The Snyder signal. (Snyder, Tex.) 1887-????, 1918-10-04
URGES MODIFICATION
or HOMESTEAD LAW


ton plan Of payment, Judge S. A.
Lindsay, treasurer OF the Federal
Land Bank Of Houston, today said
"The farm loan act has given TO
this country a perfectly safe, ciicc
tive and workable long-torm rurn
credit system, by means Of which o
rloulture may now obtain the cheap
est money to be had by any industry
and that upon terms and condition
which practically remove all DANCE.
Of the borrower burdenlng himsel
with debt beyond his ability to pay
and which safeguards him against
losing the security mortgaged.
"These provisions OF the farm
loan act are germane to the qucs-
tion Of the proposed amendment to
our State Constitution as regards the
homestead law. The only change In
the Constitution sought Is such an
amendment as will enable the Texa
farmers. who won not more than zoo
acres Of land, TO avail themselye'
OF this or other sources Of credit on
offer equally safe terms.
LET rs examine and consider
these terms and conditions. The
farm loan act, as well as the pro
posed amendment to the Constltu-
ton. stipulatcs that all loans made
Hereunder shall provide for repay
ment upon the amortization plan;
that Is. that the payments must he
made In equal scmi-annual Install
ments sufficient to discharge both
the interest, which Is not to exceed
per cent per annum, and the prln-
cipal. within the period Of the loan
This provision OF the act seems
not to have received consideration
Of the general public. The reduction
Of the rate Of interest on farm mort
gage loans. the 5 per cent, together
( with the easy means OF obtaining
loans upon farm land security, seems
to have satisfied the public; and PEG
pie have not looked for. discovered,
nor considered the provision Of the
farm loan act above mentioned,
which regard Of even greater eco
monte value than the reduction Of
the rate Of interest.
ITO amortlze' debt Is to XIII,
extingulsh, destroy IT, One can not
mako an amortization note without
at the same time and by the same
act executing tho sure and certain
death warrant Of the debt. This is be
cause with the FIRST payment q small
savings account Is startcdwhlch gath
ers volume from each interest pay
ment until the debt is entirely wiped
out within the period Of the contract
Plan Is Explained.
"llow repayment Of q debt upon
the amortization plan operates may
be illustrated by the actual working
Of the plan now in operation in the
Federal Land Bank Of Houston. Let
us take the case Of q farmer who Dor
rows $1,000. lie pays $65 year or
GiA per cent In semi-annual pay
ments Of S39.5O until the loan Is DIS
CHARGED This, OF course IL 6ls per
cent on the sum borrowed We com
monty say he is paying 3 y per cent
interest and per cent on the prin-
clpal. His first payment Is applied as
follows: Twenty seven dollars and
| nny cents on the principal and 50
on the interest. The next payment IS
figured at 81 per cent on $685. and
would be applied as follows: Twenty
seven dollars and forty cents on the
interest and $50 on theprincipol
Interest on the next payment would
be figured on S9S9.g0 and Is applied
as follows. Twenty seven dollars and
twenty cents on the interest ani
/ and $3.50 on the principal and so %
the application Of payments to the
interest growing less and that on the
principal growing greater, as they
are made. until at the date Of tn
last payments 81 pays the interest.
leaving $3.50 to apply on the prin-
cipal, and the debt is entirely wiped
out. The savings account thus start
ed with only Toe to apply on the
principal llquidates the entire $1,000
Nov. since the borrower can OBJ
tain loan Of not exceeding so per
cent Of the value Of his land eN-
elusive Of the improvements and
only 20 per cent Of the value of Die
improvements which must hc In
sured so that same may be- replaced
if destroyed and nce he is bound
to pay both the interest and tho
principal IN smal easy annual of
seml-annual natlllnonts how can
he lose the property mortglgcd? TIL