by the 1or-
rover.
No federal land bank 10 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 by more than 1 per
cent the rate 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 per cent for the
next farm loans it makes.
Out Of this margin Of not to exceed
per cent, together with such amounts
as it can earn on its paid in cash cap
ital, the bank must set aside certain re-
serves and meet all its expenses ANY
balance or net profits can be distrib
uted as dividends to the loan associ-
atoms or other stockholders The loan
associations 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, win be distributed among the Dor
rowers and Will to that extent reduce
the amount Of interest actually paid by
them.
The federal land banks are specifcal-
Iy prohibited from charging in connec-
ton with making a loan any fees or
commissions which are not authorized
by the farm loan board. The author
lied fees need not be paid in advance,
but may be made part of the loan.
Amortization Plan Of Repaying Loans.
It has been said that all loans are to
be repaid on the amortization plan
This plan calls for a number Of fixed
annual or semiannual payments which
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