1

8 771

8 12

assume the mortgage and stock interests of the
deceased. As used in this paragraph (1) the term
"person" includes an individual or a corporation en-
gaged in the raising of livestock; and (2) the term
"corporation” includes any incorporated associa-
tion; but no such loan shall be made to a corpora-
tion (A) unless all the stock of the corporation is
owned by individuals themselves personally actu-
ally engaged in the raising of livestock on the farm
to be mortgaged as security for the loan, except in a
case where the Land Bank Commissioner permits
the loan if at least 75 per centum in value and num-
ber of shares of the stock of the corporation is
owned by the individuals personally actually so en-
gaged, and (B) unless the owners of at least 75 per
centum in value and number of shares of the stock
of the corporation assume personal liability for the
loan. No loan shall be made to any corporation
which is a subsidiary of, or affiliated (either di-
rectly or through substantial identity of stock
ownership) with, a corporation ineligible to procure
a loan in the amount applied for. (July 17, 1916, c.
245, $ 12, 39 Stat. 370; June 16, 1933, c. 98, $ 74, 48
Stat. 271; June 3, 1935, c. 164, § 18, 49 Stat. 319.)

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, $ 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

8 771

$ 12

land mortgaged. Taxes, liens, judgments, or as-
sessments 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 un-
dertake 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 Administra-
tion, sums so received may be used to рау.

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 mortgage may permit said loan to be used for any purpose specified in paragraph "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 banlos 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

§ 771

§ 12

national farm loan associations after such date, shall
not exceed 31/2 per centum per annum for all interest
payable on installment dates occurring within a
period of two years commencing July 1, 1935; and
no payment of the principal portion of any install-
ment of any such loan outstanding on June 3,
1935 shall be required prior to July 11, 1938, if
the borrower shall not be in default with respect
to any other condition or covenant of his mort-
gage. The foregoing provisions shall apply to
loans made by Federal land banks through branches,
except that the rates of interest paid for the respec-
tive periods above specified shall be one-half of 1
per centum per annum in excess of the rates of in-
terest paid during the corresponding periods by bor-
rowers on mortgage loans made through national
farm loan associations. 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 amount 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 992 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 Secre-
tary of the Treasury to make payments to Federal
land banks which accrue during the fiscal year end-
ing 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; June 3,
1935, c. 164, 8 3, 49 Stat. 314; June 24, 1936, c. 762,
49 Stat. 1912.)

The amendment by Act June 3, 1935, c. 164, was effective July
“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

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

1, 1935.

of tbis chapter.

§ 772

8 12

Loans to be in 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. 346.)

8 778

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, 434, 439, 461, 476, 491, 498 of Title 43 [U. S. Code Public Lands, and acts amendatory thereof and supplementary thereto, known as the reclamation law: Provided, That such lands are otherwise eligible for loans under this subchapter: 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.)

8 773a

Loans on lands in drainage, irrigation, or conservancy districts. The Farm Credit Administration, the Federal Farm Mortgage Corporation, the Federal land banks, the Land Bank Commissioner, and any lending or financing agency established by or under subchapters I, III, IV and V of this chapter, are authorized to make loans or acquire mortgages on lands in any drainage, irrigation, or conservancy district, notwithstanding the existence of any prior lien or charge arising out of an assessment for special benefits made by such district, in any case where (1) such land is otherwise eligible for a loan, (2) such assessment is payable over a period of years, and (3) reasonable security exists for the repayment of the loan, taking into consideration all facts and values, including the term and size of the loan, the integrity of the applicant, and the increased earning capacity of the lands arising from the improvements or benefits in respect of which the assessment was made. (June 4, 1936, c. 496, 49 Stat. 1461.)

POWERS OF FEDERAL LAND BANKS GENERALLY

8 781

8 18

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 samo at or before maturity. (July 17, 1916, c. 245, 13, 39 Stat. 372; Mar. 27, 1933, Ex. Or. 6084.)

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.)

Third, Receipt and deposit of mortgages as collateral for bonds; collection of moneys payable under mortgages and bonds. To receive and to deposit in trust with the farm loan registrar for the district, to be by him held as collateral security for farm loan bonds, first mortgages upon farm land qualified under section 771 of this chapter, and to empower national farm loan associations,