The Sauk Centre herald. (Sauk Centre, Stearns County, Minn.) 1886-current, 1933-05-18
Mortgage Act May Bring
Relief to u. S. Agriculture

Mortgage Act May Bring
Relief to IT, S. Agriculture
Confined from Page One,
such borrower is shown to be with
in his capacity to meet. Exten-
sions of principal cannot be grant
ed for a period exceeding years.
I'm authorizing the Federal Land
Banks to issue within the next
two years $2,OOO,OOO,OOO of their
consolidated, tax-exempt bonds
bearing not to exceed 4 per cent,
the interest being guaranteed by
the United States, it is expected
that the lower rate of interest on
loans made from money so obtain
ed will be the cause of other mort
gage holders to reduce their rates
for the Federal Land Banks al
ways have been the pace-makers in
establishing rates Of interest
throughout the farm mortgage
field. In order to reduce the rate
to be charged on new loans, the
United States not only guarantees
the interest of the $4,000, 100000 of
bonds which may be issued during
the next two years but Congress
made them eligible collateral for
15-day loans from Federal Reserve
Banks to banks which are men,
bers Of the Federal Reserve Sys-
tenn. This eligibility adds greatly
to their liquidity for banks will be
able readily to borrow upon them.
The interest charged farmer-bor-
rowers on funds derived from the
sale of these bonds will not ex-
coed Az per cent.
"The Federal Land Banks will
continue to make loans through
national farm loan associations
and, under certain conditions, di-
rectly to farmers. The provisions
of the Farm Loan Act pertaining
to the appraisal of farms offered as
collateral for loans is unchanged.
The banks may lend up to so per
cent of the value of the land ap-
praised for agricultural purposes,
as defined in the Act, plus 20 per
cent of the insured, permanent i'm
provements.
I'm addition to making loans on
farms the bonds of the banks may
be used by these institutions to ex-
change for first mortgages. First
mortgage holders whose farm prop
erty will qualify under appraisal
will be able to exchange their mort
orc iToInrol Po,,lx
bonds at price which shall not
exceed in each individual case the
amount of the unpaid principal of
the mortgage on the date of such
purchase, or 10 per cent of the val
lie of the land and 20 per cent of
the value of the permanent, in
sured improvements thereon, as de-
terminted by appraisal, whichever
is the smaller.
"This provision, however, is not
primarily to aid the mortgage
holders who prefer the banks
bonds to their individual mort
cages; it is intended mostly as an
aid to the owner-operator trainers
whose homes are on the mortgaged
lands. Such farms must be locat-
ed within the Federal Land Bank
district and the mortgage executed
prior to the passage of the new
act.
"It is anticipated that such ex-
change of bonds or purchase of first
mortgages" continued Mr.. Klaw-
on, twill result in a good deal of
scaling down of the amount of the
mortgages offered for sale or ex-
change. The banks will not take
over at any price mortgages upon
abandoned farms or farms in areas
where it has been demonstrated
that farming cannot he carried on
successfully. Aid is to be extend
ed by the banks, but people or in
situations expecting to unload
worthless properties will be disap-
pointed.
''Sill another form Of aid to farm
ers found in the provisions of the
new Act which authorized an APP
preparation of $2O0,O0O,0OO too be
loaned by the Farm Loan Commits
sioner, secured by a first or second
mortgage upon the whole or any
part of the farm property, real or
personal, including crops, of the
farmer. Such loans will be made
through the Federal Land Bank
loans. They come from the spec
ial fund set up by Congress to give
aid to farmers who can refinance
their farms and compose and scale
down their debts in such. a man
ner that there is a chance for them
to carry on successfully and pay
them off.
From this fund amounts may be
loaned which, if added to all prior
liens and other evidences of in
debtedness against the property of
the farmer, shall not exceed Is
per cent of the normal value Of the
property as it is appraised under
the provisions of the Farm Loan
Act; nor shall such loan exceed
$1,000. Such a loan will bear 5
per cent interest and must be paid
back in installments over a series
of years, but the interest only is
required during the first three
years. To obtain such loan it is
not necessary that a farmer have
a loan from the Federal Land
Bank.