24 BULLETIN 968, U. S. PEPAETAlEZsT OE AGRICULTURE. 
suggested, and no attempt is made to consider details or to anticipate 
in discussion objections that might be raised. 
Assuming that in many instances it will be necessary for the would- 
be purchaser to borrow a considerably larger percentage of the value 
of the property mortgaged than is now possible under the Federal 
farm-loan system, it is important to inquire whether the entire loan 
should be made on first-mortgage security or whether the borrower 
should be allowed to give a first mortgage for approximately the 
maximum now permitted and to oiler a second mortgage for the 
remainder. 
There are several strong reasons for the latter method. In the 
first place, the number of loans made to facilitate the purchase of 
land represents but a small proportion of the total loans on first 
mortgages. If special credit arrangements should be provided to 
farmers in becoming owners of their farms, it would not be neces- 
sary to extend these special advantages to persons borrowing for 
other purposes. In the second place, there is a well-established mar- 
ket for conservatively placed first mortgages, in which such mort- 
gages can be resold by the lender, either directly or by issuing bonds 
secured by specific mortgages, and it would probably be difficult 
to educate investors to accept mortgages representing a much less 
conservative margin of credit. In the third place, the borrower is 
likely to desire, and probably should be required, to repay that part 
of his loan which exceeds the ordinary margin of credit allowed oa 
first-mortgage security in a shorter period than is now allowed for 
first mortgages under the Federal farm-loan system. TThile this is 
not impossible when the entire loan is secured by a single lien, it is 
easier to require it. as distinguished from permitting it. when the 
excess represents a separate contract. In the fourth place, if the 
Federal farm-loan system were modified to permit a larger credit 
in some instances, even though such leans represented but a small 
proportion of the total volume of loans, it is probable that the 
knowledge of this fact would impair the general market for the 
bonds based on mortgages as security, and this would probably be 
the case even though all mortgages exceeding a conservative margin 
of credit were excluded as a basis for bond issues. Finally, if the 
system of farm credit should be modified to permit borrowing on a 
larger proportion of the value of security offered, as a means to 
home ownership, it would be desirable to provide special restrictions 
and regulations covering such cases which would not necessarily ap- 
ply in the case of the larger volume of loans on first-mortgage 
security. 
In providing a special system of second-mortgage credit in the 
interest of promoting farm home ownership it would probably be 
