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- 1. What is a Federal Land Bank Association?
- A Federal Land Bank Association (FLBA), or Federal Land Credit Association (FLCA), is part of the Farm Credit System, which is a nationwide network of financing cooperatives that lend to agriculture and rural America. FLBAs originate and service long-term loans.
- 2. Is the FLBA of South Alabama a part of the government?
- No. The FLBA of South Alabama, as well as all Farm Credit institutions, are cooperatively owned by their customers and receive no funding from the federal government.
- 3. What does it mean that the FLBA of South Alabama is
cooperatively owned?
- When you obtain a loan through the FLBA of South Alabama, you become an owner of the association by purchasing stock equal to 2 percent of your loan amount. As of March 1, 2004, for new loans only, the stock purchase requirement is limited to the lesser of 2 percent of the loan amount or $1,000. Funds for the stock can be included in the loan. Ownership of this stock gives you the right to participate in the business affairs of the association, including the election of its board of directors. Typically the financial performance of the association allows borrowers to be paid patronage and/or dividends, which further reduces the cost of borrowing for our customers.
- 4. Who operates the association?
- A board of directors elected by the borrowers supervises the association and employs professional personnel to handle day-to-day operations. The association abides by policies and procedures adopted by the board of directors and management team.
- 5. Who is eligible to borrow?
- Any legal entity or person who currently owns or is purchasing rural real estate is eligible to apply for a loan. You do not have to be a farmer to get a loan with us. Loan approval and terms are subject to the creditworthiness of the applicant.
- 6. Does the FLBA of South Alabama make home loans?
- We make loans for the purchase, construction and improvement of homes located in rural areas. We also finance rural home sites upon which a home will be constructed in the future.
- 7. What collateral is required?
- All loans must be secured by a first lien mortgage on real estate - generally on the farm, ranch, agribusiness facility or home that is financed by the loan.
- 8. How much can I borrow?
- All loans require some level of equity, which is the difference between the appraised value of the real estate offered as collateral and the loan amount. The appraised value, financial strength and repayment ability of the applicant will determine the total amount that can be borrowed. Down payment or equity requirements generally range between 15 and 20 percent.
- 9. Does the association accept deposits?
- The FLBA of South Alabama offers interest-bearing funds-held accounts. Monies in funds-held accounts earn interest at a competitive rate and can be used to pay loan installments or withdrawn for other purposes. Monies in funds-held accounts cannot exceed the amount of the loan outstanding. Funds-held accounts are not FDIC-insured.
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