Evening star., 1933-07-19
|LAND BANK LOANS
| BIG AID TO FARMER
AgricuIturiSt Now Can Get
Money for Less Under
New Legislation.

Editors note-This is another
OF series of stories by staff ,uriters
OF the Associated Press explaining
ne10 legislation)
The farmer by getting in touch with
one of the II Federal land banks, by
letter or otherwise. now has the way
open to borrow more Federal money
at less interest.
The amounts run from $100 to $50
600. Previously there was a $25,000
limit to what one borrower could get
under the Federal farm loan act"
If he is out of debt. says the law
with its recent changes, the farmer can
obtain loan for up to so per cent CT
the appraised normal value of his land
plus 20 per cent of the appraised value
OF permanent, insured improvements,
giving a first mortgage in return.
Purposes Are Specified.
The loans must be for one of four
purposes which he must state in ap-
plying for the loan:
l. Purchase of land for agricultural
uses.
2. Purchase of equipment, fertilizers
and live stock necessary for proper and
reasonable operation of farm land.
CURED for agricultural purposes, or in
Cured prior to January /, 1893.
4. Continued operation of the land
mortgaged.
Before the lean can be made, the
farm offered as security must be ap-
praised by a land bank representative
The loan can be obtained directly
from the land bank, but the farmer can
get 1t at lower interest If it is handled
through a national farm loan associa-
tlon. There are about 1000 of these
with from a dozen to several hundred
farmer members in each.
Indcrse the Loan.
These indorse the loan and accept
responsibility for payment. To become
member a farmer who obtains a loan
through one is required to subscribe to
the associations stock in an amount
equal to per cent of his loan.
This stock forms pool to absorb
losses if members fail to pay loans
When farmer pays his loan
his responsibility ceases; he gets back
the amount he paid for his stock less
losses. If necessary he can borrow
money from the land banks as part OF
mis- mortgage loan to subscribe for stock
a member Of an association is Az pei
cent for five years and 5 per cent after
that, ii the loan is made in the next
two years.
The interest rate on a direct loan
from a land bank is one half of pei
cent higher for both periods.
Can Run 40 Years.
For the first five years, regarded as
an emergency" period. no installments
need be paid on the mortgage loans
which can run for up to 40 years.
Mortgage holders can sell theil
mortgages under the act. taking bonds
issued by the land banks in return
The banks can issue up to 1000, ,00O,'
900 in these tax-exempt bonds. with
interest guaranteed by the Government
at per cent.
To get these bonds the mortgage
holder also must apply to the land
banks.
They will allow him no more thar
so per cent of the value of the lane
and 20 per cent of the improvements
for his lien.
If his mortgage is for more than
that he will have to take loss, if fol
less he will have to take that.
Can Liquidate Claim.
The purpose of the provision is that
the holder of the paper can liquidatt
his claim. and the farmer who owes
the mortgage holder will then owe the
land banks and will get the benefit o.
lower interest rates. Most mortgages
held privately call for 6 to 7 per cent
interest.
So far no bonds have been issued tc
the public, but some have been pledged
to the Reconstruction Corporation fol
cash which is being used to buy ur
mortgages held by closed and restricted
banks.
The u Federal Land Banks are
at Springfield, Mass; Baltimore
Columbia. S. c.; Louisville, New
Orleans, ST. Louis, St. Paul, Omaha
Wichita, Houston, Berkeley and Spo'
kane.