In

property and constituting a substantial part of its value. determining the earning power of land used for the raising of livestock, due consideration shall be given to the extent to which the earning power of the fee-owned land is augmented by a lease or permit, granted by lawful authority of the United States or of any State, for the use of a portion of the public lands of the United States or of such State, where such permit or lease is in the nature of a right adjunctive to such fee-owned land, and its availability for use as such during the terms of the loan is reasonably assured.

A reappraisal may be permitted at any time in the discretion of the Federal land bank, and such additional loan may be granted as such reappraisal will warrant under the provisions of this paragraph. Whenever the amount of the loan applied for exceeds the amount that may be loaned under the appraisal as herein limited, such loan may be granted to the amount permitted under the terms of this paragraph without requiring a new application or appraisal.

Sixth. Restrictions on eligibility for loans; assumption of mortgage and stock interests by purchaser of land or heir.-No such loan shall be made to any person who is not at the time, or shortly to become, engaged in farming operations or to any other person unless the principal part of his income is derived from farming operations. In case of the sale of the mortgaged land, the Federal land bank may permit said mortgage and the stock interests of the vendor to be assumed by the purchaser. In case of the death of the mortgagor, his heir or heirs, or his legal representative or representatives, shall have the option within sixty days of such death, to assume the mortgage and stock interests of the deceased. As used in this paragraph (1) the term "person" includes an individual or a corporation engaged in the raising of livestock; and (2) the term "corporation" includes any incorporated association; but no such loan shall be made to a corporation (A) unless all the stock of the corporation is owned by individuals themselves personally actually engaged in the raising of livestock on the farm to be mortgaged as security for the loan, except in a case where the Land Bank Commissioner permits the loan if at least 75 per centum in value and number of shares of the stock of the corporation is owned by the individuals personally actually so engaged, and (B) unless the owners of at least 75 per centum in value and number of shares of the stock of the corporation assume personal liability for the loan. No loan shall be made to any corporation which is a subsidiary of, or affiliated (either directly or through substantial identity of stock ownership) with, a corporation ineligible to procure a loan in the amount applied for.

Seventh. Maximum and minimum of loans.-The amount of loans to any one borrower shall in no case exceed a maximum of $50,000, but loans to any one borrower shall not exceed $25,000 unless approved by the Land Bank Commissioner, nor shall any one loan be for a less sum than $100, but preference shall be given to applications for loans of $10,000 and under.

Eighth. Form of applications for loans.-Every applicant for a loan under the terms of this subchapter shall make application on a form to be prescribed for that purpose by the Farm Credit Administration, and such applicant shall state the objects to which the proceeds of said loan are to be applied, and shall afford such other information as may be required.

Ninth. Interest on defaulted payments; payment of taxes and liens; insurance.-Every borrower shall pay simple interest on defaulted payments at the rate of 8 per centum per annum, and by express covenant in his mortgage deed shall undertake to pay when due all taxes, liens, judgments, or assessments which may be lawfully assessed against the land mortgaged. Taxes, liens, judgments, or assessments not paid when due, and paid by the mortgagee, shall become a part of the mortgage debt and shall bear simple interest at the rate of 8 per centum per annum. Every borrower shall undertake to keep insured to the satisfaction of the Farm Credit Administration all buildings the value of which was a factor in determining the amount of the loan. Insurance shall be made payable to the mortgagee as its interest may appear at time of loss, and at the option of the mortgagor and subject to general regulations of the Farm Credit Administration; sums so received may be used to pay for reconstruction of the buildings destroyed.

Tenth. Agreement by borrowers as to use of loans.-Every borrower who shall be granted a loan under the provisions of this subchapter shall enter into an agreement, in form and under conditions to be prescribed by the Farm Credit Administration, that if the whole or any portion of his loan shall be expended for purposes other than those specified in his original application, or if the borrower shall be in default in respect to any condition or covenant of the mortgage, the whole of said loan shall, at the option of the mortgagee, become due and payable forthwith: Provided, That the borrower may use part of said loan to pay for his stock in the farm loan association, and the land bank holding such mortgage may permit said loan to be used for any purpose specified in subsection fourth of this section.

Eleventh. Loans not invalidated by unauthorized acts by banks or associations.-No loan or the mortgage securing the same shall be impaired or invalidated by reason of the exercise of any power by any Federal land bank or national farm loan association in excess of the powers herein granted or any limitations thereon. Twelfth. Reduction of interest on loans and deferment of principal. Notwithstanding the provisions of paragraph "Second" of this section, the rate of interest on any loans on mortgage made through national farm loan associations or through agents as provided in sections 801-808 of this chapter, or purchased from joint stock land banks, by any Federal land bank, outstanding on May 12, 1933, or made through national farm loan associations after such date, shall not exceed 32 per centum per annum for all interest payable on installment dates occurring within a period of nine years commencing July 1, 1935; and no payment of the principal portion of any installment of any such loan outstanding on June 3, 1935, shall be required prior to July

11, 1938, if the borrower shall not be in default with respect to any other condition or covenant of his mortgage. The foregoing provisions shall also apply to interest on so-called purchase-money mortgages and on real estate sales contracts taken by the Federal land banks which is payable on installment dates occurring after June 30, 1942, except that in the case of such mortgages and contracts the rate of interest shall be one-half of 1 per centum per annum in excess of the rate paid by borrowers on mortgage loans made through national farm loan associations. The foregoing provisions shall apply to loans made by Federal land banks through branches, except that the rates of interest paid for the respective periods above specified shall be one-half of 1 per centum per annum in excess of the rates of interest paid during the corresponding periods by borrowers on mortgage loans made through national farm loan associations. The Secretary of the Treasury shall pay each Federal land bank, as soon as practicable after October 1, 1933, and after the end of each quarter thereafter, such amount as the Land Bank Commissioner certifies to the Secretary of the Treasury is equal to the amount by which interest payments on mortgages held by such bank have been reduced, during the preceding quarter, by reason of this paragraph; but in any case in which the Land Bank Commissioner finds that the amount of interest payable by such bank during any quarter has been reduced by reason of the refinancing of bonds under section 992 of this chapter, the amount of the reduction so found shall be deducted from the amount payable to such bank under this paragraph. No payments shall be made to a bank with respect to any period after June 30, 1944. There is authorized to be appropriated, out of any money in the Treasury not otherwise appropriated, the sum of $15,000,000 for the purpose of enabling the Secretary of the Treasury to make payments to Federal land banks which accrue during the fiscal year ending June 30, 1934, and such additional amounts as may be necessary to make payments accruing during subsequent fiscal years. (July 17, 1916, ch. 245, § 12, 39 Stat. 370; Apr. 20, 1920, ch. 154, § 4, 41 Stat. 570; Mar. 4, 1923, ch. 252, §§ 306, 307, 42 Stat. 1476; Mar. 4, 1933, ch. 270, § 2, 47 Stat. 1547; Ex. Ord. No. 6084, Mar. 27, 1933; May 12, 1933, ch. 25, §§ 24, 25, 41, 48 Stat. 43, 44, 51; June 16, 1933, ch. 98 §§ 73, 74, 80 (a), 48 Stat. 271, 273; June 3, 1935, ch. 164, §§ 3, 18, 22, 49 Stat. 314, 319; June 24, 1936, ch. 762, 49 Stat. 1912; July 22, 1937, ch. 516, § 1, 50 Stat. 521; Aug. 19, 1937, ch. 704, §§ 5 (a), 12, 50 Stat. 704, 708; June 16, 1938, ch. 462, § 1, 52 Stat. 709; June 29, 1940, ch. 441, § 1, 54 Stat. 684; June 27, 1942, ch. 449, § 1, 56 Stat. 391.)

AMENDMENTS

1942-Twelfth par., first sentence was amended by act June 27, 1942, cited to text, which advanced period from "seven" to "nine" years commencing July 1, 1935.

Twelfth par., third sentence, was added by act June 27, 1942, cited to text. Twelfth par., fifth sentence, formerly fourth, was amended by act June 27, 1942, cited to text, which changed date from "June 30, 1942" to "June 30, 1944."

SAVING CLAUSE

See note under section 640a of this title.

§ 772. Loans to be in current funds, bonds of corporation, or farm loan bonds.-Amounts transmitted to farm loan associations by Federal land banks to be loaned to its members shall, at the option of the bank, be in current funds or Federal Farm Mortgage Corporation bonds, or, at the option of the borrower, in farm loan bonds. (July 17, 1916, ch. 245, § 12, 39 Stat. 370; Jan. 31, 1934, ch. 7, § 7, 48 Stat. 346.)

§ 773. Mortgages on farm lands under United States reclamation projects.-The term "first mortgage", as used in section 771 of this title, shall be construed to include mortgages on farm lands under United States reclamation projects, notwithstanding there may be against such lands a reserved or created lien in favor of the United States for construction or other charges as provided in sections 372, 381, 383, 391, 392, 411, 416, 419, 421, 431, 432, 434, 439, 461, 476, 491, 498 of Title 43, and acts amendatory thereof and supplementary thereto, known as the reclamation law: Provided, That such lands are otherwise eligible for loans under this chapter: And provided further, That the amount and date of maturity of such lien shall be given due consideration in fixing the value of such lands for loan purposes. (May 15, 1922, ch. 190, § 3, 42 Stat. 542.)

REFERENCES IN TEXT

In the original "this chapter" reads "the Federal Farm Loan Act" (act July 17, 1916, ch. 245, 39 Stat. 360). For distribution of said act in this Code, see note under section 641 of this title.

§ 773a. Loans on lands in drainage, irrigation, or conservancy districts. The Farm Credit Administration, the Federal Farm Mortgage Corporation, the Federal land banks, the Land Bank Commissioner, and any lending or financing agency established by or under this chapter, are authorized to make loans or acquire mortgages on lands in any drainage, irrigation, or conservancy district, notwithstanding the existence of any prior lien or charge arising out of an assessment for special benefits made by such district, in any case where (1) such land is otherwise eligible for a loan, (2) such assessment is payable over a period of years, and (3) reasonable security exists for the repayment of the loan, taking into consideration all facts and values, including the term and size of the loan, the integrity of the applicant, and the increased earning capacity of the lands arising from the improvements or benefits in respect of which the assessment was made. (June 4, 1936, ch. 496, 49 Stat. 1461.)

REFERENCES IN TEXT

In the original "this chapter" reads "the Farm Credit Act of 1933 (act June 16, 1933, ch. 98, 48 Stat. 257), as amended, or the Federal Farm Loan Act, as amended (act July 17, 1916, ch. 245, 39 Stat. 360)." The Farm Credit Act of 1933 was incorporated into the Code as sections 637-640, 653, 674, 678-681, 683, 694, 723, 744a, 771, 781, 791, 874, 876, 878-880, 884, 952, 963a, 964, 971, 972, 983, 987, 992, 1016-1018, 1022, 1031, 1124, 1131-1138f, 1141c1141f, 1141j, 1148a, and 1151a of this title and section 610 of Title 7, Agriculture. For distribution of the Federal Farn Loan Act in this Code, see note under section 641 of this title.

POWERS OF FEDERAL LAND BANKS GENERALLY

§ 781. Enumerated powers.-Every Federal land bank shall have power, subject to the limitations and requirements of this subchapter

First. Issuing and selling farm loan bonds.-To issue, subject to the approval of the Farm Credit Administration, and to sell farm loan bonds of the kinds authorized in this subchapter, to buy the same for its own account, and to retire the same at or before maturity.

Second. Investing funds in first farm mortgages. To invest such funds as may be in its possession in the purchase of qualified first mortgages on farm lands situated within the farm credit district within which it is organized or for which it is acting. In order to reduce and/or refinance farm mortgages, to invest such funds as may be in its possession in the purchase of first mortgages on farm lands situated within the farm credit district within which it is organized or for which it is acting, or to exchange farm loan bonds for any duly recorded first mortgages on farm lands executed prior to May 12, 1933, at a price which shall not exceed in each individual case the amount of the unpaid principal of the mortgage on the date of such purchase or exchange, or 50 per centum of the normal value of the land mortgaged and 20 per centum of the value of the permanent insured improvements thereon as determined upon an appraisal made rursuant to this subchapter, whichever is the smaller: Provided, That any mortgagor whose mortgage is acquired by a Federal land bank under this paragraph shall be entitled to have his farm mortgage indebtedness refinanced in accordance with the provisions of sections 711-723 and 731-734 of this chapter on the basis of the amount paid by the bank for his mortgage.

Third. Receipt and deposit of mortgages as collateral for bonds; collection of moneys payable under mortgages and bonds. -To receive and to deposit in trust with the farm loan registrar for the district, to be by him held as collateral security for farm loan bonds, first mortgages upon farm land qualified under section 771 of this chapter, and to empower national farm los associations, or duly authorized agents, to collect and immediately pay over to said land banks the dues, interest, amortization installments and other sums payable under the terms, conditions, and covenants of the mortgages and of the bonds secured thereby. Fourth. Acquiring and disposing of property.-To acquire and dispose of

(a) Such property, real or personal, as may be necessary or convenient for the transaction of its business, which, however, may be in part leased to others for revenue purposes.

(b) Parcels of and acquired in satisfaction of debts or purchased at sales under judgments, decrees, or mortgages held by it. But no such bank shall hold title and possession of any real estate purchased or acquired to secure any debt due to it, for a longer period than five years, except with the special approval of the Farm Credit Administration in writing. Every such bank may carry real estate as an asset for a period of not exceeding five years, at its normal value but not to exceed the amount of the