| Show jrz s izez I 1 can al the federal farm loan act vw synopsis of its salient features prepared re d by H M hanson secretary treasurer farm rm mortgage bankers association of america cs W FEDERAL FARM LOAN ACT passed pared by the house home of Re presenta and tho the united states sen ate juno june 27 and 28 1916 respectively signed by the Preil dent t july 17 1916 3 provides for a federal land bank system lu in the continental united states exclusive of alaska dividing the country into twelve land bank districts composed of whole states 8 3 the system la Is operated as a bureau burean of 0 the united states treasury department part ment and supervised by the federal farm loan board the secretary of the treasury is ex officio chairman of the board with four other members appointed by the president for eight years ot at art an annual salary of one member to Is designated farm loan commissioner and Is the active executive officer 3 appointees of board a farm loan registrar for each land bank district 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 they act acl c land babli examiners salaries paid by the united states d attorneys experts assistants and other employees to be paid by the united states 17 powers power of the board a to organize and charter federal land banks joint stock land banks and national 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 tor for bond issue and to grant or refuse any specific issue of farm loan bonds of federal land banks and joint stock block land bunks blinks d to regulate charges for appraisal pral pra isal sal examining titles and recording e to appraise land securing mortgages for bond issue f to exercise general supervisory authority tho rity over the federal land banks farm loan associations and joint stock land banks I 1 I 1 80 30 the farm loan commissioner shall examine the laws of every state and if on examination the laws of any state tire 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 government rates of interest the aggregate of such funds not to exceed 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 six representatives of farm loan associations aud three representing the public interest attorneys assistants si experts and other employees all salaries fixed by farm loan board and paid by bank subject to semiannual examinations by land bank examiner ner CAPITAL STOCK sec 5 may be owned by individuals firms arms corporations and the united states and state governments sec 5 shares 5 each see sec 6 5 all stock remaining SO 30 days das 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 shall be gradually retired after the stock held by farm loan associations shall amount to see sec 5 not less than 5 per cent of capital shall be invested in united states government bonds POWERS sec IS 13 to buy first farm mortgages within its district and to issue and sell farm loan bonds sec 13 to receive from farm loan associations interest and amortization payments lay ments on mortgages mortgage sand and farm loan bonds bond sec IS 13 to acquire and dispose of real and personal property necessary tor for the convenient transaction of business anil land taken in satisfaction of debts or purchased under judgments decrees or mortgages held by lyshall it lt shall opt hold title exceeding five years yeara sec 13 to Jacc accept ept dep deposits osith of securities curi ties or current funds from member associations but pay no interest there G gil see sec 33 13 to borrow money on security e and pay interest thereon sec 13 to buy and sell ell united states slates bonds sec 13 to appraise lands for bond issue and to charge applicants and borrowers the cost of land appraisal examining titles recording and other legal fees said fees to ha be paid in cash or be made part of loan and paid in amortization payments see sec 14 to accept mortgages only from farm loan associations and approved agents sec 14 to accept deposits of current funda only from its stockholders sec 0 0 to become financial agents of united states government and depository tory of public money public deposits cannot be invested in mortgages or farm loan bonds sec 13 to deposit its securities and current funds subject to check with any member bank of the federal reserve system and to receive interest thereon BONDS sec 20 issued in series of or more in denominations of 25 23 50 and 1000 see sec 20 may bear a maximum rate arte of 5 per cent interest per annum sec 10 19 mortgages and united sties 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 laud 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 see sec 20 26 the capital stock surplus mortgages and farm loan bonds and all income derived are exempt from federal state municipal and local taxation see sec 23 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 chartered savings institutions may act as agents for federal land banks it 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 5 per cent of the loan to the capital of the federal land bank sec 15 agents are entitled to a commis commission slon of one half of I 1 per cent per annum on unpaid principal of each loan they negotiate and the bank shall pay agent for actual expenses expenses for appraising land examining titles executing and recording the mortgage papers which shall be added to the face of the loan see 15 agents shall indorse and become liable for the payment of the loans they negotiate and the aggregate unpaid principal of such euch loans shall not exceed ten times the agents capital and surplus see sec 15 agents are ard required to make good any default within 30 days after notice see sec 15 all collections made shall be remitted without charge SPECIAL provisions see sec 22 amortization and other payments constitute a trust fund to be invested as follows a to pay off maturing farm loan hond issues b to purchase farm loan load bonds c to lend on first fa within the district d to buy united states government bonds see sec 23 reserve and dividends no limit is Is placed on dividend distributions otter a reserve account has been built up from earnings equal to 20 per cent of f the capital stock and after 8 5 per cent of the net earnings annually thereafter pre ere added to the res reserve account sec 23 reserve funds to reinvest be invested as prescribed by the federal farm loan board see sec 27 farm loan bonds are lawful investments for fiduciary and trust funds and security tor for all public deposits sec 27 r F ederae reserve vank dank may buy and sell farria loan bonds sec ec 29 I 1 revision la Is made for dissolution and the appointment of a receiver see sec 14 no commission or charge not specifically authorized in this net act shall be demanded or received NATIONAL FARM LOAN associations organization section ai 7 ten farm owners desiring loans aggregating armore 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 fixed by the farm loan board and paid by the association CAPITAL STOCK sec 8 shares 5 each 9 carry I 1 ing double liability 8 may be owned only by borrowers borroNi is who are required to subi subscribe cribe 6 5 per cent of their loan in the capital stock of the association which in turn subscribes an equal amount of stock in 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 payments at par in such case the face of the loan shall not exceed the CO 50 per cent and 20 per cent limitation sec 7 assessment on shares may be levied for operating expenses if funds are not otherwise available POWERS see sec 10 to appraise land for mortgage through its loan committee of three see sec 11 to indorse and become liable for the mortgages of its shareholders hold erg sec 11 to receive and deliver the proceeds of loans to borrowers see sec II 11 to acquire and dispose of property necessary for the convenient transaction of its business see sec 11 to issue certificates of deposit tor for not longer than one year and to pay 4 per cent interest thereon convertible into farm loan bonds at the federal land bonk bank of its district see sec 7 to receive and transmit to the federal land bank payments of interest and principal and amortization payments v LOANS see 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 dit ional optional prepayments payments pre after five years see sec 12 interest on loans shall not exceed 0 6 per cent per annum on the unpaid principal see sec 12 hor borrowers rowers shall pay 8 per cent simple interest on defaulted payments see sec 12 loans may be made for the following purposes arid and for no other under penalty a to purchase land for agricultural purposes b to purchase equipment fertilizer 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 national farm loan association within the county sec 12 maximum loan ac 1000 minimum loan sec 12 no loan shall exceed 50 60 per centon cent of the value of the land mortgaged and 20 per cent of the permanent insured 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 of the he farm mortgaged note A AI applications for loans originate with the national farm loan associations or agents and nil all loans are made and closed by the federal land banks this does not apply to joint stock land banks TAXATION see sec 26 same as applies to federal land banks SPECIAL provisions see sec 9 associations may retain as commission one eighth of I 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 stock holdings in said bank see sec 24 reserves and dividends no limit Is placed on dividend divi bend distributions after the reserve ab account count 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 te the reserve account see sec 25 defaults must be made good within 30 days after notice sec 29 09 provision Is made for dissolution and the appointment of a ro re celver ceh er JOINT STOCK LAND BANKS organization section IG 16 A private corporation subject to the requirements under this act which may be formed by ten tea or more persons with a board of directors of live five or more see sec 16 may operate wit within his the state in which its principal office 1510 in located and within some one oua state see bee 28 subject to semiannual examinations aminat ami nations lons by the federal land bank examiner CAPITAL STOCK see sec 10 minimum see sec 16 double liability of shareholders i see sec 6 the united states government shall own none of the shares hares of stock sec 10 16 no farm loan bonds can be issued until the capital stock Is fully paid although the bank 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 see sec 16 to issue and sell farm loan bonds see sec IG 16 to issue farm loan bonds up to 18 15 times the amount of its ita capital and surplus see sec 16 except as otherwise provided it lias has the powers of and Is subject to the restrictions imposed on federal land banks privileges sec 16 may blay lend more than to any one borrower but not beyond 60 50 per cent of the value of the land and 20 per cent of the permanent insured improvements see sec IG 10 loans are not restricted to the purposes prescribed for national farm loan associations see sec 16 loans may be made to farm owners regardless of whether en in cultivation i olf of the land mortgaged or not see sec 16 interest on loans shall not exceed more than I 1 per cent the interest rate established for its last series of bonds nor more than 6 per cent in any case see sec 16 commissions or other charges not specifically authorized by this net act shall not be demanded or received I 1 BONDS see sec 20 issued in series of or more in denominations of 25 50 and 1000 sec 20 may bear maximum rate of 5 per cent interest per annum see sec 16 bonds shall be so engraved as to be readily distinguishable from federal land bank bonds see sec 19 Morti mortgages ages 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 17 no issue Is authorized without the approval of the farm loan board sec 27 federal reserve banks are authorized to bryand buy and sell the bonds of joint stock land hanks banks sec 22 substitution of mortgages and united states government bonds held as collateral to farm loan bonds Is permitted see sec 27 its bonds are lawful investments for fiduciary and trust funds and security for all public deposits TAXATION see sec 26 the capital stock surplus and earnings are subject to the taxing taming powers of the state sec 26 its mortgages executed under this act and its farm loan bonds and all income derived are exempt from federal state and kunle municipal 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 repositories depositories deposit ories and financial agents of the united states government sec 0 public deposits cannot be invested in farm mortgages or in farm loan bonds sec IC 16 rates of interest tor for loans unde 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 oft off its maturing farm loan bonds b to purchase farm loan bonds c to lend on first mortgages within its prescribed field d to purchase base united states government bonds see sec 23 reserve and dividends provided for as in the case of federal land banks sec 29 provision to Is made for dissolution and the appointment of a receiver |
