The preceding language has been entirely a recital of indebtedness. Now the obligor states the terms of his promise to pay: "Which sum said obligor does hereby ..............covenant to pay." If more than one borrower, "jointly and severally" should be inserted in the blank space. The promise is made to the obligee, and since the bond is personal property, to the executors, administrators or assigns of the obligee, if an individual; or its successor and assigns if a corporation. Next is set forth the date on which the principal shall be payable, "on the......day of........

nineteen hundred twenty......."by filling in the blank spaces.

Under these terms the borrower cannot pay the bond until the due date. If the lender is willing to give the borrower the option to pay sooner, this provision may be made to read "on or before the......day." etc. Usually however the lender is unwilling to give such an option; he wants to know that his money is invested for the full period and that he will not suddenly have his money returned, compelling him to seek another investment. For this reason, even if the lender is willing to grant the option, it is customary to provide in the bond, either that notice of such intention be given a certain length of time in advance of the payment, or that the borrower when making the payment shall pay additional interest for a certain period of time. In this way the lender has opportunity in the first case to seek a new investment and be ready to place his money as soon as he receives it, or in the second case, he receives interest to cover the time the money may be idle in his hands until another investment is found.

Following the due date appears the interest clause: "with interest thereon, to be computed from the......day of

.........192.., at the rate of .......... per centum per annum, and to be paid on the ..........day of

..........next ensuing the date hereof, and semi-annually thereafter." The appropriate dates should be inserted in the blank spaces. The date of the bond is the date from which interest is usually computed. The interest is not paid in advance; no interest is paid when the loan is made. Interest may be payable at any agreed interval, monthly, quarterly, semi-annually or annually. Most often it is made payable semi-annually, and usually accords with the date of the bond: for example, if the bond be dated February 12th, 1921, the interest would become payable August 12th next ensuing, etc. This is not a fixed rule. Many investors, particularly banks, desire interest payments to come in on certain dates and to that end will have their bonds provide that the first interest payment be due on the first of their interest dates following the making of the loan, and semi-annually thereafter. The rate of interest is agreed upon between the borrower and lender and inserted in this clause.

While a definite date is fixed for repayment of the amount loaned, very few mortgage loans are paid when due. Unless the property has depreciated in value the loan is usually allowed to remain. Banks, particularly, generally permit their loans to run on indefinitely, notifying the owner from time to time of any change they may wish to make in the interest rate. Often the date of payment is extended by a formal instrument, known as an "extension agreement," which designates a new date of payment in the future and may make any agreed changes in the interest rate or other terms of the bond.

Many bond forms leave the entire interest clause blank. When using such a form care must be taken to incorporate all the requisites: due date of principal, date from which interest runs, its rate, and dates of payment. Care should be had also not to use a form of interest clause providing for payment of interest at a specified rate "until the full amount of principal and interest is paid." Such a clause prevents the lender from increasing the interest rate, even after the due date, except by express agreement. The form of bond set out heretofore permits the lender to raise the interest rate to the legal maximum, as a penalty, as soon as the date of payment of principal passes.