a land bank appraiser has made a report on said security to the national farm loan association, the Federal land bank need not request an additional report. No such loan shall be made by said land bank unless the written report of the land bank appraiser is favorable. (July 17, 1916, ch. 245, § 10, 39 Stat. 369; June 30, 1945, ch. 204, § 2, 59 Stat. 266.)

12 U. S. C. § 754

Forms for reports

F. F. L. Act § 10

Forms for appraisal reports for farm loan associations and land banks shall be prescribed by the Farm Credit Administration. (July 17, 1916, ch. 245, § 10, 39 Stat. 369; Ex. Ord. No. 6084, Mar. 27, 1933.)

12 U. S. C. § 755

Examinations by land bank appraisers

as to farm loan bonds and first mortgages

F. F. L. Act § 10

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, ch. 245, § 10, 39 Stat. 369; Ex. Ord. No. 6084, Mar. 27, 1933.) 12 U. S. C. § 756

Borrower ineligibile as land bank appraiser; association director or committeeman disqualified by interest in loan

F. F. L. Act § 10

No borrower under this subchapter shall be eligible as an appraiser under sections 751-756 of this title, 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 indirectly, 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, ch. 245, § 10, 39 Stat. 369.)

12 U. S. C. § 757

Appraisals by land bank designees;

report on security by land bank appraisers; loan as collateral

F. F. L. Act § 10

Notwithstanding any other provision of this Act to the contrary, subject to the approval of the Farm Credit Administration, the investigation and the written report or reports on the value of the security offered for a Federal land bank loan, which otherwise are required by this section and sections 751-756 of this title to be made by land bank appraisers

this title, may be made, in accordance with appraisal standards prescribed by the Farm Credit Administration, by any person (including a person who is secretary- treasurer of a national farm loan association) designated so to do by the Federal land bank of the district; a Federal land bank is authorized to make a loan, if otherwise authorized, on the basis of such an investigation and report by a person so designated; and a loan so made shall be eligible as collateral for farm loan bonds under sections 851-857 of this title, if otherwise qualified thereunder: Provided, That, within one year, the land bank shall obtain a written report on the security for the loan by a land bank appraiser appointed under sections 651, 656, and 658-664 of this title, in terms and form prescribed by the Farm Credit Administration, and such a loan shall be eligible as collateral for farm loan bonds thereafter only if such report by a land bank appraiser establishes that the security meets the standards prescribed by the Farm Credit Administration for a land bank loan, and in no event shall any such loan thereafter be carried as such collateral for bonds at more than 65 per centum of the normal value of the security as determined by such land bank appraiser. Except as otherwise specifically provided in this section, all provisions of this Act relating to loans made through national farm loan associations shall, insofar as applicable, apply with respect to loans made on such investigations and written reports by such designated persons. (July 17, 1916, ch. 245, § 10 (pt.), as added Aug. 11, 1955, ch. 785, title III, § 303, 69 Stat. 664.)

Powers of National Farm Loan Associations

12 U. S. C. § 761

Enumerated powers

F. F. L. Act § 11

Every national farm loan association shall have power:

First. Indorsing mortgages.-To indorse, and thereby become liable for the payment of, mortgages taken from its shareholders by the Federal land bank of its district.

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 title.

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.

Fourth. Issuing interest-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.

Fifth. Collections by one association for another.-Whenever a Federal land bank shall have empowered any national farm loan association of its district to collect and pay over to said bank the dues, interest, amortization installments, and other sums payable under the terms, conditions, and covenants of the mortgages taken from its shareholders, such association may, with the approval of said bank, enter into an agreement with another association operating in the same or adjacent territory to make such collections, for and on behalf of the association thus empowered to do so, on any or all of said loans, and immediately pay the amounts so collected to said land bank. Such agreements shall be made upon such terms and conditions and for such consideration as may be approved by the Farm Credit Administration. (July 17, 1916, ch. 245, § 11, 39 Stat. 369; Apr. 20, 1920, ch. 154, § 3, 41 Stat. 570; Ex. Ord. No. 6084, Mar. 27, 1933; Aug. 19, 1937, ch. 704, § 25 (c), 50 Stat. 713.)

Restrictions on Loans of Federal Land Banks
Based on First Mortgages

12 U. S. C. § 771

Restrictions enumerated

F. F. L. Act § 12

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 farm credit district in which the bank is situated.

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 farmloan 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 extinguish the debt within an agreed period, not less than five years nor more than forty years: Provided, 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 under the rules and regulations of the Farm Credit Administration any land bank may agree, at the time a loan is made or thereafter, that the mortgagor may make such payments or portions of payments in advance or pay the entire principal of such loan during the first five years the loan is in effect: 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 subchapter.

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.

Fourth. Purposes of loans. Such loans may be made for general agricultural purposes and other requirements of the owner of the land mortgaged, under rules and regulations of the Farm Credit Administration.

Fifth. Limitation on amount of loans; appraisal; reappraisal.—-No such loan shall exceed 65 per centum of the normal value of the farm mortgaged, said value to be ascertained by appraisal, as provided in sections 751-756 of this title. In making said appraisal the value of the farm for agricultural purposes shall be the basis of appraisal and the normal earning power of said farm shall be a principal factor; and, consistent with community standards, the appraisal may also reflect home advantages, and the availability to a typical operator of the property of earnings from other dependable sources to supplement the normal earning power of the farm.

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. In determining the earning power of land used for the raising 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 State, 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 availability 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.

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 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 assume the mortgage and stock interests of the deceased. As used in this paragraph (1) the term "person" includes an individual or a corporation engaged in farming operations; and (2) 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 farming operations on the farm to be mortgaged as security for the loan, except in a case where the Farm Credit Administration 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.

Seventh. Maximum and minimum of loans.-The amount of loans to any one borrower shall in no case exceed a maximum of $200,000, but loans to any one borrower shall not exceed $100,000 unless approved by the Farm Credit Administration, 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.

Eighth. Form of applications for loans.—Every applicant for a loan under the terms of this subchapter shall make application on a form