tary is authorized to insure and make commitments to insure loans to owners of farms (the operators of which engage primarily in farming or historically resided on a farm), who are citizens of the United States and who cannot secure the necessary credit from private, cooperative or other responsible credit sources, for the purposes of construction, improvement, alteration, repair or replacement of farm dwellings and other farm buildings necessary for the successful operation of their farms, and to take as security for the obligations entered into in connection with such loans first, second or other mortgages on the farms with respect to which such loans are made and such other security as may be required by the Secretary. Any such mortgage shall create a lien running to the United States for the benefit of the insurance fund, notwithstanding the facts that the note may be held by the lender or his assignee. "(b) Any loan insured under this section shall bear interest at a rate not exceeding 4 per centum per annum and shall be on such other terms and conditions as the Secretary may prescribe. Such terms may include an agreement by the Secretary to repurchase any such loan whether or not in default upon such terms and conditions as the Secretary shall prescribe. The Secretary shall require the borrower to pay an insurance charge at a rate equal to at least 1 per centum per annum of the principal outstanding on the loan on any due date of the charge. One-half of all insurance charges shall become a part of the fund and one-half shall be deposited in the Treasury of the United States and shall be available for administrative expenses in connection with the insurance of loans. "(c) The Secretary shall utilize the insurance fund created by section 11 of this title and the provisions of section 13 (b) and (c) of this title in connection with loans insured under this section. The notes and security acquired by the Secretary under insurance agreements shall become a part of the fund. The notes may be held in the fund and collected according to their terms or may be sold and, if necessary, reinsured. All proceeds from such collections, including the liquidation of security and the sale of notes, shall become a part of the fund. "(d) The Secretary may utilize the fund for the payment of taxes, insurance, prior liens, foreclosure expenses and any other costs or expenses necessary for the operation, preservation, or protection of the mortgaged property, either before or after such property is acquired by the United States. "(e) Any loan insured under this section shall be fully guaranteed by the United States as to principal and interest and the insurance agreement shall be incontestable, except for fraud or misrepresentation of which the holder has actual knowledge. "(f) The aggregate amount of principal obligations on loans insured under this section shall not exceed $50,000,000 in any one fiscal year, and may be distributed among the several States and Territories in accordance with determinations made by the Secretary. "(g) Loans insured under this section shall be subject to all of the provisions of this title, except insofar as such provisions may be inconsistent with, or except as otherwise provided in, this section." Hon. ALLEN J. ELLENDER, DEPARTMENT OF AGRICULTURE, Chairman, Committee on Agriculture and Forestry, DEAR SENATOR ELLENDER: This is in reply to your request of January 19 for report on S. 2961, a bill to amend the Bankhead-Jones Farm Tenant Act to further authorize the insurance of farm housing loans. These loans, which would be made under a new section of the act, would be authorized to owners of farms (the operators of which engage primarily in farming or historically resided on a farm) for purposes of construction, improvement, alteration, repair, or replacement of farm dwellings and other farm buildings necessay for the successful operation of their farms. Security for such loans would be first, second, or other mortgages on farms. The other terms and conditions of loans under S. 2961 would be similar to those applicable to loans now made under title I of the Bankhead-Jones Farm Tenant Act, as amended. This Department is in agreement with the objectives of S. 2961 but considers it administratively desirable to meet the farm housing credit needs of farmers under the amendments to title I of the Bankhead-Jones Farm Tenant Act which are embodied in S. 3429. The amendments proposed in S. 3429 would provide direct and insured loan authority for farm housing loans on the same terms on which loans are authorized under title I of the Bankhead-Jones Farm Tenant Act. Loans would be authorized to owners of family-sized farms and to owners of units that are less than family-sized for purposes of construction, improvement, alteration, repair, or replacement of farm dwellings and farm service buildings. This Department is of the opinion that S. 3429 would be simpler to administer than S. 2961 because the former bill would make farm housing loans an integral part of title I, whereas S. 2961 would authorize only insured farm housing loans under a separate section of the act. The Bureau of the Budget advises that it has no objection to the submission of this report. Sincerely yours, TRUE D. MORSE, Acting Secretary. [S. 3034, 84th Cong., 2d sess.] A BILL To amend the Bankhead-Jones Farm Tenant Act to adjust the loan limitations of title II so as to provide more effective assistance to production and subsistence loan borrowers Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That subsections (c) and (d) of section 21 of the Bankhead-Jones Farm Tenant Act, as amended, are further amended to read as follows: "(c) The term of any loan under this section, including any renewal or extension thereof, shall not exceed ten years from the date the original loan was made. "(d) No person who has failed to liquidate his indebtedness under this section for ten consecutive years shall be eligible for loans hereunder until he has paid such indebtedness in full, except that the indebtedness on loans made prior to November 1, 1946, which are being serviced and collected by the Farmers' Home Administration, shall not be subject to the limitations of this section until November 1, 1953." [S. 3185, 84th Cong., 2d sess.] A BILL To amend the Bankhead-Jones Farm Tenant Act so as to adjust the loan limitations of title II so as to provide more effective assistance to production and subsistence loan borrowers Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That subsections (c) and (d) of section 21 of the Bankhead-Jones Farm Tenant Act, as amended, are further amended to read as follows: "(c) The term of any loan under this section, including any renewal or extension thereof, shall not exceed eleven years from the date the original loan was made. "(d) No person who has failed to liquidate his indebtedness under this section for eleven consecutive years shall be eligible for loans hereunder until he has paid such indebtedness in full, except that the indebtedness on loans made prior to November 1, 1946, which are being serviced and collected by the Farmers Home Administration, shall not be subject to the limitations of this section until November 1, 1953." [S. 3374, 84th Cong., 2d sess.] A BILL To amend title II of the Bankhead-Jones Farm Tenant Act so as to increase existing limitations on terms and amounts of production and subsistence loans under such title Be it enacted by the Senate and House of Reprsentatives of the United States of America in Congress assembled, That subsection (b) of section 21 of title II of the Bankhead-Jones Farm Tenant Act, as amended, is amended (1) by striking out "$7,000" and inserting in lieu thereof "$12,000", and (2) by striking out "$10,000" and inserting in lieu thereof "$25,000". SEC. 2. Subsections (c) and (d) of such section are amended by striking out "seven" and inserting in lieu thereof "twelve". DEPARTMENT OF AGRICULTURE, Hon. ALLEN J. ELLENDER, Chairman, Committee on Agriculture and Forestry, United States Senate. Dear Senator ELLENDER: This is in response to your requests of January 25, February 13, and March 8, 1956, for a report from this Department concerning S. 3034, S. 3185, and S. 3374. S. 3034 would amend subsections (c) and (d) of section 21 of the BankheadJones Farm Tenant Act, as amended, to increase the period over which production and subsistence loans may be scheduled for repayment from 7 to 10 years and the period of time during which such loans may be made to an indebted borrower from 7 to 10 years. S. 3185 would amend section 21 of the Bankhead-Jones Farm Tenant Act, as amended, by providing 11-year limitations in subsections (c) and (d). S. 3374 would amend subsection (b) of section 21 by increasing the amount for which an initial loan could be made from $7,000 to $12,000 and by increasing the total amount for which a borrower may be indebted on production and subsistence loans from $10,000 to $25,000. This bill also would amend section 21 of the Bankhead-Jones Farm Tenant Act, as amended, by providing 12-year limitations in subsections (c) and (d). We do not recommend enactment of the bills. With reference to S. 3034 and S. 3185, the Department does not believe general authority is needed to extend the initial repayment period for this type of loan assistance beyond 7 years. In our opinion, Farmers' Home Administration loan experience does not indicate a need for general authority for extending repayment periods over more than 7 years in the first instance. With reference to S. 3374, the Department does not believe there is need for general authority to increase the total amount for which a borrower may be indebted for this type of loan assistance. In most areas of the country the needs of applicants can be adequately met within a $10,000 loan limit. Moreover, this bill provides for retaining both an initial loan limit and a total debt limit, and the Farmers' Home Administration's leading experience indicates that the two limits unnecessarily complicate loan-making operations. S. 3429, upon which the Department has recommended favorable action, would, if enacted, further amend subsections (b), (c), and (d) of section 21 of the Bankhead-Jones Farm Tenant Act as follows: "(b) No loan shall be made under this section for the purchase or leasing of land or for the carrying on of any land-purchase or land-leasing program. No loan may be made to any one borrower under this section which would cause the total principal amount outstanding to exceed $10,000: Provided, however, That an amount not to exceed 10 percentum of the sum made available by annual appropriation for loans under this title may be used for making loans to borrowers which would cause such indebtedness to exceed $10,000 but in no event may any loan be made which would cause such indebtedness to exceed $20,000. "(c) The terms of loans under this section, including any renewal or extension of any such loan except as provided in subsection (d) thereof, shall not exceed seven years from the date the original loan was made. "(d) No person who has failed to liquidate his indebtedness under this section for seven consecutive years shall be eligible for loans hereunder: Provided, however, That in justifiable cases where the Secretary finds that the inability of a borrower to repay his indebtedness under this section within seven years is due to causes beyond the control of the borrower, the Secretary may extend or renew such loans to be repayable in not to exceed ten years from the date the original loan was made, and during such extended term may make additional loans to such persons, if necessary." The authority to increase both the term and continuous indebtedness periods from 7 to 10 years in justifiable cases as proposed in S. 3429 is needed because prolonged drought, other adverse weather conditions and the present agricultural price-cost relationship have retarded the progress of borrowers in graduating to other sources of credit. This amendment, if enacted, would permit the Farmers' Home Administration to extend or renew the present indebtedness of borrowers when justified to enable orderly repayment and also would enable that agency to continue its loan assistance to persons whose loans had been extended or renewed. The authority to use not to exceed 10 per cent of the sum made available by annual appropriation for loans to borrowers which would cause such total indebtedness to exceed $10,000 but in no event exceed $20,000 is needed to make it possible for the Farmers' Home Administration to serve more adequately the credit needs of family-type farm operators in areas in the country requiring higher investments in working capital. The Bureau of the Budget advises that there is no objection to the submission of this report. Sincerely yours, TRUE D. MORSE, Acting Secretary. [S. 3035, 84th Cong., 2d sess.] A BILL To amend the Bankhead-Jones Farm Tenant Act and to authorize the Secretary of Agriculture to make or insure loans to farmers and stockmen for the purpose of refinancing existing debts, and for other purposes Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That the Bankhead-Jones Farm Tenant Act, as amended, is further amended by adding the following new title V: "TITLE V-DIRECT AND INSURED REFINANCING LOANS "SEC. 60. (a) The Secretary is authorized to make or insure loans to eligible farmers and stockmen for the purposes of refinancing, consolidating, renewing, or extending all or part of the existing debts of the applicant, whether unsecured or secured by real or personal property, and for farm operating and subsistence expenses in connection therewith. "(b) Such loans shall be made, or insured if made by a private credit source, to established farmers and stockmen who operate farms not larger than familytype farms in the area and who are unable to repay their existing indebtedness in accordance with present repayment schedules, are unable to secure refinancing of such indebtedness through private or cooperative sources on terms and conditions which they could reasonably be expected to meet and with respect to whom the county committee certifies and the Secretary finds there is a reasonable expectation that, with the assistance provided hereunder and the other resources available to him, the applicant will be able to repay the loan and continue his farming operations. "(c) (1) With respect to such loans the representation certification and finding required by section 44 (a) (3) shall be that credit sufficient in amount and on reasonable terms which the applicant can meet is not available to him in or near the community in which he resides from commercial banks, cooperative lending agencies, or from any other responsible source. "(2) The Secretary shall require such loans to be repaid as provided in section 44 (c) whenever it appears that the borrower is able to obtain a loan from a production credit association, Federal land bank, or other responsible cooperative or private credit source at rates and terms which he can reasonably be expected to meet. "SEC. 61. (a) In providing for the making or insuring of loans under the title, the Secretary "(1) is authorized to insure and make commitments to insure such loans on such terms and conditions as he may prescribe; "(2) is authorized to include in such insurance contracts agreements for servicing such loans and for purchasing such loans, whether or not in default, on such terms and conditions as he may prescribe; "(3) is authorized to prescribe the terms and conditions, including the interest rate or rates, for such loans: Provided, however, That (i) the total principal indebtedness of any applicant at any one time shall not exceed the fair and reasonable value, based on earning capacity or normal market value, of the applicant's farm and the fair and reasonable market value of his chattels which have security value, less the outstanding balance of any liens not refinanced hereunder; and that (ii) such loans secured only by chattel liens shall be repayable within the normal useful life of the chattels or at the normal marketing time therefor, and loans secured by real estate mortgages shall be repayable in not to exceed forty years. "(b) The Secretary shall utilize the insurance fund created by section 11 of the Bankhead-Jones Farm Tenant Act, as amended, and the provisions of section 13 (b) and (c) of said Act in connection with loans insured under this title. The notes and security therefor acquired by the Secretary pursuant to insurance or repurchase agreements under this section shall become a part of the fund. Such notes may be held in the fund and collected according to their terms, or may be sold and, if necessary, reinsured. All proceeds from such collections, including the liquidation of security, and sales of notes shall become a part of the fund. "(c) The Secretary shall require the borrower to pay such insurance charges as he deems proper, taking into account the amount of the loan and prior liens: Provided, however, That the charge shall be payable in advance at intervals of one year or less and shall be at a rate equal to at least 1 per centum per annum of the principal outstanding on the loan on the due date of the charge. One-half of all insurance charges shall become a part of the fund and one-half shall be deposited in the Treasury of the United States and shall be available for administrative expenses in connection with the insurance of loans. "(d) The Secretary may utilize the fund for the payment of taxes, special assessments, water rates, insurance, prior liens, foreclosure expenses, and any other expenses incident to the actions authorized under section 51 of this Act. Such expenditures, where necessary, may be made to protect insured loans while the loans are still held by insured lenders as well as after they have been assigned to the Secretary. "(e) Any loan insured under this section shall be an obligation guaranteed by the United States as to principal and interest and the insurance agreement shall be incontestable, except for fraud or misrepresentation of which the holder has actual knowledge. "(f) The aggregrate amount of principal obligations on loans insured under this section shall not exceed $50,000,000 in any one fiscal year. "SEC. 62. There is auhorized to be appropriated to the Secretary such sums as the Congress may from time to time determine to be necessary to carry out the provisions of this title." [S. 3184, 84th Cong., 2d sess.] A BILL To amend the Bankhead-Jones Farm Tenant Act so as to authorize the Secretary of Agriculture to make or insure loans to farmers and stockmen for the purpose of refinancing existing debts, and for other purposes Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That the Bankhead-Jones Farm Tenant Act, as amended, is further amended by adding the following new title V: "TITLE V-DIRECT AND INSURED REFINANCING LOANS "SEC. 60. (a) The Secretary is authorized to make or insure loans to eligible farmers and stockmen for the purposes of refinancing, consolidating, renewing, or extending all or part of the existing debts of the applicant, whether unsecured or secured by real or personal property, and for farm operating and subsistence expenses in connection therewith. "(b) Such loans shall be made, or insured if made by a private credit source, to establish farmers and stockmen who operate farms not larger than family type farms in the area and who are unable to repay their existing indebtedness in accordance with present repayment schedules, are unable to secure refinancing of such indebtedness through private or cooperative sources on terms and conditions which they could reasonably be expected to meet and with respect to whom the county committee certifies and the Secreary finds there is a reasonable expectation that, with the assistance provided hereunder and the other resources available to him, the applicant will be able to repay the loan and continue his farming operations. "(c) (1) With respect to such loans the representation certification and finding required by section 44 (a) (3) shall be that credit sufficient in amount and on reasonable terms which the applicant can meet is not available to him in or near the community in which he resides from commercial banks, cooperative lending agencies, or from any other responsible source. "(2) The Secretary shall require such loans to be repaid as provided in section 44 (c) whenever it appears that the borrower is able to obtain a loan from a production credit association, Federal land bank, or other responsible cooperative |