The appropriate bank officer shall certify to the action taken at the meeting of the board of directors, and his certificate shall set out the resolution adopted by the board.

[21 F.R. 8648, Nov. 9, 1956]

§ 11.1022 Approval by Administration.

Upon completion of the board's action, a certified copy of the resolution, accompanied by a detailed statement of facts concerning the condition, operations, and prospects of the association, should be forwarded to the Administration. Upon approval or disapproval of the bank's request by the Administration, notice of such decision will be sent to the bank. Upon receipt of approval notice, the bank shall take the necessary action to pay off at par and retire the stock held by the association in the bank, and when such action has been completed, the bank shall notify the Administration.

[21 F.R. 8648, Nov. 9, 1956]

§ 11.1023 Distribution of assets; completing liquidation.

The Administration will advise the association of the retirement by the bank of its stock. Upon receipt of this information the association shall have recorded on its books the retirement of the corresponding stock of the association held by the borrowers; determine by agreement with the bank the amount of contingent liabilities incurred by the association on account of endorsed mortgages and include such amount in the liabilities of the association; apply all assets of the association to the extent necessary to the payment of its liabilities; distribute any remaining assets to its stockholders, or their successors in interest, of record on the books of the association as of the effective date of

liquidation, pro rata according to their respective shareholdings; and return the charter of the association to the bank for transmittal to the Administration for cancellation.

[21 F.R. 8648, Nov. 9, 1956]

§ 11.1024

Examination; disposition of books and records.

Upon completion of liquidation the books and records of the association shall be forwarded to the office of the resident farm credit examiner for final examination: Provided, however, That upon the written request of the manager of the association, such final examination shall be made at the association's office prior to the release of the books and records by the association. Upon completion of the examination, the books and records will be forwarded to the Administration by the resident farm credit examiner.

[21 F.R. 8648, Nov. 9, 1956, as amended at 27 F.R. 10930, Nov. 9, 1962]

§ 11.1035

ELIGIBLE MEMBERS

Eligibility determined by location of land.

A farm owner shall be eligible to membership in the association within whose chartered territory any part of the land to be mortgaged is located, regardless of the applicant's place of residence. If the farm to be mortgaged lies within the territory of two or more associations, the applicant shall be eligible to join any one of the associations, but if the lands to be mortgaged are not adjoining, they will be treated as a single farm for loan purposes only if the separate units are under common management and are in such proximity to each other as to constitute practically one operative agricultural unit.

[21 F.R. 8648, Nov. 9, 1956, as amended at 27 F.R. 10930, Nov. 9, 1962] § 11.1036 Husband

owner.

or

wife as sole

When husband and wife both sign a mortgage but one or the other is sole owner, only the one in whose name the title stands is eligible to membership in the association.

[21 F.R. 8649, Nov. 9, 1956] § 11.1037 Joint owners.

In cases of joint ownership, each owner who assumes personal liability for a loan must be elected to membership in the association through which the loan

is made and the association stock must be issued jointly to all such owners. [21 F.R. 8649, Nov. 9, 1956]

§ 11.1038 Farming corporations.

A corporation engaged in farming operations which obtains or properly assumes a loan should be elected to membership and the association stock issued in its name. The corporation must authorize, by power of attorney, one of its shareholders to act for it in all association matters. The person so authorized to act for the corporation may be elected a director of the association, provided he is a bona fide resident of the territory within which the association is authorized to do business. The power of attorney referred to should be so drawn that it will continue in full force and effect until the association has received another power of attorney to supersede the old one or until the old power has been revoked.

[21 F.R. 8649, Nov. 9, 1956]

§ 11.1039 Voting by proxy.

Voting by proxy shall not be permitted at stockholders' meetings of associations unless the proxy holder is (a) the person authorized to act for a farming corporation owning the stock, (b) a joint owner of the stock, or (c) the husband or wife of the owner of the stock. In the latter case, said husband or wife shall not be eligible to any office in the association. [21 F.R. 8649, Nov. 9, 1956]

CONDUCT OF EMPLOYEES

No officer, director, or employee of an association shall receive, directly or indirectly, any part of any fee, commission, or other consideration paid to any other person for or in connection with abstracts prepared for applicants for loans, insurance on security for such loans, the sale of farms mortgaged to a land bank, or any services performed on behalf of applicants for loans or borrowers from a land bank: Provided, however, That a person employed and compensated by an association solely for the purpose of taking applications for loans may also receive compensation from applicants and borrowers for services as attorney, abstracter or insurance agent if his charges for such other services are reasonable or at standard rates. [27 F.R. 10930, Nov. 9, 1962]

§ 11.1075 Prohibition against officers, directors, and employees acquiring certain stock or claims based thereon. No officer, director, or employee of an association shall acquire any interest in the stock of such association or any other such association, or in any claim arising from the retirement of such stock, by voluntary transfer or assignment, except such interests as he may acquire in connection with the transfer to him of land mortgaged to a Federal land bank. [27 F.R. 10930, Nov. 9, 1962]

§ 11.1076 Prohibition against managers making farm loans for any other company or agency.

Section 7 of the Federal Farm Loan Act, as amended (12 U.S.C. 714), in describing the powers and duties of managers of associations, provides in part: No such manager shall engage in the making of land mortgage loans eligible at a Federal land bank through or for any other land mortgage company or agency, and the making of any such loan by any manager shall forthwith work a forfeiture of his office. [27 F.R. 10930, Nov. 9, 1962]

§ 11.1077 Administrative interpretation of provision.

This provision is construed by the Administration as prohibiting a manager from participating in, or having a part in, the making of land mortgage loans through or for any land mortgage company or agency whose business consists, in whole or in part, in making land mortgage loans, where the applicant, the security, and the purpose or purposes are eligible at a Federal land bank for a loan in any amount or where any proceeds of the loan are to be used to pay a Federal land bank loan. [27 F.R. 10930, Nov. 9, 1962] § 11.1078

Manager should not divert to other agencies business acceptable to land bank.

The manager, as the principal administrative officer of the association, holds a position of trust. He should not divert to other lending agencies business which would be acceptable to the land bank. It is the duty of the board of directors of every association to enforce compliance with this provision of the law.

[27 F.R. 10930, Nov. 9, 1962]

§ 11.1079 Political activity of employees.

Employees of associations are expected to so conduct themselves as to avoid criticism on the grounds of political activities. It is imperative that the services of association employees be rendered impartially and not be influenced by political considerations. No individual shall be eligible to become or be a salaried officer or employee of an association if he is or becomes a candidate for or is elected or appointed to any remunerative public office, unless prior to his employment or as a condition to his continued employment the board of directors of the association, after a full consideration of all the facts involved, shall find that such candidacy or the holding of such public office would not in any manner adversely affect the best interests of the borrowers or the operations and public relations of the association and the bank, and said finding is approved by the Federal land bank of the district. Any individual who is or becomes ineligible for employment by an association by reason of the foregoing provision shall not be paid any compensation for services rendered to the association during the period of such ineligibility.

[27 F.R. 10930, Nov. 9, 1962]

§ 11.1080 Other restrictions on activities. The manager and other employees of an association shall not accept any fee, commission, gratuity, or compensation in any form from any other lending agency in connection with a land mortgage loan made by it even though the loan would not be eligible at a Federal land bank. Officers and employees of the banks and corporations under the supervision of the Administration who are employed on a full-time basis are required to devote their full business time to the duties assigned them in connection with the activities and operations of the organizations in which they are employed. They are also expected to refrain from accepting employment or compensation for activities, even for services rendered outside of business hours, which might embarrass the Administration or cast reflection upon their ability to take an unbiased and impartial view of its problems.

[21 F.R. 8648, Nov. 9, 1956, as amended at 27 F.R. 10931, Nov. 9, 1962]

The banks may collect an application fee of not to exceed $10 on each application, except that in cases wherein the association application fee exceeds $5, the bank's application fee shall be limited to the difference between such association fee and $15.

§ 19.68 Applications on specialized farms.

In the case of applications for loans (or increased loans or divisions of loans) on specialized farms of certain types, such as turpentine farms, timber farms, ranches, and orchards, where appraisal costs are unusually high, the banks may establish, subject to the approval of the Administration, special additional fees in recognition of the higher costs of appraisal of such property.

§ 19.69 Appraisals.

The fee deposits authorized by these regulations should be retained by the bank if an appraisal is made of the property, but in any such case where an appraisal is not made, the fee should be refunded in its entirety to the ap

In connection with applications for a partial release of the mortgaged security, the bank may charge reasonable fees not exceeding the actual cost of appraisal by a land bank appraiser and determination of title. For cases involving appraisal, the fees charged may be based on estimated average cost of appraisal and determination of title so long as, in the aggregate, the fees collected for such cases do not exceed such actual cost. For cases not involving appraisal, the fees charged may be based on estimated average cost of determination of title so long as, in the aggregate, the fees collected for such cases do not exceed such actual cost. In any case, though, the fee charged may be in the amount of the actual cost of appraisal and determination of title involved in the particular

case.

§ 19.74 Release of personal liability.

Where, upon transfer of title to the mortgaged property, an application is made for release from personal liability, the bank may require a fee of $10 in connection with each application, such fee to be refunded in its entirety to the applicant in the event an appraisal of the property is not made.

An amount not to exceed actual costs, such as abstract notarial recording and necessary incidental items, incurred in connection with a reamortization, may be charged the borrower.

§ 19.77 Reinstatement of loans.

When a bank has instituted foreclosure or has taken necessary steps preliminary to foreclosure, it may require a borrower who wishes to reinstate such defaulted loan to reimburse it for any items of actual expense which it legally could include in its foreclosure fee; but no fee may be charged upon a reinstatement for any items of expense which legally could not be included in the foreclosure fee (such as purely collection costs), even though the amount of such outside items is less than the charges which could lawfully be imposed were the foreclosure to be completed.

ASSOCIATION FEES

§ 19.78 Applications.

Associations may collect an association application fee of not more than $5 in connection with each application, except that in cases wherein the appraisal is made for the bank by association personnel, an application fee of not more than $15 may be collected: Provided, however, That the amount of any such fee shall not exceed 1 percent of the amount of the loan applied for. If the property offered as security is subject to any outstanding mortgage loan or loans held by the bank, regardless of the amount stated in the application, the application fee shall be based on an amount applied for which includes the unmatured principal, as of the date of the application, of such outstanding mortgage loan or loans. The application fee may be collected at the time the application is filed. It may be retained by the association regardless of whether the loan is rejected or closed as a new, additional, or refunding bank loan: Provided, however, That if no association investigation or appraisal by association personnel is made for the bank after a

or in part to a bank, an additional loan is closed and the association currently endorses only the additional loan, the association may collect a closed loan fee which, when added to the association application fee already collected, will not exceed 1 percent of the amount of the additional loan. If the outstanding land bank loan or loans and the additional loan are written as one loan, and the association currently endorses for the full amount, the association may collect a closed loan fee which, when added to the association application fee already collected, will not exceed 1 percent of the full amount of the loan closed.

[27 F.R. 10931, Nov. 9, 1962]