QuestionsQuestions (Act No. 3746)
Act No. 3746 amends specific sections (7, 10, 13, 14, and 15) of Act No. 2508, the Rural Credit Law. Its purpose is to modify rules on personal security for loans, loan qualification and anti-indirect borrowing, acceleration of loans upon default or misuse, powers of the association regarding mortgaged/incumbered property, and the duration/extension of loan periods.
Personal security consists in a bond signed by two or more persons of recognized solvency in the municipality concerned.
The bondsmen’s responsibility extends from the date the loan falls due until the entire amount of the loan is fully liquidated.
No. The board may attach the property of any bondsman for repaying the entire loan without the necessity of exhausting the property of the principal obligee.
He must prove that at the time of contracting the loan: (1) he has paid up the par value of at least one share of stock; and (2) he is not indebted to the association or to his bondsmen or sureties for said loan.
Any person who, under false pretenses, obtains a loan for another person, or indirectly obtains a loan by using someone else’s name, is punished by a fine equivalent to the amount of the loan obtained, or imprisonment not exceeding two months, or both, at the court’s discretion.
The penalties are (a) a fine equivalent to the amount of the loan obtained, and/or (b) imprisonment not to exceed two months. Whether both may be imposed is at the discretion of the court.
When the borrower is three months in arrears in paying dues or interest on any loan, or when it is found that the money borrowed was invested for a purpose other than that specified in the loan application approved by the board.
The text provides that the entire loan “shall be declared” due and payable by the board of directors in those circumstances, indicating a mandatory consequence upon the stated conditions.
The entire loan becomes due and payable (acceleration) upon the finding that the proceeds were invested for a purpose other than that specified in the approved application.
It may purchase at any public or private sale any property on which it has a mortgage, judgment, lien, or any other incumbrance, or in which it has any property interest; and may sell, convey, lease, or mortgage such property.
If the property purchased is real estate, it must be sold or definitely disposed of within three years after the adjudication of the title thereto to the association.
No such deed or conveyance/lease/mortgage is valid unless it is countersigned and approved by the Director of Plant Industry.
The period of duration of the loans shall not exceed one year.
It may be extended for a time not to exceed five years by annual extensions, but it is not considered extended unless the borrower requests in writing and the board of directors approves it.
When the borrower has so requested in writing and the board of directors has approved the extension; without these, the period is not considered extended.
All acts or parts of acts inconsistent with Act No. 3746 are repealed.
It takes effect on its approval.