Loan guarantee

“ In making loans it should be recognized that character and industry are the basis of credit, and a loan may be made to a member who has not adequate security to pledge for it, provided he can obtain the guaranty of one or more other members, but no member is obliged to guarantee the loan of another member unless he desires to do so. ”

“ A law authorizing the government to guarantee a certain percentage of any loss which may be suffered by any private bank, insurance company or any other credit institution, on account of loans it may grant to private individuals for home construction, the amount of each loan not to exceed P10,000 for each individual borrower, and fixing the aggregate amount of the loans for which such guarantee may be given. ”

“ The authority to incur new direct loan obligations, make new loan guarantee commitments, or modify outstanding direct loans (or direct loan obligations) or loan guarantees (or loan guarantee commitments) shall constitute new budget authority in an amount equal to the cost of the direct loan or loan guarantee in the fiscal year in which definite authority becomes available or indefinite authority is used. Such budget authority shall constitute an obligation of the credit program account to pay to the financing account. ”

“ COMMUNITY FINANCIAL INSTITUTIONS, SMALL INSURED DEPOSITORY INSTITUTIONS, AND CREDIT UNIONS.—In making loan guarantees under this paragraph after the date of enactment of this clause, the Administrator shall guarantee not less than $30,000,000,000 in loans made by— (I) community financial institutions ”

“ The only guarantee for this loan which he demands from his brothers is their oath and honor. It has a revenue of twelve thousand francs, which will be loaned without interest to workmen with families and out of work, in sums of twenty to forty francs. These loans shall only be made to working men or women who shall bring a certificate of good conduct from their last employer, stating the cause and date of the suspension of employment. ”

“ These guaranties furnished purchasers additional security and were calculated to make the loans desirable as investments and readily saleable at a profit.
The lending fees, extension fees, and accrued interest appertain to the business of lending money rather than to insurance and may not reasonably be attributed to the subordinate element of guaranty in respondent's mortgage loan business. The so-called premiums amount to about one-third of total income, but they cover agency and other services which generally are not performed under contracts of insurance. ”

“ A borrower desiring to obtain an insured loan applies directly to the private lender, which has final authority to decide whether the loan should be made. If a loan is granted, the lender reports the details to the FHA which automatically insures the loan as soon as the required premium is paid. ”

“ The just inference is, that it is only the element of the contract that is stated in the Digest, and not its limitation, namely, that the goods, on the security of which, or for which, the loan is made, shall be at the risk of the lender; but not that they should be the specific loan, or its investment.
The practice of modern nations is free from all obscurity on this head. They sanction, with great harmony, respondentia loans made after the goods are at risk. ”

“ The time and manner of repaying, unless the loan be placed on an irredeemable fund. This enumeration is liable to a variety of objections. It omits, in the first place, the pledging or mortgaging, of a fund for the security of the money lent; an usual, and in most cases, an essential ingredient.
The idea of a stipulation of an interest or no interest, is too confined. It should rather have been said, to stipulate the consideration of the loan. Individuals often borrow upon considerations other than the payment of interest. So may government; and so they often find it necessary to do. ”

“ The fact that the debt is growing less, and, as well, the incentive to avoid small fines in case of failure to make payment, contribute to the value of the security. A loan on an ordinary basis, secured from a savings bank, insurance or trust company for a long period, is not thought of in this way. ”

“ The contracts involve an advance of money at a premium beyond the rate of the statute, dependent for its return on the result of a real risk,-a risk in which the borrower had an interest to the whole extent of the loan,-an assignment of the goods at risk, to secure the payment of principal and interest on the happening of a contingency,-and a continuance of the actual possession of the goods assigned with the agents of the borrowers, until the purposes of their employment were answered, and they returned within the reach of the lender. ”

“ We are of opinion that the complainant never conveyed his interest in the property in controversy except as security for the loan, and that his deed is a subsisting security. He has, therefore, a right to redeem the property from the mortgage. In estimating the amount due upon the loan, interest only at the rate of six per cent per annum will be allowed. ”

“ But on the other hand, if 4 per cent, bonds are selling at par and he chooses a 4 per cent, loan, he gets his $1,000 in cash for his Pfandbrief and pays $40 per year interest and gives his mortgage and note for $1,000. It is always regarded as the best policy for the borrower to choose the class of bonds selling nearest par, unless they are selling above par, in which case the farmer securing the loan gets a premium over and above the amount of his liability and it is to his advantage to take such loans. ”

“ Frequently the only consideration contemplated is that the guarantee shall extend the credit and make the advances to the third person, for whose performance of his obligation, on that account, the guarantor undertakes. But a guaranty may as well be for an existing debt, or it may be supported by some consideration distinct from the advance to the principal debtor, passing directly from the guarantee to the guarantor. In the case of the guaranty of an existing debt, such a consideration is necessary to support the undertaking as a binding obligation. ”

“ The broker's business grows legitimately out of the need of ready transfer of claims, for the sake of larger use of the floating capital of the country, and readiness of investment in more fixed forms. It adds, however, to the dangers of extended credit by making more easy the gratification of present wants through expectation of future ability. The broker makes his gain, without reference to the final settlement, by taking a commission upon the loan. ”

“ Rather than stop payment, he will, of course, make temporary sacrifices—will give high terms to whoever will furnish him with the desired means. If, by depositing securities with his banker, he can get a loan at an advanced rate of interest, well. If not, by offering an adequate temptation, he may mortgage his property to some one having good credit; who either gives bills, or draws on his banker for the sum agreed to. In either case, extra promises to pay are issued; or, if the difficulty is met by accommodation-bills, the same result follows. ”

“ In spite of the example of practically every nation in Europe for generations, the lending of money on mortgage in America still remains largely a mere brokerage business unrestricted by proper governing laws, either by individuals or corporations, while mortgages continue to be drawn up for three or five years, when experience shows that the average life of a loan is far in excess of that period and needs to be renewed time and again, with added expense to the debtor and trouble for the creditor. ”

“ No person, firm, or corporation, or any agent thereof, other than a national bank or a bank or trust company duly incorporated under the laws of this state, or a pawnbroker, as provided in chapter 235 of the Public Acts of 1905, shall, directly or indirectly, loan money to any person, and directly or indirectly charge, demand, accept, or make an agreement to receive therefor interest at a greater rate than 15 per centum per annum. ”

“ Any mutual saving fund, loan, or building association, as authorized to loan funds and to secure such loans by mortgage or other security, and any premiums taken by any such association for the preference or priority of such loans, shall not be deemed interest within the meaning of § 1 of chapter 23 of the general statutes. ”

“ All remittances for advance, instalments, premiums, monthly instalments, fines and penalties, interest and premiums, and all other payments shall be made to the secretary of the association at the home office, and in registered letter, express or money order, or drafts. Individual checks shall not be received.
The other sections of the article provide for the manner in which the loan shall be made, upon what security, interest and premium, and covenants, the manner of payment and prepayment, and the enforcement of payment, and when shares may be canceled and forfeited. ”

“ The redemption shall be effected by purchase at the market price. If the market price be above par, it shall be effected by drawings at par.
Art. VI. The service of the Guaranteed Loan shall be conducted by the Treasury of the Public Debt, under the same conditions as the Preference and Unified Debts.
Art. VII. The Commissioners of the Treasury of the Debt shall, fifteen days previous to each payment falling due, furnish us with an account, in a special Report to be published in the 'Journal Officiel,' of the state of the funds assigned to the service of the loan. ”

“ The conditions of the loan, or whether any particular security shall be given to the lender, are matters of arrangement between the parties; they do not concern any one else. They do not imply that the borrower can give to his promise to refund the money any security to the lender outside of property or rights which he possesses. The transaction is completed when the lender parts with his money and the borrower gives his promise to pay at the time and in the manner and with the securities agreed upon. ”

“ The security taken is on freehold, or leasehold, interest clear of incumbrances and free of any breach of conditions. The loans are on first mortgage of land and improvements. No loan is to be less than $125, or more than $15,000, and the sum of the advances to any one person must not exceed $15,000. ”

“ Loans shall be made only for the purposes which promise to result in a saving or a profit to the borrower. Each applicant for a loan must state the object for which he desires to borrow, in order that the credit committee, which passes on all loans, may rigidly exclude thriftless and improvident borrowing. ”

“ While therefore it is possible that a loan may be so proposed and accepted as to give to the intended borrower a cause of action for any failure to perform the agreement, and a right to recover damages at law, yet on a bill in the nature either of a bill for specific performance or for an equitable garnishment, the court may well inquire where is the substantial equity in the case. ”

“ A contract to give a mortgage to secure a loan of money may be enforced by the creditor, but a contract to lend money cannot be enforced by either party, because there is usually an open market for the lending and borrowing of money. ”

“ A loan is—an issue of government bills of exchange containing a percentage obligation commensurate to the sum of the loan capital. If the loan bears a charge of 5 per cent, then in twenty years the State vainly pays away in interest a sum equal to the loan borrowed, in forty years it is paying a double sum, in sixty—treble, and all the while the debt remains an unpaid debt. ”

“ Such capital stock shall be held by said land bank as collateral security for the payment of said loan, but said association shall be paid any dividends accruing and payable on said capital stock while it is outstanding. Such stock may, in the discretion of the directors, and with the approval of the Farm Credit Administration, be paid off at par and retired, and it shall be so paid off and retired upon full patment of the mortgage loan. ”

“ The company have agreed with the bondholders, (for the mortgagee represents them,) that if they will advance their money to build the road, and equip it, the road and equipments thus constructed, and as fast as constructed, shall be pledged as a security for the loan. This is the simple contract, when stripped of form and verbiage; and, in order to carry out this intent most effectually, and with as little hazard as possible to the lender, the company specially stipulate that the money thus borrowed shall be faithfully applied in the construction and equipment of the road. ”

“ The application of a loan does not affect either the debt or the security given for it. The maritime law, as to this species of loan, is the same. The doctrine of application arises only where the master hypothecates, not where the owner bottomries, or borrows on respondentia. Even in the former case, though a necessity for the advance must be shown, the application does not concern the lender, unless there be a misapplication by collusion with him, or with his privity. ”

“ So, when there is a sudden demand for loans, a rate higher than the legal one will certainly be paid, and the law violated, if the getting of a loan is absolutely necessary to save the borrower from commercial ruin. The effect of a legal rate is to stop loans at the very time when loans are most essential to the business public. ”