Pullman herald. [volume] (Pullman, W.T. [Wash.]) 1888-1989, 1919-02-21
FARM LOANS
APPEAL TO RANCHERs
Continued from first page)

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were the following:
O. What becomes of a farmers
stock when he pays off his loan?
A. He may turn it in for cash at
par or he may turn it over at its par
value as the last payment on his loan
O. What is the maximum and
minimum amount of loans?
A. No one farmer may borrow
more than $4,000 nor less than
500, but an attempt is being made
70 increase the maximum loan 10
5000
@. What is the object of limiting
the size of the loans?
A. The government wants to
benefit the actual farmer not the
landlord or the Spectator Limit
ing the size of the loans to $4,000
prevents the use of this act for the
| purpose of land monopoly.
@. What percentage of the value
of the security may be borrowed?
A. Up to so per cent of the value
OF the land and 20 per cent of the
value of the permanent insured inn
provements.
Q. Will it cost anything to have
titles examined?
A No.
@. Will the borrower pay for alb
stracts of title?
A. Yes.
@. May II borrower pay off his
loan before maturity?
A. He may pay it all or in part on
any interest-paying date after the
mortgage has run five years.
@. You say farmer who borrows
| is required to buy stock of his local
association equal to five per cent Of
his loan. What becomes of this
stock?
A. 1t is held by the local loan as
| sociation as collateral security until
| the farmer pays off his debt. Then
| the money is returned to him, and
the farmer may use it as the last pay
ment of his debt.
@. What does the local associa-
ton do with the money the borrower
pays for his stock?
A. 1t buys stock in the Federal
Land bank, so as to increase the
land banks capital so that 1t can
make more loans.
@. Why does the local association
hold the borrowers stock?
A. The stock purchased by each
borrower in that association is a part
of the assets of the local association
and is to be used to meet defaults in
case some borrower defaults and his
land does not satisfy the face of the
mortgage
@. Is there any other possible liza
bility on the part of the borrower?
A. Yes. In case of very severe
loss experienced by the local loan
association each borrower is liable
for another five per cent This is the
double-liability feature which has al
ways been the rule in national bank
stock ownership.
Q. Then the total responsibility
Of the borrower for the debts of other
members of the association is only
10 per cent of the face of his loan ?
A. Yes.
q. And what Is the likelihood
that this 10 per cent might ever be
called for?
A. 1t is very remote. If loans are
conserVatively made no loss could
reasonably occur that would call fol-
either of these five per cent labil.
tiles. This illustrates the necessity
for careful management of the local
loan association and demonstrates
one of the reasons for their exist
ence-the creation of body for the
exclusion of bad risks and for the
conservative valuation of lands.
Q. May local association in
crease its membership after 1t is or
ganized and in operation?
A. Certainly. 1t may admit any
borrower who subscribes to stock
equal to five per cent of his loan.
He is admitted only by a two-thirds
vote of the directors of the associa-
ton.
z. Is there any limit to the num-
Der that may be taken in?
A. No.
Q. Does the act specify how the
money borrowed shall be expended?
A. Yes; the money may be spent
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