Evening star., 1933-04-03
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1t has been estimated that farm
ms rtgages outstanding in this country
total $8,500,000, 900. To this must be
added the personal and short term
debts Of American farmers, estimated
to be not less than $500 900 900. This
makes the total farm Indebtedness
more than $4,000, 100000. About 40
per cent OF the farmers in the country
are carrying farm mortgages. Thirty
per cent OF the farm mortgages are held
by individuals and about % per cent,
1t is reported, by insurance companies
The Federal and Joint Stock Land
Banks have 10 per cent Of these mort
cages; commercial banks, IL per cent;
mortgage companies have 10 per cent
and other firms or agencies, z per cent.
1t has been estimated that the annual
interest bill Of the farmers Is nearly
5000, ,000, 900.
Early Relief Sought.
Because of the low prices Of farm
commodities and their inability to earn
fair return on their investments, the
American farmers have felt the mort
gage burden terribly. The effort Of the
President Is to grant early relief through
reduced interest, curtailed principal
and long period Of years In which
to pay.
Not all farm mortgages are expected
to be reflnanced, for many OF them are
being cared for under existing terms.
The sponsors Of the farm mortgage re-
lief plan believe that an issue Of from
two to three billion dollar5 in bonds
can take care Of the rennancing Of the
mortgages.
Highlights Explained.
The highlights of the bill were eX-
planned as follows in statement by
Senator Robinson Of Arkansas, who In
troduced the measure:
Il. The Federal land banks within
two years from the time the act takes
effect (or until the farm loan commits
sioner finds that Federal land banks
bonds are readily saleable on the market
at per cent? may issue not more than
81. .000, ,000, 900 in 4 per cent bonds on
which the interest shall be guaranteed
by the United States. The bonds may
be issued for two purposes, namely. %
making new loans, CD exchanging
bonds for outstanding mortgages.
"2 The Federal land banks are au-
thorized to purchase first mortgages on
farm land within their respective dis
tricts or to exchange bonds for first
mortgages at price not exceeding the
unpaid principle or SO per cent Of the
normal value Of the land mortgaged
plus 20 per cent Of the improvements,
whichever Is the smaller, the mort
gagor being entitled to have his in
debtedness refinanced for the amount
paid by the bank for his mortgage.
"3. To provide for extensions the
Secretary of the Treasury Is authorized
to subscribe at such periods as the
farm loan commissioner shall determine
to the paid-in surplus of the Federal
Land Banks the sum Of $50 0,000, 900 to
be repaid when resources Of the banks
become available therefore.
~ The maximum rate Of interest
payable on loans on mortgages out
standing or made within two years from
the effective date of the act shall not
exceed Az per cent per annum, $15.-
100000 being made available from the
Treasury to compensate the banks for
the reduction, the payments to be made
quarterly when certified by the farm
loan commissioner.
Loan Limit $4,000.
"5. The limit as to amount of loans
Is proposed to be raised from $25, 900
to $4,000 in cases approved by the
farm loan commissioner.
"6. Where lands are located in ter
ritory not covered by national farm
loan association, or when the Federal
land bank Of the district in which the
lands are situated is unable to accept
applications from an association, direct
loans may be authorized at q rate OF
one-half Of per cent in excess Of the
interest charged to borrowers through
national farm loan associations. Such
borrowers are required to covenant that
when 10 or more borrowers whose loans
aggregate not less than $40, 900 reside
in locality which may be covered or
served by national farm loan associa-
ton, they will unite in forming such
an association, the adjustments or re-
adjustments are to be made respecting
the stock that will put them on the
same level with other borrowers belong
ing to such associations.
~. Receivers Of land banks appointed
pursuant to the farm loan act are au-
thoriZed to borrow from the Reconstruc-
certificates for the purpose OF paying
taxes on real estate owned by the bank
or secured to 1t by mortgages. such re-
ceivers' certificates constituting prior
liens on the assets.
g. Title two contemplates the volun-
tary liquidation Of joint stock land
banks. forbids them to issue hereafter
any tax-exempt bonds except such as are
necessary to refinancing existing loans
or bond issues. or to ref1nance the sale
OF real estate belonging to the bank.
No Foreclosure Period Set.
"9. The Reconstruction Finance Cor
porat1on Is directed to make available
500 100000 for loans to joint stock
land banks at 4 per cent per annum,
the amount to be loaned to any one
bank being apportioned in accordance
with the proportion Of the unpaid prin-
cipal of the mortgages they hold to the
| total amount Of the mortgages held by
all the joint stock land banks, the
loans to be secured by first mortgage
or purchase money mortgages on farm
| lands, first mortgages on farm real
estate owned by the banks, or such
other collateral as may be available,
the real estate underlying the collateral
to be appraised and the borrowing
capacity to be limited to so per cent
Of its normal value AS a condition
precedent, the joint stock land bank
borrowing must agree to reduce to s
per cent the rate OF interest carried on
its mortgages pledged as collateral and
to refrain from foreclosure during q
period OF two years, except where the
property is abandoned by the mortgagor.
40. Two hundred million dollars of
the credit of the r. F. c. is made avail
able for loans to farmers for refinanc-
ing their Indebtedness In accordance
with the amendments adopted at the
last session to the bankruptcy act re-
lating to compositions and extensions,
one Of the objects being to protect the
farmer where circumstances permit
against having his operations suspended
or shut down by unsecured creditors or
inability to obtain funds with which to
carry on his business. even though he
may have arranged to refinance the
first mortgage on his real estate.
I'll. An important feature of the bill
is Title Four, which authorizes loans by
the r. F. C. in the aggregate amount
Of $5o.ooo,000 to drainage, levy and ir-