loan would not be eligible at a Federal land bank. Officers and employees of the banks and corporations under the supervision of the Administration who are employed on a full-time basis are required to devote their full business time to the duties assigned them in connection with the activities and operations of the organizations in which they are employed. They are also expected t refrain from accepting employment or compensation for activities, even for services rendered outside of business hours, which might embarrass the Admonstration or cast reflection upon their abib take an unbiased and impartial view of its problems.

[21 F.R. 8648, Nov. 9, 1956, as amended at 27 F.R. 10931, Nov. 9, 1962]

19.80

Additional and refunding loans.

AUTHORITY: §§ 19.67 to 19.80 issued under secs. 11, 13, 39 Stat. 369, as amended, 372, as amended; 12 U. S. C. 761, 781.

SOURCE: §§ 19.67 to 19.80 appear at 21 F. R. 8649, Nov. 9, 1956, except as otherwise noted.

NOTE: 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. [27 F.R. 10931, Nov. 9, 1962]

BANK FEES

§ 19.67 Applications.

The banks may collect an application fee of not to exceed $10 on each application, except that in cases wherein the association application fee exceeds $5, the bank's application fee shall be limited to the difference between such association fee and $15.

87104-63- -3

§ 19.68 Applications on specialized farms.

In the case of applications for loans (or increased loans or divisions of loans) on specialized farms of certain types, such as turpentine farms, timber farms, ranches, and orchards, where appraisal costs are unusually high, the banks may establish, subject to the approval of the Administration, special additional fees in recognition of the higher costs of appraisal of such property.

§ 19.69 Appraisals.

The fee deposits authorized by these regulations should be retained by the bank if an appraisal is made of the property, but in any such case where an appraisal is not made, the fee should be refunded in its entirety to the applicant. Where a reappraisal is required because of delay of the applicant or is made at his request, the applicant may be required to pay a second fee. § 19.70 Additional and refunding loans.

In connection with applications for additional or refunding loans, whether or not additional security is offered, the bank may require that a fee of not more than $10 be submitted with the application.

charged may be based on estimated average cost of determination of title so long as, in the aggregate, the fees collected for such cases do not exceed such actual cost. In any case, though, the fee charged may be in the amount of the actual cost of appraisal and determination of title involved in the particular

case.

§ 19.74 Release of personal liability.

Where, upon transfer of title to the mortgaged property, an application is made for release from personal liability, the bank may require a fee of $10 in connection with each application, such fee to be refunded in its entirety to the applicant in the event an appraisal of the property is not made.

§ 19.75 Forbearance agreements.

No fees may be charged in connection with forbearance agreements but borrowers may be charged with direct outlays for determination of title including filing or notarial expense.

An amount not to exceed actual costs, such as abstract notarial recording and necessary incidental items, incurred in connection with a reamortization, may be charged the borrower.

§ 19.77 Reinstatement of loans.

When a bank has instituted foreclosure or has taken necessary steps preliminary to foreclosure, it may require a borrower who wishes to reinstate such defaulted loan to reimburse it for any items of actual expense which it legally could include in its foreclosure fee; but no fee may be charged upon a reinstatement for any items of expense which legally could not be included in the foreclosure fee (such as purely collection costs), even though the amount of such outside items is less than the charges which could lawfully be imposed were the foreclosure to be completed.

ASSOCIATION FEES

§ 19.78 Applications.

Associations may collect an association application fee of not more than $5 in connection with each application, except that in cases wherein the appraisal is made for the bank by association per

sonnel, an application fee of not more than $15 may be collected: Provided, however, That the amount of any such fee shall not exceed 1 percent of the amount of the loan applied for. If the property offered as security is subject to any outstanding mortgage loan or loans held by the bank, regardless of the amount stated in the application, the application fee shall be based on an amount applied for which includes the unmatured principal, as of the date of the application, of such outstanding mortgage loan or loans. The application fee may be collected at the time the application is filed. It may be retained by the association regardless of whether the loan is rejected or closed as a new, additional, or refunding bank loan: Provided, however, That if no association investigation or appraisal by association personnel is made for the bank after a fee provided for in this section has been collected, the amount of such fee shall be refunded.

[27 F.R. 10931, Nov. 9, 1962] § 19.79

Closed loans.

Except as hereinafter provided when a bank loan is closed, associations may collect a closed loan fee in an amount which, when added to the association application fee already collected, will equal but not exceed 1 percent of the amount of the bank loan closed.

§ 19.80

Additional and refunding loans.

Where, upon the basis of an application in which there is offered as security property which is mortgaged in whole or in part to a bank, an additional loan is closed and the association currently endorses only the additional loan, the association may collect a closed loan fee which, when added to the association application fee already collected, will not exceed 1 percent of the amount of the additional loan. If the outstanding land bank loan or loans and the additional loan are written as one loan, and the association currently endorses for the full amount, the association may collect a closed loan fee which, when added to the association application fee already collected, will not exceed 1 percent of the full amount of the loan closed.

[27 F.R. 10931, Nov. 9, 1962]

The Governor of the Farm Credit Administration, under the direction and control of the Federal Farm Credit Board, has the responsibility for supervision of the Federal intermediate credit banks and production credit associations. (12 U.S.C. 636d.) By order of the Governor, the exercise of this authority has been delegated to the Deputy Governor and Director of Short-Term Credit Service. Unless otherwise indicated, all matters pertaining to these banks and associations requiring attention or action by the Farm Credit Administration are to be referred to the office of the Director of Short-Term Credit Service. § 40.111 Capital stock; participation certificates.

(a) Each Federal intermediate credit bank is authorized to issue two classes of capital stock. Class A stock, preferred as to assets in event of liquidation, may be issued only to the Governor of the Farm Credit Administration on behalf of the United States and represents the investment of the United States in such bank. Class B stock may be issued to and held by production credit associations only.

(b) Other financing institutions dealing with a credit bank may not acquire

capital stock in the bank but will receive participation certificates in payment of patronage refunds due them out of net earnings of the bank.

(c) All capital stock and participation certificates shall have a designated issue date, which shall determine its order of retirement. An additional series designation may be used if approved by the board of directors.

§ 40.111-3 Same; class B stock.

(a) Class B stock shall have a par value of $5.00 per share. Class B stock certificates shall be in a form prescribed by the board of directors of the bank, subject to the approval of the Farm Credit Administration. No fractional shares shall be issued.

(b) In the discretion of the bank, class B stock certificates need not be furnished unless a request therefor is made by the production credit association concerned. In the event a certificate is not issued, an "Advice of Class B Stock Issued", in form approved by the Farm Credit Administration, should be furnished to the association.

§ 40.111-4 Same; participation certifi

cates.

Participation certificates issued to other financing institutions shall be in multiples of $5.00 and shall be in form prescribed by the board of directors of the bank, subject to the approval of the Farm Credit Administration. Ordinarily, participation certificates will be issued and delivered to the owners thereof; however, upon request of the owner an "Advice In Lieu of Participation Certificate", in form approved by the Farm Credit Administration, may be furnished. § 40.112-1 Retirements of class B stock and participation certificates; general.

After all class A stock has been retired, and under policies established by the Farm Credit Administration, the bank may retire class B stock and participation certificates at par or face amount without preference and in such order that the oldest shares of stock and participation certificates outstanding at any time shall be retired first (12 U.S.C. 1061 (a) (2)). The amount of class B stock owned by any active production credit association shall not be less than the original subscription made by the association pursuant to the Farm Credit Act of 1956, unless a different amount is

In case of liquidation or dissolution of a production credit association or other financing institution, the class B stock or participation certificates of the bank owned by such association or other institution may be retired by the bank at the fair book value thereof, not exceeding par or face amount, as the case may be (12 U.S.C. 1061(a) (2)). A financing institution holding participation certificates issued by a Federal intermediate credit bank will be deemed to be in "liquidation or dissolution" if it is going out of business, liquidating its assets for distribution of the proceeds to those entitled thereto, and taking appropriate steps to terminate its corporate existence in accordance with applicable State laws. Merely paying its indebtedness to the credit bank and suspending the making of loans will not qualify a corporation for retirement of its participation certificates.

§ 40.112-3 Same; institutions in default.

In the event of default by the holder of class B stock or participation certificates, the bank may retire and cancel all or any part of such stock or participation certificates, as the case may be, in total or partial liquidation of the debt of the holder to the bank.

§ 40.113-1

Transfers of class B stock and participation certificates; class B stock-general.

Class B stock of a credit bank may be transferred to another production credit association, with the approval of the issuing bank (12 U.S.C. 1061(a) (2)). § 40.113-2 Saine; disposition of class B stock in merger or consolidation of associations.

In the event of the merger or consolidation of two or more production credit associations, class B stock held by the associations involved shall be disposed of in the manner provided in the agreement of consolidation or merger. § 40.113-3

cates.

Same; participation certifi

Participation certificates may be transferred only on the books of the issuing bank, and with its approval.

§ 40.113-4

Same; preservation of statutory lien.

All changes in ownership of class B stock and participation certificates shall be subject to the statutory lien of the bank for any indebtedness of the transferor to the issuing bank (12 U.S.C. 1061(b)).

§ 40.114 Surrender of certificates; issuance of new certificates.

Upon retirement of any class B stock or participating interest, evidenced by an outstanding certificate, the certifcate involved shall be surrendered to the bank for cancellation. In case of partial retirement a new certificate shall be issued for the balance not retired, which shall bear the same issue date and series designation, if any, as the cancelled certificate. In the event of a transfer of class B stock or participation certificates from one holder to another, including transfers resulting from mergers or consolidations, any new class B stock or participation certificates issued shall bear the same issue dates and series designations, if any, as the original certificates for which new certificates are substituted.

§ 40.115 Lost, destroyed, or stolen stock or participation certificates.

Whenever a class B stock certificate or a participation certificate which has been issued by the bank is lost, stolen, destroyed, or so mutilated as to impair its value, the bank may issue in lieu thereof a new certificate which shall bear the same issue date and series designation, if any, upon compliance with the following requirements:

(a) The owner shall furnish an affidavit of loss, acceptable to the bank setting forth: (1) The issue date or series, number of shares, and any other information required to establish its identity; (2) a detailed statement of the circumstances surrounding the loss, theft, destruction, mutilation or defacement of the certificate; and (3) a statement that the affidavit was made for the purpose of obtaining a new certificate. Since class B stock and participation certificates may not be transferred except with the approval of the bank, a bond of indemnity ordinarily will not be required.

(b) If a class B stock certificate or participation certificate which was reported lost, stolen or destroyed is recovered by the owner, he should notify the