BUYING FARMS WITH LAXD-BAXK LOAXS. 



11 



banks regarding the title to property; but the possibility of delaj' 

 for other reasons, such as the impracticability of the appraiser for 

 the land bank promptly viewing the land, should be foreseen, and 

 the contract of sale should be made to cover a sufficient time. 



METHODS EMPLOYED TO FINANCE THE PURCHASE PRICE ABOVE 

 THE AMOUNT OBTAINED FROM THE FEDERAL FARM LOAN SYS- 

 TEM. 



A question of special interest in the present study is. How did 

 those who borrowed from the Federal land banks for the purjDose 

 of buying farm land finance the remainder of the purchase price 

 above the amount obtained by first mortgage ? Or, more particu- 

 larly, To what extent were second mortgages employed for this pur- 

 pose, and what were the terms of these second mortgages ? 



EXTENT OF USE OF SECOND MORTGAGES. 



To answer these questions it is possible to use 1,008 replies in 

 which a complete record of the conditions of purchase were given. 

 Of this number, 477 did not involve second mortgages, while 531 did. 

 Of the latter number, second mortgages were given to relatives 

 who were also sellers of the land in 43 cases, and to other sellers in 

 372 cases. Thus in practically 78 per cent of the cases the second 

 mortgage was given to the sellers of the land — that is, to persons who 

 might presumably be interested in gi^^ng specially favorable terms. 

 In only 22 per cent of the cases were the mortgages given to others 

 than sellers of the land. 



The terms of purchase for these 1,008 cases are summarized in 

 Table V. 



Table Y. — Use of the second mart {/age bit horroicers from the Federal land banks 

 in order to complete the purcha-'ie. 





Num- 

 ber 

 of 

 rec- 

 ords. 



Averages. 



Class of case. 



Cost 



of 



farm. 



Cash 



or 

 trade.» 



Second 

 mort- 

 gage. 



Interest 

 rate 

 on 

 second 

 mort- 

 gage. 



Per cent h 



- 





Fed- 

 eral 

 loan. 



Second 

 mort- 

 gage. 



Cash 



or 

 trade.' 



No second mortgage given 



477 

 531 



43 



372 

 116 



$8,294 

 9,874 



12,807 

 9,162 

 11,069 



S4,912 

 2,414 



2,209 

 1,983 

 3,873 







41.0 

 43.3 



43.9 

 43.3 

 43.1 



■"3i'i* 



39.7 

 37.4 

 22.8 



59.5 



Second mortgage given 



$3,363 



.5,087 

 3,424 

 2,527 



6.7 



5.8 

 6.6 

 7.2 



24.4 



Second mortgage hold by: 



A rcliii ivc who is the seller 



Other sellers 



17.3 

 21.6 



Parties other than sellers 



35.0 









1,008 



9.126 







42.7 











1 







1 This item includes some of the expenses incident to borrowing. 



