The north Mississippi herald. (Water Valley, Yalobusha Co., Miss.) 1888-1929, 1919-05-23
FARM TENANT may
NOW BECOME OWNER
Federal Farm Loan System
Gives Him Opportunity. Bor-
rower's Terms Easy-Many
Ambitious Young Men Avail
ing Selves of Chance to Ac-
quire Title to Lands.


ing Selves of Chance to Ac-
quire Title to Lands.
"How can the farm tenant become
farm owner?"
This question, asked by students
Of agricultural conditions, more fre-
quently perhaps than any other, is
answered by member Of the Fed
eral Farm Board as follows:
The statement is often made that
the federal farm loan system does
not help the tenant to acquire a
farm, and until the matter is studied
this would seem to be true. The fed
real land banks cannot loan to any
man the entire amount which he must
pay for farm. 1t will loan him so
per cent plus 20 per cent Of the per-
manent insured Improvements. The
farm tenant who has saved enough
money to pay so per cent of the val
ue of the farm can give a second
mortgage for what he is unable to
pay TO the owner of the farm. So it
would seem, at first glance, that the
federal farm loan system cannot help
the farm tenant in the business of
getting a farm.
This, however, is not true. Here
and there all over the United States
farmers are buying farms through
the aid of the federal farm loan sys-
tenn, which they could not buy if it
were not for that system. The secret
in these cases Is found in the de
sirable character of the second mort
gage, subject to first mortgage in
the federal farm loan system.
'Let us take concrete case as an
illustration.
Concrete Illustration.
"A tenant-farmer, occupying a
farm of 100 acres worth 500 an
acre, has in the course of years be-
come possessed of plows, harrows,
wagons, tools, horses, harness, cattle,
hogs, poultry and other equipment
sufficient to make him q desirable
| farm tenant. The owner of the
farm may perhaps be his father,
lives in neighboring town, and is
not q man of very much wealth. He
idoes not feel that he can afford to
sell the farm altogether on credit,
but the tenant has heard of the fed
eral farm loan mortgage, and of the
second-mortgage system of acquiring
a farm, so he goes to the landlord
suggests that if the landlord will
carry half the purchase price of the
| farm in the form of second mort
gage, he, the tenant, will borrow $8,-
900 on the farm and turn it over to
the owner in cash. The owner per-
haps says, No; no second mortgage
| for mel" But says the tenant,
this is different kind of 3 second
mortgage, and here is the way they
| deal figures out:
This federal farm loan first
mortgage in the amount of $4,000
bears 5 Il per cent interest, or $440
a year. will also have to pay /
per cent in addition, or $50 a year
to amortize, or pay off the debt. This
makes $500 a year that / will have
to pay on the first mortgage, and as
long as l pay that, the mortgage
never comes due and can never be
lforeclosed.'
Then said the landlord, if that
$500 q year is taken care of there
is no danger of my ever losing my
second mortgage by foreclosure of
the first mortgage?"
Mortgage's Advantages.
"'This is fact said the farmer.
That is the advantage of a second
mortgage, subject to the federal farm
loan mortgage. And, further than
that, your second mortgage gets bet
ter every year, because, by the pay
ment of the $500 year, the $4,000
first mortgage pays itself off in about
35 years. If / do fail to pay the
$500 year, the worst that can hap
pen is that you will have to assume
the payment of the first mortgage.
which will be smaller every year.
The net result will be, first, you viii
get $4,000 in cash; second / will
have chance to get farm of my
own; third, you will get interest on
your second mortgage; and, fourth,
you cannot possibly lose if anything
should happen to me so that / could
not carry the first mortgage
THE result of such conferences
as this is that frequently the owner
Of the farm, anxious to get rid of its
management, and glad to put it in
the hands of someone who will build
lit up instead of running it down, is
willing to take the $4,000 and the in
terest on the other $4,000, and will
enter into this arrangement, and the
farm tenant will become at once a
farm owner. He will be deeply in
debt, but he is a man who has ex-
perienee and equipment, and is in an
ideal position to do we'll on the farm.
He must pay the $500 year interest
and amortization on his first mort
gage Of $4,000 he may have to pay
rs high as per cent interest, or
$500 year. This puts him, in in
terest and amortization charges, a
load Of little over q thousand dol
lars a year, which at present prices
Of farm products is not such heavy
burden as to prevent him from re-
firing part of his second mortgage
every year.
sThe federal land banks are care
full in these cases to look into the
matter so as to assure themselves
that the tenant-farmer is not under
taking q load which he cannot carry.