bring about a general upgrading of the con- 

 dition of both fishing vessels and fishing 

 gear thereby contributing to nore efficient 

 and profitable fishing operations. 



This loan fund program was put into 

 operation in the fall of 1956 and as of 

 April 30, 1959 we have received 565 appli- 

 cations for loans totaling $8,li2li,000. 

 Cf these 303 were approved for loans in the 

 amount of *?.li80.000 and ll|2 applications 

 requesting ^U,13u,000 were denied. Thirty 

 applications were pending, h9 were found 

 ineligible and 1*1 were withdrawn by the 

 applicants . 



In the California territory U2 loans 

 have been authorized in the amount of 

 $.,860,000 for the benefit of tuna vessels. 

 These include loans made to vessels of the 

 albacore fleet as well as loans authorized 

 on the larger tuna vessels. In the north- 

 west there were 27 loans authorized in the 

 amount of ^307,000 to vessels that devote 

 a fair share of their fishing effort to 

 the tuna fishery, especially for albacore . 

 This makes a total of $2,1^0,000 that has 

 been .authorized for the aid of tuna fishing 

 vessels, or approximately 1/3 in dollar 

 value of the total loans authorized under 

 the program. 



MORTGAGE INSURANCE PROGRAM 



The second program, which we expect 

 to place into operation shortly, is the 

 Fishing Vessel Mortgage Insurance Program. 

 This program will, in our opinion, be of 

 considerable assistance to the industry in 

 the financing of the construction of new 

 fishing vessels and the reconstruction of 

 older vessels. 



Title XI of the Merchant Marine Act 

 of 1936 established the Federal Ship Mort- 

 gage and Loan Insurance Program under the 

 Maritime Administration in the Department 

 cf Commerce. This title was drafted in 

 language that not only expressed the in- 

 tent of Congress but spelled out in broad 

 detail exact procedures to be followed. 

 Discretionary power of the Secretary, 

 however, permitted some latitude in issuing 

 regulations. The merchant marine fleet 

 presented problems which are mostly dif- 

 ferent from those of fishing vessels. 

 Regulations issued by the Secretary of 

 Commerce were designed for the larger ves- 

 sels and, of necessity, had requirements 



which fishing vessels could not meet. 



When authority under this title to 

 insure mortgages and loans on fishing ves- 

 sels was transferred to the Department of 

 the Interior, we found it necessary to 

 begin from scratch and draft regulations 

 which will permit the most effective use 

 of the funds. We believe we now have a 

 workable set of regulations for adminis- 

 tering the program. This is a straight 

 business program with bank standards, ex- 

 cept that the mortgage may be for 1$ years 

 instead of the 2> - $ years which banks 

 usually allow. A mortgage may be given 

 for a maximum of 75 percent of the cost of 

 the new vessel, where banks generally ad- 

 vance only 50 percent. As stated, the 

 credit requirements are to be equal to 

 normal banking requirements, except for 

 the length of time allowed for repayment. 

 Guaranties may be required of shareholders 

 of a corporate applicant. In determining 

 the economic soundness of the proposed 

 vessel operation, the condition and inten- 

 sity of the fishery will be considered. 

 The operation of the vessel must be in a 

 fishery approved by the Secretary of the 

 Interior. 



Probably a simple way of describing 

 the operation of this mortgage insurance 

 program for the construction and recon- 

 struction of fishing vessels is to say 

 that it will operate in a manner similar 

 to FHA financing on a home. It will be 

 up to the borrower to find a lender who is 

 willing to lend him the money providing 

 the United States Government is willing to 

 insure the mortgage. Borrowers under this 

 program must have demonstrated ability to 

 manage profitably, the vessel to be con- 

 structed. 



As for lending agencies, any bank, 

 insurance company, or other commercial 

 lending institution may be approved as a 

 lender or mortgagee, unless there is evi- 

 dence that it is not capable of handling 

 loans or mortgages of this type. Marine 

 supply houses or others may be approved if 

 they can show that they have the experience 

 and facilities necessary to properly ad- 

 minister the proposed loan or mortgage. 

 Someone who has ample funds, but shows no 

 evidence of being able to properly service 

 the mortgage, would not be considered a 

 suitable lender. Both the borrower and the 

 lender must be approved by the Secretary 



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