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As used in this section, the term "person” includes an individual, an incorporated association, and a corporation which is eligible for a loan under sections 771 and 772 of this title. (July 17, 1916, c. 245, 87, 39 Stat. 365; June 3, 1935, c. 164, § 19 (a), (b), 49 Stat. 319.)
12 U.S. C., 8717
F.F. L. Act, 87 Report and affidavit accompanying articles of association.When the articles of association are forwarded to the Federal land bank of the district as provided in sections 711-723 of this title, they shall be accompanied by the written report of the loan committee as required in section 751 of this title, and by an affidavit stating that each of the subscribers is the owner, or is about to become the owner, of farm land qualified under section 771 of this title as the basis of a mortgage loan; that the loan desired by each person is not more than $10,000, nor less than $100, and that the aggregate of the desired loans is not less than $20,000; that said affidavit is accompanied by a subscription to stock in the Federal land bank equal to 5 per centum of the aggregate sum desired on mortgage loans; and that a temporary organization of said association has been formed by the election of a board of directors, a loan committee, and a secretary-treasurer who subscribes to said affidavit, giving his residence and post-office address. (July 17, 1916, c. 245, 87,39 Stat. 365.) See § 771 (Seventh), of this title, for maximum loan which may be made to any one
The maximum limitation contained in the subsection last mentioned has twice been increased by amendments to the original provisions; and in the view of the Farm Credit Administration such amendments operated to increase the limitation stated in $ 717.
12 U.S.C., 8718
F.F. L. Act, 8 7 Investigation of solvency of applicants for incorporation.Upon receipt of such articles of association, with the accompanying affidavit and stock subscription, the directors of said Federal land bank shall send an appraiser to investigate the solvency and character of the applicants and the value of their lands, and shall then determine whether in their judgment a charter should be granted to such association. They shall forward such articles of association and the accompanying affidavit to the Farm Credit Administration with their recommendation. If said recommendation is unfavorable, the charter shall be refused. (July 17, 1916, c. 245, § 7, 39 Stat. 365; Mar. 27, 1933, Ex. Or. 6084.)
12 U.S.C., 8719
F.F.L. Act, 8 7 Grant or refusal of charter; modification. If said recommendation is favorable, the Farm Credit Administration shall thereupon grant a charter to the applicants therefor, designating the territory in which such association may make loans, and shall forward said charter to said applicants through said Federal land bank: Provided, That said Farm Credit Administration may for good cause shown in any case refuse to grant a charter. The boundaries of the territory designated in the charter of any national farm loan association may be readjusted from time to time to meet the farm loan needs of the locality, as determined by the Farm Credit Administration. (July 17, 1916, c. 245, 87, 39 Stat. 365; Mar. 27, 1933, Ex. Or. 6084: Aug. 19, 1937, c. 704, 8 8,50 Stat. 707.)
- an -ra 245, 9.)
12 U.S.C., & 720
F.F.L. Act, 8 7 Authorization to receive funds to be loaned to members.—Upon receipt of its charter such national farm loan association shall be authorized, and empowered to receive from the Federal land bank of the district sums to be loaned to its members under the terms and conditions of this subchapter. (July 17, 1916, c. 245, 87, 39 Stat. 365.)
and еу as
12 U.S.C., 8721
F.F. L. Act, 87 Securing loans for members; subscriptions to stock of land bank as collateral; retirement of stock.—Whenever any national farm loan association shall desire to secure for any member a loan on first mortgage from the Federal land bank of its district it shall subscribe for capital stock of said land bank to the amount of 5 per centum of such loan, such subscriptions to be paid in cash upon the granting of the loan by said land bank. Such capital stock shall be held by said land bank as collateral security for the payment of said loan, but said association shall be paid any dividends accruing and payable on said capital stock while it is outstanding. Such stock may, in the discretion of the directors, and with the approval of the Farm Credit Administration, be paid off at par and retired, and it shall be so paid off and retired upon full payment of the mortgage loan. In such case the national farm loan association shall pay off at par and retire the corresponding shares of its stock which were issued when said land bank stock was issued. (July 17, 1916, c. 245, $ 7, 39 Stat. 365; Mar. 27, 1933, Ex. Or. 6084.)
12 U.S. C., 722
F.F. L. Act, 8 7 Federal land banks; limitation on reduction of capital stock.The capital stock of a Federal land bank shall not be reduced to an amount less than 5 per centum of the principal of the outstanding farm loan bonds issued by it. (July 17, 1916, c. 245, $ 7,39 Stat. 365.) 12 U. S.C., 8723
F.F. L Act, 8 7 Federal land banks; direct loans-(a) Authorization to make direct loans; provisions relative to loans through associations, applicable to direct loans.—Whenever it shall appear to the Land Bank Commissioner that national farm loan associations have not been formed in any locality in the continental United States, or that the farmers residing in the territory covered by the charter of a national farm loan association are unable to apply to the Federal land bank of the district for loans on account of the inability of the bank to accept applications from such association, the Land Bank Commissioner shall authorize said bank to make direct loans to borrowers secured by first mortgages on farm lands situated within any such locality or territory. Except as herein otherwise specifically provided, all provisions of this chapter applicable with respect to loans made through national farm loan associations shall, insofar as practicable, apply with respect to such direct loans, and the Land Bank Commissioner is authorized to make such rules and regulations as he
may deem necessary with respect to such direct loans. (July 17, 1916,
(b) Interest rate. The rate of interest on such direct loans made
(c) Subscription to stock; retirement of stock. Each borrower who obtains a direct loan from a Federal land bank shall subscribe and pay for stock in such bank in the sum of $5 for each $100 or fraction thereof borrowed. Such stock shall be held by such Federal land bank as collateral security for the loan of the borrower and shall participate in all dividends. Upon full payment of the loan such stock shall, if still outstanding, be canceled at par, or, in the event that such stock shall have become impaired, at the estimated value thereof as approved by the Land Bank Commissioner, and the proceeds thereof shall be paid to the borrower. Any borrower's interest in such stock may be transferred or hypothecated, by him or by operation of law, to the Federal Farm Mortgage Corporation. (July 17, 1916, c. 245, 87,39 Stat. 365; Mar. 4, 1933, c. 270, § 1, 47 Stat. 1547; May 12, 1933, c. 25, $ 26, 48 Stat. 44; June 16, 1933, c. 98, 880 (a), 48 Stat. 273; Aug. 19, 1937, c. 704, 8 22,50 Stat. 710.)
(d) Organization of national farm loan association by direct borrowers. Each such borrower may covenant in his mortgage that, whenever there are ten or more borrowers who have obtained from a Federal land bank direct loans under the provisions of this section aggregating not less than $20,000, and who reside in a locality which may, in the opinion of the Land Bank Commissioner, be conveniently covered by the charter of and served by a national farm loan association, he will unite with such other borrowers to form a national farm loan association. Such borrowers shall organize the association subject to the requirements and the conditions specified in sections 711-723, so far as the same may be applicable, and in accordance with rules and regulations of the Land Bank Commissioner. As soon as the organization of the association has been approved by the Land Bank Commissioner, the stock in the Federal land bank held by each of the members of such association shall be canceled at par, and in lieu thereof the bank shall issue in the name of the association an equal amount of stock in said bank, which stock shall be held by said bank as collateral security as provided in sections 711-723 with respect to other loans through national farm loan associations. Thereupon there shall be issued to each such member an amount of capital stock in the association equal to the amount which he previously held in said bank, which stock shall be held by said association as collateral security as provided in section 733 of this title. The board of directors of said association shall adopt a resolutiton authorizing and directing its secretary-treasurer on behalf of said association to endorse, and thereby become liable for the payment of, the mortgages taken from its charter members by the Federal land bank. When it shall appear to the satisfaction of the Land Bank Commissioner that all the foregoing conditions have been complied with, and upon the granting of
the charter by the Land Bank Commissioner, the interest rate paid by each charter member of such association whose loan is in good standing shall, beginning with his next regular installment date, be reduced to the rate of interest paid by borrowers on new loans made through national farm loan associations in the same farm credit district at the time the said loan was made to such charter member. (July 17, 1916, c. 245, § 7, 39 Stat. 365; Mar. 4, 1933, c. 270, § 1, 47 Stat. 1547; May 12, 1933, c. 25, $ 26, 48 Stat. 44; June 16, 1933, c. 98, $ 80 (a), 48 Stat. 273; Aug. 19, 1937, c. 704, $ 5 (a), 50 Stat. 710.)
(e) Charges to applicants and borrowers.-Charges to be paid by applicants for direct loans from a Federal land bank shall not exceed amounts to be fixed by the Land Bank Commissioner and shall in no case exceed the charges which may be made to applicants for loans and borrowers through national farm loan associations under the provisions of sections 761 and 781 of this title. (July 17, 1916, c. 245, $ 7,39 Stat. 365; Mar. 4, 1933, c. 270, § 1, 47 Stat. 1547; May 12, 1933, Č. 25, § 26, 48 Stat. 44; June 16, 1933, c. 98, § 80 (a), 48 Stat. 273.)
(f) Option to make loan in bonds.- Direct loans made under subsections (a)-(e) hereof, may, at the option of the Federal land bank, be made in bonds of the Federal Farm Mortgage Corporation. (Jan. 31, 1934, c. 7, § 6, 48 Stat. 346.) 12 U.S.C., 8724
Loans when association's stock is impaired-(a) Authorization; interest; admission to membership of borrowers under section 723.—Whenever it shall appear that the capital stock of a national farm loan association is impaired, the Farm Credit Administration may
authorize the Federal land bank of the district in which such association is located to make loans to applicants through such association subject to the requirements and conditions specified for direct loans in section 723 of this title, except as otherwise specifically provided in this section, and may authorize such association to elect to membership borrowers having loans made pursuant to said section on lands situated within the chartered territory of the association. Borrowers admitted to membership in the association pursuant hereto shall be entitled to vote and hold office in the association and the rate of interest on their loans shall be one-fourth of 1 per centum per annum less than the rate of interest provided at such time for direct loans. The association shall endorse all such mortgage loans but it shall not become liable therefor except as hereinafter provided. (Aug. 19, 1937, c. 704, § 25 (b),50 Stat. 711.)
(b) Effect of admission of ten borrowers with loans in good standing aggregating $20,000.-When there are ten or more borrowers admitted to membership in an association pursuant to this section whose loans are in good standing, as defined by the Farm Credit Administration, and aggregate not less than $20,000 :
First. Liability of association and members. The association shall become liable for the payment of said loans: Provided, however, That, any other provisions of law to the contrary notwithstanding, the shareholders who have become members pursuant to this section shall not be held responsible, through the amount paid in and represented by their shares or otherwise, for any contracts, debts, or engagements of the association entered into before the date on which the first member
was admitted to the association pursuant to this section and the shareholders of such association who were members prior to said date shall not be held responsible, through the amount paid in and represented by their shares or otherwise, for any mortgages endorsed by such association on or after said date, but this provision shall not be construed to relieve any other liability with respect to stock held by shareholders who were members prior to said date.
Second. Reduction of interest rate. The interest rate paid by each such borrower on each such loan shall, beginning with the next regular installment date, be reduced one-fourth of 1 per centum per annum.
Third. Exchange of Federal land bank stock for association stock.The stock in the Federal land bank held by each of said borrowers shall be exchanged for association stock in the manner provided for in section 723 (d) of this title.
Fourth. Admission of new members.--The association may thereafter admit new members, endorse their loans, and become liable for the payment of such loans as provided in paragraph "First” of this section.
Fifth Election of loan committee.--At the next annual meeting of stockholders, and thereafter, the loan committee of such association may be elected by the members who become stockholders pursuant to this section and any loan committee so elected shall have the powers specified for loan committees elected as provided in section 747 of this title: Provided, however, That in the event such stockholders fail to elect the loan committee, new members shall be admitted to the association as otherwise provided in this chapter.
Sixth. Records and accounts; dividends. In accordance with rules and regulations prescribed by the Farm Credit Administration, the association shall maintain separate capital-stock records; shall keep all capital losses or gains, reserves (including legal reserves), and dividends received from the Federal land bank on stock owned by the association in connection with loans for which it becomes liable as provided in this section separate and apart from capital losses or gains, reserves (including legal reserves), and dividends received from the Federal land bank on stock owned by the association in connection with other loans of the association; and shall segregate any undivided profits of the association resulting from its business operations in like manner when so required by rules and regulations of the Farm Credit Administration. Subject to the other provisions of this chapter with respect to the declaration of dividends, dividends may be declared exclusively on association stock owned by borrowers with loans for which the association becomes liable as provided in this section or exclusively on association stock owned by borrowers with other loans through the association. (Aug. 19, 1937, c. 704, $ 25 (b), 50 Stat. 711.)
(c) Same; effect of loan not in good standing. If the loan of any borrower who was admitted to membership pursuant to this section is not in good standing at the time when there are ten or more borrowers with loans aggregating not less than $20,000 which are in good standing, the provisions of paragraphs “First”, “Second”, and “Third” of this section shall be applicable to his loan at such time as it shall be placed in good standing. (Aug. 19, 1937, c. 704, § 25 (b), 50 Stat. 711.)
(d) Removal of impairment of stock.-If and when all impairment is removed in the stock owned by shareholders with loans which