The herald., 1897-10-13
Mortgages VS.. Trust Deeds

To the Editor Of the Los Angeles
Herald: In a recent issue Of The Herald
an article appeared under the above
heading, which would seem to convey
the impression that the only object OF
bankers and money lenders was to
"cinch" the borrower and get possession
Of his property as expeditiously and
cheapIy as possible. without regard 10
his rights in the matter.
Perhaps you will allow me to suggest
that there is another side to this ques-
tion. and that bankers and money lend
ers are not, as rule, the constituencies
and land-hungry class that the article
would, seem to imply. AS far as my ex-
perience goes a lender Is very well sat
isfied if he gets his interest paid prompt
ly and his principal at the time agreed
upon. and looks upon the acquisition OF
the property pledged as security for
the loan, as. last resort only, and one
to be avoided in every case, II posslple
It Is unfortunately true that there is
a class of borrowers. very small, inoeeo'
compared with the whole number, VINO
seem to be entirely without the sense OF
responsibility as to obligations incurred
and who will neither pay their interest
and taxes nor keep up their insurance,
and under the new law It would be, a.
the least two years, and often nearer
three. from the time the loan Is made.
before the lender could realize on the
security. With the interest and cost OIL
foreclosure, advertising. etc., added
taken in connection with the depre-
ciation Of improvements, usually al
lowed to take place by the owner on the
property in process of foreclosure, 1t Is
very seldom that the lender, say Of $1,000
or less, would "get out" whole by selling
the property. IT, however, deco OF trust
is taken, the property can De- 'turneo' more
quickly and with less expense, conse-
ouently to greater advantage 10 the
owner, as he will get the benefit OF what
ever the property brings over and above
the claim Of the lender, for, besides the
difference in the amount OF interest ac-
crued. the expense of acquiring the title
under a deed OF trust is only one-fourth
10 one-third Of that incurred In fore
closing a mortgage. On the other hand,
there is nothing in the conditions OF
deed of trust to prevent the lender from
being as lenient as he chooses when the
circumstances of the case warrant Il.
while with mortgage, and the certainty
of nearly two years delay between the
time of beginning foreclosure proceed
ings and realization on the security, he
is almost forced to be severe, in self de-
fense.
The interests Of the lender and bor-
rover are no more inimical than those of
a merchant and his Gust omers.
There is competition in money lend
ing as in all other businesses, and the
only way one can hope to build up
successful business in this line, as IN
all others, is by fair treatment, so that
a customer once obtained will stay with
you, and bring his friends.
If the deed of trust is "cut-'throat
proposition, it seems singular that all
loans made in the state of Missouri (and,
presume, in other states as welD arr
made on it, rather than on mortgages
1t cannot be claimed that the laws OF
Missouri are careless of the rights ano
interests of debtors. AS a Democratic
paper, 1 believe that you will agree with
me that we suffer rather from too much
legislation than from too little. 1t is
impossible to- change natural laws In
either the financial or commercial world
DIV leGlSldtlOI, dLNl IL yOA LII COStdCiCS
in the way of the lender by making It
difficult for him to obtain his own, you
simply oblige the borrower to- pay in
one way or another, higher rate of in.
terest for financial accommodations The.
great majority Of borrowers are thrifty
people who are making Improvements.
building homes and giving employment
to our mechanics and laborers. One-half
to two-thirds of the loans are made by
savings banks, buildicg and loan asso-
Citations, and organizations of that class
and these are simply the agents of the
great mass of thrifty wage earnsrs who
are laying up something for rainy day
It iS therefore, not case Of the rich
against the poor, but question Of trans
acting a legitimate business between
the borrower aad lender, with the least
possible friction and expense. predict
therefore. that when the legal status Of