Imperial Valley press., 1933-05-19

3IGlllldiICliis 1AiiOuBh lllt leQtIdl
farm act has just been received by
Frank Beyschlag, farm advisor. in
a circular communication from
Henry Morgenthau Jr.. designated
to be governor of the farm credit
administration. Beyschlag states
that the giSt OF the information is
that the federal land banks will
issue bonds to the amount Of 81
000000,000 with interest at per
cent guaranteed by the government
! for new farm loans and mortgage
refinancing. The land-banks are
authorized to exchange these bonds
for existing farm mortgages. In no
case. however. may the amount Of
bonds given in exchange for a
mortgage exceed one-half the "fair
normal value'' of the land as ap-
praised by the land-bank apprais-
erS, plus 20 per cent of the value
of permanent insured improvements
on the land. AS security for these
bonds the government then takes a
first mortgage bearing Az per cent
interest on the land. These mort
cages TO the land-bank do not re-
quire payments on the principal of
the loan known as amortization
payments for a period of S years
If the mortgage is otherwise kept
in good standing. In addition the
land-banks can permit borrowers
to postpone such interest payments
as they can show they are unable
to meet.
There are two ways III which
the above exchange of land-bank
bonds for mortgages may be
brought about, according to the
farm advisor. One is for the hold
er of the mortgage to make appli-
cation to the federal land bank in
the district in which the land is To-
Gated. In case the present mort
gage exceeds the amount the land
bank will loan the exchange can
not be consummated unless the
mortgage holder consents to seal
ing down the amount of the prin-
cipal to the loan value set by the
land-bank appraiser 1t is antici-
pated that mortgage holders in a
great many cases will be quite will
ing to Go this rather than take
chances of ultimate collection of
the principal of a mortgage which
has not sufficient sound value be-
hind it.
Alternative Explained
The other way of refinancing is
for the farmer, whose mortgage has
fallen due and payable, or whose
mortgage contains a provision that
it may be paid off at any time, to
make application to the federal
land-bank for new mortgage loan
with which to pay off the existing
mortgage. If the holder of the ex-
isting mortgage is willing to accept
the amount which the land-bank
can loan on the property, the bank
has authority to loan for that pur-
pose. The farmer then can obtain
the benefit of the low interest rates
and the favorable terms authorized
by the refinancing act in addition
to any reduction in the principal
OF the loan which may result.
Still another means is provided
by the new act for paying off ex-
iSting mortgages, for the redemp-
ton of land that has already been
sold under foreclosure, for satisfy
ing other than mortgage debts, and
for obtaining funds with which to
continue the operation of the farm.
The farm loan commissioner, who
is the supervising authority over
the federal land banks, can make
individual loans in amounts not
over $1,000 for a period of 13 years
to be paid off during the last 10
years Of the term. For the first
three years nothing but interest
payments at the rate of per cent
will be required. Preference for
these loans is to be given to those
farmers wishing to borrow to save
their land from foreclosure or tn
redeem land that has already been
sold. These loans may be made on
the security of either first or sec
ond mortgages against not only the
farm itself but any stock, machin-
cry, or other farm property which
the farmer possesses. The amount
borrowed under this plan, together
with the amount of all outstand-
ing claims which take precedence.
must not exceed rs per cent of the
value Of all farm property pledged
for the loan. 1t is expected that
loans under this provision of the
act will permit many farmers tc
reduce their burdens of debt by
coming to understandings with
their creditors.
Must Apply To Berkeley
Information to the farm advisor
makes it clear that all applications
for the exchange of land-bank
bonds for mortgages. either on the
part Of the mortgage holder or the
/ farmer, must be made to the feder-
al land bank whose office in this
district is located at Berkeley, Calf.
Applicants for the farm loan COM
missioner loans should write to
the agent of the farm loan COM
missioner, in care of the federal
land bank, Berkeley, Calf. The
new law imposes an extremely
heavy task on the federal land
banks and the agents of the farm
loan commissioner. Beyschlag,
therefore, urges that all applicants