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in an association that is a party to the agreement and shall be a bona fide resident of the territory within which such association is authorized to do business: And provided further, That no such agreement shall provide for a term of office in excess of three years for any member of such board. The number of members of the common board of directors shall be specified in the agreement and shall be five or more. The agreement may provide that any director may be elected by the shareholders of one or more of the associations which are parties to the agreement; that in the balloting for any director an association may vote at a separate meeting of its shareholders or at a joint meeting with the shareholders of any other association or associations participating in the election of the director; and that the candidate receiving the highest aggregate number of votes at such meeting or meetings shall be declared elected. Whenever two or more national farm loan associations have entered into such an agreement, the members of the common board of directors provided for in the agreement shall be ex officio the members of the board of directors of each association that is a party to the agreement, any provisions of this chapter to the contrary notwithstanding. (July 17, 1916, ch. 245, § 9 (par.), as added Aug. 19, 1937, ch. 704, § 25 (a), 50 Stat. 710.)

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12 U. S. C. $ 747

F. F. L. Act & 9

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Same; transfer of powers to loan committee

Whenever a national farm loan association has entered into such an agreement, the power of approving applications for loans through the association and the power of admitting persons to membership in the association shall be vested in the loan committee of the association in lieu of being vested in its board of directors. The loan committee of any such association shall be elected annually by the shareholders of the association, instead of by its board of directors, and the shareholders shall in addition annually elect two alternates to serve as members of the loan committee at such times as regular members may be absent or disqualified. (July 17, 1916, ch. 245, $ 9 (par.), as added Aug. 19, 1937, ch. 704, § 25 (a), 50 Stat. 711.)

Appraisal for Farm Loans

12 U. S. C. $ 751

F. F. L. Act $ 10

Investigation by loan committee; report
by appraiser; report and approval by committee;
notification to applicant

Whenever an application for a mortgage loan is made to a national farm loan association, the loan committee provided for in section 712 of this title shall forthwith make, or cause to be made, such investigation

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as it may deem necessary as to the character and solvency of the applicant, and the sufficiency of the security offered. The committee may request a report on the value of the security by a land bank appraiser appointed under the authority of section 656 of this title, in which event such an appraiser shall investigate and make a written report to the association upon the security offered. The committee shall cause written report to be made of the results of such investigation or investigations as it has required to be made and shall, if it concurs in such report, approve the same in writing. No loan shall be made unless the report of the committee is favorable. After the investigation required in this section has been made, the association has requested and received a report upon the value of the security by a land bank appraiser, and the loan committee has reached an agreement as to the amount and terms of the loan which may be offered to the applicant, if such amount is not in excess of 65 per centum of the normal value of the security offered as determined by said appraiser the secretary-treasurer may notify the applicant of the amount and terms of the loan approved by the loan committee: Provided, That any such notice shall contain a statement that the amount and terms of the loan offered to the applicant are subject to and conditioned upon subsequent approval or disapproval by the Federal land bank. (July 17, 1916, ch. 245, 10, 39 Stat. 369; Apr. 20, 1920, ch. 154, § 2, 41 Stat. 570; June 30, 1945, ch. 204, § 2, 59 Stat. 266.)

12 U. S. C. $ 752

F. F. L. Act $ 10

Submission of loan application and required
reports to land bank; consideration by bank

The written report required in section 751 of this title, together with any report made by a land bank appraiser, shall be submitted to the Federal land bank with the application for the loan, and the land bank shall examine said written report when it passes on the loan application which it accompanies, but it shall not be bound by the value placed upon the property by the loan committee. (July 17, 1916, ch. 245, § 10, 39 Stat. 369; Apr. 20, 1920, ch. 154, § 2, 41 Stat. 570; June 30, 1945, ch. 204, § 2,59 Stat. 266.)

12 U. S. C. $ 753

F. F. L. Act § 10

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 application to one or more of the land bank appraisers appointed under the authority of section 656 of this title, and such appraiser or appraisers shall investigate and make a written report on the security offered for said loan: Provided, That if

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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.)

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12 U. S. C. $ 754

F. F. L. Act $ 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, ch. 245, § 10, 39 Stat. 369; Ex. Ord. No. 6084, Mar. 27, 1933.)

12 U. S. C. $ 755

F. F. L. Act § 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, ch. 245, § 10, 39 Stat. 369; Ex. Ord. No. 6084, Mar. 27, 1933.)

12 U. S. C. $ 756

F. F. L. Act § 10

Borrower ineligibile 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 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 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.)

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12 U. S. C. $ 757

F. F. L. Act § 10

Appraisals by land bank designees;
report on security by land bank appraisers;
loan as collateral

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 appointed under the authority of sections 651, 656, and 658–664 of

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

F. F. L. Act $ 11

Enumerated powers

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

F. F. L. Act § 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 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

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