The Emergency Farm Mortgage Act, enacted on May 1933, established two separate but closely coordinated programs to address a rising wave of default farm mortgage loans. One program was run by the Federal Land Banks (FLBs)—a regional set of 12 private but government sponsored farm mortgage lenders—and the other was run by their regulator, the Land Bank Commissioner (LBC). FLBs and LBC at peak in the 1930s. Financially, funding came mainly from federally-guaranteed bonds, and the Treasury also provided the programs with significant direct subsidies to offset the costs of the modifications. Applications were poured out quickly after the Emergency Mortgage Act was passed on May 1933. The majority of applications were filed between May 1933 and the end of 1935, when farmers filed 1,068,267 applications, and 68% of loan applicants were successful. Another 354,205 applications were filed between 1936 and 1941, with almost acceptable rates. Application activity after 1941 was minimal, especially for LBC loans, and LBC’s lender eventually expired in 1947. Only individuals could borrow from either program. FLBs have modified all their existing loans to fulfill these terms, and provide refinancing in the same terms to borrowers at other lenders. LBC, which has no pre-existing loan portfolio, is also provided refinancing, focusing on non-eligible loans for a FLB loan because the loans exceed the FLB’s statutory lending limits. will be secured by debt. It shows that the reduction in debt was mainly in the form of low interest rates – down to 3.5% for FLB loans – and principal repayments. New FLB borrowers also benefit from a 30-40 year period, but this is not a source of funding for existing FLB borrowers because their loans carry those periods of time. . LBC’s terms are less favorable than FLB terms, with the aim of encouraging borrowers to refinance FLB if possible.
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The Emergency Farm Mortgage Act. (2019, Mar 01). Retrieved January 28, 2021, from https://midwestcri.org/the-emergency-farm-mortgage-act/