Farm-mortgage investments of life insurance companies

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Material Information

Title:
Farm-mortgage investments of life insurance companies
Physical Description:
33 p. : ill., maps ; 27 cm.
Language:
English
Creator:
Larsen, Harald C ( Harald Christian ), 1907-
United States -- Bureau of Agricultural Economics
Publisher:
United States Department of Agriculture, Bureau of Agricultural Economics
Place of Publication:
Washington, D.C
Publication Date:

Subjects

Subjects / Keywords:
Farm mortgages -- United States   ( lcsh )
Agricultural credit -- United States   ( lcsh )
Life insurance -- Finance -- United States   ( lcsh )
Insurance companies -- Investments -- United States   ( lcsh )
Genre:
federal government publication   ( marcgt )
non-fiction   ( marcgt )

Notes

Statement of Responsibility:
by Harald C. Larsen ...
General Note:
Title from cover.
General Note:
Reproduced from typescript.
General Note:
"December 1943."

Record Information

Source Institution:
University of Florida
Rights Management:
All applicable rights reserved by the source institution and holding location.
Resource Identifier:
aleph - 028447840
oclc - 54673621
System ID:
AA00025966:00001

Full Text






ES DFPA:AT12lT
TaTIM STATE iil AGRlrJLIL7PE
Bureau of griclaltvral Eccnorics
















FARE-KORTGAGE IIWESTLE-IITS OF

















B17
Ilarala 0. Larsen )erd. r 4,ricultural Econo ,ist















Yas',ington, D. C.













CONTENTS




Intre ductory .............................................. 1

Amount of farm-mortgage investments of insurance
companies ............................................... 1

Relative importance of insurance companies as lenders
on farm mortgages ....................................... 4

Concentration of loans .................................... 9

Amount held by States ................................ 9

Amount held relative to other lenders, by States ..... 10 Loan concentration among life insurance companies .... 10 Composition of farm-mortgage investments .................. 13

Amount of purchase-money and regular mortgages ....... 13 Average size of outstanding farm mortgages ................ 16

Average size of purchase-money and regular
mortgages ......... 6 ....... 0 ........... 0.0 .......... 19

New farm-mortgage loans made .............................. 22

Mortgage recordings .................................. 24

Principal repayments on farm-mortgage loans ............... 27

Delinquent 1(jans ..... ...................... 29

Foreclosures ........ I ........ 0 ........ # ............. 29

Summary ................................................... 32











FARM-MORTGAGE IN ESMMENTS OF LIFE INIStRANCE C01YANIES

By Harald C. Larsen, Senior Agricultural Economist


INTRODUCTORY

For several decades, life insurance companies have been a major institutional factor in the financing of agriculture. They are one of the principal sources of long-term mortgage credit for farmers, and they currently hold upwards of one-sixth of the total farm-mortgage debt. Furthermore, they have a
substantial a.ditional investment in the unpaid principal of sales contracts which is significant, both from the standpoint of farmers' long-term debt and from the stpndnoint of institutional real estate holdings. Investments of these companies in real estate held, together with their real estate acquirements and disposals since the early thirties, have significantly influenced the tenure pattern in certain farming areas and have substantially affected the recent trends of the real estate market. Currently (January 1, 1943)
their real estate holdings are nearly three-fourths of the total holdings of the major institutional lenders. Life insurance companies remain a potential source of a large part of the funds needed to finance agriculture and their current policies with respect to both farm loans and farm real estate will have a significant influence on the future financial soundness of a large number of farmer borrowers.

Recognition of the importance of insurance companies in farm financing led to a study designed to provide additional and more detailed information on their loan and real estate operations. This report deals principally with the former and discusses in some detail the amount, composition, and distribution of regular and purchase-money mortgages, together with certain related material. A subsequent report will deal with insurance company investments in sales contracts and real estate held outright.


A11OUIT OF FARM-MORTGAGE IhNESTENTS OF INSURANCE COMPANIES

The investment of life insurance compani s in farm-mortgage loans for
January 1, 1943 is estimated at $991,41,000, 1/a decrease of $15,700,000 from S907,1)1,000 on January 1, 1942 (table 1). This decrease is a reversal

1/ Book value or admitted asset value. For individual mortgages this figure may be somewhat larger or smaller than the unpaid principal; for the entire portfolio, however, this figure is believed to approximate the unpaid principal, although it may be biased downward to some extent, particularly for purchasemoney mortgages.







Table 1.- Total farm-mortgage debt and Investments of insurance companies in farm mortgages, sales contractsand real estate, January 1, 1910-43

Insurance company inuestments 1
Total farm- Sales con Percentage
Tear mortgage Para-mortgage loans outstanding tracts and total loans are
debt real estate of total
Percentage Percentage Percentage agriclteral
Amount 2/ of sort- of admittq& Amount 1I Amount of admitted investaeats
__e debt sets V assets
1,000 1,000 1,000 1,000
dollars dollars Percent Percent dol1are dollars Percet Percent
1910 3,207,863 986,961 12.1
1911 3,522,121 43.454 12.0
1912 3.929,758 479,653 12.2 11.5
1913 4,347,679 550,158 12.7
1914 4,707,358 597,462 12.7
1915 4,990,785 669.984 134
1916 5,256,425 165,571 N.6
1917 5.825,851 86,144 1.s 15.6
1918 6,536,860 955,591 14.6
1919 7.137,365 1,018,163 14.3
1920 8,448,772 974,826 11.5
1921 10,221,126 1,205,778 11.8 16.5
1922 10,702,257 1,432,367 13.4 18.0
1923 10,785,621 1,556,203 1N.4 18.0
1924 10,664,919 1,792,15 16.8 19.0
1925 9,912,650 1,942,624 19.6 18
1926 9,713,213 2,030,301 20.9 1.
1927 9,658,422 2,123,664 22.0 16.4
1928 9,756,957 2,172,863 22.3 15.1
1929 9,756.559 2.138,980 21.9 13.14 88,305 2,227,285 14.0 96.0
1930 9,63o,768 2,105,477 21.9 12.0 120,020 2,225,497 12.7 94.6
1931 9,458,281 2,059,221 21.8 10.9 151,229 2,210,450 11.7 93.2
1932 9,214,004 2,oo7.361 21.8 10.0 219,947 2,227,308 11.0 90.1
1933 8,638,383 '1,869,160 21.6 9.0 316,931 2,186,091 10.7 a5.g*
134 7,887,119 1,661,046 21.1 -.9 465,072 2,126,118 10.2 78.1
1935 7.785.971 1,258,900 16.2 5.8 600,873 1.859.773 8.5 67.7
1936 7.638,867 1,054,770 13.8 1.5 646,280 1,701,oo 7.3 62.0
1937 7,389.797 936,454 12.7 3.8 713,166 1,649,62o 6.6 56.8
1938 7.214.138 895,470 12.4 3.4 T05,207 1,600,677 6.1 55.9
1939 7,070,896 887.336 12.5 3.2 /702,961 1,590,297 5.7 55.8
1940 6,909,794 a3,.414 12.8 3.0 700,530 1,583.944 5.4 55.8
1941 6,824,126 890,516 13.0 2.9 673,600 1,564,116 Z.1 56.9
1942 6,713,835 907,141 13.5 2.8 97,796 1.5.4937 .6 60.3
1943 6,350,263 891,441 14.0 2.6 457.731 1,379,172 4.0 64.6

If Based upon direct reports from insurance companies, official reports submitted to State commissionor* of insurance, and "Best's Life Insurance Reports." 2/ Book vaiue or adaitted asset value. A] Amount of total admitted assets of life insurance companies obtained from Proceedings of the Association of Life Insurance Presidents. 4/ Includes the book value of real estate held outright plus the book value of sales contracts.
Revised.





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of the upward trend that had been in evidence since the beginning of 19140, when mortgage loans outstanding totaled only $883.,000,000. Between 1910 and 1928, the investment of insurance companies in such loans increased each year, with the exception of 1919. 'Holdings of farm mortgages :reached a maximum of' $2,172,g63,000 on January 1, 1929, then decreased to a 23-year low on January 1, 19140. In the earlier part of the period 1928-40, the annual bercentage decrement became increasingly greater. In 1934, the amount outstading decreased by a fourth. Since 1934, the annual rate of fall decreased until January 1, 19140, when the amount outstanding reached the low of $993,000,000.

Investments in farm-mortgage loans, however, make up only a part'of
the agricultural investments of insurance companies. In addition, such companies have a considerable investment in real estate held outright and in the unpaid principal balance outstahdiTng on sales contracts. As of January 1, 1943, their total agricultural investments apprpximated $1,379,172,000, or about 4 percent of the total admitted assets. 2/

Insurance companies also have invested considerable sums in agriculture indirectly through the purchase and ownership of consolidated bonds of Federal land banks and in guaranteed bonds of the Federal Farm Mortgage Corporation. These bonds are all secured by farm mortgages held by the land banks and the Corporation. On January 1, 1943, insurance-company holdings of these bonds totaled over $310,000,000, of which about $13,000,000.v as in consolidated land bank bonds, and $297,000,000 was in guaranteed Federal Farm Mortgage Corporation bonds. Substantial amount of both land bank and Corporation bonds are callable in the next succeeding 3 or 4 years and no doubt large amounts of the insurance-company holdings of these bonds will be retired or refinanced within that period.

Before the acquirement of a large number of farms during the depression in the early thirties, farm mortgages made up 90 percent or more of the total agricultural investments of insurance companies. On January 1, 1929, the earliest date for which composite figures are available, they ran as high as 96 percent. 3/ At that time total agricultural investments were 14 percent of total assets. By 1940, following the period during which many of their loans had been liquidated through the acquirement of the security, the proportion of farm-mortgage loans dropped to only 55.8 percent of agricultural investments, and the ratio to total admitted assets had fallen to 5.4 percent. With increased real estate sales in recent years, resulting in larger recordings 2/ These figures include the book value of real estate held outright and the
-ook value of sales contracts. In general, the unpaid principal balance outstanding on sales contracts is the same as the book value of sales contracts. However, when a farm is sold at a price in excess of the book value, the book value of the contract may not reflect this difference. For January 1, 1943, the remaining principal unpaid'on sales contracts was approximately 15.S percent larger than the book value for 10 insurance companies holding about 61 percent of the total mortgage loans. Similarly, the market value of the real estate may exceed the book value. For 12 companies holding 72.5 percent of the real estate, the market value was estimated to exceed the book value by 11.7 percent. 2j Data presented by Norman J. Wall before the Temporary National Economic Committee, February 14, 1940. Processed report "Farm-Mortgage Debt and Farm Investments of Life Insurance Companies," U.S.D.A., Bureaof Agricultural Economics.





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of 'urchase-money mortgages, the proportion of loans to total agricultural investments is again larger about 65 percent on*January 1, 1943 (table 1). This increase is not so great as might have been expected from the reduction in real estate held outright. Because of the popularity of sales contracts which are not included in the statistics of mortgages as n method of financing the sale of property, reductions of real estate held outright have not resulted in a corres-onding increase in purchase-money mortgages.

Since 1932, the total agricultural investment of insurance companies, including the asset value of real estate held outright and the book value of sales contracts as well as their mortgage investment, has declined continuously. In the years immediately following 1932, the decrease in farm loans was larger than the increase in investment in the form of real estate held outright and sales contracts. This was due in large degree to the substantial amount of insurance-company loans refinanced during this period by the Federal land banks and the Land Bank Commissioner. The Farm Credit Administration in its ainual reports shows the estimated percentage of loan proceeds of the Federal land banks and the Land Bank Commissioner used to refinance loans held by insurance companies for all the years, 1933-41, except 1935. By applying these percentages to the total amount of loans closed by these agencies it is possible to indicate with a fair degree of accuracy the amount of insuranceeompany loans liquidated through such refinancing (table 2). If the amount so liquidated is in turn related to total amount of principal liquidated on insurance-company loans as determined by adding,total mortgage recordings for insurance companies to the outstanding loans at the beginning and subtracting outstanding loans at the end of the year, it is found that about 39 percent of the total principal liquidated for insurance companies in 1934 was refinanced by the land banks and the Commissioner. No figures are available for 1935, but in 1936 the figure was nearly 13 percent. In the following years it continued to drop, so that for 1941 the latest date for which such data are available it was only 5.2 percent.-/ In the more recent years, the total investment in loans and in real estate and sales contracts has declined. These decreases are due in large degree to increased principal repayments out of increased farm income, savings, and other sources of funds and substantial down payments received on the farms that were sold.


RELATIVE I1,ORTANCE OF INSURZICE COYYANIES AS LENDERS ON FARM MOTGAGES

Although farm-mortgage investments of life insurance companies decreased moderately during 1942, this lender group held a relatively larger proportion of the total farm-mortgage debt on January 1, 1943 than it held a year earlier (fig. 1). In other words, the percentage decrease in loans held by life insurance companies was less than the percentage decrease which occurred in the total fnrm-mortgage indebtedness. This is a continuation of the increased relative irTortance of insurance companies as lenders on farm mortgages in evidence over the last 6 years (table 1). On January 1, 1938, the ratio of insurnnce-company mortgage investments to total farm-mortgage debt was 12.4

- The recording figures no doubt include varying amounts of insurance-company loans refinanced by themselves. The net liquidation figures, therefore, would
r obabl be somewhat overstated.






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percent. It then rose gradually to 14.0 percent for "January 1, 1943. 'Furthermore, on January 1, 1937, the proportion was at about the same level as the average for January 1 of the years 1910-14. Between 1914 and 1939, however, the proportion increased to a high on January 1, 1929 of 22.3 percent, with over $2,173,000,000 outstanding in farm mortgages and then dropped to 12.4 percent on January 1, 193.5/ The current relationship is about the same as that which existed during World War I. However, during World War I both the farm-mortgage debt and insurance-company holdings were increasing, whereas for 1943, both-the total~farm-mortgage debt and the loans held by insurance
companies are continuing to decline. The total mortgage debt appears to be falling sufficiently faster in 1943 than the holdings of insurance companies to enable these lenders to more than maintain their relative position. 1

The reduction in outstanding loans of ihsurance companies relative to
other lenders during the first 9 years of the 1930's is due to several factors, some of which are common with the factors responsible for the decrease in absolute amounts. The primary factor, as previously mentioned, is the refinancing of ins-rance-company loans by the Federal land banks and the Land Bank Commissioner. This refinancing had the double effect of decreasing the relativ e position of insurance companies and concurrently increasing the relative position of the Federal agencies. But other factors also entered into the changed relationship between lenders during this period. The new loans being made by insurance companies were lessening and at the same time foreclosures were in substantial volume. Both of these factors, as well as the
amount being refinanced, tended to decrease loans held, whereas for the Federal agencies new loans made increased from 29 million dollars in 1932 to 222 million in 1933 and to 1,2S94 million in 1934. In addition to those refinanced for life insurance companies, these new loans include new and increased mortgages growing out of the funding of short-term debt as well as mortgages refinanced by the Federal agencies for other lenders.

The increased proportion of the total farm-mortgage debt held by insura.nce companies in 1942 reflects principally a substantial decrease in new loans made by the Federal agencies and a maintenance of the level in new loans


For historical data on farm-mortgage debt held by insurance companies, 1910-40, see "Farm-Mortgage Credit Facilities in the United States," Miscellaneous Publication 479, U. S. Department of Agriculture, 1942, p. 12. For current &at" see "Agricultural Finance Review," U. S. Department of Agi*iculture, Burea~u of Agricultural Economics, Nov. 1942, appendix table 1 and release, "Accelerated Decline in Farm Real Estate Debt During 1942, U. S. Department of Agriculture, Bureau of Agricultural Economics, Aug. 1943.
6/ Reports from the Association of Life Insurance Presidents, covering 36 member companies whose assets represent 92 percent of the total admitted assets of all United States legal reserve life insurance companies, show that the mortgage investments of these companies on June 30, 1943 were about 2 percent less than for January 1, 1943, whereas preliminary figures on total farmmortgage debt for June 30, 1943 indicate a reduction of slightly more than
3 percent.






made by insurance compamies.l/ This latter factor resulted from increased purchase-money mortgages made and a slightly decreased volume Of regular nor tgpges made.


CONTERATICN OF LOANS

The amount of farm-mortgage loans held by life insurance companies on January 1, 19143 was concentrated to a large degree in the West North Central States.. Moreover, there has been a decided tendency toward greater concentration, particularly in the Corn Belt proper, in recent years. This tendency can probably be attributed in no small part to the variations, by areas, in the extent to which mortgages were liquidated in the earlier years through refinancing of loans and through involuntary transfers to mortgagees of the real estate securing mortgage loans. In the Great Plains, where foreclosures and involuntary transfers were relatively heavy, outstanding loans held by insurance companies were reduced to "a greater degree than in the Corn Belt proper. In recent years these farms have been sold and many purchase-money1 mortgages have been taken back. However, because of greater losses on farmp/ in the poorer areas, and because many of the farms acquired in these areas have been sold on contract rather than outright, the general tendency toward concentration of mortgage holdings in the Corn Belt was fairly continuous over the last decade. In addition-to these factors, it is probable that the experience of insurance companies in the Great Plains has resulted in less
emphasis being placed on new loans in this area, and, with more favorable farmer incomes, the relative amount of debt liquidated in the Great Plains continues to be relatively large.


Amount Held by States

Over 65 percent of the total investment of insurance companies in farm mortgages on January 1, 1943, or $591,672,000 out of $991,441,000, was in the six States of Minnesota, Iowa, 4llinois, Indiana, Missouri, and Texas. The addition of four States Nebrask', K-ansas, Oklahoma, and Ohio brings this
percentage to 80 percent (fig. 2), Similar percentages for earlier years indicate that some shifts have occurred in the area of greatest concentration. On January 1, 1930, the same six States mentioned above accounted for only 58 percent as compared with 65 percent as of January 1, 1943. For the same date in 1940 they accounted for 62 percent. The reverse trend is shown for the States in the Great Plains area North Dakota, South Dakota, Nebraska, Kansas, and Oklahoma. These five States on January 1, 1930 had 214.4 percent of the total insurance-company loans outstanding. On the sane date for 1935, 194o, and 19143 they had 23.1 percent, 16.5 percent, and 14.2 percent respectively.

7/ Iew loans nmade by the Federal land banks and the Land Bank Commissioner durin(: 1942 were only 80.2 percent of those made during 1941. 9/ Purchnse-money mortgages are mortgages which are given by the buyer to the
.ller of a fnrra to PaT all or a part of the purchase price of the property. A distirnction is made throughout this report between purchase-money mortgages
arnd oth Jr or regular mortgVes in order to segregate the influence of real est; tu sles on the loan portfolio of insurance companies.


















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Amount Held Relative to Other Lenders, by States

Despite the continued trend toward the concentration of insuranceco,--many loans in the Corn Belt, the amount of their loans in this area relative to other lenders decrease& during most of the 1930's and only in recent years has tended to regain some of this loss. For January 1, 1930, before the period
of maximum refinancing by the Federal agencies, insurance co tpanies held over 25 percent of the total State farm-mortgage debt in 11 States and as much as 41.9 percent in Iowa (fig. 3). By January 1, 1940, the percentage for Iowa
had. dropped from 41.9 percent to 30 percent, with similar reductions for a number of other States. Between January 1, 1940 and January 1, 1943, insurance companies have increased their proportion of the total debt in numerous States, whereas a few of the other States have shown continued decreases. Most of the increases, it will be noted from figure 3, are in the West North Central States, with scattered. increases occurring in certain other areas. Declines continued in Georgia, Tennessee, and Louisiana, with slight decreases also noted in a few other States.


Loan Concentration Among Life Insurance Companies

With the decline in investments of insurance companies in farm mortgages after they reached their maximum in the late twenties the larger insurancecompany investors in farm mortgages have tended. to hold an increased proportion of the total loans outstanding. On January 1, 1930, the 5 largest investors, as determined by their holdings on January 1, 1943 held 46.2 percent of the total, and the 10 largest held 66.9 percent of the total. On January 1, 1940, these percentages were 51.9 and 71.0 percent, and for 1943, 52 and 72.1 percent (table 3).

Even on the basis of the change in proportion for a shorter period,
1940-43, the tendency for large investors to hold an increased proportion of the total loans in certain of the geographic divisions is also noticeable. For
January 1, 1940, the 5 largest investors, based on their holdings January 1, 1943, held 52.6 percent of the total insurance-con-pany investments in mortgages in the West North Central States, whereas 3 years iater they held. 54.4 percent. However, for the 17 companies holding the largest amount of mortgages there was little change. On January 1, 1943, these 17 companies hold 99.9 percent of the total insurance-company investments in the area and on January 1, 1940, 99.0 percent. The situation in the East North Central States was the reverse of that in the West North Central States. The 5 largest holders of mortgages in this region accounted for 65.7 percent of the total company loans on January 1, 1940, and for 62.2 percent on January 1, 1943. However, the tendency in the South Atlantic States and in the East South Central States is consistent with that in the West North Central. In the South Atlantic States, the 5 largest insurance companies held 52.4 percent for January 1, 1940 and 57.5 percent for January 1, 1943. In the East South Central States they held 61.4 percent and 67.2 percent for the respective dates. On the other hand, in the West South Central States the holdings of the 5 largest companies were consistent with those of the East North Central States, the decrease being
from 27.1 percent to 24.7 percent.



















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13

COMPOSITION OF FAIN-14ORTGAGE INVESTIWTS

Farm-mortgage loans of life insurance companies are of two major types: regular mortgages and purchase-money mortgages. Purchase-money mortgages have some special significance because they arise directly out of the sale of real estate owned by the mortgagee. The importance of the distinction between regular mortgages and purchase-money mortgages becomes evident when the differences in trends in outstanding loans end in their size and other characteristics are noted.

It will be observed in the following paragraphs, for instance, that the amount of purchase-money mortgages increased on January 1, 1943 over that held on January 1, 1942, whereas the amount of regular mortgages decreased slightly. As the real estate investment is diminished through the sale of farms, fewer purchase-money mortgages will be made and the principal repayments on such mortgages may soon equal or exceed new loans. However, this may not occur as soon as might be expected from the number of farms remaining unsold by insurance companies, as the average size of purchase-money mortgages shows an increase on January 1, 1943 over that for a year earlier.


Amount of Purchase-Money and Regular Mortgages

Estimates based upon data for 54 companies covering more than 97 percent of the total farm-mortgage loans of insurance companies indicate that purchasemoney mortgages outstanding January 1, 1943 were about $177,902,000 or 19.5 percent of the total of $891,441,ooo for all mortgages held by insurance companies. The difference of about $713,539,000 is made up of regular mortgages. The relative amounts of these mortgages, by States, for January 1, 1942 and
1943 are shown in table 4.

The relationship of purchase-money mortgages to total loans, by States, varies considerably from that of the United States, the proportion being the highest in the South Atlantic and West South Central States, where the peroentages are slightly in excess of 29 and 24 respectively. In these divisions, South Carolina and Georgia show particularly high ratios of 52 and 57 percent. Certain States in other areas also show unusually high ratios. These high ratios reflect principally the number of farms previously held and the extent to which this farm real estate has subsequently been sold. In some of the States the ratios are influenced also by the degree to which the sales contract has been used to finance the sale of the properties. However, in general it is noted that those States which show a high ratio of purchasemoney mortgages also have relatively large numbers of sales contracts. Furthermore, these ratios may also reflect few regular mortgages rather than a large number of purchase-money mortgages an& may therefore indicate areas in which insurance companies are contracting their regular loan business.

In the South Atlantic States, purchase-money mortgages were 4.9 percent of the total for the United States, whereas these States accounted. for only
2.9 percent of the total regular loans (table 5). These relatives may be compared with the West North Central States where purchase-money mortgages were 52.6 percent and regular mortgages were 50.9 percent respectively. In









Table 4.- Outstanding farm-mortgage loans of life insance companies: Amount of pychase-money mortgages, regular mortgages.
and total by States, JanuAry 1, 1942-43

January 1, 1942 January 1, 1943

State and Purchase-money Regular mortgages Total mrt ase Regular mortgages Total
division e ercent- Percent- PercentAmount age of Amount age of Amount Amount age of A Amount
total total I total total
1,000 1,000 1,000 1,000 1,000
dollars Percent dollars Percent dollar, dollars Percent dollars IdPercent dollar
Naine .............. 0 0.0 1 1 100.0 1 0 00 0.01 0
Noe Hamp shire ...... 0 .00 0 0 0
Vermont ............ O .0 4 100.0 4 0 .0 2 100.0 1 2
Massachusetts ...... 0 .01 Ti 100.0 7 0 .0 7 100.0 7
Rhode Island ....... 0 .0 0 .0 0 0 .0 0 .0 0
Connectit ........ O .0 100.0 8 9 .0 81100.08
New England ...... O .0 20 100.0 I 20 0 .01 0
New York ...........O .0 81 100.0 328 6 2.3 270 97.7 276,
ew Jersey .... 0 .0 88 100.0 88 O .0 81 100.0 81
Pennsylvania ....... 2 .1 1,59 99.9 1__91 5 .8 1,804 9. 8I
Middle Atlantic.. 2 .1 2,005 2,007 11 .4 2,15 1 99.6 1 2 16E
Ohio ............... 4,785 15-4 "26,287 1 S4.6 1 31,072 1 4,677 1 15.9 1 24,7140 184.1 1 29,417
Indiana ............ 9,464 16.0 49,685 84.0 59,152 10.352 18.3 46,21s 81.7 56,57
Illinois ........... 10,940 10.0 98,459 90.0 109,399 13,655 12.8 93,045 87.2 l06,701
Michigan ........... 61,2 21.4 2,250 78.6 2,862 658 24.6 2,016 75.4 2,671
Wisconsin .......... 67g J.4 ,86 92.6 9.164- a 10.8 .999 .2 8.961
East North Central 26,479 12.5 185,170 9T.5 11,bbL y -30314 1X.9 7~174,018 85.1 204,3l
Minnesota .......... ,6,092 10.8 50,312 89.2 56,4o4 8.219 .14.3 49,260 85.7 57,47c
Iowa ............... 28,673 14.0 176,137 86.0 204,810 38,487 18.) 171,827 81.7 210,31iu
Missouri ........... 16857 28.1 43,1 4 71.9 59,991 21,25 4.4 40.595 65.6 61,ss,
North Dakota ....... 726 20.9 2,7 79.1 374 2,100 Z3.3 2.7 1456.7 s
South Dakota- l1739 10.7 14,513 89.3 16,252- 3,o62 18.5 13:492 91.5 16,55
Nebraska ........... 3,950 9.8 6,357 90.2 40,307 6,055 15.4 ,3266 8s.6 I 9,32
Kansas ............. 02 15.2 6 $4.8 !&5038 7.f1 18. 5.463 81.7 4218
West North Central by,3}} 15.2 3b fl 62 20.0 38652 80.0 42.58.
Delaware ........... 1 2.9 26 97.1 27 5 18-5 22 81.5 2
Maryland ........... 38 1.6 2,355 98.4 2,393 112. 5.0 2,126 95.0 2.23
Virginia ........... 539 13.0 3,607 87.0 4,1 462 12.1 3,353 87.9 3,.1
West Virginia ...... 74 11.8 556 88.2 630 67 10.7 557 89.3 62
North Carolina 1.1451 14.8 8.352 55.2 9,803 944 11.1 7,560 88.9 8,50
South Carolina 1,205 49.4 1,235. .6 2.440 1,013 52.6 913 47.4 1,92
Georgia ............ 5,642 55.4 4542 11.6 10,184 5,463 57.6 4,022 42.4 9,48
lorida ............ 111 12.2 Mlj 87.9 966 100 1 800 .)8.9 9
South Atlantic 9,061 29.1 21,% 29.1 1. .0.9 21 5)

Kentucky ........... 1,031 6.3 15,338 93.7 16,369 1,076 6.7 14,987 93-3 16.oE
Tennessee .......... 2,488 22.6 .8.520 77.4 11.008 2,118 21.5 7,732 78.5 9.85
Alabama ............. 545 21.7 1.965 78.3 2,510 562 25.4 1,69 74.6 2.2
Mississippi ........ . 240 8.8 12.956 71.2 18,196- 963 27 12,955 J.. ) 1 1
Bast South Central 900 19.2 38,779 80.8 48,083 9,719 18.8 3Tr323 81.2 01-V
Arkansas............ 2,155 14.7 12,507 5.3 14,662 2,05 14.2 12,1o6 55 14,49
Louisiana ........... 2,o65 35.7 3,720 5,785 1,995 373 3,354 62.
Oklahoma ........... 6.629 25.6 19,265 74.5 25,894 7,o6 17,035 70.7 2 .
Texas .............. 20,221 22.2 70.863 77.8 9140% 21 64# 24.L 6T.075 T5.6 8 .7
West South Central 31,070 22.8 106 355 77.2 1) 2) J2 6 24.9 99,80. 1 6
Montana ............ 735 33.5 1,464 66.5 2,202 911 42.4 1,237 57.6 2, 1
Idaho .............. 1,265 18.8 5,466 81.2 6,731 1505 23.4 4,937 1 76.6 6,
Wyoming ............ 38 22.5 133 77.5 171 10 6.3 150 93.7 I 1
Colorado ........... 294 10.5 2,508 89.5 2,802 322 11.9 2,388 8.1 1 2,7
New Mexico ......... 194 10.1 1.725 9. 191Z 163 6.3 231 958 2.5
Arizona ............ 91 5.6 1.533 94. 1,62 75 4.2 1,70s 95.8 1.7
Utah 1.............. 141 4. 175 55.5 316 150 54.2 126 4.8 2
ovada ............. 0 .0 yo 100,0 1 og 0 .0 14, 100.o 1
mountain ......... 2,761 10.6 113l 81.4 16,07 1l 2 13,120 U6.2 8
Washington ......... 1,447 10.4 12,463 59.6 13,910 1 1.68 13-1 11,194 s6.9 12,8
Oregon ............. 1,255 18.5 5528 81.5 6,753 1 22.1 5.o97 7.9 6I
California ......... 1905 34.3 .480 65.7 11:395 4.3 4s.2 5,740 54.s
____ 8.6 -A...jijjjj IL- 22,031 I8
Pacifi .......... 7 15.2 PS T461 1.
UN756ULT 907.14 1 177.902 I
NIta aTAa. 150,623 16.2 518 83. 9 19.5 1 713,539 50.5 1 891,1

Book valus of total mortgages outstanding based upon reports in 'Best's Life Insurance Reports. Breakdown between purch money mortgages and regular mortgages based upon reports of 54 life insurance companies to State commissioners of insurance.







15



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A16

the East North Central States, the amount of purchase-money mortgages was substantial, accounting for 19.5 percent, but 25.7 percent of the regular mortgages were also in these States.
.,.-e increased relative importance of insurance companies as farm-mortgage

lenders in 1942 as evidenced by the increased proportion of the total farmmortgage debt held by them can be accounted for to a large degree by the
increases in puirchase-'money mortgages during the year. The amount of purchasemoney mortgages was lg.1 percent larger on January 1, 1943 than on January 1, 1942, whereas the amount of regular mortgages was 5.6 percent less. As the volume of regular mortgages considerably outweighs the volume of p-urchasemoney mortgages, there was a net decrease in total mortgage loans held by insurance companies of about 2 percent (table 6).

Despite the general increase in purchase-money mortgages during 1942, numerous States, notably in the Southeast and-'the extreme Southwest, show decreases (table 4). On the other hand, the largest percentage increases are recorded in the States of the West North Central Division (fig. 4). However, changes in the average size of the purchase-money mortgages held. resulted in a much larger reduction in number than in amount for 'some of the Southern States, but the reverse was true in most of the Corn Belt. This in general reflects the increased average size of purchase-money mortgages held.

-The percentage change in number of regular mortgages outstanding
between January 1, 1942 and January 1, 1943 shows a relatively constant decrease among the States (fig. 5). Only a few scattered States show any increase in numbers. In amounts, still fewer States show increases and most of thc States show greater decrease in amount than in number, again indicating a general decrease in the average size of regular mortgages outstanding.


AVERAGE SIZE OF OUTST D10ING FAR; MORTGAGES

Figures on the average size of outstanding mortgages for 17 of the largest insurance companies indicate a continuous decrease during the last decade. For January 1, 1931, the average size was about $6,400 as compared with only $5,400 for Jaauary 1, 1943, a reduction of a little more than a sixth. Responsibility for this reduction may be attributed to any one or a
combination of the following factors: (1) The average size of new loans, which in nart reflects the changing level of land values, (2) the extent to which the principal amount of old loans is increased, (3),the average size of old loans liquidated in full, and (4) the amount by which old loans are being
paid down. Although data are not available to indicate the responsibility of aill of these factors, some available information will throw partial light on the interplay of these four factors.

During the 3 years 1Q36-39, the average size of new loans made, as in i~tcd by farm-mortgage recordings for insurance companies, decreased, w. r~as from 1938 to 1943 the trend was reversed, with the average size increasing. Thus, fro,. 1936-3g the averng size of recordings and outstanding lono ho-od in the samo direction- but in recent years they have gone in the oppocitc direction.







17



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PERCENTAGE CHANGE IN NUMBER AND AMOUNT OF PURCHASE MONEY MORTGAGES HELD BY LIFE INSURANCE COMPANIES FROM JAN. 1, 1942 TO JAN. 1, 1943




NUMBER
+19.4 4


0










+*
59 440
33_ 9 5
295

























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19

Although the data for 17 companies used as a basis for determining the
annual average size of outstanding loans in the previous paragraph are probably adequate for United States figures, they would not be accurate enough to show variations by States. Consequently, for January 1, 1942 and 1943, data have been prepared showing the average size of outstanding loans for the 54 companies reporting to State commissioners of insurance (table 7).

The average size of outstanding loans for January 1, 1943 varies by
States from extremely large average size loans in Florida, New Jersey, Arizona, and New Mexico to very small average size loans in Utah and New York. These are areas in which the volume of insurance-company loans is relatively insignificant and probably on specialized types of farms. In other areas in which the volume of loans is more substantial it is found that the larger loans are generally in the West North Central Division, with the smaller loans in the South and Southeast.

Between January 1, 1942 and January 1, 1943, the slight decrease in
average size of loans for the Unite& States is found to be common to almost all of the States. Only four States Vermont, Now Jersey, New Mexico, and Arizona showed an increase of more than 5 percent. On the other hand, eight States showed a decrease of more than 5 .percent, an& these were in the East and far West.


Average Size of Purchasc-Money and RcElar Mortgages

On January 1, 1943, the average size of outstanding purchase-money nortgages is estimated on the basis of the 54 companies to be about $4,549 and for
regular mortgages $5,674. This represents an increase for purchasc-mono.,- ncrt,-!aLp- s of $225 over January 1, 1942 and a decrease for regular mortgages of $96. Therefore, it is evident that the small decrease in the average size of outstanding mortgages mentioned in the preceding paragraphs occurred in spite of an increased size of purchase-money mortgages. It is further probable that the increased size of purchase-money mortgages outstanding is attributable to
the size of these new mortgages made, whereas the decrease in size of regular mortgages is due to fewer new loans made and larger principal repayments. Although principal repayments on purchase-money mortgages have been voluminous, they have not been sufficient to offset the amount of new loans made. With the future volume of new purchase-money mortgages limited to the amount of real estate for sale, the trend in their average size as well as in amount may be reversed in the next few years.

Despite the fact that purchase-money mortgages are smaller than regular mortgages in the majority of States, tbare are several States, particularly in the 'Vest North Central Division, where purchase-noney mortgages are the larger. For those States in the Corn Belt that do not show this precise relationship, the difference is so small as to be almost insignificant, The fact that purchase-money mortgages are substantially smaller in most of the South nvy be partially accounted for by the practice of many companies of subdividing acquired plantations into smaller units and selling these units as individual farms.







20



PERCENTAGE CHANGE IN NUMBER AND AMOU-NT OF REGULAR MORTGAGES HELD BY LIFE INSURANCE COMPANIES
FROM JAN. 1, 1942 TO)A,-); 1943.



9..
NUMBER
:1. 7 9 . .-.66. *












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UNITED STATES -4.O PERCENT
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F231 RE10

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FIGURE: 5








Table 7.- Average size of farm-mortgage loans outstanding of 54 life insurance companies, January 1, 1942-143i

State 1January 1, 1942 January 1, 1943 Percentage change, 1942-43
and II T 1 [
geographic I Purchase-I Regular Toal Purchase-1 Regular Total Purchase-A Regular T
division money I money Imal I m money mortgagesI Total
mortgages mortgages mortgages
Dollars Dollars Dollars Dollars I dollars Dollars Percent. Percent I Percent
Maine
New Hampshire
Vermont 1 0 1,181 1,181 1 0 1 2,000 2,000 0.0 A 69.3 69.3
Massachusetts 0 7,000 7,000 0 6,500 6,500 _.0 -7.1 -7.1
Rhode Island I I
Connecticut 0 4,250 4,250 0 4,012 1 4,012 1 .0 -5.6 -5.6
New England 3,174 3,1741 ,131 14,131 A 30.21 30.2
New York 0 2,013 2,013 A 2,774 1 1,838 1 1,852 1 .0 I -8.7 1 -8.0
New Jersey 0 22,019 22,019 A 0 A 27,050 A 27,050 1 .0 A 22.8 1 22.8
Pennsylvania 1 1.441 1 03 14,032 1 2,840 1 4,068 1 4,062 71 .7 1.7
Middle Atlantic 1,411 3,961 3.890 1 2,818 1 2 3,919 1 .8 A .7
Ohio I 4,890 1 4,662 A 4,696 A 4,839 1 4,610 A 4,645 1 -1.0 1 -1.1 1 -1.1
Indiana 4,777 3,899 4,017 4,924 3,791 3,958 3.1 -2.8 -1.5
Illinois 7.095 7,473 7,433 7.602 7,218 7,265 7.1 -3.4 -2.3
Michigan 4101 3,229 3,383 4,013 3,107 3,290 -2.1 -3.8 -2.7
Wisconsin 4,84 5,112 5,091 4,929 6,949 4,947 1.7 -3.2 -2.8
East North Central 5,531 5 476 5,802 5,325 5,391 -2.6 -1.6
Minnesota 5,796 5,887 5,878 6,019 5,677 5,723 3.8 -3.6 -2.6
Iowa 7,560 8,192 8,097 7,801 7,854 7.s44 3.2 -4.1 -3.1
Missouri 3,226 4,595 4,105 3,459 4,574 4,117 7.2 -.5 -3
North Dakota 2,986 3.341 3,260 3,149 3,263 3,212 5.5 -2.3 -1.5
South Dakota 4.127 4.551 4,501 4,003 4,421 4,337 -3.0 -2.9 -3.6
Nebraska 5,117 5,619 5,566 5,361 5.415 5,407 4.8 -3.6 -2.9
Kansas 3,750 6 3,693 3,604 3556 3,565 -3.9 -S.4 -3.5
West North Central j,933 606 5,859 15,936 5,79 4.3 -2.1 -1.7
Delaware 790 3,2g4 3,007 2,145 3,0O4 2,813 171.5 -8.5 -6.5
Maryland, 4,090 5,435 5,.06 10,706 5.366 5,50 161.8 -1.3 1.8
Virginia A 3,551 5,553 5,174 3,591 5,691 5,314 1.1 2.5 2.7
West Virginia 7,872 4,874 5,103 7,959 5,060 5,265 1.1 3.8. 3.2
North Carolina 2,950 2,564 2,615 2,246 2,576 2.535 -23.9 .5 -3.1
South Careina 1 2,263 2,908 2,r49 2,230 2,933 2,516 -1.5 .9 -1.3
Georgia 2,068 2,625 2,284 2,006 2,399 2,155 -3.0 -9.6 -5.6
Florida 32,179 23,39. 24,755 30,322 22,&76 23,331 -5.8 -5.5 -5.8
South Atlantic 2.313 3,234 2,899 2,187 3,230 2,837 -5.4 -.1 -2.1
Kentucky 3,181 6,771 6,321 3,630 6,611 6,267 14.1 -2.h ..9
Tennessee 2,652 3,483 3,253 2,698 3.398 3.219 1.7 -C.4 -1.0
Alabama 2,574 3,420 3,192 2,859 3,168 3,097 11.1 -6.8 -3.0
Mississippi 7,091 9,029 869 ,096 8,806 8,256 .1 -2. -1.4
East South Central 594,259 98) 5,453 4,467 5,795 .,47 4.9 -.9 .6
Arkansas 3,905 6,263 5,752 3.833 6,247 5,734 -1.8 -.3 *3
Louisiana 5,432 5,672 5,584 5,496 5,515 5,508 1.2 -2.8 -1.L
oklaoma 2,373 3,158 2,911 2,354 3,098 2,835 -.8 -1.9 -2.6
Texas 3,720 8,646 6,680 3,756 8,716 6,592 .1.C .8 -1.7
West South Central 3,341 5,897 5,020 3,330 5,937 4,969 -. .7 -1.0
Montana 3,678 6,164 5,025 3,827 5,904 4,799 4.1 -4.2 -4.5
Idaho 3,438 5,582 4,996 3,771 5,427 4.922 9.7 -2.8 -1-5
Wyoming 3.557 6,142 5,281 478 5,641 3,346 -86.6 -8.2 -36.6
Colorado 4,683 6,051 5.871 4,129 6,329 5.953 -11.8 4.6 1.4
New Mexico 3,087 18,116 12,161 3,146 22,216 16,065 1.9 22.6 32.1
Arizona 6 373 9,500 9,246 6,467 11,95 11,14 1.5 25.2 24.2
Utah 2.134 1,647 1,833 2,050 1,599 1,816 -3.9 -2.9 -.9
Nevada I -Mountain I -605 6,214 5,477 Effa 6,567 6.6 5.7 ___Washington 8624 9.933 9,779 9,403 9,879 9,814 9.0 -.5 .4
Oregon 5.296 7,788 7,164 5,895 8.132 7.502 11.3 4.4 4.7
California 6.502 11,1 8,941 6,628 7,463 7.061 1.9 A_ 2. -21.0
Pacific b,82 8,9014 9,207 8,729 8.3 -2 -1.2
UNITED STATES 4,323 5.770 5,473 4,54s 5,674 5.413 5.2 -1.7 -1.1

1/ B3aed on annual reports to State commissioners of insurance.




22

From the standpoint of the change in the average size of regular and
purchase-money mortgages between January 1, 1942 and January 1, 1943, it will be observed that all of the possible combinations of increase and decrease between the types occurred. In most of the States, the average size of Dmurchase-money mortgages increased, whereas the size of regular mortgages
decreased. The reverse was true in only 3 States -Co1 vr;o, North Carolina,an& South Carolina. However, in 10 States both types of mortgages decreased and in
7 States both increased.


NEW FARM-MORTGAGE LOANS EADE

The increased amount of purchase-money mortgages and the decreased
amount of regular mortgages noted above are manifestly the result of an excess of additions to the loan account over total liquidation of principal in the
case of purchase-money mortgages and an excess of principal liquidations over additional loans in the case of regular mortgages, but such increases or decreases in outstanding loans do not show either the extent of new loans or principal repayments. Figures for 54 life insurance companies show that in the case of purchase-money mortgages, the additional new loans made during 1942 totaled 49,321,433, or 39.4 percent of the loans outstanding at the beginning of the year, whereas regular mortgages totaled $62,337,89, or only
9.3 percent. Total new loans made thus amounted to $111,659,331 for both types of loans or 14.0 percent of total loans outstanding (table 9). As the loans outstanding for the 54 companies oft January 1, 1943 are about 97 percent of the total loans for all companies, it is probable that the total additions to the loan account would Ppproximate $130,000,000 during 1942. Of the total new purchase-money mortgage loans made during 1942, only a fraction of a percent were made to cover delinquent interest, taxes, and other items; the remainder were new loans in connection with the sale of real est ate. However, in the case of regular mortgages, 9.3 percent were transfers2' and 4.9 percent were increased mortgages to cover taxes, interest, -nd other items. The remainder, or 85.8 percent, were new loans in cash or mortgages purchased.

New purchase-money mortgages made during 1941 were 34.4 percent of
outstanding purchase-money mortgages at the beginning of that year compared with 38.4 percent for 1942; whereas new regular mortgages made were 11.0 percent in 1941 compared with 9.3 percent in 1942. The average for all loans was 14.2 percent for the earlier year as compared with 14.0 percent for 1942. Purchase-money mortgages made in 1942 were 132 percent of those made in 1941, whereas regular mortgage loans were only g4.2 percent of those for the previous year. However, there was an increase in transfers of 38.9 percent, whereas new regular mortgages made and purchased decreased 15.8 percent, and additional loans on refunded mortgages decreased 16.0 percent.




9_/ Loans substituted by new papers. This includes transfers of purchase-money
rr :!7 to regular mortgages, when, on renewal, new papers are substituted, tind h ortgi-es othorwiso qualify as new mortgages.









-23





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24

Mortgage Recordings

Currently no information is available by States on the amount of new loans made. However, certain data on mortgage recordings by insurance companies are available. The major differences between actual new loans made and mortgages recorded are to be found in the fact that not all additions to the mortgage-loan account are reflected in recordings and that some loans are not recorded in the year in which the loans are placed. It may be noted, also, that recordings may be artificially increased by merely shifting loans between agencies. In spite cf these limitations, mortgage recordings have a comparative value for indicating the volume of new loans by States and geographic areas, between years, and for comparing new loans made by various lenders.

The number of mortgages recorded by insurance companies during 1942 is
characterized by a sharp drop over those recorded in 1941. This drop is counter to the increased recordings in evidence for the period 1939-41. Moreover, the
drop in numbers in 1942 was considerably greater (g.7 percent) than that which occurred in amount (3.7 percent), indicating the increased average size of recordings. Compared with other lenders, insurance companies showed next to the smallest decrease in amount recorded (table 9). Individual lenders showed very little change in amount over last year, although they showed a considerably greater drop in number; other lenders such as the Federal agencies and commercial banks showed larger decreases, both in number and amount, than either insurance companies or individuals, although the tendency to record larger mortgages is noted for other agencies as well as for individuals Pnd insurance companies.

The average size of mortgages recorded by insurance companies during
1942 is estimated at $6,320, compared with $6,000 during 1941. This is considerably larger than the average size for any other lender. The average size of mortgages recorded by the Federal land banks was $3,980; Land Bnak Commissioner, $1,750; individuals, $2,070; commercial banks, $2,270; and other lenders, $3,3"-.

Table 9.- Number and amount of farm real estate mortgages recorded during
1942 compared with number and amount recorded during 19411/
--r
Number Amount
Type of lender Nu b e r centage
1941 1942 Percctage !941 1942 Percentage
c L~a 1,000 1,000 cag
Percent dollars dollars Percent

Federal land banks 16,795 13,793 -17.8 64,726 53,559 -17.3
Land Bank Commissioner 21,419 16,097 -24.8 37,307 28,242 -24.3
Individuals .......... 134,677 119,903 -11.0 247,647 24s,709 .4
Commercial brinks 105,891 g4,039 -20.6 221,310 191,023 -13.7
In.trance companies 26,763 24,442 8.7 160,469 154,566 3.7
Other lenders ....... J0,750 25,642 -16.6 l2,5I s6,674 -15.5
All lenders ......... 336,284 283,916 -15.6 j833,996 762,772 9.5
I/ Far2 Credit Administrtion.







25

The percentage increase in average size over 1941 for the va-rious lenders was: Insurance comDanies, 5 percent; individuals, 12 percent; commercial banks, 9 percent; Federal land banks and Land Bank Commissioner, 0.5 percent; and other
lenders, 2 -percent. 10/

From figure 6 it will be observed 'What one-fourth of the total amount of farm mortgages recorded during 1942 by insurance companies was recorded in the State of Iowa alone. Inclusion of Illinois, Minnesota, Indiana, and 1,.,issouri accounts for nearly another third of the total, so that over 60 percent of the total recordings during 1942 were in these States. Reference to figure 2 will indicate the relationship of these recordings to the distribution of outstanding mortgages. In this connection it will be noted that the percentages are relatively consistent. In the West North Central States the percentage of total recordings for the States of Minnesota, Iowa, Illinois, Indiana, Nissouri, and South Dakota is slightly higher than the percentage of total outstanding mortgage loans held; whereas in Nebraska and Kansas the reverse is evident. This again indicates where insurance companies. are making most of their new loans and the degree of concentration. Aside from the fact that in Texas, insurance companies accounted for a somewhat smaller percentage of recordings than of outstanding, the differences for other States are small -Md relatively insignificant.

Also showing a degree of concentration of mortgage loans is the fact
that farm-mortgage recordings by insurance companies in the West North Central States increased 9 percent during 1942 over recordings for 1941. On the other hand, all of the other geographic divisions showed decreases. The New England States showed a decrease of 6.9 percent; the Middle Atlantic, 3.9 percent; the East North Central, 7.8 percent; the South Atlantic, 15.3 percent; the East South Central, 25.8 percent; the West South Central, 24.2 -percent; the Mountain, 15.5 percent; and the Pacific, 11 percent. Of the States in these various geographic areas, only a few show significant changes from the regional trend. In the East North Central States, Michigan recorded an increase of 43.9 -percent compared with decreases of 15.6 percent for Ohio, 16.9 percent for Indiana,
1.1 percent for Illinois, and 10.7 percent for Wisconsin. In the West North Central States, Kansas was the only one to show a decrease over 1941. This decrease amounted to 15.4 percent as compared with increases of 11.1 percent in Minnesota, 2-5 percent in Iowa, 3.5 percent in Missouri, 316.5 percent in North Dakota, 37 percent in South Dakota, and 19.5 percent in Nebraska. Although certain of the other States in the different areas also showed increases, the inadequacy of the data natorially limits its significance.


1O[Data for 1936-42 obtained from studies of farm-mortgage recordings for selected lender groups by the Economic and Credit Research Division, *Yarm Credit Administration. Historical data on the average size of farm-mortgage recordings by States, 1917-35, available in publication entitled "Average Size of FarmMortgage Recordings of Selected Lender Groups," U. S. Department of Agriculture, Bureau of Agricultural Economics, November 1940.












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27

PRINCIPAL REPAYMENTS ON FAR OITGAGE LOANS

Substantial principal repayments made during 1942 are chiefly responsible for the decrease in outstanding farm-mortgage loans of insurance companies. During 1942, the total principal liquidated for 54 companies amounted to $136,639,190 or 17.2 percent of the total loans outstanding at the beginning of the year (table 9). Principal repayments on purchase-money mortgages amounted to $26,216,773, or 20.4 percent,- whereas principal repayments on regular mortgages amounted to ')110,422,417, or 16.5 percent. The amount of principal liquidated for these companies was more than $14,000,000 greater than the additions to the loar tocgount. In the case of regular mortgages, the principal liquidated exceeded/ editions made by near 3g,000,O00, but for purchase-money mortgages the reverse was the case. Here editions made were $23,000,000 more than liquidations. Thus it is indicated that principal repayments for insurance companies during the last year have been substantial, with purchase-money mortgages liquidated at a relatively more rapid rate than regular mortgages.

The principal liquidations mentioned above are classified in the annual reports of insurance companies as follows:

(1) Payments on principal including cash on mortgages refunded.

(2) Mortgages foreclosed and transferred to real estate.

(3) Mortgages on properties acquired by deed in lieu of foreclosure
and transferred to real estate.

(4) Decrease in book value of mortgages refunded or by adjustment in
book value of mortgages.

(5) Amortization of premium on mortgages purchased.

(6) Transfers.

These items were shown for each type of mortgage purchase-money and
regular. It is fairly clear what items are included in the first three classes; the fourth class apparently is made up of adjustments in the book value of mortgages outstanding or refunded as a result of a reappraisal of the value of the security and the probable future income-producing capacity of the property. For class five it appears that some of the mortgages are purchased by insurance companies at a premium and that this premium is amortized over a period-of years probably a number of years equal to the remaining term of the mortgage. The sixth class, "transfers," refers chiefly to mortgages transferred from one type of mortgage to another. This may occur when, on renewal, new papers are substituted and the mortgage otherwise qualifies as a regular mortgage in respect to such items as the ratio of unpaid principal to value. In the following data, item 5 was included with item 1, as the amounts in item 5 were insignificant they totaled less than $16,000 for both types of mortgages. Because of the similarity of items 2 and 3, these were also added together. This left four classes. During 1942, principal liquidations in class 1 accounted for 90.7 percent of total liquidations. Class 1 for purchase-money mortgages made up 93.6 percent and class 1 for regular mortgages, 90.0 percent. Acquirement




29

of -properties, either through foreclosure or voluntary deed, accounted for
4 percent, with regular mortgages having a larger percentage of liquidations (4.2 percent) than purchase-money mortgages (2.9 percent). Principal liquidated through transfers on all loans was 4.9 percent, but regular loans accounted for 5.6 percent as compared with only 2.0 percent for purchasem.oney mortgages. Adjustments in book value were less than 0.5 percent of total liquidations; although for purchase-money mortgages, book-value adjustments were about 2 percent. Thus, principal liquidations for purchase-money mortgages, because of adjustments in book value and of regular repayments,
were relatively greater than for regular mortgages, whereas a larger percentage of the total liquidations on regular mortgages came about through acquirement of real estate and because of transfers.

The total amount of principal liquidated during 1942 was considerably above that for 1941, even though the number of loans outstanding decreased
between January 1, 1942 and January 1, 1943. In this latter year, principal liquidations for the 54 companies totaled $136,639,190, compared with only $lo6,350,144 for 1941 or an increase of 29.5 percent. Related to the amount of outstanding loans at the beginning of 1941, principal liquidations during that year were 13.6 percent compared with 17.2 percent for 1942. Similarly, in 1941 principal liquidations on purchase-money mortgages were 16.4 percent of the outstanding purchase-money mortgages, compared with 20.4 percent in 1942; and liquidations for regular mortgages were 13.1 percent in 1941 and 16.5 percent in 1942. Besides general increase in principal repayments in 1942, it is noted that the increase was largely in connection with regular principal payments. Liquidations due to the acquirement of the property decreased from Sll,313,744 in 1941 to less than half that amount in 1942.
Although only limited data are available by States on principal repayments, some rough indications may be obtained by adding the amount of new loans recorded by insurance companies during 1942 to the amount of their outstanding loans at the beginning And subtracting the amount outstanding at the end of 1942. The sum of the two figures should approximate the gross amount of principal liquidated during the year. For the United States, principal liquidations estimated on this basis would approximate 19.S percent of the loans outstanding at the beginning of the year compared with the principal liquidations of the 56 companies which showed 17.2 percent. In the States in which insurance companies are making new loans in a fairly substantial number, and in
which the method mentioned for estimating principal repayments would have the greatest significance, principal repayments as a percentage of loans outstanding in these States showed only slight dispersion from the geographic division average. In the East North Central States, for example, the dispersion by States from the average percentage of 19.9 was from a low of 19.5 in Ohio to 21.9 in Michigan. In the West North Central States the average was 18.6 percfent. In this division, however, North Dakota stands out with a high of 76.9 poercent. Otheri',ise the percentages vary only between 16.1 percent for M;issouri and 21.2 percent for Kansas. The South Atlantic States show an average relationship of principal repayments to loans of 23.3 percent. The East South >r~traol and West South Central States record l.g percent and 15.7 percent respectlvely, whereas the Mountain and the Pacific States show 17.5 percent and 23.5 percent respectively. It would then appear that principal repayments were rielati'ly uniform throughout the country, with somewhat higher principal repayments mde in the Ehst rid West North Central and Pacific States.





29

Delinquent Loans

At the beginning of 1943, the 17 insurance companies had only $5,750,505 in interest which was delinquent 3 months or more and/or taxes and other liens, delinquent 2 -rears or more. This amount represents only 0.9 percent of their loans outstanding on January 1, 143, compared with $20,g95,201 or 2.g percent for 1942; $33,320,317 or 4.6 -percent for 1941; and over 25 percent in 1936
(table 10). Moreover, no State sho-,s delinquency of as mulcrh as 9 -.ercent at the beginning of ?9L3, and in those States in which deinquency approaches
5 percent, insurance comipanies have relativeely few loans. 2he .6aes in the West North Ce-ntra! Division, in which delinquency for 19Th ws especially high, and in which insurance-comnany holdings are concentr-atel. ave shown a remarkable recovery. Minnesota then had a delinquency of 30 3 p recent compared with 0.4 percent on January 1, 1943; Iowa had a delinquency of 26. percent compared with 0.4 percent; and North Dakota, 37.3 percent compared with 0.4 percent.

For January 1, 1943 the only data for which there is a break-down
between purchase-money mortgages and regular mortgages, delinquency was larger for the regular mortgages than it was for the purchase-money mortgages. Delinquency on purchase-money mortgages was 0.5 percent of outstanding purchasemoney mortgages aind 0.9 percent of the outstanding regular mortgages. This relationship appears to be relatively consistent by States, although there are a few exceptions.


Foreclosures

As with delinquency, the amount of farm-mortgage loans in the process of foreclosure for recent years is so small as to be relatively insignificant. For the same 17 companies that were used as a sam-ple for delinquency, loans in the process of foreclosure on January 1, 1943 were only 0.6 percent of the loans outstanding on January 1, 1943, with only one State, California, showing a percentage in excess of 2 percent. California showed loans in the process of foreclosure equal to 7.4 percent of the loans outstanding (table 11).

For January 1, 1942, loans in the process of foreclosure were 1.1 percent of outstanding loans on January 1, 1942 with numerous States showing percentages in excess of 2 percent and with three of the States California, Wyoming, and Alabama showing percentages of 10.5 percent, 20.4 percent, and
7.1 percent respectively.

The extent to which farmers have recovered from this financial dilemma of the middle thirties is further evidenced by a comparison with the percentage of foreclosures in 1936. Many of the States for January 1, 1936 show recorded loans in the process of foreclosure in excess of 20 percent of loans outstanding. For Wisconsin it was 21.0 percent; North Dakota, 20.3 percent;
South Dakota, 24.3 percent; Nebraska, 24. percent; ,1-ryland, 31 percent; and Arizona, 23.9 percent.







-30

Table 10.- Percentage of farm-mortgage loans of 17 life insurance copies, classified as delinquent, by States, January 1, 1936-43


Percentage of amount of loans outstanding

'State
and 1943
division
1936 1937 1938 1939 1940 1941 1942 Purchase- Regular
Total money Imortgages
P-__mortgages Percent Percent Percent Percent I recent Perceercent I Perc Percent Percent Percent

Maine . . . .---------IN Hampshire . . --- -----Vermont........ 0.0 100.0 100.0 0.0 0.0 0.0 0.0 0.0 0.0
Massachusetta ..0 .0 .0 .0 .0
Rhode Island . 01
Connecticut . . ._
ev England . .

New Tork . . . .0 .0 .0 .0 .0 .0 .0 2.8 0.0 2.9
Nsv Jersey . . 72.8 .0 .0 .0 .0 .0 .0 .0 .0
Pdnnsylvania . . .0 .0 .0 .0 .b 4.0 6.3 1.4 .0 1.4
Middle Atlantic . ..5 5.5 14 .0 1.5

Ohio . . . . 12.0 7.2 5.3 4.s 3.5 3.2 2.1 .8 .9 .5
Indiana . . . 13.9 9.3 7.3 5-7 4.7 3-9 2.6 .4 .6 .4
Illinois . . . 26.6 12.4 9.2 7.3 4.7 2.5 1.4 *5 -3 *5
Kichigan . . . 18.3 17.2 12.4 5.4 6.0 2.8 2.1 1.1 2.8 .5
Wisconsin . . . 21.7 12.4 9.0 j.5 6.6 3.8 2.0 .5 .0 .5
Rest North Central 3.1 1.9 .5 .5 .5

Minnesota . . . 30.3 18.1 14.c 9.9 6.2 2.5 1.1 .4 .1 .5
Iowa . . . . 26.s 16.9 16.5 11.8 6.8 3.6 1.3 .4 .1 .4
Missouri . . . 33.9 27.4 23.7 17. 10.4 5.6 3.1 1.0 .8 1.1
North Dakota . . }7.3 40.9 30.7 2.4 12.1 9.8 .1 .4 .5 .4
South Dakota . . 3.9 35.1 2.5 2 .1 117 9.9 .4 1.4 .1 1.7
lebrasks . . . 27.2 23.5 22.8 22.1 17.5 14.5 10.0 3.8 .9 4.3
Kansas . . . .1.6 14.0 10.9 12.9 10.7 8.0 5.1 1.0 1.2 .9
Vest North Central .5 2.7 .8 .

Delevare . . .-
Maryland . . . 40.2 7.4 .0 1.8 4.0 1.5 3.7 2.4 .0 2.5
Virginia . . . 6.6 6.3 5.6 6.6 2.7 1.1 9.1 3.0 5*9 2.5
est Virginia . . 4.9 2.1 3.1 1.4 2.5 6.3 3.5 4.6 .0 5.2
North Carolina . 6.4 5.0 2.6 2.0 2.8 1.6 1.5 .4 .5 .4
South Carolina . 10.1 7.0 6.4 8.9 .9 .5 2.5 0.7 .6 .8
horgia . . . 16.g 12.0 9.2 9.4 6.4 6.7 14.6 1.4 .6 2.7
Florids . . . 22. .0 .0 .0 .0 .0 .0 .0 .0 .0
South Atlantic . 1.7 J.6 1.6 .

tentucky' . . . 17.1 13.4 7.8 8.5 7.2 4.2 2.2 .7 1.2 .6
Tennessee . . . 16.6 11.3 7-9 6.1 5.2 3.6 3.4 1.2 .0 1.5
A-labama . . . 16.1 13.8 9.7 8.2 6.9 4.6 5.0 2.0 .0 3.0
Kissiaippi . . 29.2 11.5 7-3 4.7 2.7 3.1 1.5 .5 V/ .7
hat South Central 3.7 2.T .5 .2 .9

Arksas ... . . 22.8 ..3 1.6 .0
Louisiaaa . . . 16.9 9.6 5.0 4.0 2.9 3-3 5.3 2.1 1.6 .
Oklahama . . . 20.6 18.5 12.4 11.1 8.1 6.3 Z.3 1.3 1.5 1.2
Texas . . . . 33. 23.0 15.4 10.7 7.3 5.3 4.2 1.0 .4 1.2
est South Central 5.1 -T.. 2 1.0 .8 1.1

meatass. . . . 18.8 14.5 17.4 13.9 4.9 6.0 o4. 2.6 .2 4.5
IdAho . . . . 23.7 15.6 10.7 8.6 7.4 4.9 4.3 1.1 .0 1.4
Wyoming . . . 51.2 32.5 35.7 54.5 31.6 35.0 .0 .0 .0 .0
Colorado . . . 33.5 29.6 23.2 27.3 18.4 8.1 7.2 4.5 .0 5.1
Nov Nexieo. ......53- 55.6 36.3 28.9 3.4 .0 .0 / .5 .0
Arises . . . 8.1 1.6 1.0 11.5 1.9 .4 .6 .0 .0 .0
Utah . . . . 40.5 18.2 15.3 19.7 6.4 1.1 .0 .0 .0 .0
Iovada . . . -- -_-
Monataa . . .- 5.3 6.2 1.5 .1 2.2

Vashinteo . . 16.5 Z.6 6.8 6.2 4.6 2.7 2.5 .8 .0 .9
Oregon . . . 19.4 11.5 12.2 11.4 8.1 3.9 4.5 1.6 1.9
California . . 16.0 8.9 6.0 1I.__ 18.9 I 88 2.5 .5 -1. .0
Pacific . . . __ J.0 1.0 1.1

UNIT=S rTAT 25.6 17.1 14. 0 7. 4.6 1 2.8 .8 .9

Based onannual reports to State conmiesioners of insurance. Loans classified as dolinquent are loans upon wbich interest is overdue more than 3 months and upon vhih taxes or other liens are delinquent. Division averages not available before 19141.
2 Less than 0.05 percent.










Table i.- Percentage of farm-mortgage loans of 17 life insurancelgompanies, in process of foreclosure, by States, January 1. 1936-]63 -/


Percentage of amount of loans outstanding

State and 1943
division
1936 1937 1938 1939 1940 19141 1942 Purchas#Total money Regular
mortgages mortgages
Percent Percent Percent Percent Percent Percent Percent Percent Percent Percent

Maine ............... -....
Hampshire ...
Vermont ......... 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Massachusetts ....... .... .0 .0 .0 .0 .0
R h o e I s l a n d . . . .. ........
Connecticut ......... .. __l e a n d . . . _- .......
lew Tor ............ .0 .0 .0 .0 .0 .0 .0 .0 0.0 .0
New Jersey ........... 0 .0 .0 .0 .0 .0 .0 .0 .0
Pennsylvania ........ .0 100.0 .0 .0 .0 14 1.14 .0 .0 .0
Middle Atlanti I 1.1 1.2 .0 .0 .0
Ohio ................ 4.8 3.5 2.9 2.3 1.6 1.4 1.2 .7 1.2 .5
Indiana ............. 9.1 4.4 1.7 1.5 1.5 1.4 1.5 1.0 .6 1.1
Illinois ............ 9.6 6.4 2.6 1.3 1.0 .7 .14 .2 .2 .3
Michigan ............ 15.6 10.9 9.9 6.s 6.2 3.9 2.6 1.1 .0 1.5
Wisconsin ........... 21.0 141 6.7 3.. 3.] 3.0 1.6 .9 .0 1.0
Ust North Central - 1.2 .9 ,6_ .0 .
Minnesota ........... 15.6 12.4 6.5 4.9 3.3 1.5 .9 .2 .5 .1
Iowa ................ 17.2 17.5 13.1 10.3 6.3 1.6 .5 .3 2 .3
Missouri ............ 3.9 2.5 2.1 1.3 .9 .5 .3 .1 2 .1
Nort Dakqta ........ 20.3 23.3 27.7 19.5 114.1 5.8 2.3 .7 .5 .8
South Dakota ........ 214.3 23.1 15.5 10.6 10.1 6.2 2.8 1.7 V 2.1
Nebraska ............ 24.8 24.1 21.0 11.2 8.6 5.7 3.2 1.3 .7 1.4
Kansas .............. 17.0 12.6 _.9 4.4 5.9 6. 4 14.0 1.9 1.0 2.1
West North Central 2.5 1.2 .5 .2 T6
Delaware ............
Maryland ............ 31.0 1.0 1.9 3.6 4.s .4 .0 .0 .0 .0
Virginia ............ 114.6 4.4 3.3 1.8 2.4 3.4 .8 V .0 V
Vest Virginia ....... 17.0 .0 .0 3.4 1.4 .0 .0 .0 .0 .0
North Carolina ...... 2.0 2.1 1.5 1.4 1.1 .8 .2 .1 .0 .1
South Carolina ....... 12.0 5.7 3.3 2.2 5.8 14.6 .9 1.6 3.0 .0
Georgia ............ 6.3 2,0 2.1 2.5 2.8 2.2 2.1 2.0 2.1 1.8
Florida ............. .0 .0 20.0 .0 .0 .0 .0 .0 .0 .0
South Atlantic ....- 2.0 1.0 .9 1.9 .1F
--Kentucky ............ 9.3 7.2 4.6 2.4 1.2 .8 .1 .1 .1 .2
Tennessee ........... 7.0 4.8 2.7 2.4 1.7 1.6 1.2 1.2 .2 1.5
Alabama ............. 11.7 6.3 5.5 5.0 4.5 6.6 7.1 1.1 .0 1.6
Mississippi ......... 7.9 2.9 1.2 1.3 .2 .3 .1 .1 .2 .0
last South Central 1.1 .1F .2 .
Arkaa* ............ 12.0 7.2 P.6 1.5 1.1 .5 .3 .1 .6 .0
Louisiana ........... 7.5 3.2 .9 .9 .4 .5 .8 1.2 2.3 .6
Oklahoma ............ 5.8 5.0 14.14 4.0 3.9 2.8 2.3 1.7 1.5 1.7
Texas ............... 3.6 3.9 3.7 2.6 1.7 1.0 .5 .5 .1 .6
West South Central 1.4 .9 -7 .8
Montana .............. 15.5 7.8 9.0 6.9 5.7 14.4 2.9 1.1 1.5 .8
Idaho ............... 12.5 7.8 2.8 2.7 3-9 3.6 2.2 .1 .0 .1
Wyoming .............. 18.0 3.5' 6.3 .0 .0 .0 20.4 .0 .0 .0
Colorado ............ 6.7 3.1 6.1 1.9 4.6 3.1 2.6 1.7 .0 1.9
New Mexico .......... 2.5 .0 .0 15.6 9.14 7.0 1.1 .8 .0 .8
Arizona ............. 23.9 L2.0 9.4 .0 2.0 .0 .0 .0 .0 o0
Utah ................ 7.0 29.5 10.7 8.0 3.0 .0 1.5 .0 .0 .0
Nevada .............. .........
Mountain ........... 3. 2.2 .6 .5
Washington .......... 4.1 .6 7 .6 .X4 .3 .2 .1 .0 .1
Oregon .............. 15.6 12.5 6.3 6.8 8.6 4.6 2.8 .8 .0 1.
California .......... 9.2 14.2 2.5 4,o 6.I 8.1 10.5 7. J.j 10.14
Pacific .......... ...- 1 1i.. I .2 .8
UNITD STIS ....... 13.1 11.1 7.6 5.2 3.8 2.0 1.1 .6 .4 j .6

1B lased on annual reports to State commissioners of insurance. Include* properties in the course of voluntary conveyance to the
company. Division averages not available before 1941.
/ Loe than 0.05 percent.




32

SIAlRY

The following paragraphs summarize briefly the major developments relative to the investments of life insurance companies in farm-mortgage loans:

(1) Insurance companies for several decades have been one of the
farmer's principal sources of long-term mortgage credit, having held as much as $2,172,g63,000 on January 1, 1929, or 22.3 percent of the total farmmortgage debt on that date. On January 1, 1943, they held farm-mortgage loans estimated at $991,441,OO0, or about one-sixth of the total farmmortgage debt. Between January 1, 1942 and January 1, 1943, the amount of farm mortgages held declined $15,700,000, but despite this decrease their holdings on January 1, 1943 were about $g,0O0,00 larger than on January 1, 1940, reflecting the net effect of an increase in each of the years 1940 and 1941 and the decline in 1942.

(2) Insurance companies increased their relative position among the major farm-mortgage lenders during 1942 even though there was an absolute decline in their loans held. On January 1, 1943 they held 14 percent of the total farm-mortgage debt, as compared with 13.5 percent on January 1, 1942 and only 12.4 percent on January 1, 1938.

(3) With the decline in the farm-mortgage investments of insurance companies there has been a tendency for the largest insurance companies to hold an increased proportion of the total loans outstanding. On January 1, 1943, the five companies having the largest holdings of farm-mortgage loans held 52 percent of the total, whereas on January 1, 1930, these same companies held 46.2 percent.

(4) The farm-mortgage loans of insurance companies are of two major types regular mortgages and purchase-money mortgages. On January 1, 1943, purchase-money mortgages held are estimated to have been about $177,902,000, or 19.5 percent of the total of $g91,441,000 for all mortgages. During 1942, purchase-money mortgages held increased l.1 percent, whereas regular mortgages held decreased 5.6 percent.

(5) The average size of farm-mortgage loans held by insurance comranies continued to decline between January 1, 1942 and January 1, 1943, falling from $5,457 to $5,421. On January 1, 1931, the average size of outstanding loans was estimated to be $6,426.

(6) The average size of purchase-money mortgages is estimated to have
increased from $4,323 on January 1, 1942 to 4,549 on January 1, 1943, compared with a decrease in the average size of regular mortgages of from $5,770 to
$5,674 between the same two dates.

(7) Total additions to the loan account of insurance companies during 1942 show little change over those for the preceding year. Estimates based upor the annual runortq of 54 major companies to State commissioners of insurr~rCe show ,U incrtiazso of a little ovor 1 percent between 1941 and 1942. On the baaiz of the reports for these same r4 companies, it is further estimated t r~r aIrch-! r -money mortgr:nr increased. 32 percent during 1942 over that
., wherf regular mortgagees ducreasod 15.3 percent.





33
(9) Data on the types of regular mortgages made indicate that the
decline in such loans between 1941. ,and 1942 would have been even greater had it not been for transfers, many of yhich no doubt were transfers from purchasemoney mortgages and sales contracts to regular mortgages.

(9) Substantial principal repayments appear to be largely responsible for the decline in outstanding farm-mortgage loans of insurance companies. For the 54 companies mentioned above, -principal liquidations during 1942 were 17.2 percent of their total loans outstanding at the beginning of the year, compared with only 13.6 percent for 1941. Between 1941 and 1942, principal liquidations for these companies increased 29-5 percent.
(10) Loan delinquency at the beginning of 1943 was relatively insignificant. For 17 of the largest insurance companies, loan delinquency was only 0.9 percent of their outstanding loans on that date compared with 2.9 percent for 1942 and 25.6 percent for 1936. Loans in the process of foreclosure for 17 companies were similarly low, being only 0.6 percent of outstandings for January 1, 1943.
(11) The amount of farm-mortgage loans held by life insurance companies is concentrated to a large degree in the West North Central States. Moreover, there has been a decided tendency toward greater concentration, particularly in the Corn Belt proper in recent years. Over 65 percent of their total investment in farm mortgages on January 1, 1943, was in the six States of Iowa, Minnesota, Illinois, Indiana, Missouri, and Texas. On January 1, 1930, the same-six States accounted for onlY 59 percent. The reverse trend is shown for the States of the Great Plains North Dakota, South Dakota, Nebraska, Kansas, and Oklahoma. On January 1, 1930, 24.4 percent of the total loans held were in these five States. For January 1, 1943, only 14.2 percent were in these States.
(12) Although purchase-money mortgages are concentrate& largely in the West North Central States, the7 are a somewhat greater proportion of the total loans in the South Atlantic and the West South Central States.

These tacts have Important implications from the standpoint of the future trend of insurance-company holdings of farm mortgages and are therefore of considerable significance in the interpretation of the total farm-mortgage debt.
It would appear that insurance companies have maintained their relative importance in the farm-mortgage credit field in recent years, chiefly as a result of increased new purchase-money mortgages made. These mortgages are in turn dependent upon the sale of real estate held outright. With a rnpia depletion of real estate holdings, a continued increase in purchase-money mortgages, particularly in sufficient volume to offset principal liquidations on such Mortgages, is becoming less likely. On the other hand, real estate held outright as a source of new loans has not been As great for such lenders as the Federal land banks, the Federal Farm Mortgage Corporation, and commercial banks as for insurance companies and this undoubtedly has in a large degree accounted for the greater decreases in loans held by these lenders. It would thus appear that the mortgage loans of insurance companies may continue to show substantial decreases during the next few years unless principal liquidations fall off as a result of
smaller net farm income or unless a boom in land values should result in increased real estate transfers accompanied by new mortgage borrowing to finance such transfers. In connection with new recordings during 1943, however, it is noted that increased recordings are being shown primarily by commercial banks and individuals rather than by the federally sponsored agencies and insurance companies.




UNIVERSITY OF FLORIDA 3 1262 089215171