794 AGRICULTURAL ECONOMICS 



associations; the size of loan granted to one person and the purposes 

 for which loans may be made are also left to their own discretion. The 

 interest rates which they charge may not exceed 6 per cent nor be 

 more than i per cent above the rate established for the last series of 

 farm loan bonds issued by them. Their mortgages must provide for 

 amortization payments. 



The rate of interest charged the farm borrower is not to exceed 

 the interest rate on the last issue of farm loan bonds put out by the 

 land bank through which the loan is secured, plus a charge of not more 

 than i per cent to cover the cost of administration and a profit. This 

 gross rate, however, shall not be more than 6 per cent per annum. 

 In granting the loan the federal land bank is authorized to charge the 

 applicant reasonable fees to cover the actual cost of appraisal and 

 determination of title. Legal fees and recording charges imposed by 

 law hi the state where the land to be mortgaged is located may also 

 be included hi the preliminary costs of negotiating mortgage loans. 

 These costs the borrower may pay or he may have their amount added 

 to the face of his loan, to be discharged by amortization payments. 

 Furthermore, each annual or semi-annual payment by the borrower 

 shall include, besides the amount due for interest on his loan, such 

 an additional sum as will amortize the debt within an agreed period 

 not less than five years nor more than forty years. After five years 

 from the date of the loan, additional payments of $25 or any multiple 

 thereof may be made or the whole remaining principal may be paid 

 up on any instalment date. 



Issue and sale of bonds. The method by which both federal and 

 joint stock land banks finance their loan operations is through the 

 sale of debentures. These are to be known as "farm loan bonds," 

 and shall be issued by land banks only under specific authorization of 

 the Federal Farm Loan Board. Each district is to have a farm loan 

 registrar, appointed by the Federal Farm Loan Board, to whom land 

 banks desiring to issue bonds may bring the mortgages which they 

 have taken from borrowers (through farm loan associations or other- 

 wise). If these securities are approved by the Federal Farm Loan 

 Board, the land bank is given farm loan bonds of equal amount in 

 exchange therefor, by the farm loan registrar. The mortgages are 

 retained by the registrar as collateral, being assigned to him hi trust 

 by the land bank. The registrar may at his discretion allow the land 

 bank to"witEcIraw such of their mortgages as are paid off, and substi- 



