GUARANTY OF FARM-LOAN BONDS

SEC. 3. All farm-loan bonds (including consolidated farm-loan bonds) hereafter issued under section 21 of the Federal Farm Loan Act, as amended, shall be issued in such amounts, in such forms and denominations, shall have such maturities, shall bear such rates of interest, shall be subject to such terms and conditions, and shall be issued in such manner and sold at such prices, as may be approved by the Governor and the Secretary of the Treasury. Such bonds shall be fully and unconditionally guaranteed, both as to interest and principal, by the United States, and such guaranty shall be expressed on the face thereof. Such bonds shall be lawful investments, and may be accepted as security for all fiduciary, trust, and public funds, the investment or deposit of which shall be under the authority or control of the United States, or any officer or officers thereof. In the event that the Federal land banks shall be unable to pay upon demand, when due, the principal of, or the interest on, such bonds, the Secretary of the Treasury shall pay to the holder the amount thereof, which is hereby authorized to be appropriated out of any moneys in the Treasury not otherwise appropriated, and thereupon, to the extent of the amount so paid, the Secretary of the Treasury shall succeed to all the rights of the holders of such bonds. The Secretary of the Treasury, in his discretion, is authorized to purchase any such bonds, and for such purpose the Secretary of the Treasury is authorized to use as a public-debt transaction the proceeds from the sale of any securities hereafter issued under the Second Liberty Loan Act, as amended, and the purposes for which securities may be issued under such Act, as amended, are extended to include any purchases of such bonds. The Secretary of the Treasury may, at any time, sell any of the bonds acquired by him under this section. All redemptions, purchases, and sales by the Secretary of the Treasury of such bonds shall be treated as public-debt transactions of the United States. No such bonds shall be issued in excess of the assets of the Federal land banks, including the assets to be obtained from the proceeds of such bonds, but a failure to comply with this provision shall not invalidate the bonds or the guaranty of the same. The Federal land banks shall have power to purchase such bonds in the open market at any price and at any time. Any farm-loan registrar may accept any such bonds, or bonds issued by the Federal Farm Mortgage Corporation, in the place of any mortgages which are required to be assigned to such Corporation by section 11 (c) of this Act.

REFINANCING OF FARM-LOAN BONDS

SEC. 4. (a) As soon as practicable after the date of enactment of this Act, the Federal Farm Mortgage Corporation and each Federal land bank shall surrender to the Land Bank Commissioner for cancelation, all farm-loan bonds (including consolidated farm-loan bonds, held by it which bear interest at a rate higher than the average rate of interest, computed as of the end of the calendar month next preceding such date, borne by all interest-bearing obligations of the United States then forming a part of the public debt, and shall receive in exchange therefor farm-loan bonds of an equal face amount which are guaranteed as provided in section 3 of this Act and which bear interest at a rate not in excess of such average rate of interest.

(b) The Land Bank Commissioner is further authorized and directed to refund any farm-loan bonds (including consolidated farm-loan bonds) outstanding on the date of enactment of this Act other than those surrendered pursuant to subsection (a) of this section, upon application therefor by the holder of such bonds, and any such holder shall receive in exchange therefor farm-loan bonds of an equal face amount guaranteed as provided in section 3 of this Act, and bearing the same rate of interest and having the same maturities as the bonds so refunded.

STOCK LIABILITY ABOLISHED

SEC. 5. No borrower from any Federal land bank who receives a loan after the date of enactment of this Act, through any farm-loan association or otherwise, shall be required to subscribe to or pay for any capital stock of such bank, or of the national farm-loan association through which such loan is made, either out of funds deducted from the amount of his loan or otherwise; and no national farmloan association through which any loan is made after such date shall be required to subscribe to or pay for any capital stock in such bank, or to endorse, or otherwise become liable upon any such loan.

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RETIREMENT OF CAPITAL STOCK

SEC. 6. (a) As soon as practicable after the date of enactment of this Act each Federal land bank shall, as hereinafter provided, pay off the claims of its retired shareholders and pay off and retire all outstanding shares of its capital stock held by any national farm-loan association or by any borrower from such bank; and each national farm-loan association shall, as hereinafter provided, pay off the claims of its retired shareholders and pay off and retire all outstanding shares of its capital stock held by any borrower through such association.

(b) The capital stock of each Federal land bank shall be paid off and retired at par, with dividends accrued and payable while such stock is outstanding. The capital stock of each national farm-loan association shall be paid off and retired at its fair book value, determined by the Governor as of the date of such retirement, without making any deduction, in the case of such stock held as collateral security for the loan of any borrower, for losses resulting from the defaults after June 16, 1933, of any other borrowers through such association.

(c) The shares of stock of any borrower from a Federal land bank, or of any borrower through a national farm-loan association, shall be paid off by crediting the amount at which such stock is so retired as a payment on the unpaid balance of the loan of such borrower, and if such amount exceeds such unpaid balance the excess shall be paid in cash to such borrower.

(d) Each Federal land bank and each national farm-loan association shall make payment to each of its retired shareholders whose loan has been fully repaid after June 16, 1933, and who has not received full credit for, or the full proceeds of, his stock in such bank or association, on the same basis as is provided in subsection (b) in the case of the retirement of the outstanding stock of such bank or association. Such payments shall be made notwithstanding any releases previously executed by such retired shareholders. Each Federal land bank shall pay to the national farm-loan associations within its district an amount equal to the amounts required to be paid by such associations under this section. Any amounts which any Federal land bank is required to pay in carrying out the purposes of this section may be paid out of its paid-in surplus.

(e) The Governor is authorized to make such rules and regulations as may be necessary for carrying out the provisions of this section.

NATIONAL FARM-LOAN ASSOCIATIONS

SEC. 8. (a) As soon as practicable after the date of enactment of this Act, the Governor shall determine the extent to which farmer participation in the Federal land bank system can be increased, and the operating expenses of the Federal land banks and the Federal Farm Mortgage Corporation reduced, by the delegation of functions now exercised by such banks and such Corporation to national farm-loan associations, or, where such associations cannot perform such functions, to county committees established under section 9 of this Act, and the Governor is authorized to make such rules and regulations as may be necessary to provide for such delegation of functions. The Governor is also authorized to delegate to any such association or committee any of the functions vested in him under the provisions of sections 12 (b), 14 (a), 15, and 16 of this Act. To compensate any such association for the performance of any functions so delegated to it, the Governor may authorize such association to retain as a service payment from each interest payment on any loan or mortgage serviced by it an amount not to exceed one-fourth of 1 per centum per annum of the unpaid principal of said loan or mortgage.

(b) After the date of enactment of this Act, any person desiring to borrow through a national farm-loan association, or any mortgagor under section 13 of this Act, or any direct borrower from the Federal land bank of the district or borrower through a branch bank or agent, whom the Governor shall determine can be conveniently included as a member of such association, shall be entitled to membership therein by paying a membership fee, fixed by the board of directors of such association, in an amount not exceeding $10, to be paid for by such borrower on approval of his application for membership in such association, and any borrower whose stock is retired pursuant to section 6 of this Act shall, notwithstanding such retirement, retain membership in the national farm-loan association through which his loan was made, without being required to pay any membership fee therefor.

FARM-DEBT ADJUSTMENT COMMITTEES

SEC. 8. (a) The Governor is authorized and directed (except as provided in subsection (d) of this section) to appoint in each county in which he finds that there is need for debt adjustment under section 9 of this Act, or for refinancing proceedings under sections 10 to 13, inclusive, of this Act, a farm-debt adjustment committee (hereinafter referred to as the "committee"), to be composed of three farmers who reside in the county.

(b) Each member of the committee shall be allowed compensation at the rate of not to exceed $3 per day while engaged in the performance of duties under this Act. In addition, the members of the committe shall be allowed such amounts as the Governor may prescribe for necessary traveling and subsistence expenses. (c) Two members of the committee shall constitute a quorum. The Governor shall prescribe rules governing the procedure of the committee, furnish forms and equipment necessary for the performance of their duties, and authorize and provide for the compensation of such clerical assistance as he deems may be required by any committee.

(d) With respect to any county which is included within the territory of any national farm-loan association, the Governor may, in lieu of appointing a committee, designate the board of directors of such association as the agency to receive applications and submit certifications under the provisions of sections 9 to 13, inclusive, of this Act. A majority of such board of directors shall constitute a quorum, and such board and the members thereof, in the performance of such functions, shall be subject to all the provisions herein provided with respect to committees and the members thereof.

SEC. 9. (a) Each such committee is authorized to assist in the voluntary adjustment of indebtedness between farm debtors and their creditors. Services furnished by the committee shall be without charge to the debtor or creditor. Except in cases provided for in subsection (b) of this section, such adjustments need not be reviewed or approved by the Governor.

(b) Whenever the Government is a creditor of any debtor for whom debtadjustment proceedings may be brought before any committee, by reason of any loan or loans made pursuant to the acts set forth in subsection (c) of this section, and the committee finds that an adjustment should be made of the debt of the Government, the committee shall certify to the Governor the basis upon which such debt shall be adjusted. If the Governor approves such certification, he may consent to the adjustment of the indebtedness of the Government, including the compromise, reduction, or release thereof, upon such terms and conditions as he deems appropriate; but no such adjustment shall be made with respect to any loan which has not been in default for a period of at least three years prior to such adjustment.

(c) The provisions of this section shall apply to any loans to farmers pursuant to the Acts of July 1, 1918 (40 Stat. 635); March 3, 1921 (41 Stat. 1347); March 20, 1922 (42 Stat. 467); April 26, 1924 (43 Stat. 110); February 25, 1927 (44 Stat. 1245); February 28, 1927 (44 Stat. 1251); February 25, 1929 (45 Stat. 1306), as amended May 17, 1929 (46 Stat. 3); March 3, 1930 (46 Stat. 78-79), as amended April 24, 1930 (46 Stat. 254); December 20, 1930 (46 Stat. 1032), as amended February 14, 1931 (46 Stat. 1160); February 23, 1931 (46 Stat. 1276); January 22, 1932 (47 Stat. 5); February 4, 1933 (47 Stat. 795); February 23, 1934(48 Stat. 354); June 19, 1934 (48 Stat. 1056); February 20, 1935 (49 Stat. 28); March 21, 1935 (49 Stat. 50); January 29, 1937 (50 Stat. 5); and February 4, 1938 (52 Stat. 27).

(d) No member of any committee shall participate in the consideration of any adjustment, repurchase, or refinancing proceedings under this Act in which such member or any person related to such member within the third degree of consanguinity or affinity has any property interest, direct or indirect, or in which they or either of them had had such interest within one year prior to the date of certification. The Governor shall designate an alternate member of the committee to serve in the place of any such member who is so prohibited from participating in any such proceedings.

REFINANCING OF MORTGAGES

SEC. 10. (a) Any farmer who is indebted under a mortgage to any Federal land bank or to the Federal Farm Mortgage Corporation (hereinafter referred to as the "Corporation"), under the provisions of the Federal Farm Loan Act, as amended, or the Emergency Farm Mortgage Act of 1933, as amended, or to any other creditor, may make application for the refinancing of his mortgage indebtedness, and if he establishes to the satisfaction of the Governor that his indebted

ness is in excess of the productive value of the mortgaged farm, or that the payments periodically due on such indebtedness exceed the normal farm income available for such payments, he shall be entitled to refinance his mortgage indebtedness as hereinafter provided.

(b) Each such application shall be filed with the committee of the county in which the farm is located, shall be in such form and accompanied by such records and data covering the farm and its crop yields as the Governor may prescribe, and shall include a covenant by the applicant that, upon the approval of the application, and in consideration of the refinancing benefits to be made available to him, he will comply with all the conditions hereinafter set forth.

(c) If the committee finds that the application has been filed in good faith, and that the mortgage indebtedness is in excess of the productive value of the mortgaged farm, or that the payments periodically due on such indebtedness exceed the normal farm income available for such payments, and that the applicant, by reason of his character, ability, and experience is likely successfully to carry out the undertakings required of him, it shall so certify to the Governor; and no mortgagor shall be entitled to such refinancing benefits unless such certification has been made by the committee.

SEC. 11. (a) Upon receiving any certification required by section 10 of this Act, the Governor shall make such further investigation as he may deem necessary with respect to the matters covered by such certification. If, after such investigation, the Governor is satisfied that all the requirements of section 10 of this Act have been met, he shall refinance the mortgage to which such certification relates. (b) Any mortgagor who is indebted to the Corporation shall be entitled to receive the refinancing benefits herein provided immediately upon the approval by the Governor of his application for such benefits.

(c) Any mortgagor who is indebted to a Federal land bank shall be entitled to receive such benefits upon the approval by the Governor of his application for such benefits and the assignment of his mortgage by such bank to the Corporation. Upon receiving notice from the Governor that any mortgagor's application for such benefits has been approved, the Federal land bank shall assign his mortgage to the Corporation and the Corporation shall deliver to such bank, in exchange for such mortgage, cash or bonds issued or held by such Corporation in an amount equal to the value of the property covered by such mortgage as agreed to by the Governor and such bank. Any losses or gains subsequently incurred or realized on account of the sale or other disposition of the property covered by any mortgage so assigned shall be shared equally by such bank and the Corporation.

(d) Any mortgagor who is indebted under a mortgage on his farm property to any creditor other than the Corporation or a Federal land bank, shall be entitled to receive such benefits upon the approval by the Governor of his application for such benefits and the assignment of such mortgage to the Corporation with the consent of the holder of such mortgage. The Corporation shall deliver to such holder, in exchange for the mortgage so assigned, cash or bonds issued or held by the Corporation in an amount not in excess of the value of the property covered by such mortgage as determined by the Governor.

SEC. 12. (a) Any mortgagor who is entitled to the refinancing benefits herein provided shall, as a condition to obtaining such benefits, forthwith convey to the Corporation full title to the property covered by his mortgage free and clear of all liens and encumbrances. Such conveyance shall constitute a waiver by the mortgagor of all rights of redemption under the mortgage, and the acceptance of such conveyance by the Corporation shall constitute a full release and satisfaction of the mortgage debt. Upon receiving such conveyance, the Corporation shall enter into a lease with the mortgagor which shall

(1) be for a period of not to exceed five years at a rental agreed upon between the parties thereto, which shall, so far as practicable, be in accordance with the rental arrangements prevailing in the locality, and may be either on a cash basis or for a share of the crop;

(2) be in such form and contain such covenants as the Governor shall prescribe to assure the payment of the agreed rental, and to assure that the farm will be maintained in repair and that waste and exhaustion of the property will be prevented;

(3) provide that the tenant, or the Corporation on his behalf out of the rental fixed under paragraph (1) hereof, shall pay taxes and assessments on the farm to the proper taxing authorities, and, unless otherwise provided for by the Governor, shall insure and pay for insurance on farm buildings; and

(4) provide that upon the assignment, sale, or other disposition of the lease, or any involuntary transfer or sale thereof, or upon default in the perform

ance of, or failure to comply with, any covenant or condition contained in the lease, the Governor may terminate the lease.

(b) If the tenant complies with all of the terms and conditions of his lease and gives notice to the Corporation of his desire to purchase the property covered by such lease, the Corporation shall, as of the date of termination of the lease, or at such time prior thereto as the Governor shall approve, convey the property to the tenant at a price to be determined by the Governor on the basis of its productive value or for the amount of the mortgage indebtedness on such property at the time it was conveyed to the Corporation, whichever shall be less. The tenant shall be entitled to credit toward the amount of such purchase price all rental payments made by him in excess of such amount as will compensate the Corporation (1) for interest on such purchase price during the period of the lease at the rate currently payable on loans made by the Federal land bank of the district in which the property is located, as determined pursuant to section 2 of this Act, and (2) for any expenditures made by the Corporation for current repairs or maintenance during the period of the lease which are necessary to preserve such property. In determining the productive value of the property as the basis for such purchase price, there shall be excluded any increases in the value of the property attributable to expenditures by the tenant.

(c) Upon such conveyance of any property by the Corporation, the purchaser shall deliver to the Corporation a first mortgage or deed of trust to secure the payment of the purchase price which shall—

(1) provide for the payment of the purchase price within an agreed period of not more than forty years from the date of the conveyance;

(2) provide for the payment of interest on the unpaid balance of the purchase price at the rate of interest currently payable on loans made by the Federal land bank of the district in which the property is located, as determined pursuant to section 2 of this Act;

(3) provide for the payment of such purchase price, together with interest thereon, in installments in accordance with amortization schedules prescribed by the Governor;

(4) be in such form and contain such covenants as the Governor shall prescribe to secure the payment of the purchase price, together with interest thereon, to protect the security, and to assure that the farm will be maintained in repair, and waste and exhaustion of the property will be prevented; (5) provide that the purchaser shall pay taxes and assessments on the property to the proper taxing authorities, and, unless otherwise provided for by the Governor, shall insure and pay for insurance on farm buildings; and

(6) provide that upon the assignment, sale, or other disposition of the property, or of any interest therein, without the consent of the Governor, or upon default in the performance of, or failure to comply with, any covenant or condition contained in the mortgage or deed of trust, or upon the involuntary transfer or sale of the property, the Governor may declare the amount unpaid immediately due and payable, or may rescind the conveyance. In event of any such rescission, the Corporation shall refund to the purchaser from the Corporation all principal payments theretofore made by him, less the amount of any damages to the property occasioned by his fault. (d) No provision of section 75, as amended, or of chapters XI, XII, and XIII of the Act entitled "An Act to establish a uniform system of bankruptcy throughout the United States," approved July 1, 1988 (U. S. C., 1934 ed., title 11, sec. 203; supp. IV, 1938, title 11, sec. 203; and chs. XI, XII, and XIII), shall in any way affect, apply to, extend, or impair any obligation incurred by any person pursuant to this section.

REPURCHASE OF FORECLOSED PROPERTY

SEC. 13. (a) Any farmer whose property was acquired under foreclosure by any Federal land bank or by the Corporation and has not been disposed of by such bank or the Corporation, and who is aggrieved by the refusal of such bank or the Corporation to permit him to repurchase the foreclosed property, shall be entitled to appeal to the committee of the county in which the property is located, and such appeal shall be in such form and accompanied by such records and data covering the property and its crop yields as the Governor may prescribe, and shall include a covenant by the person so appealing that, upon the allowance of his appeal, and in consideration of the benefits to be made available to him, he will comply with all the conditions hereinafter set forth.