Appropriation on loans.-The Department of Agriculture Appropriation Act of 1947, June 22, 1946, ch. 445, § 1, 60 Stat. 294, provided in part: "For loans to individual farmers in accordance with title I of said act [7 U. S. C. §§ 10061007] and section 505 (b) of the Servicemen's Readjustment Act of 1944 (38 U. S. C. § 694e (b)), $50,000,000, including $25,000,000 for loans to eligible veterans which may be distributed, without regard to the provisions of section 4 of the Bankhead-Jones Farm Tenant Act [7 U. S. C. § 1004], among the States and Territories in such amounts as are necessary to make such loans, which sums shall be borrowed from the Reconstruction Finance Corporation at an interest rate of not to exceed 3 per centum per annum and no loans, excepting those to eligible veterans, may be made for the acquisition or enlargement of farms which have a value, as acquired, enlarged, or improved, in excess of the average value of efficient family-size farm-management units, as determined by the Secretary, in the county, parish, or locality where the farm is located; and the Reconstruction Finance Corporation is hereby authorized and directed to lend such sum to the Secretary upon the security of any obligations of borrowers from the Secretary under the provisions of title I of the Bankhead-Jones Farm Tenant Act, approved July 22, 1937 (7 U. S. C. §§ 1000-1006): Provided, That the amount loaned by the Reconstruction Finance Corporation shall not exceed 85 per centum of the principal amount outstanding of the obligations constituting the security therefor: Provided further, That the Secretary may utilize proceeds from payments of principal and interest on any loans made under such title I to repay the Reconstruction Finance Corporation the amount borrowed therefrom under the authority of this paragraph."

Similar appropriations have been carried in prior appropriation acts as follows:

1945-May 5, 1945, ch. 109, § 1, 59 Stat. 161.

1944-June 28, 1944, ch. 296, § 1, 58 Stat. 457. 1943-July 12, 1943, ch. 215, § 1, 57 Stat. 427. 1942-July 22, 1942, ch. 516, § 1, 56 Stat. 695. 1941-July, 1941, ch. 267, § 1, 55 Stat. 439.

1940-June 25, 1940, ch. 421, § 1, 54 Stat. 564.

§ 1002. Examination, appraisal, and certification of loans and insurance by county committee. (a) The county committees established under section 1016 of this title shall

(1) examine applications (filed with the chairman of the county committee, or with such other person as the Secretary may designate) of persons desiring to obtain the assistance of the Secretary in financing the acquisition of farms or farming operations in the country as provided in this chapter; and

(2) examine and appraise farms in the county with respect to which applications are made.

(b) If the committee finds that an applicant is eligible to receive the benefits of this chapter, that, in the opinion of the committee, by reason of his character, ability, industry, and experience, he will successfully carry out undertakings required of him under a loan which may be made or insured under this chapter, that credit sufficient in amount to finance the actual needs of the applicant, specified in the application, is not available to him at the rates (but not exceeding the rate of 5 per centum per annum) and terms prevailing in the community in or near which the applicant resides for loans of similar size and character from commercial banks, cooperative lending agencies, or from any other responsible source; and that the farm with respect to which the application is made is of such character that there is a reasonable likelihood that the making or insuring of the loan with respect thereto will carry out the purposes of sections 1001-1005d of this title, it shall so certify to the Secretary. The committee shall also certify to the Secretary the amount which the committee finds is the fair and reasonable value of the farm based upon its normal earning

capacity. The farm shall be appraised by competent employees of the Secretary thoroughly trained in appraisal techniques and the appraisal shall be made available to the county committee and the Secretary for their guidance in determining the value of the farm as specified above. (c) No member of the committee shall participate in any certification under his section with respect to any application or farm in which such member, or any person related to such member within the third degree of consanguinity or affinity has any pecuniary interest, direct of 2 indirect, or in which any of them had such interest within one year prior to the date of certification.

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(d) No loan shall be made for any purpose under this chapter and no mortgage shall be insured under this chapter, unless certification by the committee, as required under this section, has been made with respect to the applicant applying for the loan and with respect to the farm which is to be taken as security either for an insured or an uninsured mortgage. (As amended Aug. 14, 1946, ch. 964, § 5, 60 Stat. 1072.)

Act Aug. 14, 1946, cited to text, amended section by making minor revisions in the language of the section.

§ 1003. Terms of loans.-(a) Loans made under sections 10011005d of this title shall be in such amount (not in excess of the amount certified by the county committee to be the value of the farm) as may be necessary to enable the borrower to acquire the farm and for necessary repairs and improvements thereon, and shall be secured by a first mortgage or deed of trust on the farm. Loans may not be made for the acquisition or enlargement of farms which have a value, as acquired, enlarged, or improved, in excess of the average value of efficient family-type farm-management units, as determined by the Secretary, in the county, parish, or locality where the farm is located. (b) The instruments under which the loan is made and security given therefor shall

(1) provide for the repayment of the loan within an agreed period of not more than forty years from the making of the loan;

(2) provide for the payment of interest on the unpaid balance of the loan at the rate of 312 per centum per annum;

(3) provide for the repayment of the unpaid balance of the loan, together with interest thereon, in installments in accordance with amortization schedules prescribed by the Secretary;

(4) be in such form and contain such covenants as the Secretary shall prescribe to secure the payment of the unpaid balance of the loan, together with interest thereon, to protect the security, and to assure that the farm will be maintained in repair, and waste and exhaustion of the farm prevented, and that such proper farming conservation practices as the Secretary shall prescribe will be carried out;

(5) provide that the borrower shall pay taxes and assessments on the farm to the proper taxing authorities, and insure and pay for insurance on farm buildings;

(6) provide that upon the borrower's assigning, selling, or otherwise transferring the farm, or any interest therein, without the consent of the Secretary, or upon default in the performance of, or upon any failure to comply with, any covenant or condition contained in such

instruments, or upon involuntary transfer or sale, the Secretary may declare the amount unpaid immediately due and payable, and that, without the consent of the Secretary, no final payment shall be accepted, or release of the Secretary's interest be made, less than five years after the making of the loan; and

(7) contain the provisions for refinancing specified in section 1018 (c) of this title.

(c) Except as provided in paragraph (6) of subsection (b) of this section, no instrument provided for in this section shall prohibit the prepayment of any sum due under it.

(d) No provision of section 203 of Title 11, otherwise applicable in respect to any indebtedness incurred under sections 1001-1005d of this title by any beneficiary thereof, shall be applicable in respect of such indebtedness until such beneficiary has repaid at least 15 per centum thereof. (As amended Aug. 14, 1946, ch. 964, § 5, 60 Stat. 1072.)

Act Aug. 14, 1946, cited to text, amended section by increasing the interest rate from 3 per centum to 31⁄2 per centum.

§ 1004. Equitable distribution of loans and mortgage insurance-In making loans and insuring mortgages under sections 10011005d of this title, the amount which is devoted to such purposes during any fiscal year shall be distributed equitably among the several States and Territories on the basis of farm population and the prevalence of tenancy, as determined by the Secretary: Provided, That there may be distributed to each State such amounts as are necessary to insure mortgages or finance loans pursuant to all bona fide applications from veterans qualified under section 1001 of this title: Provided further, That there may be disbursed in any fiscal year to each State or Territory such amount not in excess of $100,000 as is determined by the Secretary to be necessary to finance loans in such State or Territory under sections 1001-1005d of this title. (As amended Aug. 14, 1946, ch. 964, § 5, 60 Stat. 1972.)

Act Aug. 14, 1946, cited to text, amended section by adding provisions.

§ 1005. Appropriations. To carry out the provisions of sections 1001-1005d of this title with respect to tenant-purchase loans, there is authorized to be appropriated not to exceed $50,000,000 for each fiscal year beginning with the fical year ending June 30, 1947, and such further sums as may be necessary in carrying out the provisions of said sections during such fiscal year, with respect to tenant purchase loans and insured mortgages. (As amended Aug. 14, 1946, ch. 964, § 5, 60 Stat. 1072.)

Act Aug. 14, 1946, cited to text, amended section generally to provide for appropriations.

§ 1005a. Farm tenant mortgage insurance fund; appropriation; disposition of excess; use; annual report.-(a) There is created a fund, to be known as the "farm tenant-mortgage insurance fund" (in sections 1001-1005d of this title referred to as the "fund"), which shall be used by the Secretary as a revolving fund for carrying out the provisions of said sections with respect to mortgages insured under section 1005b of this title and to mortgages accepted for the account of the fund under section 1005c of this title. There is authorized to be appropriated to the Secretary the sum of $25,000,000 to constitute such fund.

(b) Moneys in the fund not needed for current operations shall be deposited with the Treasurer of the United States to the credit of the fund or invested in direct obligations of the United States or obligations guaranteed as to principal, and interest by the United States. The Secretary may purchase, with money in the fund, any notes issued by the Secretary to the Secretary of the Treasury to obtain money for the fund.

(c) All amounts deposited in or credited to the fund and the proceeds of investments of amounts in the fund shall be used only purposes to which the fund is specifically authorized to be devoted under sections 1001-1005d of this title and shall not be diverted to any other use.

(d) The Secretary shall include in his annual report a complete statement with respect to the status of the fund. (Aug. 14, 1946, ch. 964, 5, 60 Stat. 1072.)

§ 1005b. Insurance of mortgages-Authorization to Secretary.— (a) The Secretary is authorized, upon application of a prospective mortgagor or mortgagee under a first mortgage eligible for insurance under sections 1001-1005d of this title, to insure such mortgage and to make commitments for the insurance of any such mortgage prior to the date of its execution.

(b) Aggregate amount of mortgages.-The aggregate amount of principal obligations on all mortgages insured under sections 10011005d of this title, on all mortgages with respect to which commitments to insure have been made, and on all mortgages accepted for the account of the fund and not disposed of under section 1005d of this title shall not exceed $100,000,000 in any one fiscal year. With respect to any fiscal year, the amount available for insurance, commitment and acceptance of mortgages under sections 1001-1005d of this title shall be distributed among the several States and Territories on the basis provided in section 1004 of this title and preferences shall be given to mortgages executed by veterans qualified under section 1001 of this title.

(c) Eligibility provisions. In order for a mortgage to be eligible under sections 1001-1005d of ths title

(1) the person obligated to pay thereunder shall be a person who would be eligible under section 1001 of this title for a loan under sections 1001-1005d of this title;

(2) the farm mortgaged shall be one with respect to which, under section 1001 (c) of this title, a loan could be made under sections 1001-1005d of this title;

(3) there shall be an appropriate certification by the county committee as required by section 1002 of this title:

(4) the mortgage instruments shall comply with section 1003 (b) of this title, except that the base rate of interest shall be 22 per centum per annum;

(5) the principal obligation (and fees and other charges chargeable under subsection (d) of this section) shall not exceed 90 per centum of the reasonable value of the farm and necessary repairs and improvements thereon, as such values are certified by the county committee pursuant to section 1002 (b) of this title;

(6) the mortgage instruments shall contain a covenant to pay to the Secretary the initial and annual charges provided for in sub

sections (d) and (e) of this section, and a covenant to pay to the Secretary, as collection agent for the mortgagee, the amounts payable by the mortgagor to the mortgagee under the mortgage; and

(7) the mortage instruments shall contain a stipulation (not binding upon the Secretary) that the holder of the mortgage will accept the benefits provided by section 1005c of this title in lieu of any right of foreclosure which he may have against the property and any right to a deficiency judgment against the mortgagor on account of the mortgage.

(d) Payment of initial fees; disposition.-The Secretary shall require the payment by the mortgagor or mortgagee of such initial fees for inspection, appraisal, and other charges as it finds necessary and such amounts may be included in the principal obligation of the mortgage, and the payment of such delinquency charges and default reserves as it finds necessary. The proceeds of such fees shall be deposited in the Treasury for use for administrative expense as provided in subsection (e) (2) of this section.

(e) Collection of initial charge; disposition.-(1) The Secretary shall collect from the mortgagor, upon insurance of the mortgage, an initial charge of 1 per centum of the principal obligation of the mortgage and annually thereafter when payment of an installment of principal and interest is due, a charge of 1 per centum of the principal obligation remaining unpaid after such installment is paid, without taking into account delinquent payments or prepayments. If the principal obligation of the mortgage is paid in full in less than five years after the time when the mortgage was entered into, the Secretary may require payment by the mortgagor of a charge equal to the amount of the last annual charge required of the mortgagor.

(2) One-half of the amount paid as charges in pursuance of this subsection shall be the premium for insurance and shall be deposited in the fund and may be used only for purposes to which the fund may be devoted, the other half of the amounts so paid shall be deposited in the Treasury to the credit of the Secrtary and shall be available only for administrative expenses to carry out the provisions of sections 1001-1005d of this title, relating to mortgage insurance.

(f) Payment of sums to mortgagee; payment of full amount; repayments to fund.-(1) The Secretary shall promptly remit to the mortgagee under any mortgage insured under sections 1001-1005d of this title any sums collected by it as agent for the mortgagee. The Secretary shall promptly advise any such mortgagee of any default by the mortgagor.

(2) If within thirty days after the due date of any installment the mortgagor under an insured mortgage has failed to pay to the Secretary the amount due, the Secretary shall notwithstanding the amount paid is less than the interest and principal due, pay the amount of such principal and interest to the mortgagee, less the amount of any previous prepayments.

(3) Payments to mortgagees under paragraph (2) of this subsection shall be advanced out of the fund for the account of the mortgagor. Such advances shall be repaid to the fund out of the first available collections received from the mortgagor, with interest thereon at the rate fixed in the insured mortgage, and shall be added to subsequent installments.