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(a) To provide for the purchase of land for agricultural uses.

(b) To provide for the purchase of equipment, fertilizers, and livestock necessary for the proper and reasonable operation of the mortgaged farm; the term "equipment” to be defined by the Farm Credit Administration.

(c) To provide buildings and for the improvement of farm lands; the term "improvement” to be defined by the Farm Credit Administration.

(d) To liquidate indebtedness of the owner of the land mortgaged incurred for agricultural purposes, or incurred prior to January 1, 1933.

(e) To provide the owner of the land mortgaged with funds for general agricultural uses. (July 17, 1916, c. 245, § 12,39 Stat. 370; Apr. 20, 1920, c. 154, § 4, 41 Stat. 570; Mar. 4, 1923, c. 252, § 306, 42 Stat. 1476; Mar. 4, 1933, c. 270, $ 2,47 Stat. 1547; Mar. 27, 1933, Ex. Or. 6084.)

Fifth. Limitation on amount of loans; appraisal; reappraisal.--No such loan shall exceed 50 per centum of the value of the land mortgaged and 20 per centum of the value of the permanent, insured improvements thereon, said value to be ascertained by appraisal, as provided in sections 751-756 of this chapter. In making said appraisal the value of the land for agricultural purposes shall be the basis of appraisal and the earning power of said land shall be a principal factor.

That in making loans to owners of groves and orchards, including citrus fruit groves and other fruit groves and orchards, the Federal land banks, the farm land banks, and all Government agencies making loans upon such character of property may, in appraising the property offered as security, give a reasonable and fair valuation to the fruit trees located and growing upon said property and constituting a substantial part of its value.

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. Whenever the amount of the loan applied for exceeds the amount that may be loaned under the appraisal as herein limited, such loan may be granted to the amount permitted under the terms of this paragraph without requiring a new application or appraisal. (July 17, 1916, c. 245, § 12, 39 Stat. 370; May 12, 1933, c. 25, $ 41, 48 Stat. 51.)

Sixth. Restrictions on eligibility for loans; Assumption of mortgage and stock interests by purchaser of land or heir.No such loan shall be made to any

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8771

§ 12

person who is not at the time, or shortly to become,
engaged in farming operations or to any other per-
son unless the principal part of his income is de-
rived from farming operations. In case of the sale
of the mortgaged land, the Federal land bank may
permit said mortgage and the stock interests of the
vendor to be assumed by the purchaser. In case
of the death of the mortgagor, his heir or heirs, or
his legal representative or representatives, shall
have the option within sixty days of such death, to
assume the mortgage and stock interests of the
deceased. (July 17, 1916, c. 245, $ 12,39 Stat. 370;
June 16, 1933, c. 98, § 74, 48 Stat. 271.)

Seventh. Maximum and minimum of loans. The
amount of loans to any one borrower shall in no case
exceed a maximum of $50,000, but loans to any one
borrower shall not exceed $25,000 unless approved
by the Land Bank Commissioner, nor shall any one
loan be for a less sum than $100, but preference
shall be given to applications for loans of $10,000
and under. (July 17, 1916, c. 245, § 12, 39 Stat.
370; Mar. 4, 1923, c. 252, 8 307, 42 Stat. 1476;
May 12, 1933, c. 25, $ 25, 48 Stat. 44; June 16, 1933,
c. 98, § 80 (a), 48 Stat. 273.)

Eighth. Form of applications for loans. Every applicant for a loan under the terms of this subchapter shall make application on a form to be prescribed for that purpose by the Farm Credit Administration 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. (July 17, 1916, c. 245, $ 12, 39 Stat. 370; Mar. 27, 1933, Ex. Or. 6084.)

Ninth. Interest on defaulted payments; payment of taxes and liens; insurance. Every borrower shall pay simple interest on defaulted payments at the rate of 8 per centum per annum, and by express covenant in his mortgage deed shall undertake to pay when due all taxes, liens, judgments, or assessments which may be lawfully 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 8 per centum per annum. Every borrower shall undertake to keep insured to the satisfaction of the Farm Credit Administration all buildings the value of which was a factor in determining the amount of the loan. Insurance shall be made payable to the mortgagee as its interest may appear at time of loss, and at the option of the mortgagor and subject to general regulations of the Farm Credit Administration,

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sums so received may be used to pay for recon-
struction of the buildings destroyed. (July 17,
1916, c. 245, $ 12, 39 Stat. 370; Mar. 27, 1933, Ex.
Or. 6084.)

Tenth. Agreement by borrowers as to use of
loans.—Every borrower who shall be granted a loan
under the provisions of this subchapter shall enter
into an agreement, in form and under conditions to
be prescribed by the Farm Credit Administration,
that if the whole or any portion of his loan shall be
expended for purposes 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, become due and payable
forthwith: Provided, That the borrower may use part
of said loan to pay for his stock in the farm loan
association, and the land bank holding such mort-
gage may permit said loan to be used for any pur-
pose specified in subsection fourth of this section.
(July 17, 1916, c. 245, § 12, 39 Stat. 370; Mar. 27,
1933, Ex. Or. 6084.)

Eleventh. Loans not invalidated by unauthorized acts by banks or associations.- No loan or the mortgage securing the same shall be impaired 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. (July 17, 1916, c. 245, § 12, 39 Stat. 370.)

Twelfth. Reduction of interest on loans and deferment of principal.-Notwithstanding the provisions of paragraph “Second” of this section, the rate of interest on any loans on mortgage made through national farm loan associations or through agents as provided in sections 801-808 of this chapter, or purchased from joint stock land banks, by any Federal land bank, outstanding on the date this paragraph takes effect [May 12, 1933) or made through national farm loan associations within two years after such date, shall not exceed 472 per centum per annum for all interest payable on installment dates occurring within a period of five years commencing sixty days after the date [May 12, 1933] this paragraph takes effect; and no payment of the principal portion of any installment of any such loan shall be required during such five-year period if the borrower shall not be in default with respect to any other condition or covenant of his mortgage. The foregoing provisions shall apply to loans made by Federal land banks through branches, except that the rate of

interest on such loans for such five-year period shall
be 5 per centum in lieu of 42 per centum. The
Secretary of the Treasury shall pay each Federal
land bank, as soon as practicable after October 1,
1933, and after the end of each quarter thereafter,
such amounts as the Land Bank Commissioner
certifies to the Secretary of the Treasury is equal
to the amount by which interest payments on
mortgages held by such bank have been reduced,
during the preceding quarter, by reason of this
paragraph; but in any case in which the Land
Bank Commissioner finds that the amount of
interest payable by such bank during any quarter
has been reduced by reason of the refinancing of
bonds under section 991 of this chapter, the amount
of the reduction so found shall be deducted from
the amount payable to such bank under this para-
graph. No payments shall be made to a bank with
respect to any period after June 30, 1938. There
is authorized to be appropriated, out of any money
in the Treasury not otherwise appropriated, the
sum of $15,000,000 for the purpose of enabling
the Secretary of the Treasury to make payments
to Federal land banks which accrue during the
fiscal year ending June 30, 1934, and such additional
amounts as may be necessary to make payments
accruing during subsequent fiscal years. (July 17,
1916, c. 245, $ 12, 39 Stat. 370; May 12, 1933, c.
25, $ 24, 48 Stat. 43; June 16, 1933, c. 98, § 80
(a), 48 Stat. § 273.)

"Farm Credit Administration" mentioned in the text was substituted for
“Federal Farm Loan Board” pursuant to the Executive Order cited
thereto, which is set out in full at the beginning of this chapter.

For Government subscription to paid-in surplus of bank, in amounts equal to principal payments deferred, see $ 781 (tenth) of this chapter.

Loans to be current funds, bonds of corporation, or farm loan bonds.—Amounts transmitted to farm loan associations by Federal land banks to be loaned to its members shall, at the option of the bank, be in current funds or Federal Farm Mortgage Corporation bonds, or, at the option of the borrower, in farm loan bonds. (July 17, 1916, c. 245, § 12, 39 Stat. 370; Jan. 31, 1934, c. 7, § 7,48 Stat. 344.)

$ 772

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$773

Mortgages on farm lands under United States reclamation projects. The term "first mortgage, as used in section 771 of this chapter, shall be construed to include mortgages on farm lands under United States reclamation projects, notwithstanding there may be against such lands a reserved or created lien in favor of the United States for construction or other charges as provided in sections 372, 381, 383, 391, 392, 411, 416, 419, 421, 431, 432,

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434, 439, 461, 476, 491, 498 of Title 43, Public
Lands, and acts amendatory thereof and supple-
mentary thereto, known as the reclamation law:
Provided, That such lands are otherwise eligible for
loans under this chapter: And provided further,
That the amount and date of maturity of such lien
shall be given due consideration in fixing the value
of such lands for loan purposes. (May 15, 1922,
c. 190, $ 3, 42 Stat. 542.)

$ 781

§ 13

POWERS OF FEDERAL LAND BANKS GENERALLY

Enumerated powers. Every Federal land bank shall have power, subject to the limitations and requirements of this subchapter

First. Issuing and selling farm loan bonds.--To issue, subject to the approval of the Farm Credit Administration, and to sell farm loan bonds of the kinds authorized in this subchapter, to buy the same for its own account, and to retire the same at or before maturity. (July 17, 1916, c. 245, $ 13, 39 Stat. 372; Mar. 27, 1933, Ex. Or. 6084.)

Federal land banks authorized to make their services and facilities available to Land Bank Commissioner to aid in administering Subchapter II of this chapter. See $ 1018 of this chapter.

Second. Investing funds in first farm mortgages. 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. In order to reduce and/or refinance farm mortgages, to invest such funds as may be in its possession in the purchase of first mortgages on farm lands situated within the Federal land bank district within which it is organized or for which it is acting, or to exchange farm loan bonds for any duly recorded first mortgages on farm lands executed prior to May 12, 1933, at a price which shall not exceed in each individual case the amount of the unpaid principal of the mortgage on the date of such purchase or exchange, or 50 per centum of the normal value of the land mortgaged and 20 per centum of the value of the permanent insured improvements thereon as determined upon an appraisal made pursuant to this subchapter, whichever is the smaller: Provided, That any mortgagor whose mortgage is acquired by a Federal land bank under this paragraph shall be entitled to have his farm mortgage indebtedness refinanced in accordance with the provisions of sections 711-723 and 731-734 of this chapter, on the basis of the amount paid by the bank for his mortgage. (July 17, 1916, c. 245, $ 13, 39 Stat. 372; May 12, 1933, c. 25, $ 22, 48 Stat. 42.)

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