72 Stat. 842.

than the United States. Any security instrument taken in connection with such loan shall create a lien running to the United States, notwithstanding the fact that the note may be held by such lender or his assignee;

"(2) To insure and make commitments to insure such loans, which, when endorsed for insurance, shall be covered by the insurance provisions of this Act;

"(3) To sell such loans at an annual charge, at a rate to be determined by the Secretary, of not less than 1 per centum of the unpaid principal obligation from time to time outstanding on the loan, such charge to be retained by the Secretary out of interest payments made by the borrower: Provided, That the total of the rate of such charge plus the rate of return to the holder of the note shall not exceed the interest rate specified in the note. Out of the charges so collected an amount not in excess of one-half of 1 per centum of such unpaid principal obligations shall be deposited in and become a part of the fund. The remainder of such charges collected shall be deposited in the Treasury to the credit of the Secretary and may be transferred annually to the administrative expense account of the Farmers Home Administration and become merged therewith. Each such loan shall be sold at the full amount of the unpaid balance thereof at the time of sale, but no loan, except loans to associations (including corporations not operated for profit and public or quasi-public agencies), shall be sold if such balance exceeds 90 per centum of the value of the security less any prior lien indebtedness at the time the loan was made or upon a determination of such fact by the Secretary at the time of sale;

"(4) To make loans out of moneys in the fund, including funds borrowed from the Secretary of the Treasury under item (4) of subsection 18 (a) of the Bankhead-Jones Farm Tenant Act, as amended, Ante, p. 840. within the aggregate limits therein provided, for the purpose of insuring and selling such loans under this section: Provided, however, That no loan made under this item (4) shall be in excess of 90 per centum of the value of the security less any prior lien indebtedness, but such limitation shall not apply to loans to associations, including corporations not operated for profit and public or quasi-public agencies: And provided further, That no loan shall be made under this item (4) unless the Secretary has reasonable assurance that it can be sold without undue delay.

"(b) The borrower shall not be required to pay any additional charges for insurance of the loan, but the Secretary may require the payment of such appraisal and delinquency charges as he deems proper. The proceeds of such appraisal or delinquency charges shall be deposited in the Treasury for use for administrative expense as provided in item (a) (3) of this section.

"(c) The amount of the principal obligations on loans made under item (a) (4) of this section shall be included in computing the aggregate amount of the principal obligations which may be insured in any one fiscal year, as provided in section 10 (e) of this Act, at the time such loans are made. The amount of the principal obligations on any other loans made by the Secretary and insured under this section shall not be included in computing said aggregate amount.

"(d) Loans made from funds advanced by lenders other than the United States may be insured by the Secretary upon terms and conditions consistent with the provisions of this section, but no such loan, except loans to associations (including corporations not operated for profit and public or quasi-public agencies), shall be in excess of 90 per centum of the value of the security less any prior lien indebtedness. Loans made or insured under this section shall be subject to all the provisions of this Act except as otherwise provided in this section.

72 Stat. 843.

"(e) Any loan heretofore or hereafter made or insured under this Act may be converted to an insured loan under this section at the discretion of the Secretary, and any expenses in connection with such conversion may be paid out of funds available for administrative expenses.

"(f) The Secretary is further authorized to sell any loan heretofore or hereafter made or insured under this Act without insurance thereof upon the written consent of the borrower, or without such consent when the borrower has failed to comply with his agreement to refinance the indebtedness at the request of the Secretary. Such loan shall be sold at the full amount of the unpaid balance thereof, and upon such sale the Secretary is authorized to assign the security instrument and evidence of debt in such manner that the United States shall have no further right or obligation with respect to the loan."

Approved August 25, 1958.

Public Law 86-168 86th Congress, S. 1512 August 18, 1959

AN ACT

73 STAT. 384.

To amend the Federal Farm Loan Act to transfer responsibility for making appraisals from the Farm Credit Administration to the Federal land banks, and for other purposes.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That this Act may Farm Credit be cited as the "Farm Credit Act of 1959”.

TITLE I-FEDERAL LAND BANKS

Act of 1959.

SEC. 101. Section 3 of the Federal Farm Loan Act, as amended, is Registrars, amendedappraisers, examiners.

(a) by changing the paragraph thereof relating to the appointment of registrars, appraisers, and examiners (12 U.S.Č. 656)

to read:

"The Farm Credit Administration shall appoint a farm loan registrar for each farm credit district to receive applications for issues of farm loan bonds and to perform such other services as are prescribed by this Act, and may appoint a deputy registrar who shall during the unavoidable absence or disability of the registrar perform the duties of that office. It shall also appoint as many farm credit Restriction. appraisers and farm credit examiners as it shall deem necessary. Such farm loan registrars, deputy registrars, farm credit appraisers, and farm credit examiners shall have no connection with or interest in any institution, association, or partnership engaged in banking or in the business of making land mortgage loans or selling land mortgages but they may perform such duties as are authorized by the Farm Credit Administration in connection with the business of the banks and associations it supervises: Provided, That this limitation shall not apply to persons employed by the Farm Credit Administration on a temporary basis.";

(b) by deleting the paragraph thereof relating to the compensation of appraisers and inspectors (12 U.S.C. 658);

(c) by deleting the paragraph thereof relating to the employment of certain personnel by the Farm Credit Administration (12 U.S.C. 659); and

(d) by deleting the second sentence of the third paragraph from the end thereof (12 U.S.C. 662).

SEC. 102. (a) The second paragraph of section 9 of the Federal Farm Loan Act, as amended (12 U.S.Č. 742), is amended to read:

chase.

"Any person desiring to secure a loan through a Federal land bank Loan for association under the provisions of this Act may, at his option, borrow stock purfrom the Federal land bank through such association the sum neces- Addition. sary to pay for shares of stock subscribed for by him in the Federal land bank association. Any such sum for the purchase of stock shall be made a part of the face amount of the loan and such sum shall for all purposes be additional to the 65 per centum of the normal value of the farm as specified in any provision of this Act."

(b) Section 10 of the Federal Farm Loan Act, as amended (12 U.S.C. 751-757), is amended to read:

723.

"SEC. 10. (a) Whenever an application for a mortgage loan is made Appraisal to a Federal land bank association, the loan committee provided for reports. in section 7 of this Act shall cause to be made such investigation as it 12 USC 711may deem necessary as to the character and solvency of the applicant and the sufficiency of the security offered. When it appears that a loan may be approved, the loan committee shall obtain a written report on the security by an appraiser designated or appointed by the

Notification.

Restriction.

Studies.

73 STAT. 385.

Federal land bank of the district and such appraiser shall investigate and make a written report upon the security offered. Such appraisal, investigation, and report shall be made in accordance with appraisaĺ standards prescribed by the Farm Credit Administration and may be made by any competent person (including an employee of a Federal land bank association) when designated for that purpose by the Federal land bank of the district. The loan committee shall cause a written report to be made of the results of such investigations of the applicant and the security and shall, if it concurs in such report, approve the same in writing. After the loan committee has reached an agreement as to the amount and terms of the loan which may be offered to the applicant, if such amount is not in excess of 65 per centum of the normal value of the security offered as determined by said appraiser, the association may notify the applicant of the amount and terms of the loan approved by the loan committee: Provided, That any such notice shall contain a statement that the amount and terms of the loan offered to the applicant are subject to and conditioned upon subsequent approval or disapproval by the Federal land bank.

"(b) The written report of the loan committee and the report made by an appraiser designated or appointed by the Federal land bank shall be submitted to the Federal land bank with the application for the loan, and the land bank shall examine said reports when it passes on the loan application which they accompany. No loan shall be made unless the report of the loan committee and the report of the appraiser are favorable.

"(c) All appraisal reports shall be made on forms approved by the Farm Credit Administration.

"(d) No farm credit appraiser and no appraiser designated or appointed by a Federal land bank shall make any appraisal in connection with a loan in which he is interested, directly or indirectly. No member of a loan committee or of a board of directors of a Federal land bank association shall participate in the consideration of or action on any loan in which he is interested, directly or indirectly.

(e) Each Federal land bank shall conduct studies in such manner and to such extent as the Farm Credit Administration deems necessary in connection with the appraisal standards prescribed for the district. "(f) Notwithstanding the foregoing provisions of this section

"(1) appraisal reports made by appraisers heretofore or hereafter appointed by the Farm Credit Administration pursuant to section 3 of this Act may be used as a basis for Federal land bank loans;

"(2) the Farm Credit Administration may, in its discretion and in such circumstances and for such periods as it deems necessary, direct that any or all appraisals in connection with loans by any Federal land bank, or appraisal standards studies required by subsection (e), shall be made by farm credit appraisers appointed pursuant to section 3 of this Act; and

"(3) for purposes of paragraph (2) of this subsection, the Farm Credit Administration is authorized to employ additional farm credit appraisers, including such appraisers as it may select who have been designated or appointed by a Federal land bank, and to require that the salaries and other expenses of all such additional appraisers be paid by the Federal land bank served by them in such manner as the Farm Credit Administration shall determine.

"(g) Farm credit appraisers appointed pursuant to section 3 of this Act shall make such reviews and investigations as the Farm Credit Administration determines to be necessary to assure compliance with

73 STAT. 386.

the appraisal standards prescribed by it pursuant to subsection (a) of this section; make such additional reviews and investigations concerning the quality of first mortgages securing farm loan bonds as the Farm Credit Administration shall direct; and perform such other duties as may be prescribed by the Farm Credit Administration. Any first mortgage which is found not to conform to the appraisal and loan standards prescribed by the Farm Credit Administration shall not be credited toward meeting the amount of bond collateral which a Federal land bank is required to maintain with a farm loan registrar except in such amount as the Farm Credit Administration shall approve."

SEC. 103. On the effective date of this title each land bank appraiser Transfer of shall be transferred from the Farm Credit Administration to the appraisers. Federal land bank served by him immediately prior to said effective date, without reduction in salary and accumulated leave, unless the Farm Credit Administration, in its discretion, determines that individual appraisers shall be retained as farm credit appraisers. The selection of personnel for transfer, or for retention as farm credit appraisers, shall be without regard to section 12 of the Veterans' Preference Act of 1944, as amended (5 U.S.C. 861). Land bank 58 Stat. 390. appraisers shall be subject to the same employment conditions as other bank employees after transfer under this section. At least sixty days prior to the effective date of this title the Farm Credit Administration shall notify each land bank appraiser that he is to be transferred to a Federal land bank or that he is to be retained in the Farm Credit Administration. Any land bank appraiser who notifies the Farm Credit Administration in writing at least thirty days before the effective date of this title that he does not desire to accept employment as stated in the notice from the Farm Credit Administration shall be separated from employment on said effective date and such separation shall be deemed involuntary.

loan.

SEC. 104. (a) Section 12 of the Federal Farm Loan Act, as amended Amortized and (12 U.S.C. 771), is amended by (1) changing the last proviso of unamortized paragraph "Second" thereof to read: "And provided further, That any land bank may make loans on an unamortized or partially amortized basis, under rules and regulations issued by the Farm Credit Administration."; (2) striking out of paragraph "Seventh" thereof "loans to Loan limit. any one borrower shall in no case exceed a maximum of $200,000, but". (b) Section 20 of the Federal Farm Loan Act, as amended, is amended by deleting the second sentence thereof (12 U.S.C. 861, second sentence) and by inserting the following immediately before the period at the end of the last sentence thereof (12 U.S.C. 864, last sentence): 66 except that, with the approval of the Farm Credit Administration, an issue of bonds may be limited to bearer or coupon bonds".

(c) The first and second sentences of section 23 of the Federal Farm Loan Act, as amended (12 U.S.C. 901), are amended by substituting "at the end of each fiscal year" for "semiannually" therein.

(d) The first and second sentences of section 24 of the Federal Farm Loan Act, as amended (12 U.S.C. 911), are amended by substituting "at the end of each fiscal year" for "semiannually" therein. (e) The seventh paragraph of section 29 of the Federal Farm Loan Act, as amended (12 U.S.C. 967), is amended by changing "land bank 50 Stat. 713. appraiser" in the second and third sentences thereof to "farm credit appraiser".

(f) Section 202 (c) of the Federal Farm Loan Act, as amended (12 U.S.C. 1033), is amended by changing the period at the end thereof 42 Stat. 1455. to a comma and adding the following: "and any Federal intermediate

credit bank may in its discretion purchase such loans or discounts

with or without such endorsement.".