§ 7.2, the qualification standards shall be decided upon before the applicants are rated. Information concerning the standards for any position shall be furnished upon request. The qualification standards effective for each position shall be applied uniformly to all applicants for such position. Under the standards established, it may be provided that certain factors will disqualify applicants for employment. These may include, among others, the following: (1) Dismissal from employment for delinquency or misconduct; (2) criminal, infamous, dishonest, immoral, or notoriously disgraceful conduct; (3) intentional false statements as to any material fact, or deception or fraud in connection with an application; (4) habitual use of intoxicating beverages to excess; (5) reasonable doubt as to the loyalty of the person involved to the Government of the United States; (6) any legal disqualification for appointment; and (7) lack of United States citizenship.

(d) Rating. (1) The qualifications of all applicants for a position may be evaluated at any time prior to appointment being made to such position. Numerical ratings shall be assigned on a scale of 100 and all applicants rated 70 or more shall be eligible for appointment. In the case of persons rated 70 or more who are entitled to veterans' preference under § 7.2, 5 points shall be added if such persons are within paragraph (a) of § 7.2 and 10 points shall be added if such persons are within paragraph (b) (c), (d), or (e) of § 7.2. No numerical ratings need be assigned whenever all qualified applicants will be offered immediate employment. Whenever there is an excessive number of applicants, only a suf ficient number of the highest qualified applicants to meet the anticipated needs within a reasonable time need be given numerical ratings; in such cases procedures shall be followed which will insure consideration of all preference applicants in the order in which they would have been considered if all applicants had been assigned numerical ratings.

(2) For the positions of elevator operator, messenger, guard, and custodian, the application of a nonpreference applicant shall not be rated or given consideration unless there are no active applications on hand from qualified persons entitled to preference.

(3) Whenever experience is a factor in determining eligibility, an applicant

entitled to 5-point or 10-point preference shall be credited with time spent in the military or naval service of the United States when the position for which he is applying is similar to that he held immediately prior to his entrance into the military or naval service; credit shall also be given such applicant for all valuable experience, including experience gained in religious, civic, welfare, service, and organizational activities, regardless of whether any compensation was received therefor.

(e) Employment list. All applicants assigned eligible numerical ratings shall have their names entered on an employment list in accordance with their ratings, except that the names of applicants entitled to a 5- or 10-point preference shall be entered on such list in accordance with their respective augmented ratings, and the name of a preference applicant shall be entered ahead of all others having the same rating. An employment list may be considered inactive if and when no appointment has been made from it within 12 months and it is not expected that any appointment will be made from it in the near future.

(f) Selection and appointment—(1) Order of consideration. The names of all applicants on the employment list for a given position shall be considered in the order in which their names appear thereon but every effort shall be made to utilize a person entitled to veterans' preference before a nonpreference applicant is appointed.

(2) Passing over a preference applicant. Whenever in making a selection of a nonpreference applicant, the name of a preference applicant who is entitled to prior consideration in the order that his name appears on the employment list is passed over, the reasons for so doing shall be recorded in writing. A copy of such reasons shall upon request be sent to the preference applicant or his designated representative. When in making appointments to a position, the name of a preference applicant has been passed over on three occasions and the reasons for so doing have been recorded, consideration of his name for such position may thereafter be discontinued.

(g) General provisions—(1) Procedural modifications. In view of the circumstances and conditions surrounding employment in the following classes of positions, the appointment procedures in this section need not be followed as to such positions: (i) Intermittent posi

tions; (ii) positions pald on a fee basis; and (iii) positions of a confidential or policy-determining character such as the principal officers and any confidential assistants.

(2) Special plans. Any district farm credit board may submit to the Farm Credit Administration a system for making appointments which will result in granting preference to veterans but which does not conform to all of the procedural requirements set forth in this section, but no such system may be put into effect until it has received the prior approval of the Administration.

§ 7.4 Reductions in force.

When a reduction in personnel is to be made in any type and level of work, due to lack of work, shortage of funds, reorganization, or exercise of reemployment rights, and an employee entitled to veterans' preference under § 7.2 is among the competing employees, any preference employees whose performance is satisfactory may not be separated unless or until all nonpreference employees in the same type and level of work and with the same type of appointment are separated, but employees with temporary appointments for one year or less, or who have not completed their probationary period, may be separated without regard to the regulations in this section. Between preference employees with the same type of appointment and whose performance is equally satisfactory, the employee with least service in the banks, including active military service in the armed forces of the United States, shall be separated before an employee who has more such service. Only in unusual cases where the preference just indicated for reductions in force would cause undue interruptions in the activity involved may there be a variance from such preference. In any such case, the variance should be substantiated in writing, with a copy thereof to be given any employee whose preference is denied upon his so requesting.

§ 7.5 Discharge, suspension, etc., only for cause.

For the purposes of this section, employees during their first year of current continuous service, employees appointed for periods specifically limited to one year or less, and employees whose annuity under the Civil Service Retirement Act was continued upon reemployment on or after October 1, 1956, shall

not be deemed to be permanent or indefinite preference eligibles. No permanent or indefinite preference eligible shall be discharged, suspended for more than 30 days, furloughed without pay, reduced in rank or compensation, except as provided in the preceding section, or for such cause as will promote the efficiency of the service and for reasons given in writing, and the person whose discharge, suspension for more than 30 days, furlough without pay, or reduction in rank or compensation is sought shall have at least 30 days advance written notice (except where there is a reasonable cause to believe the employee to be guilty of a crime for which a sentence of imprisonment can be imposed), stating any and all reasons, specifically and in detail, for any such proposed action. Such preference eligible shall be allowed 10 days for answering the same personally and in writing, and for furnishing affidavits in support of such answer, and from an adverse decision thereon shall have the right to appeal locally as provided in the next sentence. Such appeal shall be made in writing within 10 days after receipt of notice of such adverse decision and shall be made to the farm credit board of the district unless the board shall have designated the general agent or a senior officer not connected with the employing bank to hear such appeals locally. On such local appeal, the matter shall be reviewed with the preference eligible and the appropriate bank officers and such recommendation shall be made (or conclusion reached in the case of the board) as is deemed advisable. The preference eligible shall be notified in writing of the action taken as a result of the local appeal. If this does not conclude the matter satisfactorily, such preference eligible, may, within 30 days after receiving notice of the action on the local appeal, further appeal in writing to the Deputy Governor, Farm Credit Administration, Washington 25, D.C. Such preference eligible shall have the right to make a personal appearance, or an appearance through a designated representative, as may be arranged with the Deputy Governor. After investigation and consideration of the evidence submitted, the Deputy Governor shall submit his decision to the bank and shall send copies of the same to the appellant or to his designated representative. Such decision of the Deputy Governor shall be final and binding upon all parties

In addition to the appeal provided for discharge, suspension, etc., cases under the preceding section, any person considering he has not received the preference provided for him under these rules and regulations may appeal locally, as provided in the next sentence, within 10 days after receiving notice of the action deemed adverse. Such appeal shall be made in writing to the farm credit board of the district unless the board shall have designated the general agent or a senior officer not connected with the employing bank to hear such appeals 10cally. On such local appeal, the matter shall be reviewed with such person and the appropriate bank officers and such recommendation shall be made (or con

clusion reached in the case of the board) as is deemed advisable. If this does not conclude the matter satisfactorily, such person may, within 10 days after receiving notice of the action on the local appeal, further appeal in writing to the Deputy Governor of the Farm Credit Administration, Washington 25, D.C. The decision of the Deputy Governor in respect to such appeal shall be made known to and shall be final and binding upon all parties concerned.

§ 7.7 District board action.

The action taken by the farm credit board in each district to provide for veterans' preference under these rules and regulations, and any changes therein, shall be reported to the Farm Credit Administration. In the case of the Central Bank for Cooperatives, any corresponding action shall be by its board of directors.

10.12

Normal agricultural value.

10.120a

10.120b

10.120c

10.120d

Subpart-Repayment Plans

10.121

10.122

Exchanges and assignments of consolidated bonds.

Basis of relief on account of lost, stolen, destroyed, mutilated, or defaced consolidated bonds or coupons.

Claims and proof for lost, stolen, destroyed, mutilated, or defaced consolidated bonds or coupons. Restrictive endorsements of bearer securities.

Lost or stolen bonds and coupons issued by a bank individually. Same; bond of indemnity.

AUTHORITY: §§ 10.1 to 10.122 issued under sec. 6, 47 Stat. 14, as amended; 12 U.S.C. 665. SOURCE: §§ 10.1 to 10.122 appear at 27 F.R. 877, Jan. 31, 1962, except as otherwise noted.

NOTE: That part of each section number which follows the first decimal is the same as the section number of the corresponding provision in the Federal Land Bank Manual, except for §§ 10.120a, 10.120b, 10.120c, and 10.120d which do not appear in the manual. Where the word "bank" appears alone, it refers to a Federal land bank; the word “association" refers to a Federal land bank association; the word "Administration" refers to the Farm Credit Administration.

Subpart-Eligibility

§ 10.1 Eligibility of applicants.

An eligible person as used in section 12 Sixth of the Federal Farm Loan Act (12 U.S.C. 771 Sixth) is one who is engaged, or shortly to become engaged, in farming operations or who derives the principal part of his income from farming operations.

§ 10.2 Same; farming operations.

A person will be deemed to be engaged in farming operations if, in the capacity of owner, lessee, or tenant of a farm, he actively participates personally or through an agent to a substantial degree in the management and conduct of the farming operations on any farm land.

§ 10.3

Same; farming corporations.

The term "person" includes a corporation engaged in farming operations. Loans may be made to such a corporation provided that (a) more than onehalf of its income is derived from farming operations, (b) one or more individuals owning a substantial portion of the outstanding stock of the corporation are engaged in farming operations in connection with the farm to be mortgaged as security for the loan, and (c) one or more individuals owning a substantial portion of the outstanding stock of the corporation assume personal liability for the loan. Requirements (b) and (c) may be met by either the same or different individuals.

§ 10.5 Same; joint owners.

An application offering jointly held property as security may be accepted if it is signed by one or more of the joint owners, on behalf of all of the joint owners, provided it is understood that all of the owners will join in a mortgage if a loan is approved.

(a) the fiduciary, as such, or the beneficiary or ward is engaged, or shortly to become engaged, in farming operations, or derives the principal part of his income from farming operations; (b) a valid lien can or will be given on the property on which the loan is sought; and (c) an individual sufficiently interested to do so, can and will incur personal liability for the loan.

§ 10.7 Eligibility of purposes.

The statutory provision as to the purposes for which loans may be made is as follows (12 U.S.C. 771 Fourth):

Such loans may be made for general agricultural purposes and other requirements of the owner of the land mortgaged, under rules and regulations of the Farm Credit Administration.

While many of them might be placed in either category, the recognized purposes are as hereafter listed under the headings § 10.8 Same; general agricultural purposes and § 10.9 Same; other requirements of the owner.

§ 10.8 Same; general agricultural pur

poses.

(a) Purchase and improvement of farm real estate;

(b) Purchase of livestock, equipment, and supplies;

(c) Payment of farm operating expenses, including taxes and insurance;

(d) Provide a home for use in connection with farm operation;

(e) Removal of a lien from farm land; (f) Refinance indebtedness incurred for any of the foregoing purposes or reimburse applicant for amounts spent out of his own funds for such purposes. § 10.9 Same; other requirements of the

owner.

(a) Provide a home for the owner or his family;

(b) Pay family living expenses, including premiums on life insurance, educational, medical, and funeral expenses;

(c) Provide facilities for processing, storage, and marketing of farm products, and the handling of farm equipment and supplies, even though not located on the mortgaged farm;

(d) Discharge any bona fide liability of the owner, including income and other taxes, judgments, liens, liability as endorser or surety for the debt of another, etc.;

To be acceptable security for a loan, a property must meet each of the following minimum standards:

(a) It must be sufficiently desirable to be readily salable or rentable under normal agricultural conditions.

(b) It must be sufficiently durable to maintain satisfactory production during the loan term specified.

(c) It must have sufficient stability of value to assure that, on a loan that would be proper to a typical owner of the property, the bank could recover its investment if unforeseen difficulties should result in acquirement of the property.

(d) It must be capable of producing, under typical operation, sufficient normal agricultural earnings to pay farm operating expenses, including taxes and other fixed charges, maintain the property, and meet family living expenses and installments on a loan that would be proper to a typical operator: Provided, That where income from dependable sources other than farm earnings is available to a typical operator, such income may be relied upon to meet loan installments and family living expenses including that part of the taxes, insurance, and maintenance costs chargeable to the dwelling.

§ 10.12

Normal agricultural value.

The normal agricultural value of a farm is the amount a typical purchaser would, under usual conditions, be willing to pay and be justified in paying for the property for customary agricultural uses, including farm home advantages, with the expectation of receiving normal net earnings from the farm and from other dependable sources.

§ 10.13 Basis of loan and appraisal.

The normal agricultural value of a farm shall be the basis for a loan. In making the appraisal the net earnings of the farm shall be determined by using normal commodity prices and the related level of farm operating costs.

Normal prices and related costs shall be determined on the basis of the long-term economic outlook and be approved by the Administration. Likewise, the net earnings from other dependable sources shall be on a normal level that reflects the same long-term economic outlook.

Subpart-Limitations and
Requirements

§ 10.33 Bona fide ownership.

A loan should not be made in any case if the ownership of the security by the applicant(s) is not bona fide, or if it was acquired with the intention to reconvey after the loan is closed in order to avoid limitations as to eligibility of person or amount of loan.

(a) Limitation. The amount of any loan made by a bank may not exceed one-twelfth of 10 percent of the combined total net worth of all Federal land banks, or 10 percent of the total net worth of the bank making the loan, whichever is higher, based on the respective amount of such total net worth as of the end of the preceding semiannual period (June 30 or December 31). The amount of loans to any one borrower, computed as hereinafter provided, may not exceed such limitation.

(b) Individuals. In determining the amount loanable to an individual, within such limitation, there shall be charged against his borrowing capacity the total unpaid principal of all indebtedness to any bank of the system which is secured by property presently owned or being acquired by him, either individually or jointly with others, or for which he is personally liable. The amount of any loan to a corporation engaged in farming operations shall be charged against the individual borrowing capacity of each stockholder who assumes personal liability for the loan to the corporation.

(c) Farming corporations. In determining the amount loanable to a corporation engaged in farming operations, within such limitation, there shall be charged against its borrowing capacity the total unpaid principal of all indebtedness to any bank of the system which is secured by property presently owned or being acquired by it, or for which it is liable. The amount loaned to a corporation shall be limited to such amount as I will not cause the amount chargeable