SEO. 9. FARM LOAN ASSOCIATIONS-SPECIAL PROVISIONS. tire and pay off corro 11 full payment of the mortgage loan. In such case the national farm, Association must reloan association shall pay off at par and retire the corresponding sponding stock at par. shares of its stock which were issued when said land bank stock was Federal land bank issued. The capital stock of a Federal land bank shall not be re- stock can not be reduced to an amount less than five per centum of the principal of the outstanding farm loan bonds issued by it. CAPITAL STOCK OF NATIONAL FARM LOAN ASSOCIATIONS. duced to less than 5 per cent of outstanding bonds. $5. SEC. 8. That the shares in national farm loan associations shall be Par value of shares of the par value of $5 each. Every shareholder shall be entitled to one vote on each share of stock held by him at all elections of directors and in deciding all questions at meetings of shareholders: Provided, That the maximum number of votes which may be cast by any one shareholder shall be twenty. Each share 1 vote, but one shareholder limited to 20 votes. holders confined to bor. loan must apply for scribe to stock in asso and shareholder. No persons but borrowers on farm land mortgages shall be members Members and shareor shareholders of national farm loan associations. Any person de- rowers. siring to borrow on farm land mortgage through a national farm loan association shall make application for membership and shall subscribe Every applicant for for shares of stock in such farm loan association to an amount equal membership and subto five per centum of the face of the desired loan, said subscription to ciation to extent of 5 be paid in cash upon the granting of the loan. If the application for per cent of desired loan. membership is accepted and the loan is granted, the applicant shall, Loan granted and upon full payment therefor, become the owner of one share of capital stock paid for, applistock in said loan association for each $100 of the face of his loan, or cant becomes member any major fractional part thereof. Said capital stock shall be paid off at par and retired upon full payment of said loan. Said capital retinoin stock shall be held by said association as collateral security for the meanwhile is held as payment of said loan, but said borrower shall be paid any dividends accruing and payable on said capital stock while it is outstanding. Every national farm loan association formed under this Act shall by its articles of association provide for an increase of its capital tion as loans are made. stock from time to time for the purpose of securing additional loans for its members and providing for the issue of shares to borrowers in accordance with the provisions of this Act. Such increases shall be included in the quarterly reports to the Federal Farm Loan Board. NATIONAL FARM LOAN ASSOCIATIONS. SPECIAL PROVISIONS. Stock retired when collateral security, bor rower receiving divi dends declared thereon. Capital stock to be ensed in propor Increase must be ports to board. stated in quarterly re titled to borrow, when Loan Board otherwise for stock from proceeds SEC. 9. That any person whose application for membership is Every member enaccepted by a national farm loan association shall be entitled to funds are available, unborrow money on farm land mortgage upon filing his application in less land bank or Farm accordance with section eight and otherwise complying with the terms determine. of this Act whenever the Federal land bank of the district has funds available for that purpose, unless said land bank or the Federal Farm Loan Board shall, in its discretion, otherwise determine. Any person desiring to secure a loan through a national farm loan, Borrower may pay association under the provisions of this Act may, at his option, of loan granted; to be borrow from the Federal land bank through such association the tionsum necessary to pay for shares of stock subscribed for by him in the national farm loan association, such sum to be made a part of the face of the loan and paid off in amortization payments: Provided, loan does not exceed however, That such addition to the loan shall not be permitted to maximum limit. increase said loan above the limitation imposed in subsection fifth of section twelve. repaid by amortiza Provided amount of tain from interest col Subject to rules and regulations prescribed by the Federal Farm Associations may re Loan Board, any national farm loan association shall be entitled to lected commission not retain as a commission from each interest payment on any loan exceeding one-eighth of indorsed by it an amount to be determined by said board not to ally. exceed one-cighth of one per centum semiannually upon the unpaid 1 per cent semiannu stock held in Federal principal of said loan, any amounts so retained as commissions to be Deducted from fu- deducted from dividends payable to such farm loan association by ture dividends on the Federal land bank, and to make application to the land bank of land bank; may borrow the district for loans not exceeding in the aggregate one-fourth of ing one-fourth of stock its total stock holdings in said land bank. The Federal land banks shall have power to make such loans to associations applying therefor and to charge interest at a rate not exceeding six per centum per from bank not exceed holdings. ciations personally li annum. Shareholders of asso- Shareholders of every national farm loan association shall be held able for its debts to ex- individually responsible, equally and ratably, and not one for antent of stock severally other, for all contracts, debts, and engagements of such association to the extent of the amount of stock owned by them at the par value thereof, in addition to the amount paid in and represented by their held. Any natural person own qualified land may approval of directors to shares. After a charter has been granted to a national farm loan associaowning or about to tion, any natural person who is the owner, or about to become the become member upon owner, of farm land qualified under section twelve of this Act as the and borrow on mort-basis of a mortgage loan, and who desires to borrow on a mortgage gage, upon subscribing of such farm land, may become a member of the association by a per cent of desired loan. two-thirds vote of the directors upon subscribing for one share of the capital stock of such association for each $100 of the face of his proposed loan or any major fractional part thereof. He shall at the same time file with the secretary-treasurer his application for a mortgage loan, giving the particulars required by section twelve of Application for loans must be referred to loan committee. must examine land, this Act. APPRAISAL. SEC. 10. That whenever an application for a mortgage loan is made to a national farm loan association, it shall be first referred to the loan committee provided for in section seven of this Act. Said loan committee shall examine the land which is offered as security Loan committee for the desired loan and shall make a detailed written report signed make appraisal and by all three members, giving the appraisal of said land as determined written report. by them, and such other information as may be required by rules and regulations to be prescribed by the Federal Farm Loan Board. approve loan unless No loan shall be approved by the directors unless said loan comcommittee's report is mittee agrees upon a favorable report. Directors can not favorable. Report and appraisal submitted to land bank directors. Land bank must refer application and tion and report, which loan is made. The written report of said loan committee shall be submitted to the Federal land bank, together with the application for the loan, and the directors of said land bank shall examine said written report when they pass upon the loan application which it accompanies, but they shall not be bound by said appraisal. Before any mortgage loan is made by any Federal land bank, or report to land bank joint stock land bank, it shall refer the application and written report appraiser for investiga- of the loan committee to one or more of the land bank appraisers must be favorable if appointed under the authority of section three of this Act, and such appraiser or appraisers shall investigate and make a written report upon the land offered as security for said loan. No such loan shall be made by said land bank unless said written report is favorable. Forms for appraisal reports for farm loan associations and land banks shall be prescribed by the Federal Farm Loan Board. Appraisal forms prescribed by Farm Loan Board. Farm Loan Board to Land bank appraisers shall make such examinations and appraisdirect land bank ap- als and conduct such investigations, concerning farm loan bonds and tion and examination. first mortgages, as the Federal Farm Loan Board shall direct. praisers as to investica ble as appraiser, but Borrower not eligi- No borrower under this act shall be eligible as an appraiser under may be member of loan this section, but borrowers may act as members of a loan commitcommittee where not tee in any case where they are not personally interested in the loan under consideration. When any member of a loan committee or of a board of directors is interested, directly or indirectly, in a loan, a interested. majority of the board of directors of any national farm loan association shall appoint a substitute to act in his place in passing upon Substitute on loan such loan. POWERS OF NATIONAL FARM LOAN ASSOCIATIONS. committee may be ap pointed by directors. tion SEC. 11. That every national farm loan association shall have, Farm loan associa power: First. To indorse, and thereby become liable for the payment of, mortgages taken from its shareholders by the Federal land bank of its district. Second. To receive from the Federal land bank of its district funds, advanced by said land bank, and to deliver said funds to its shareholders on receipt of first mortgages qualified under section twelve of this Act. May indorse mort gages. Receive funds from land bank. borrowers. Third. To acquire and dispose of such property, real or personal, Own property reas may be necessary or convenient for the transaction of its business. bearing interest con bonds. Fourth. To issue certificates against deposits of current funds May issue certificates bearing interest for not longer than one year at not to exceed four per vertible into farm loan centum per annum after six days from date, convertible into farm loan bonds when presented at the Federal land bank of the district in the amount of $25 or any multiple thereof. Such deposits, when received, shall be forthwith transmitted to said land bank, and be invested by it in the purchase of farm loan bonds issued by a Federal land bank or in first mortgages as defined by this Act. RESTRICTIONS ON LOANS BASED ON FIRST MORTGAGES. SEC. 12. That no Federal land bank organized under this Act shall make loans except upon the following terms and conditions: First. Said loans shall be secured by duly recorded first mortgages on farm land within the land bank district in which the bank is situated. Funds thus arising to be invested in mortgages or farm loan bonds by Federal land bank. Loans must be se garcs on farm lands cured by first mortwithin district; joint stock banks exempted. Mortgages must conpayment on amortiza tain provision for re gages can not exceed by clude sufficient amount but within 40 years, at Second. Every such mortgage shall contain an agreement providing for the repayment of the loan on an amortization plan by means of a fixed number of annual or semiannual installments sufficient to tion plan. cover, first, a charge on the loan, at a rate not exceeding the interest Interest rate on mortrate in the last series of farm loan bonds issued by the land bank mak- more than 1 per cent ing the loan; second, a charge for administration and profits at a rate per annum interest paid on farm loan not exceeding one per centum per annum on the unpaid principal, said bonds. two rates combined constituting the interest rate on the mortgage; and, third, such amounts to be applied on the principal as will extin- Installment to inguish the debt within an agreed period, not less than five years nor to extinguish debt after more than forty years: Provided, That after five years from the date expiration of 5 years upon which a loan is made additional payments in sums of $25 or any option of borrower. multiple thereof for the reduction of the principal, or the payment of Principal may the entire principal, may be made on any regular installment date paid as desired after 5 under the rules and regulations of the Federal Farm Loan Board: inent. And provided further, That before the first issue of farm loan bonds by any land bank the interest rate on mortgages may be determined in the discretion of said land bank subject to the provisions and limita-sue of farm loan i onds tions of this Act. Third. No loan on mortgage shall be made under this Act at a rate Interest charged on of interest exceeding six per centum per annum, exclusive of amorti- ceed 6 per cent per anzation payments. Fourth. Such loans may be made for the following purposes and for no other: (a) To provide for the purchase of land for agricultural uses. (b) To provide for the purchase of equipment, fertilizers and live stock necessary for the proper and reasonable operation of the mort be years with any install Interest rate on mortgages made prior to isdetermined by land bank. mortgages must not ex num. stricoceeds of loans re joint stock banks exempted. Buy land for agricultural uses. Buy equipment, fertilizers, live stock. Provide buildings and improvements. Discharge indebtedness incurred for any gaged farm; the term "equipment" to be defined by the Federal Farm Loan Board. (c) To provide buildings and for the improvement of farm lands; the term "improvement" to be defined by the Federal Farm Loan Board. (d) To liquidate indebtedness of the owner of the land mortgaged, purpose for which pro- existing at the time of the organization of the first national farm loan ceeds of loan may be used. association established in or for the county in which the land mortgaged is situated, or indebtedness subsequently incurred for purposes mentioned in this section. Mortgage loans must not exceed 50 per cent lands and 20 per cent of Fifth. No such loan shall exceed fifty per centum of the value of of appraised value of the land mortgaged and twenty per centum of the value of the perpermanent improve- manent, insured improvements thereon, said value to be ascertained ments thereon, latter by appraisal, as provided in section ten of this Act. In making said Appraisal deter- appraisal the value of the land for agricultural purposes shall be the mined by agricultural basis of appraisal and the earning power of said land shall be a prinpower of lands. cipal factor. to value and earning Reappraisal. A reappraisal may be permitted at any time in the discretion of the Federal land bank, and such additional loan may be granted as such reappraisal will warrant under the provisions of this paragraph. Loans granted for Whenever the amount of the loan applied for exceeds the amount applied for without that may be loaned under the appraisal as herein limited, such loan new appraisal. may be granted to the amount permitted under the terms of this paragraph without requiring a new application or appraisal. smaller amounts than Borrowers must engage in cultivation of empted. Sixth. No such loan shall be made to any person who is not at the land mortgaged. time, or shortly to become, engaged in the cultivation of the farm Joint stock banks ex mortgaged. In case of the sale of the mortgaged land, the Federal Mortgages assumed land bank may permit said mortgage and the stock interests of the by a purchaser. vendor to be assumed by the purchaser. In case of the death of the representatives of bor- mortgagor, his heir or heirs, or his legal representative or representarower may assume his tives, shall have the option, within sixty days of such death, to assume the mortgage and stock interests of the deceased. In case of death legal obligations. and $100 minimum $10,000 maximum Seventh. The amount of loans to any one borrower shall in no loan to any borrower. case exceed a maximum of $10,000, nor shall any loan be for a less sum than $100. Joint stock banks exempted. on prescribed forms Applicant must state Eighth. Every applicant for a loan under the terms of this Act purpose for which pro- shall make application on a form to be prescribed for that purpose ceeds of loan are to be by the Federal Farm Loan Board, and such applicant shall state the objects to which the proceeds of said loan are to be applied, and shall afford such other information as may be required. used. Defaulted payments carry 8 per cent interest. Borrower must un and other liens. and bear 8 per cent interest. Ninth. Every borrower shall pay simple interest on defaulted payments at the rate of eight per centum per annum, and by express dertake to pay all taxes covenant in his mortgage deed shall undertake to pay when due all If unpaid, become taxes, liens, judgments, or assessments which may be lawfully part of mortgage debt assessed against the land mortgaged. Taxes, liens, judgments, or assessments not paid when due, and paid by the mortgagee, shall become a part of the mortgage debt and shall bear simple interest at the rate of eight per centum per annum. Every borrower shall undertake to keep insured to the satisfaction of the Federal Farm Loan Board all buildings the value of which was a factor in determining the Losses payable to amount of the loan. Insurance shall be made payable to the mortgagor may require in- gagee as its interest may appear at time of loss, and, at the option of surance money used the mortgagor and subject to general regulations of the Federal Farm Loan Board, sums so received may be used to pay for reconstruction of the buildings destroyed. Buildings must be kept insured. mortgagee, but mort for rebuilding. If proceeds of loan expended otherwise Tenth. Every borrower who shall be granted a loan under the prothan agreed (joint-stock visions of this Act shall enter into an agreement, in form and under banks being exempt conditions to be prescribed by the Federal Farm Loan Board, that if the whole or any portion of his loan shall be expended for purposes ed). If borrower be in de fault. Loans may be col ship. other than those specified in his original application, or if the borrower shall be in default in respect to any condition or covenant of the mortgage, the whole of said loan shall, at the option of the mortgagee, Joan become due and payable forthwith: Provided, That the borrower may Part proceeds may be use part of said loan to pay for his stock in the farm loan association, used to purchase stock and the land bank holding such mortgage may permit said loan to required for memberbe used for any purpose specified in subsection fourth of this section. Eleventh. That no loan or the mortgage securing the same shall be Exercise of unauthorimpaired or invalidated by reason of the exercise of any power by any Federal land bank or national farm loan association in excess of the powers herein granted or any limitations thereon. Funds transmitted to farm loan associations by Federal land receive proceeds of loan banks to be loaned to its members shall be in current funds, or farm in farm loan bonds. loan bonds, at the option of the borrower. POWERS OF FEDERAL LAND BANKS. ized power by lender can not impair validity of mortgage. Borrower may elect to SEC. 13. That every Federal land bank shall have power, subject, Federal land banks; to the limitations and requirements of this Act powers First. To issue, subject to the approval of the Federal Farm Loan and sell farm loan Board, and to sell farm loan bonds of the kinds authorized in this bonds; prepay same. Act, to buy the same for its own account, and to retire the same at or before maturity. May invest in mortuated in district. gages on farm lands sit mortgages with regisbond issue. Second. To invest such funds as may be in its possession in the purchase of qualified first mortgages on farm lands situated within the Federal land bank district within which it is organized or for which it is acting. Third. To receive and to deposit in trust with the farm loan reg- May hypothecate istrar for the district, to be by him held as collateral security for trar, as security for farm loan bonds, first mortgages upon farm land qualified under section twelve of this Act, and to empower national farm loan asso- May utilize associaciations, or duly authorized agents, to collect and immediately pay tions and agents to over to said land banks the dues, interest, amortization installments and other sums payable under the terms, conditions, and covenants of the mortgages and of the bonds secured thereby. Fourth. To acquire and dispose of (a) Such property, real or personal, as may be necessary or convenient for the transaction of its business, which, however, may be in part leased to others for revenue purposes. collect and remit payments thereon. May buy, sell, of for its business. lease property required quired in satisfaction debts can be held (b) Parcels of land acquired in satisfaction of debts or purchased No real estate acat sales under judgments, decrees, or mortgages held by it. But no or part payment of such bank shall hold title and possession of any real estate purchased longer than five years or acquired to secure any debt due to it, for a longer period than five without specialauthoryears, except with the special approval of the Federal Farm Loan Board." Board in writing. ity from Farm Loan any member bank and Fifth. To deposit its securities, and its current funds subject to May deposit with check, with any member bank of the Federal Reserve System, and to receive interest therereceive interest on the same as may be agreed. on. from farm loan associ Sixth. To accept deposits of securities or of current funds from, May accept deposits national farm loan associations holding its shares, but to pay no ations. interest on such deposits. Seventh. To borrow money, to give security therefor, and to pay May borrow money. interest thereon. Eighth. To buy and sell United States bonds. May deal in United States bonds. May charge appli cants for loans actual Ninth. To charge applicants for loans and borrowers, under rules and regulations promulgated by the Federal Farm Loan Board, rea- expenses incurred in sonable fees not exceeding the actual cost of appraisal and determina- connection with aption of title. Legal fees and recording charges imposed by law in the tion of title. State where the land to be mortgaged is located may also be included praisal and determina |