Amendments to the Rural Credit Law

Section 7 defines personal security for rural credit as a bond signed by two or more persons of recognized solvency in the municipality concerned.
The bond covers liability from the date the loan falls due until the entire amount of the loan is fully liquidated.
The board of directors may attach the property of any of the bondsmen for repayment of the entire loan.
Attachment of bondsmen’s property under Section 7 does not require exhausting the property of the principal obligee.

Section 10 requires a member applying for a loan to prove to the board of directors that, at the time of contracting the loan, the member has paid up the par value of at least one share of stock.
Section 10 further requires that the member is not indebted to the association or to his bondsmen or sureties for the same loan.
Section 10 penalizes any person who, through false pretense, obtains a loan for another person.
Section 10 also penalizes any person who indirectly obtains a loan from the association by using someone else’s name.
Punishment under Section 10 is a fine equivalent to the amount of the loan thus obtained, or imprisonment not to exceed two months, or both, at the court’s discretion.

Section 13 provides that the board of directors must declare the entire loan due and payable when the borrower is three months in arrears in payment of dues or interest.
Section 13 provides another ground for acceleration: when it is found that the borrowed money was invested for any purpose other than that specified in the loan application approved by the board of directors.
The declaration of the entire loan due and payable is made by the board of directors under these conditions.

Section 14 authorizes the association to purchase at any public or private sale any property on which it has a mortgage, judgment, lien, or any other incumbrance, or any property in which it has any property interest.
Section 14 authorizes the association to sell, convey, lease, or mortgage such property.
Section 14 imposes a real estate disposal rule: if the purchased property is real estate, it must be sold or definitely disposed of within three years after the adjudication of the title to the association.
Section 14 requires approval for validity: no deeds of sale, conveyance, lease or mortgage made under this section are valid unless they are countersigned and approved by the Director of Plant Industry.

Section 15 limits the duration of loans to not exceed one year.
Section 15 allows extension of the loan period for up to five years, but only through annual extensions.
Section 15 requires that the borrower must request extensions in writing.
Section 15 requires that the board of directors must approve the extension request for it to take effect.

Section 6 repeals all acts or parts of acts inconsistent with Act No. 3746.
Section 7 provides that Act No. 3746 takes effect on its approval (approved November 24, 1930).