Show FARMER ABLE TO BORROW ATLESS AT ATLESS LESS INTEREST Workings of New Agricultural al Credit of U. U S. S Are Explained Editors Editor's Note This is another of Df a R series of stories b by staff still writ writers rs of the Associated Press explaining new legislation By Br ROY nOy F. F HENDRICKSON WASHINGTON July 21 The farmer by getting in touch with one of the twelve federal land banks by letter eUer or 01 otherwise now has the way open to borrow more federal money at less interest The amounts run from to 50 Previously there was a tit limit to what one borrower co could ld get Under the federal farm loan act act I If U he is out of debt says sas the thc law with it its recent changes the thc farmer can obtain a loan lom for u up to 50 percent per percent cent of the appraised normal value alue of his land plus 20 per cent of the appraised value of permanent insured in lured cured improvements improvement giving a first mortgage in return The loan must be for one of four purposes which he must state in applying applying ap ap- ap- ap plying for the loan 1 1 Purchase of land for tor agricultural uses 2 2 Purchase of equipment fertilizers ers and livestock necessary for proper prop prop- er and reasonable operation of ot farm land 3 Liquidation of ol indebtedness Incurred In In- Burred for agricultural purposes or incurred prior to January Januar 1 I 1933 4 Continued operation of the land mortgaged MUST l BE APPRAISED Before the loan can be made the farm offered as security must be appraised appraised appraised ap ap- ap- ap praised by a land bank live tive The loan can be obtained directly from the land bank but the farmer can get et it at lower interest if it fL is I handled through a a national farm loan association There are about of these with from a dozen to several hundred members farmer m armer-m in each cacho These indorse the loan and accept responsibility for tor payment To become become be be- come a member a farmer who ho obtains a loan through one is required to subscribe to the associations association's stock in an amount equal to five per cent of ot his loan loaD This stock forms a pool to absorb I losses if members fail to pay loans Joans When a farmer member pays his loan his responsibility ceases he gets back the amount he hc paid for his stock less losses If It necessary he can borrow I money from the land banks 3 as part I I of ot his mortgage l loan a t to subscribe for stock The interest rate where the farmer farm farm- er is a member of an association is 4 41 2 2 1 per cent for five years rears and 5 per percent percent percent cent after that if it the loan is made Inthe in inthe inthe the next two years The interest rate on a direct lo loan n from a land bank is one half of one per cent higher for both periods For For- Forthe the first five years regarded as an emergency period no instalments ments need be paid on the mortgage loans which can run for up to 40 to years Mortgage holders can sell seU their mortgages under the act taking bonds issued by the land banks in return The banks can issue up to in these tax exempt bonds with Interest guaranteed by the government govern govern- ment meat at 4 per cent To get these bonds the mortgage mortgage- holder also aha must apply to the land banks LIMIT IS SET They will allow him no more than SO 50 per cent of ot the value of at the land and 20 per cent of at the improvements for his lien If his mortgage Is for more than that he will have to take a loss I if for less he will have to take that The purpose of ot the provision is that the holder of ol the paper can liquidate li 11 li his claim and the farmer arm r who owes the mortgage holder will then owe the land banks and will get the thc benefit of ot lower interest rates Most mortgages held privately call for tor t 6 to 7 per cent interest So far no bonds have been issued to the thc public but some have been I pledged to the reconstruction corporation corporation corpor corpor- for cash which is being used to buy up mortgages held by closed and restricted banks The twelve federal land banks are areat areat areat at Springfield Massachusetts Baltimore Baltimore Balti more Columbia South Carolina Lou Louisville Is New Orleans St S1 Louis Missouri St SI Paul Omaha Wichita Houston Berkeley California and Spokane 4 |