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has been closed and the buildings erected, but before the loan is completed.

(e) Other expenses. Each applicant will also be required to pay actual cash outlays for abstract expenses, title insurance fees, notarial fees, recording fees, or other disbursements necessary for completion of the loan. (Sec. 13 "Ninth," 39 Stat. 372, secs. 32, 33, 48 Stat. 48, 49, as amended; 12 U.S.C. 781 "Ninth", 1016 (e), 1017, and Sup.; 6 CFR 19.4019-19.4022) [Circ. Letter 184Á, Jan. 10, 1936, Special bulletin 273, Aug. 1, 1935]

32.2 Partial release of security fees. On each application for a partial release of security, a fee is charged as follows:

Single application:

If no appraisal required

If appraisal required--.

Joint application (Federal land bank loan and Land Bank Commissioner loan):

If no appraisal required.
If appraisal required_-

Fee

$5.00

20.00

7.50

22.50

(Sec. 13 "Ninth", 39 Stat. 372, sec. 32, 48 Stat. 48, as amended, secs. 1, 2, 48 Stat. 344, 345; 12 U.S.C. 781 "Ninth", 1016, 1020, 1020a, and Sup.) [Circ. Letter 181A, Dec. 4, 1935]

32.3 Loan segregation fees. On each application for a segregation of a mortgage lien, that is, where two or more owners of the security desire to have the mortgage allocated to respective ownerships, an application fee will be charged as follows:

Where original owners only are involved, $10.00.

Where other parties than original borrowers are involved a fee is charged as for closing a new loan.

(Sec. 13 "Ninth", 39 Stat. 372, sec. 32, 48 Stat. 48, as amended, secs. 1, 2, 48 Stat. 344, 345; 12 U.S.C. 781 "Ninth", 1016, 1020, 1020a, and Sup.) [Circ. Letter 184A, Jan. 10, 1936]

32.4 Reamortization and long-term extension fees. On each application for the reamortization or the long-term extension of a loan, a fee is charged as follows:

$10.00 on single Land Bank Commissioner loans.

$10.00 on single land bank loans up to $7,500.00, plus $5.00 on each additional $5,000.00 or fractional part thereof.

$15.00 on joint land bank and Land Bank Commissioner loans up to $15,000.00 (both loans being so extended), plus $5.00 on each additional $5,000.00 or fractional part thereof.

Each applicant will also be required to pay actual cash outlays for abstract expenses, notarial fees, recording fees, or other disbursements necessary for completion of the transaction. (Sec. 13 “Thirteenth", as added by sec. 4, 47 Stat. 1548, secs. 1, 2, 48 Stat. 344, 345; 12 U.S.C. 781 "Thirteenth", 1020, 1020a, and Sup.; 6 CFR 19.4043, 19.4045) [Gen. Memo. 672, Apr. 7, 1938]

32.5 Fees on prepayment of loan less than five years old. The following fees are charged in connection with the prepayment of land bank loans less than five years old:

No penalty is charged on prepayment of a loan on any interest paying date prior to the expiration of five years, if such payment

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does not exceed 20 percent of the loan for each year that has expired, and provided such funds are derived from the borrower's earnings or savings.

On amounts in excess of such 20 percent prepayments and on payments made from funds not derived from the borrower's earnings or savings, a service charge will be collected as follows:

No penalty if the funds are derived from sources beyond the borrower's control.

A service charge of 1/2 of 1 percent per annum for the unexpired time from the date of payment to the end of the five year period, if payment is from the borrower's own resources.

A prepayment charge of 1 percent per annum on the unpaid balance of the loan for the unexpired portion of the five-year term, provided the loan is being refunded. (Sec. 12 "Second", 39 Stat. 370, as amended; 12 U.S.C. 771 "Second"; 6 CFR 10.387) [Circ. Letter 179A, rev., Feb. 14, 1938]

Subchapter D-Federal Intermediate Credit Banks

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The

(c) Person.

(d) Agricultural purpose and agricultural paper.

(e) Staple agricultural product. (f) Discounts; purchases.

Section 40.101 Functions. Federal intermediate credit banks are designed to furnish a constant and dependable supply of funds to finance, on a sound basis, the seasonal production and marketing of agricultural products, including livestock, as distinguished from long-term farm mortgage loans. They are not banks of deposit, nor do they engage in a general banking business. They operate principally as banks of discount, handling farm and livestock paper for production credit associations and for banking and other financing institutions. They discount paper for the banks for cooperatives organized under the Farm Credit Act of 1933 (48 Stat. 257), and may make certain types of loans direct to cooperative associations of agricultural producers. The Federal intermediate credit banks may make loans to banks and other financing institutions upon the security of agricultural and livestock paper; and to production credit associations and banks for cooperatives upon the security of such collateral as may be approved by the Governor of the Farm Credit Administration.

The Federal intermediate credit banks are not emergency institutions or relief organizations. They are designed to serve as permanent sources of agricultural and livestock credit. Since the major portion of the funds used in their lending operations is obtained through the issuance and sale of debentures, which are not guaranteed

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by the Government but are secured principally by notes and other obligations representing loans made and paper discounted by the banks, it is essential that they pursue sound credit policies and practices in order to assure an ample supply of funds at favorable interest rates.† (Sec. 209, as added by sec. 2, 42 Stat. 1459; 12 U.S.C. 1101)

†In §§ 40.101 to 40.104, inclusive, the numbers to the right of the decimal point correspond with the respective section numbers in the Manual for Federal Intermediate Credit Banks issued as of September 1, 1937.

40.102 Supervision. The powers and functions of the Federal Farm Loan Board with respect to the supervision of Federal intermediate credit banks have been vested in the Intermediate Credit Commissioner, subject to the jurisdiction and control of the Farm Credit Administration.

The Intermediate Credit Commissioner is a public officer, appointed by the President of the United States, by and with the advice and consent of the Senate.† (Sec. 209, as added by sec. 2, 42 Stat. 1459; 12 U.S.C. 1101)

40.103 Debtor and creditor relationship with borrowing institutions. Cooperative associations and other institutions obtaining credit from a Federal intermediate credit bank are not subsidiaries or agents of such bank. The relationship of an intermediate credit bank to such concerns is that of a creditor, or the holder for value of paper discounted or purchased with the indorsement of such borrowing institution. Each intermediate credit bank will conduct its dealings with borrowing institutions in such manner as to preclude any inference, through correspondence or otherwise, of any relationship between them other than as stated.

Any concern which places upon its letterheads, stationery, advertising matter, etc., any inscription or statement referring in any manner to dealings with the Federal intermediate credit bank, should be advised promptly to discontinue the use of such representations as a condition to the continuance of its rediscounting or borrowing privilege.† (Sec. 209, as added by sec. 2, 42 Stat. 1459; 12 U.S.C. 1101)

40.104 Definitions-(a) Financing institution. As used herein, the term "financing institution" shall be held to mean any incorporated organization for which a Federal intermediate credit bank may discount agricultural paper, or to which it may make loans, under the Federal Farm Loan Act, as amended (48 Stat. 271, 272; 12 U.S.C. 1031 and Sup.). Such institutions include production credit associations organized under the Farm Credit Act of 1933 (48 Stat. 257), State and national banks, savings institutions, cooperative banks, credit unions, trust companies, agricultural credit corporations, livestock loan companies, and similar corporations.

(b) Agricultural credit corporation or livestock loan company. The terms "agricultural credit corporation" and "livestock loan company" shall be held to mean any privately capitalized financing institution (other than a bank) organized under the laws of any State or of the United States for the primary purpose of lending money for agricultural purposes, as herein defined, and/or for the

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For source citation, see note to § 40.101.

raising, breeding, fattening, or marketing of livestock, regardless of the corporate name of the concern.

(c) Person. The word "person" shall, unless the context otherwise requires, be construed to mean an individual, a partnership, an association, a corporation, or two or more persons having a joint or common interest.

(d) Agricultural purpose and agricultural paper. The term "agricultural purpose", as used herein, shall be held to mean the purpose of carrying on agricultural production, including the raising, breeding, fattening, or marketing of livestock, defraying expenses incident thereto, or paying an indebtedness arising therefrom. The term "agricultural paper" shall be held to mean notes or other obligations of farmers and stockmen, the proceeds of which have been advanced or used in the first instance for an agricultural purpose as herein defined, and the credit instruments executed in connection therewith.

(e) Staple agricultural product. The term "staple agricultural product" shall be held to mean a product of agriculture having, in the opinion of the Farm Credit Administration, such uses as to make it the subject of constant dealings in ready markets with such frequent quotations of prices as to make (1) the price easily and definitely ascertainable and (2) the product itself easy to realize upon by sale at any time. To be regarded as a staple product a commodity should be of such character and keeping quality that it may be warehoused safely for such period as may be necessary to permit orderly marketing.

(f) Discounts; purchases. Unless otherwise stated, or indicated by its context, the term "discounts" as used herein and in the accounting terminology prescribed for the Federal intermediate credit banks, will be understood to cover both discounts and purchases, or obligations so discounted or purchased, regardless of whether interest is deducted at the time of acquirement or is accrued and collected at maturity or at stated intervals.t (Sec. 209 as added by sec. 2, 42 Stat. 1459; 12 U.S.C. 1101)

Sec.

PART 41-ORGANIZATION AND INTERNAL AFFAIRS

41.204 Interest and discount rates.

(a) Limitations and application
of interest and discount rates.
(b) Discounting (deducting in-
terest, or collecting in ad-
vance).

(c) Interest after maturity.
(d) Interest on notes receivable
(financing institutions in liq-
uidation).

Sec.

41.207 Credit information.

(a) Credit information strictly confidential.

(b) Refusal of information; exceptions.

41.210 Candidates for office of director.

Section 41.204 Interest and discount rates-(a) Limitations and application of interest and discount rates. Interest and discount rates of each Federal intermediate credit bank which, except with the approval of the Governor of the Farm Credit Administra

For source citation, see note to § 40.101.

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tion, shall not exceed by more than 1 per centum per anum the rate borne by the last preceding issue of debentures which it issued or in which it participated, will be applied in the following manner:

(1) Interest, or discount, is to be charged on each original note (or upon such amounts as may be advanced thereon) at the rate in effect at the time the funds are advanced by the bank.

(2) On any renewal note the bank will charge its established rate in effect at the date such renewal is taken into its accounts.

(3) Extension notes, which mature in not to exceed 90 days from the date the original obligation matured, may be carried at the same rate as that charged on the note which has matured or, in the discretion of the bank, at its loan and discount rate prevailing at the time of extension.

(b) Discounting (deducting interest, or collecting in advance). Federal intermediate credit banks will not collect interest (deduct discount) in advance, except when paper offered to them bears interest after maturity only. All financing institutions dealing with a Federal intermediate credit bank should be urged, when taking paper to be offered to the bank, to draw the notes to bear interest from date. (c) Interest after maturity. Should a note purchased or discounted by a Federal intermediate credit bank be not paid promptly at maturity the bank may, in its discretion, collect the full rate of interest called for by the note for such time as the indorsing financing institution permits such note to remain with the bank as past due and unpaid.

(d) Interest on notes receivable (financing institutions in liquidation). On paper which a Federal intermediate credit bank is obliged to take over from a financing institution for liquidation, interest will be collected at the rate specified in the notes. Renewals of such notes, when taken payable directly to the bank, should bear interest at a rate not to exceed the maximum rate that may be charged by financing institutions on paper eligible for discount by the bank, under regulations prescribed by the Farm Credit Administration. In no event may such rate exceed the maximum interest rate permitted by applicable State laws. (Sec. 209, as added by sec. 2, 42 Stat. 1459, sec. 7, 49 Stat. 316; 12 U.S.Č. 1101, 12 U.S.C., Sup., 1051)

†In §§ 41.204 to 41.210, inclusive, the numbers to the right of the decimal point correspond with the respective section numbers in the Manual for Federal Intermediate Credit Banks issued as of September 1, 1937.

41.207 Credit information-(a) Credit information strictly confidential. No credit information shall be furnished concerning individual borrowers or applicants except upon specific request therefor by a reliable institution (e. g., a bank, insurance company, credit company, finance company, or credit department of a mercantile house) desiring such information in connection with a contemplated extension of credit to the person concerning whom the information is requested; and then only in strict confidence and with an express negation of any responsibility on the part of the unit or agency furnishing such information, or of any director, officer, agent, or employee thereof, for the accuracy or truth of such information.

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