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Show ( ft The Federal Farm Loan Act Synopsis of Its Salient Features Prepared by H. M. Hanson, Secretary-Treasurer Farm Mortgage Bankers' Association of America FEDERAL FARM LOAN ACT Passed by the House of Representatives Representa-tives and the United States Sen-at Sen-at June 27 and 28, 1916, Respectively. 'Bignid by the President July 17, 1916. 3.-. .Provides for a federal land bank system In tlie continental United States (exclusive of Alaska), dividing tlie count! y Into twelve land bank districts composed of whole states. 3. The system Is operated as a bureau bu-reau lit tlie United states treasury department de-partment and supervised by tlie federal fed-eral farm loan board. The secretary of Die treasury Is ex-ofllclo chairman of tie board with four other members appointed by the president for eight years ut an annual salary of $10,000. One member is designated farm loan commissioner and is the active executive execu-tive ollicer. 3 Appointees of Board: (a) Farm loan registrar for each laud bunk district dis-trict and (b) One or more land appraisers for each land bank district. Salaries paid by federal land bank or joint stock land bank for which Ihey act. (c) Land bank examiners; salaries paid by the United Slates. (0 Attorneys, experts, assistants and other employees to be paid by the United Slates. 17. Powers of the Board: (a) To organize and charter federal land banks, Joint stock land banks and national na-tional farm loan associations. (b) To review and alter the rate of Interest to be charged by federal land banks for loans. (c) To approve or reject any or all loans for bond issue and to grant or refuse nny specific issue of farm loan bonds of federal land banks and joint stock land banks. (d) To regulate charges for appraisal, ap-praisal, examining titles and recording. record-ing. (e) To appraise land securing mortgages mort-gages for bond issue. (f) To exercise general supervisory -authority over the federal land banks, farm loan associations und joint stock land banks. 30. The farm loaQ commissioner ' shall examine the laws of every state and if on examination the laws of any state are shown to afford insufficient protection to holders, its mortgages shall be declared Ineligible under this act during the continuance of the laws in question. 32. The secretary of the treasury Is authorized to deposit United States funds In federal land banks at current j government rates of interest, tlie aggregate ag-gregate of such funds not to exceed $6,000,000 at any one time. FEDERAL FARM LOAN BANKS ORGANIZATION. Section 4. .One in each land bank district. Branches permitted within Its district. Officers: President, vice .president, secretary and treasurer; directors; di-rectors; six representatives of farm loan associations and three representing represent-ing the public Interest. Attorneys, assistants, as-sistants, experts and other employees. All salaries fixed by farm loan board and paid by bank. Subject to semiannual semian-nual examinations by land bank exam- . Iner. CAPITAL STOCK. Sec. 5. $7o0,000. May be owned by Individuals, firms, corporations and the United States and state governments. .Sec. 5. Shares, $.") each. 'Sec. 5. All stock remaining unsubscribed unsub-scribed 30 'days after subscription books are opened Shall be subscribed by the :United States and thereafter only the United States government and borrowers may acquire shares of stock. Sec. 5. United States government not to participate In dividends. All other stockholders share dividends equally. Sec. 5. The original capital stock ahull be gradually retired after the stock held by farm loan associations shall amount to S750.000. Sec. 5. Not less than 5 per cent of capital shall be invested In United States government bonds. POWERS. Sec. 13. To buy first farm mortgages mort-gages within Its district and to issue and sell farm loan bonds. Sec. 13. To receive from farm loan associations interest and amortization , payments on mortgages and farm loan bonds. Sec. 13. To acquire and dispose of real and personal property necessary for the convenient transaction of business; busi-ness; and land taken in satisfaction of debts or purchased under judgments, decrees or mortgages held by It. Shall oiot hold title exceeding five years. Sec. 13. To accept deposits of securities se-curities or current funds from member associations but pay no Interest thereon. there-on. Sec. 13. To borrow money on security se-curity and pay interest thereon. Sec. 13. To buy and sell United States bonds. Sec. 13. To appraise lands for bond lssue'and to charge applicants and borrowers bor-rowers the cost of land appraisal, examining ex-amining titles, recording and other ie-.gal ie-.gal fees, said fees (o be paid la Cfculi or be made part of loan and paid In amortization payments. Sec. 14. To accept mortgages only from farm loan associations and approved ap-proved agents. Sec. 14. To accept deposits of current cur-rent funds only from Its stockholders. Sec. 0. To become financial agents of United States government and depository de-pository of public money. Public deposits de-posits cannot be Invested in mortgages mort-gages or farm loan bonds. Sec. 13. To deposit its securities and current funds subject to check with any member bnnk of the federal reserve system and to receive interest thereon. BONDS. Sec. 20. Issued In series of $30,000 or more, in denominations of $25, $50, $100, $500 and $1,000. Sec. 20. May bear a maximum rate of 5 per cent Interest per annum. Sec. 19. Mortgages and United States government bonds equal In amount to the farm loan bonds issued are retained as collateral security by the land bank registrar. Sec. 14. The outstanding farm loan bonds shall not exceed 20 times the capital and surplus. Sec. 21. Shall be guaranteed by bank of Issue and all other federal land banks. Sec. 17. No Issue Is authorized without the approval of the farm loan board. Sec. 22. Substitution of mortgages and United States government bonds held as collateral to farm loan bonds is permitted. TAXATION. Sec. 2G. The capital stock, surplus, sur-plus, mortgages and farm loan bonds and all income derived therefrom are exempt from federal, state, municipal and local taxation. Sec. 26. Real property taken and held under the provisions of sections 11 and 13 is not tax exempt. AGENTS. Sec. 15. Incorporated banks, trust companies, mortgage companies or chnrtered savings institutions may act as agents for federal land banks if no farm loan association has been formed In a given locality after one year. Sec. 15. Borrowers securing loans through agents are required to subscribe sub-scribe 5 per cent of the loan to the capital of the federal land bank. Sec. 15. Agents are entitled to a commission of one-half of 1 per cent per annum on unpaid principal of each loan they negotiate and the bank shall pay agent for actual expenses for appraising ap-praising land, examining titles, executing exe-cuting and recording the mortgage papers pa-pers which shall be added to the face of the loan. Sec. 15. Agents shall indorse and become liable for the payment of the loans they negotiate and the aggregate aggre-gate unpaid principal of such loans shall not exceed ten times the agent's capital and surplus. Sec. 15. Agents are required to make good any default within 30 days after notice. Sec. 15. All collections made shall be remitted without charge. SPECIAL PROVISIONS. Sec. 22. Amortization and ether payments constitute a trust fund to be invested as follows : (a) To pay off maturing farm loan bond Issues. (b) To purchase farm loan bonds. (c) To lend on first farm mortgages within the district. (d) To buy United States government govern-ment bonds. Sec. 23. Reserve and dividends: No limit is placed on dividend distributions after a reserve account has been built up from earnings equal to 20 per cent of the capital stock and after 5 per cent of the net earnings annually thereafter are added to the reserve account. ac-count. Sec. 23. Reserve funds to be Invested Invest-ed as prescribed by the federal farm loan board. Sec. 27. Farm loan bonds are lawful Investments for fiduciary and trust funds and security for all public deposits. de-posits. Sec. 27. Federal reserve bank may buy and sell farm loan bonds. Sec. 20. Provision is made for dissolution dis-solution and the appointment of a receiver. re-ceiver. Sec. 14. No commission or charge not specifically authorized In this act shall be demanded or received. NATIONAL FARM LOAN ASSOCIATIONS ASSOCI-ATIONS ORGANIZATION. Section 7. Ten farm owners desiring desir-ing loans aggregating $20,000 or more may form such an association. Sec. 7. Its affairs are administered by five directors, Including president, vice president and a loan committee of three serving without compensation, and by a secretary treasurer with salary sal-ary fixed by the farm loan board and paid by the association. CAPITAL STOCK. Sec. 8. Shares, $5 each ; (!)) carry-lug carry-lug double liability; (8) may be owned only by borrowers who are required to subscribe 5 per cent of their loan in the capital stock of the association 1 which In turn subscribes an equal amount of stock la the federal land bank. Sec. 8. Shares are paid for In cash or (9) the amount may be added to the face of the loan and retired in amortization amorti-zation payments at par. In such case the face of the loan shall not exceed the 50 per cent and 20 per cent limitation. lim-itation. Sec. 7. Assessment on shares may be levied for operating expenses If funds are not otherwise available. POWERS. Sec. 10. To appraise land for mortgage mort-gage through Its loan committee of three. Sec. 11. To Indorse and become liable for the mortgages of Its shareholders. share-holders. Sec. 11. To receive and deliver the proceeds ef loans to borrowers. Sec. 11.- To acquire and dispose of property necessary for the convenient transaction of Its business. Sec. 11. To issue certificates of deposit de-posit for not longer than one year and to pay 4 per cent interest thereon, convertible into farm loan bonds at the federal land bank of its district. Sec. 7. To receive and transmit to the federal land bank payments of Interest In-terest and principal and amortization payments. LOANS. Sec. 12. Loans shall be secured by first mortgages on land within Its land bank district. Section 12. To run from 5 to 40 years with amortization and with additional ad-ditional optional prepayments after five years. Sec. 12. Interest on loans shallnot exceed 6 per cent per annum on the unpaid principal. Sec. 12. Borrowers shall pay 8 per cent simple Interest on defaulted payments. Sec. 12. Loans may be made for the following purposes and for no other under penalty : (a) To purchase land for agricultural agricul-tural purposes. (b) To purchase equipment, fertilizer fertil-izer and live stock for the operation of the mortgaged farm. (c) To provide buildings and for the Improvement of farm lands. (d) To pay debts existing at time of organization of the first Etional farm loan association within the county. Sec. 12. Maximum loan $10,000; minimum loan $100. Sec. 12. No loan shall exceed 50 per cent of the value of the land mortgaged and 20 per cent of the permanent insured in-sured improvements. Sec. 12. No loans shall be made to any person who is not at the time or shortly to become engaged in the cultivation culti-vation of the farm mortgaged. Note. All applications for loans originate with the national farm loan associations or agents and all loans are made and closed by the federal land banks. This does not apply to Joint stock land banks. TAXATION. Sec. 26. Same as applies to federal land banks. SPECIAL PROVISIONS. Sec. 9. Associations may retain as commission one-eighth of 1 per cent semiannually from interest payments on the unpaid principal of loans. Sec. 9. Associations may borrow from federal land banks at 6 per cent annual Interest up to one-fourth of Its total stockholdings in said bank. Sec. 24. Reserves and dividends: No limit is placed on dividend distributions distri-butions after the reserve account, built up from net earnings equals 20 per cent of the capital stock and after 2 per cent of the net earnings annually thereafter are added to the reserve account. ac-count. Sec. 25. Defaults must be made good within 30 days after notice. Sec. 29. -Provision is made for dissolution dis-solution and the appointment of a re-cei re-cei ver. JOINT STOCK LAND BANKS ORGANIZATION. Section 16. A private corporation subject to the requirements under this act which may be formed by ten or more persons with a board of directors of five or more. Sec. 16. May operate within the state in which its principal office is located lo-cated and within some one contingu-ous contingu-ous state. Sec. 28. Subject to semiannual examinations ex-aminations by the federal land bank examiner. CAPITAL STOCK. Sec. 16. $230,000 minimum. Sec. 16. Double liability of shareholders. share-holders. Sec. 16. The United States government govern-ment shall own none of the shares of stock. Sec. 16. No farm loan bonds can he issued until the capital stock Is fully paid, although the hank may begin business when one-half of the capital is subscribed and paid in cash. POWERS. Sec. 16. To lend money on farm mortgage security. Sec. 16. To Issue and sell farm loan bonds. Sec. 16. To issue farm loan bonds up to 15 times the amount of its capital capi-tal and surplus. Sec. 10. Except as otherwise provided pro-vided it has the powers of and is subject sub-ject to the restrictions imposed on federal land banks. PRIVILEGES. Sec. 16. May lend more Ihan $10,000 to any one borrower, but not beyond 50 per cent of the value of the land und 20 per cent of the permanent Insured In-sured Improvements. Sec. 16. Loan art not restricted to the purposes prescribed for national farm loan associations. Sec. 16. Loans may be mad t farm owners regardless of whether engaged en-gaged in cultivation of the land mortgaged mort-gaged or not. Sec. 16. Interest on loans shall not exceed more than 1 per cent, the Interest In-terest rate established for its last series of bonds, nor more than 6 per cent in any case. Sec. 16. Commissions or other charges not specifically authorized by this act shall not be demanded or received. re-ceived. BONDS. Sec. 20. Issued in series of $30,000 or more, in denominations of $25, $50, $100, $500 and $1,000. Sec. 20. May bear maximum rate of 5 per cent interest per annum. Sec. 16. Bonds shall be so engraved as to be readily distinguishable from federal laud bank bonds. Sec. 19. Mortgages and United States government bonds equal la amount to the farm loan bonds issued are retained as collateral security by the land bank registrar. Sec. 17. No issue is authorized without with-out the approval of tlie farm loan board. Sec. 27. Federal reserve banks are authorized to buy and sell the bonds of Joint stock land banks. Sec. 22. Substitution of mortgages and United States government bonds held as collateral to farm loan bonds Is permitted. Sec. 27. Its bonds are lawful investments invest-ments for fiduciary and trust funds and security for all public deposits. TAXATION. Sec. 26. The capital stock, surplus and earnings are subject to tlie taxing powers of the state. Sec. 26. Its mortgages executed under un-der this act and Its farm loan bonds and all income derived therefrom are exempt from federal, state and municipal munic-ipal and local taxation. Sec. 26. Real property taken and held under the provisions of sections 11 and 13 Is not tax exempt. SPECIAL PROVISIONS. Sec. 6. Joint stock land banks are made public depositories and financial agents of the United States government. govern-ment. Sec. 6. Public deposits cannot be Invested In-vested In farm mortgages or in farm loan bonds. Sec. 16. Rates of interest for loans under 6 per cent are not subject to review or alteration by the farm loan board. Sec. 13. Shall receive no deposits except public deposits. Sec. 22. Amortization and other payments constitute a trust fund to be Invested as follows: (a) To pay off Its maturing farm loan bonds. (b) To purchase farm loan bonds. (c) To lend on first mortgages within with-in its prescribed field. (d) To purchase United States government gov-ernment bonds. Sec. 23. Reserve and dividends provided pro-vided for as in the case of federal land banks. Sec. 29. Provision Is made for dissolution dis-solution and the appointment of a receiver. |