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a national farm loan association, the loan com-
mittee provided for in section 712 of this chapter,
shall forthwith make, or cause to be made, such in-
vestigation as it may deem necessary as to the char-
acter and solvency of the applicant, and the suffi-
ciency of the security offered, and cause written
report to be made of the result of such investi-
gation, and shall, if it concurs in such report, ap-
prove the same in writing. No loan shall be made
unless the report is favorable, and the loan com-
mittee is unanimous in its approval thereof. (July
17, 1916, c. 245, $ 10, 39 Stat. 369; Apr. 20, 1920,
C. 154, § 2, 41 Stat. 570.)

8 752

g 10

Submission to land bank of loan application and report of association's committee; consideration of association's appraisal by bank.--The written report required in section 751 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 on the loan application which it accompanies, but they shall not be bound by said appraisal. (July 17, 1916, c. 245, § 10, 39 Stat. 369; April 20, 1920, c. 154, § 2, 41 Stat. 570.)

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Requirement for appraisal of land offered as
security before making land bank loan. Before
any mortgage loan is made by any Federal land
bank, or joint stock land bank, it shall refer the ap-
plication and written report of the loan committee
to one or more of the land bank appraisers ap-
pointed under the authority of section 656 of this
chapter, and such appraiser or appraisers shall in-
vestigate 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. (July 17, 1916, c. 245, § 10, 39
Stat. 369.)

Joint stock land banks prohibited from making farm loans
after May 12, 1933, except such
dental to refinancing existing loans and to sale of acquired real

See § 810 of this chapter.

as

are necessary and inci

estate.

8 754

§ 10

Forms for reports.-Forms for appraisal reports for farm loan associations and land banks shall be prescribed by the Farm Credit Administration. (July 17, 1916, c. 245, § 10, 39 Stat. 369; 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 tbe beginning of this chapter.

8 755

8 10

Examinations by land bank appraisers as to farm loan bonds and first mortgages.--Land bank appraisers shall make such examinations and appraisals and conduct such investigations, concerning farm loan bonds and first mortgages, as the Farm Credit Administration shall direct. (July 17, 1916, c. 245, § 10, 39 Stat. 369; 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.

8 756

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8 10

Borrower ineligible as land bank appraiser; association director or committeeman disqualified by interest in loan.—No borrower under this subchapter shall be eligible as an appraiser under this subdivision, but borrowers may act as members of a loan committee 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 indi. rectly, in a loan, a majority of the board of directors of any national farm loan association shall appoint a substitute to act in his place in passing upon such loan. (July 17, 1916, C. 245, g 10, 39 Stat. 369.)

10

POWERS OF NATIONAL FARM LOAN ASSOCIATIONS

8 761

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Enumerated powers.

Every national farm loan association shall have power:

First. Indorsing mortgages.-To indorse, and thereby become liable for the payment of, mortgagés taken from its shareholders by the Federal land bank of its district. (July 17, 1916, c. 245, $ 11,39 Stat. 369.)

Second. Receiving advances from banks and loaning to shareholders.-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 771 of this chapter. (July 17, 1916, c. 245, $ 11, 39 Stat. 369.)

Third. Fixing charges for applications for loans.-To fix reasonable initial charges to be made against applicants for loans and to borrowers in order to meet the necessary expenses of the association: Provided, That such charges shall not exceed amounts to be fixed by the Farm Credit Administration, and shall in no case exceed 1 per centum

of the amount of the loan applied for; to acquire and dispose of property, real and personal, that may be necessary or convenient for the transaction of its business. (July 17, 1916, c. 245, § 11, 39 Stat. 869; Apr. 20, 1920, c. 154, § 8, 41 Stat. 570; Mar. 27, 1933, Ex. Or. 6084.)

Fourth. Issuinginterest-bearing certificates against deposits of current funds.--To issue certificates against deposits of current funds bearing interest for not longer than one year at not to exceed 4 per 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 subchapter. (July 17, 1916, c. 245, § 11, 39 Stat. 369.)

National farm loan associations authorized to make their sery. ices and facilities available to Land Bank Commissioner to aid in administering subchapter II of this chapter, See § 1018 of this chapter.

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

RESTRICTIONS ON LOANS OF FEDERAL LAND

BANKS BASED ON FIRST MORTGAGES

§ 12

Restrictions enumerated. - No Federal land bank organized under this chapter shall make loans except upon the following terms and conditions:

First. Security by first mortgage.-Said loans shall be secured by duly recorded first mortgages on farm land within the land bank district in which the bank is situated. (July 17, 1916, c. 245, 8 12, 39 Stat. 370.)

Second. Agreement for repayment on amortization plan.--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 cover, first, a charge on the loan at a rate not exceeding the interest rate in the last series of farm loan bonds issued by the land bank making the loan; second, a charge for administration and profits at a rate not exceeding, except with the approval of the Governor of the Farm Credit Administration, 1 per centum per annum on the unpaid principal, said two rates combined constituting the interest rate on the mortgage; and, third, such amounts to be applied on the principal as will ex

8 12

8 771 tinguish the debt within an agreed period, not less

than five years nor more than forty years: Pro-
vided, That after five years from the date upon
which a loan is made the mortgagor may, upon any
regular installment date, make in advance any
number of payments or any portion thereof on
account of the principal of his loan as provided by
his contract or pay the entire principal of such
loan, under the rules and regulations of the Farm
Credit Administration: And provided further,
That before the first issues 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 limitations of this sub-
chapter. (July 17, 1916, c. 245, $ 12, 39 Stat. 370;
Apr. 20, 1920, c. 154, 84, 41 Stat. 570; June 16, 1933,
c. 98, § 73, 48 Stat. 271; Mar. 27, 1933, Ex. Or.
6084.)

Third. Maximum interest rate.--No loan on
mortgage shall be made under this subchapter at a
rate of interest exceeding 6 per centum per annum,
exclusive of amortization payments. (July 17, 1916,
c. 245, $ 12, 39 Stat. 370.)

Fourth. Purposes of loans enumerated.--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 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, 8 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

8 771

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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.

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 con-
stituting a substantial part of its value. In deter-
mining the earning power of land used for the rais-
ing of livestock, due consideration shall be given to
the extent to which the earning power of the fee-
owned land is augmented by a lease or permit,
granted by lawful authority of the United States
or of any Štate, for the use of a portion of the public
lands of the United States or of such State, where
such permit or lease is in the nature of a right
adjunctive to such fee-owned land, and its availa-
bility for use as such during the terms of the loan
is reasonably assured.

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; June 3, 1935, c. 164, § 22, 49 Stat. 319.)

Sixth. Restrictions on eligibility for loans; assumption of mortgage and stock interests by purchaser of land or ħeir.-No such loan shall be made to any person who is not at the time, or shortly to become, engaged in farming operations or to any other person unless the principal part of his income is derived 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

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