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the Treasury the amount so paid shall become an
obligation to the United States of the issuing bank
or banks and shall bear interest at the same rate as
that borne by the bonds upon which the interest has
been so paid. After the expiration of one year
from May 12, 1933, if in the opinion of the Land
Bank Commissioner any part of the proceeds of the
bonds authorized to be issued under this paragraph
is not required for the purpose of making new
loans or for purchasing mortgages or exchanging
bonds for mortgages as herein provided, such bonds
may be issued within the maximum limit herein
specified for the purpose of refinancing any out-
standing issues of Federal farm loan bonds; but no
such bonds shall be issued after two years from
May 12, 1933, for the purpose of such refinancing.
(July 17, 1916, c. 245, $ 32, 39 Stat. 384; May 12,
1933, c. 25, § 21, 48 Stat. 41; June 16, 1933, c. 98,
$ 80' (a), 48 Stat. 273.)

Limitation on issuance of bonds under this section, see § 992a

of this chapter.

§ 992a

Limitation of section 992.-After ninety days after January 31, 1934, no Federal land bank shall issue any bonds under the provisions of section 992 of this chapter, subject to the guarantee of interest on such bonds by the United States except for the purpose of refinancing any bond which is or has been issued subject to such guarantee of interest. (Jan. 31, 1934, c. 7, 5, 48 Stat. 346.)

§ 993

8 32

Bonds issued under section 992; delivery in payment of certain mortgages.--Any borrower who obtains a loan from a Federal land bank after May 12, 1933, may, at any time after the expiration of five years from the date such loan was made, tender to such bank on any regular installment date, bonds issued under section 992 in an amount not to exceed the unpaid principal of his loan, and the bonds so tendered shall be accepted by the bank at par in payment of any part of such unpaid principal. (July 17, 1916, c. 245, § 32, 39 Stat. 384; May 12, 1933, c. 25, § 21, 48 Stat. 41.)

LIMITATION OF COURT DECISIONS

$ 1011

8 34

Limitation of court decisions respecting validity of provisions.—If any clause, sentence, paragraph, or part of this subchapter or of subchapter

2018

III hereof shall for any reason be adjudged by any
court of competent jurisdiction to be invalid, such
judgment shall not affect, impair, or invalidate the
remainder of said subchapters, but shall be confined
in its operation to the clause, sentence, paragraph,
or part thereof directly involved in the controversy
in which such judgment shall have been rendered.
(July 17, 1916, c. 245, § 34, 39 Stat. 384; Mar. 4,
1923, c. 252, § 2, 42 Stat. 1454.)

AMENDMENTS TO CHAPTER

§ 1012

8 35

Reservation of right to amend.-The right to amend, alter, or repeal this subchapter or subchapter III of this chapter is hereby expressly reserved. (July 17, 1916, c. 245, $ 35, 39 Stat. 384; Mar. 4, 1923, c. 252, § 2, 42 Stat. 1454.)

SUBCHAPTER II-LOANS TO FARMERS BY

LAND BANK COMMISSIONER

8 1016

Loans to farmers by Land Bank Commissioner; provisions governing—(a) Funds available to Commissioner; security for Commissioner's loans.- The Reconstruction Finance Corporation is authorized and directed to allocate and make available to the Land Bank Commissioner the sum of $200,000,000, or so much thereof as may be necessary, to be used for the purpose of making loans as hereinafter provided to any farmer, secured by a first or second mortgage upon the whole or any part of the farm property, real or personal, including crops, of the farmer. (May 12, 1933, c. 25, 8 32, 48 Stat. 48; June 16, 1933, c. 98, § 80 (a), 48 Stat. 273.)

(b) Maximum loan; value of security for loan; valuation of farm property.—The amount of the mortgage given by any farmer, together with all prior mortgages or other evidences of indebtedness secured by such farm property of the farmer, shall not exceed 75 per centum of the normal value thereof, as determined upon an appraisal made pursuant to the preceding subchapter; nor shall a loan in excess of $7,500, be made to any one farmer. For the purposes of this section, farm property may be valued at an amount representing a prudent investment, consistent with community standards and rentals, if (1) the person occupying the property is not entirely dependent upon farm in

§ 1016 come for his livelihood but receives a part of his

income from other dependable sources, and (2) the farm income from the property, together with earnings from other dependable sources ordinarily available in the community to a person operating such property, would be sufficient to support his family, to pay operating expenses and fixed charges, and to discharge the interest and amortization payments on the loan. (May 12, 1933, c. 25, $ 32, 48 Stat. 48; Jan. 31, 1934, c. 7, 8 10, 48 Stat. 347; May 28, 1935, c. 150, $ 32, 49 Stat. 300.)

(c) Provisions to be included in mortgage; interest rate; repayment of principal in installments; maximum terms of loans as affected by character of security; privilege of deferring principal payments during first three years of loan.--Every mortgage made under this section 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 (1) interest on unpaid principal at a rate not to exceed 5 per centum per annum and (2) such payments equal in amount to be applied on principal as will extinguish the debt within an agreed period of not more than ten years or, in the case of a first or second mortgage secured wholly by real property within an agreed period no greater than that for which loans may be made under the preceding, subchapter, from the date the first payment on principal is due: Provided, That during the first three years the loan is in effect payments of interest only may be required if the borrower shall not be in default with respect to any other condition or covenant of his mortgage. (May 12, 1933, c. 25, $ 32, 48 Stat. 48; June 3, 1935, č. 164, § 2 (a), 49 Stat. 313.)

(d) Requirement of waiver by prior lien holder.—No loan shall be made under this section unless the holder of any prior mortgage or instrument of indebtedness secured by such farm property arranges to the satisfaction of the Land Bank Commissioner to limit his right to proceed against the farmer and such farm property for default in payment of principal. (May 12, 1933, c. 25, § 32, 48 Stat. 48; June 16, 1933, c. 98, § 80 (a), 48 Stat. 273.)

(e) Purposes of loans.-Loans may be made under this section for any of the purposes for which Federal land banks are authorized by law to make loans, and for the following additional purpose, and none other: Refinancing, either in connection with

proceedings under chapter VIII of the Bankruptcy Act of July 1, 1898, as amended, or otherwise, any indebtedness, secured or unsecured, of the farmer, or which is secured by a lien on all or any part of the farm property accepted as security for the loan. The provisions of paragraph "Ninth" of section 781 of this chapter, as amended (relating to charges to applicants for loans and borrowers from the Federal land banks), shall, so far as practicable, apply to loans made under this section. (May 12, 1933, c. 25, § 32, 48 Stat. 48; June 11, 1934, c. 446, 48 Stat. 929; June 3, 1935, c. 164, S 2 (b), 49 Stat. 313.)

(f) Definitions; loans to corporations; exceptions.-As used in this section, (i) the term "farmer" means any person who is at the time, or shortly to become, bona fide engaged in farming operations, either personally or through an agent or tenant, or the principal part of whose income is derived from farming operations or livestock raising, and includes a personal representative of a deceased farmer; (2) the term "person" includes an individual or a corporation engaged in the raising of livestock; and (3) the term “corporation” includes any incorporated association; but no such loan shall be made to a corporation (A) unless all the stock of the corporation is owned by individuals themselves personally actually engaged in the raising of livestock on the land 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 number of shares of the stock of the corporation is owned by the individuals personally actually so engaged, 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 directly or through substantial identity of stock ownership) with, a corporation ineligible to procure a loan in the amount applied for. (May 12, 1933, c. 25, $ 32, 48 Stat. 48; June 3, 1935, c. 164, 8 2 (c), 49 Stat. 313.)

(g) Loans by Commissioner on behalf of Federal Farm Mortgage Corporation; loans in cash or bonds; amount available.—Until February 1, 1940, the Land Bank Commissioner shall, in his name, make loans under this section on behalf of the Federal Farm Mortgage Corporation, and may make such loans in cash or in bonds of the corporation, or if acceptable to the borrower, in consolidated farm loan bonds; but no such loans shall be

made by him after February 1, 1940, except for the purpose of refinancing loans previously made by him under this section. As much as may be necessary of the assets of the corporation, including the bonds (and proceeds thereof) issued under section 1020c of this chapter, may be used for the purposes of this section. (May 12, 1933, c. 25, $ 32, 48 Stat. 48; Jan. 31, 1934, c. 7, § 9, 48 Stat. 347; June 3, 1935, c. 164, 8 2 (d), 49 Stat. 314.)

(h) Execution of instruments by Federal land banks; presumption of authority.-Any Federal land bank, when duly authorized by the Land Bank Commissioner and the Federal Farm Mortgage Corporation, shall have the power to execute any instrument relating to any mortgage taken to secure a loan made or to be made under this section, or relating to any property included in any such mortgage, or relating to any property acquired by the Land Bank Commissioner and/or the Federal Farm Mortgage Corporation. Any such instrument heretofore or hereafter executed on behalf of the Land Bank Commissioner and/or the Federal Farm Mortgage Corporation by a Federal land bank, through its duly authorized officers, shall be conclusively presumed to have been duly authorized by the Land Bank Commissioner and the Federal Farm Mortgage Corporation. (May 12, 1933, c. 25, $ 32, 48 Stat. 48; June 3, 1935, c. 164, 82 (), 49 Stat. 314.)

In connection with Commissioner's loans in Puerto Rico, see note * to 8 672 of this chapter.

Commissioner loans on lands in drainage, irrigation, or conservancy districts, see § 773a of this chapter.

§ 1017

Rules and regulations; appointment, employment, and compensation of officers, employees, and agents.-The Land Bank Commissioner is authorized to make such rules and regulations, and to appoint, employ, and fix the compensation of such officers, employees, attorneys, and agents as may be necessary to carry out the purposes of this subchapter and to make the relief contemplated by this subchapter immediately available, without regard to the provisions of other laws applicable to the employment and compensation of officers and employees of the United States: Provided, That no salary or compensation in excess of $10,000 shall be paid to any person employed under the terms of the foregoing section. (May 12, 1933, c. 25, § 33, 48 Stat. 49; June 16, 1933, c. 98, $ 80 (a), 48 Stat. 273.)

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