BUYING FARMS WITH LAND-BANK LOANS. 13 



It is probable that the terms on mortgages given to the chiss of 

 persons other tlian sellers represent fairlj^ closely the typical con- 

 ditions for ordinary commercial loans on second mortgages. How- 

 ever, some of these loans ma}' have been given to relatives or other 

 persons who had some special motives for granting specially favor- 

 able terms. 



The need of popularizing the second mortgage when given in con- 

 nection with the purchase of a farm through the aid of a first-mort- 

 gage loan obtained from the Federal land banks is strongly suggested 

 b}^ the fact that, of the entire number of farms purchased on which 

 second-mortgage loans were obtained, only 116, or 22 per cent of 

 the entire 531, were taken by men who were reported neither as rela- 

 tives of the purchaser nor as the former owners of the land. If 

 second mortgages given in connection with Federal farm loans were 

 looked upon with more favor by men having money to lend, there 

 Avould doubtless be a wider use of the Federal land bank mortgage as 

 a means of acquiring land by persons having a small amount of 

 money, but not enough to operate a farm and pa}^ for the full 

 amount of its cost not covered by a loan which they could get from 

 a Federal land bank. 



PROPORTION OF PURCHASE PRICE OBTAINED ON SECOND MORTGAGE. 



In Table VI is shown the percentage of the purchase price repre- 

 sented by second mortgages in the case of 527 farms purchased 

 through the aid of second mortgages, for which complete data are 

 available. Of these. 167, or 32 per cent of the second mortgages, were 

 for one-fourth or less of the purchase price, and 18 per cent for more 

 than half of the purchase price. Men who purchased from sellers 

 who were not their relatives, but Avho were willing to accept the sec- 

 ond mortgage in lieu of part of the cost of the farm, placed more 

 than half of the cost of the farm on second mortgage in 22 per cent 

 of the cases. Of the men who were able to get relatives to accept 

 the second mortgage, 10 out of a total of 32, or 31 per cent, were ac- 

 commodated with second mortgages which represented more than 

 half of the purchase price of the farm. On the other hand, only 4 

 of the 107 second mortgages which were held neither by the former 

 owner of the land nor by a relative of the buyer of the farm were 

 for more than half the cost of the farm. 



