8 723

loan such stock shall, if still outstanding, be can-
celed at par, or, in the event that such stock shall
have become impaired, at the estimated value
thereof as approved by the Land Bank Commis-
sioner, and the proceeds thereof shall be paid to the
borrower. (July 17, 1916, c. 245, § 7, 39 Stat. 365;
Mar. 4, 1933, c. 270, 81, 47 Stat. 1547; May 12, 1933,
c. 25, § 26, 48 Stat. 44; June 16, 1933, c. 98, § 80 (a),
48 Stat. 273.)

(d) Organization of national farm loan asso-
ciation by direct borrowers.-Each such borrower
may covenant in his mortgage that, whenever there
are ten or more borrowers who have obtained from
a Federal land bank direct loans under the pro-
visions of this section aggregating not less than
$20,000, and who reside in a locality which may,
in the opinion of the Land Bank Commissioner, be
conveniently covered by the charter of and served
by a national farm loan association, he will unite
with such other borrowers to form a national farm
loan association. Such borrowers shall organize
the association subject to the requirements and the
conditions specified in sections 711-722, so far as
the same may be applicable, and in accordance with
rules and regulations of the Land Bank Commis-
sioner. As soon as the organization of the associa-
tion has been approved by the Land Bank Com-
missioner, the stock in the Federal land bank held
by each of the members of such association shall be
canceled at par, and in lieu thereof the bank shall
issue in the name of the association an equal amount
of stock in said bank, which stock shall be held
by said bank as collateral security as provided in
this section with respect to other loans through
national farm loan associations. Thereupon there
shall be issued to each such member an amount
of capital stock in the association equal to the
amount which he previously held in said bank,
which stock shall be held by said association as col-
lateral security as provided in section 733 of this
chapter. The board of directors of said associa-
tion shall adopt a resolution authorizing and direct-
ing its secretary-treasurer on behalf of said associa-
tion to endorse, and thereby become liable for the
payment of, the mortgages taken from its charter
members by the Federal land bank. When it shall
appear to the satisfaction of the Land Bank Com-
missioner that all the foregoing conditions have
been complied with, and upon the granting of the
charter by the Land Bank Commissioner, the in-
terest rate paid by each charter member of such

8 7

§ 723

association whose loan is in good standing shall,
beginning with his next regular installment date,
be reduced to the rate of interest paid by borrowers
on new loans made through national farm loan
associations in the same Federal land bank district
at the time the said loan was made to such charter
member. (July 17, 1916, c. 245, § 7, 39 Stat. 365;
Mar. 4, 1933, c. 270, § 1, 47 Stat. 1547; May 12,
1933, c. 25, § 26, 48 Stat. 44; June 16, 1933, c. 98,
§ 80 (a), 48 Stat. 273.)

(e) Charges to applicants and borrowers.-
Charges to be paid by applicants for direct loans
from a Federal land bank shall not exceed amounts
to be fixed by the Land Bank Commissioner and
shall in no case exceed the charges which may be
made to applicants for loans and borrowers through
national farm loan associations under the provi-
sions of sections 761 and 781 of this chapter. (July
17, 1916, c. 245, § 7, 39 Stat. 365; Mar. 4, 1933,
c. 270, § 1, 47 Stat. 1547; May 12, 1933, c. 25, § 26,
48 Stat. 44; June 16, 1933, c. 98, § 80 (a), 48 Stat.
273.)

(f) Option to make loan in bonds.-Direct loans made under subsections (a) to (e) hereof, may, at the option of the Federal land bank, be made in bonds of the Federal Farm Mortgage Corporation. (Jan. 31, 1934, c. 7, § 6, 48 Stat. 346.)

87

8 731

§ 732

8 733

CAPITAL STOCK OF NATIONAL FARM LOAN
ASSOCIATIONS

Par value of shares.-The shares in national farm loan associations shall be of the par value of $5 each. (July 17, 1916, c. 245, § 8, 39 Ŝtat. 367.)

Voting privileges. 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. (July 17, 1916, c. 245, § 8, 39 Stat. 367.)

Borrowers only to be members; application for membership; subscription to stock in association; stock held as collateral; retirement of stock. No persons but borrowers on farm land mortgages shall be members or shareholders of

88

88

8 8

8 734

national farm loan associations. Any person desir-
ing to borrow on farm land mortgage through a
national farm loan association shall make applica-
tion for membership and shall subscribe for shares
of stock in such farm loan association to an amount
equal to 5 per centum of the face of the desired.
loan, said subscription to be paid in cash upon the
granting of the loan. If the application for mem-
bership is accepted and the loan is granted, the ap-
plicant shall, upon full payment therefor, become
the owner of one share of capital stock in said loan
association for each $100 of the face of his loan,
or any major fractional part thereof. Said capital
stock shall be paid off at par and retired upon full
payment of said loan. Said capital stock shall be
held by said association as collateral security for
the payment of said loan, but said borrower shall
be paid any dividends accruing and payable on said
capital stock while it is outstanding. (July 17,
1916, c. 245, § 8, 39 Stat. 367.)

Increase of stock. Every national farm loan association formed under this chapter shall by its articles of association provide for an increase of its capital 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 chapter. Such increases shall be included in the quarterly reports to the Farm Credit Administration. (July 17, 1916, c. 245, § 8, 39 Stat. 367; Mar. 27, 1933, Ex. Or. 6084.)

"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.

§ 8

8 741

NATIONAL FARM LOAN ASSOCIATIONS; SPECIAL

PROVISIONS

Right of members to loans.-Any person whose application for membership is accepted by a national farm loan association shall be entitled to borrow money on farm land mortgage upon filing his application in accordance with section 733, and otherwise complying with the terms of this chapter whenever the Federal land bank of the district has funds available for that purpose, unless said land bank or the Farm Credit Administration shall, in

& 9

FARM MORTGAGE LOANS

its discretion, otherwise determine. (July 17, 1916,
c. 245, § 9, 39 Stat. 368; Mar. 27, 1933, Ex. Or.
6084.)

"Farm Credit Administration" mentioned in the text was sub-
stituted for "Federal Farm Loan Board" pursuant to the Execu-
tive Order cited thereto, which is set out in full at the beginning
of this chapter.

F. F. L. Act

8 742

8 743

Payment for stock from proceeds of member's mortgage loan.-Any person desiring to secure a loan through a national farm loan association under the provisions of this chapter may, at his option, borrow from the Federal land bank through such association the sum 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, however, That such addition to the loan shall not be permitted to increase said loan above the limitation imposed in paragraph "Fifth" of section 771. (July 17, 1916, c. 245, § 9, 39 Stat. 368.)

Commissions on interest payments; deduction
from dividends; loans by land banks to associa-
tions; rate of interest.-Subject to rules and reg-
ulations prescribed by the Farm Credit Adminis-
tration, any national farm loan association shall be
entitled to retain as a commission from each inter-
est payment on any loan indorsed by it an amount
to be determined by said administration not to ex-
ceed one-eighth of 1 per centum semiannually upon
the unpaid principal of said loan, any amounts so
retained as commissions to be deducted from divi-
dends payable to such farm loan association by the
Federal land bank, and to make application to the
land bank of the district for loans not exceeding in
the aggregate one-fourth of its total stock holdings
in said land bank. The Federal land banks shall
have power to make such loans to associations ap-
plying therefor and to charge interest at a rate not
exceeding 6 per centum per annum. (July 17, 1916,
c. 245, § 9, 39 Stat. 368; Mar. 27, 1933, Ex. Or.
6084.)

"Farm Credit Administration" and "administration" mentioned
in the text were substituted for "Federal Farm Loan Board" and
"board", respectively, pursuant to the Executive Order cited
thereto, which is set out in full at the beginning of this chapter.

8 744

Individual liability of shareholders.-Shareholders of every national farm loan association shall be held individually responsible, equally and ratably, and not one for another, 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 shares. (July 17, 1916, c. 245, § 9, 39 Stat. 368.)

See 744a of this chapter for provisions modifying this section.

89

§ 744a

8 745

Same; contract liability after June 16, 1933.Notwithstanding the provisions of section 744, the shareholders of national farm loan associations shall not be held individually responsible for any contract, debt, or engagement of such association entered into after June 16, 1933, but this section shall not be construed to relieve any other liability with respect to stock held by such shareholders. (June 16, 1933, c. 98, § 72, 48 Stat. 271.)

New members. After a charter has been granted to a national farm loan association, any person who is the owner, or about to become the owner, of farm land qualified under section 771 of this chapter as the basis of a mortgage loan, and who desires to borrow on a mortgage of such farm land, may become a member of the association by a 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 771 of this chapter. As used in this section, the term "person" includes an individual, an incorporated association, and a corporation which is eligible for a loan under section 771 of this chapter. (July 17, 1916, c. 245, § 9, 39 Stat. 368; June 3, 1935, c. 164, § 20, 49 Stat. 319.)

8 9

8 751

APPRAISAL FOR FARM LOANS

Investigation by loan committee of association; character and solvency of applicant; sufficiency of security offered; report. Whenever an application for a mortgage loan is made through

8 10