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FEDERAL HOME LOAN BANK ACT AS AMENDED 1
[PUBLIC—No. 304—72D CONGRESS
[H. R. 12280]
AN ACT To create Federal Home Loan Banks, to provide for the supervision
thereof, and for other purposes.
. Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That this Act may be cited as the "Federal Home Loan Bank Act."
SEC. 2. As used in this Act
(1) The term “board” means the Federal Home Loan Bank Board.
(2) The term “Federal Home Loan Bank” means a bank established by the board under authority of this Act.
(3) The term “State” includes the District of Columbia, Puerto Rico, the Virgin Islands of the United States, and the Territories of Alaska and Hawaii.
(4) The term “member” (except when used in reference to a member of the board) means any institution which has subscribed for the stock of a Federal Home Loan Bank.
(5) The term “home mortgage loan” means a loan made by a member or a nonmember borrower upon the security of a home inortgage.
(6) The term “home mortgage” means a mortgage upon real estate, in fee simple, or on a leasehold (1) under a lease for not less than ninety-nine years which is renewable or (2) under a lease having a period of not less than fifty years to run from the date the mortgage was executed, upon which there is located a dwelling for not more than four families, and shall include, in addition to first mortgages, such classes of first liens as are commonly given to secure advances on real estate by institutions authorized under this Act to become mem
147 Stat. 725, 12 U. S. C. 1421 et seq. as amended by Home Owners' Loan Act of 1933 (Public, No. 43, 730 Cong. H. R. 5240, approved June 13, 1933, 48 Stat. 128, 12 U. S. C. 1424); and as amended by An Act to Guarantee the Bonds of the Home Owners' Loan Corporation (Public, No. 178, 730 Cong., S. 2999, approved April 27, 1934, 48 Stat. 643, 12 U. S. C. 1430); and as amended by the National Housing Act (Public, No. 479, 73d Cong., H. R. 9620, approved June 27, 1934, 48 Stat. 1246, 12 U. S. C. 1422, 1426, 1430, 1430a, 1431); and as amended by An Act to provide Additional Home-Mortgage Relief (Public, No. 76, 74th Cong., H. R. 6021, approved May 28, 1935, 49 Stat. 293, 12 U. S. C. 1422, 1426, 1427, 1428a, 1430, 1430b, 1433, 1439); and as amended by An Act to Amend the National Housing Act, (Public Law 24, 77th Cong., H. R. 3575, approved March 28, 1941).
bers, under the laws of the State in which the real estate is located, together with the credit instruments, if any, secured thereby.
(7) The term “unpaid principal," when used in respect of a loan secured by a home mortgage means the principal thereof less the sum of (1) payments made on such principal, and (2) in cases where shares or stock are pledged as security for the loan, the payments made on such shares or stock plus earnings or dividends apportioned or credited thereon.
(8) An "amortized" or "installment" home mortgage loan shall, for the purposes of this Act, be a home mortgage loan to be repaid or liquidated in not less than eight years by means of regular weekly, monthly, or quarterly payments made directly in reduction of the debt or upon stock or shares pledged as collateral for the
repayment of such loan.
(9) The term "nonmember borrower" includes an institution authorized to secure advances from a Federal Home Loan Bank under the provisions of section 6 (e).
FEDERAL HOME LOAN BANKS
Sec. 3. As soon as practicable the board shall divide the continental United States, Puerto Rico, the Virgin Islands, and the Territories of Alaska and Hawaii into not less than eight nor more than twelve districts. Such districts shall be apportioned with due regard to the convenience and customary course of business of the institutions eligible to and likely to subscribe for stock of a Federal Home Loan Bank to be formed under this Act, but no such district shall contain a fractional part of any State. The districts thus created may be readjusted and new districts may from time to time be created by the board, not to exceed twelve in all. Such districts shall be known as Federal Home Loan Bank districts and may be designated by number. As soon as practicable the board shall establish, in each district, a Federal Home Loan Bank at such city as may be designated by the board. Its title shall include the name of the city at which it is established.
ELIGIBILITY OF MEMBERS AND NON MEMBER BORROWERS
Sec. 4. (a) Any building and loan association, savings and loan association, cooperative bank, homestead association, insurance company, or savings bank, shall be eligible to become a member of, or à nonmember borrower of, a Federal Home Loan Bank if such institution (1) is duly organized under the laws of any State or of the United States; (2) is subject to inspection and regulation under
2 Sec. 2 (6) of the Federal Home Loan Bank Act (47 Stat. 725, 12 U. S. C. 1422) originally read as follows:
"(6) The term 'home mortgage' means a first mortgage upon real estate, in fee simple, or leasehold under a renewable lease for not less than ninety-nine years, upon which there is located a dwelling for not more than three families, and shall include, in addition to first mortgages, such classes of first liens as are commonly given to secure advances on real estate by institutions authorized under this Act to become members, under the laws of the State in which the real estate is located, together with the credit instruments, if any, secured thereby."
Sec. 507 of the National Housing Act (48 Stat. 1264) amended sec. 2 (6) of the Federal Home Loan Bank Act to read as above set forth in the text, except that the word "four" read “three."
Sec. 1 of An Act to Provide Additional Home-Mortgage Relief (49 Stat. 293, 12 U. S. C. 1422) struck out the word "three" and inserted in lieu thereof the word "four."
the banking laws, or under similar laws, of the State or of the United States; and (3) makes such home mortgage loans as, in the judgment of the board, are long-term loans (and in the case of a savings bank, if, in the judgment of the board, its time deposits, as defined in section 19 of the Federal Reserve Act, warrant its making such loans). No institution shall be eligible to become a member of, or a nonmember borrower of, a Federal Home Loan Bank if, in the judgment of the board, its financial condition is such that advances may not safely be made to such institution or the character of its management or its home-financing policy is inconsistent with sound and economical home financing, or with the purposes of this Act.
(b) An institution eligible to become a member or a nonmember borrower under this section may become a member only of, or secure advances from, the Federal Home Loan Bank of the district in which is located the institution's principal place of business, or of the bank of a district adjoining such district, if demanded by convenience and then only with the approval of the board.
(c) Notwithstanding the provisions of clause (2) of subsection (a) of this section requiring inspection and regulation under law as a condition with respect to eligibility for membership, any building and loan association which would be eligible to become a member of a Federal Home Loan Bank except for the fact that it is not subject to inspection and regulation under the banking laws or similar laws of the State in which such association is organized shall, upon subjecting itself to such inspection and regulation as the board shall prescribe, be eligible to become a member.3
Sec. 5. No institution shall be admitted to or retained in membership, or granted the privileges of nonmember borrowers, if the combined total of the amounts paid to it for interest, commission, bonus, discount, premium, and other similar charges, less a proper deduction for all dividends, refunds, and cash credits of all kinds, creates an actual net cost to the home owner in excess of the maximum legal rate of interest or, in case there is a lawful contract rate of interest applicable to such transactions, in excess of such rate (regardless of any exemption from usury laws), or, in case there is no legal rate of interest or lawful contract rate of interest applicable to such transactions, in excess of 8 per centum per annum in the State where such property is located. This section applies only to home mortgage loans made after the enactment of this Act.
CAPITAL OF FEDERAL HIOME LOAN BANKS AND SUBSCRIPTIONS THERETO
SEC. 6. (a) As soon as practicable after the enactment of this Act, the board, with the approval of the Secretary of the Treasury, shall determine the minimum capital of each Federal Home Loan Bank which shall be not less than $5,000,000. The board shall, as soon as practicable thereafter, open books in each district established under
3 As amended by sec. 3 of Home Owners' Loan Act of 1933 (48 Stat. 129, 12 U. S. C. 1424), repealing subsec. (d) of sec. 4. Subsec. 4 (d) of the Federal Home Loan Bank Act (47 Stat. 727, 12 V. S. C. 1424) read as follows:
"Any home owner who comes within the limits of this Act and who is unable to obtain mortgage money from any other source may obtain same from any bank organized under this Act: Provided, That this subsection shall not be effective when the Federal Government has had its stock retired."