Collaterals Acceptable for Loans.
Section 20
SEC. 20. Collaterals Acceptable for Loans. — For purposes of this Act, loans shall be granted with any or a combination of the following collaterals, namely: (1) real estate property, if available; (2) chattel mortgage on standing crops in bonded warehouses; and/or existing livestock or poultry; (3) stored crops in bonded warehouses; (4) two co-makers acceptable to the bank: Provided, That in case a farmer is a member of a group or "selda," the cooperative or "selda" may act as a co-maker: And provided, further, That in the case of multi-purpose cooperatives, no co-maker shall be required; (5) leasehold rights arising from leasehold contracts, subject to the following conditions: (a) That the landowner-lessor consents to the mortgage of the applicant's leasehold rights; (b) That the applicant belongs to a duly-registered producers' or farmers' cooperative; (c) That at the time of filing of the application for loan, the financial institution concerned shall explain to the applicant in the language or dialect understood by him that his leasehold contracts may be foreclosed in the event of willful or neglectful non-payment of all or part of the loan extended to him and the explanation shall be evidenced by a written notice to the applicant; (d) That the association, cooperative or "selda" to which the applicant belongs certifies, accredits or co-makes the accommodation for loan; (e) That in case of crop failure due to furtuitous events and/or force majeure, a refinancing scheme shall be devised or instituted for the benefit of the farmer-borrower; (f) That if the farmer-borrower fails to pay the amount due on his loan despite a normal crop yield and such failure of payment was due to his diversion or misuse of the proceeds of his crop, the creditor-financial institution may foreclose the leasehold contract not later than six months from the due date of the loan; and (g) That notwithstanding the provisions of any law or regulation to the contrary, the termination of the foreclosure proceeding on the lease-hold contract shall ipso facto extinguish the farmer-borrower's right thereunder and shall be cause for his ejectment from the land covered therein. Upon termination of the foreclosure proceedings, the leasehold contract foreclosed shall be disposed of in accordance with the following order of priorities: (a) It shall be offered for redemption to the association, cooperative or "selda" to which the applicant belongs; (b) If the farmer waives his right and/or fails to redeem the foreclosed leasehold contract, it shall be offered to any qualified farmer residing in the locality even though the farmer concerned is not yet a member of any of the above organizations ; (c) If the association, cooperative, "selda," or the qualified farmer waives such right and/or fails to redeem the foreclosed leasehold contract, it shall be offered to the Land Bank for redemption; and (d) Finally, if neither the Land Bank nor any party in the locality manifests interest in the redemption of such right, the same shall be offered to the original landowner who shall redeem said loan by paying the charges, principal and interest due.