New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1913-12-07
Ways and Means Proposed
to Make Loans More
Salable Everywhere.
APPRAISAL BOARDS
TO VALUE REALTY
Many Big Lending Concerns Have
Never Lost a Dollar on Real
Estate Investments.

LStotN
Surprising as it may seem, no dis
sentlng voice has been heard by the mort
gage loans committee OF the Real Estate
Board Of New York TO the general propo-
sition that the mortgage lending system
and the form Of mortgage loans be thor
oughly recognized. On the contrary, it
has received letters from the leaders
among the investors, title and insurance
companies. attorneys and brokers strong
Is urging immediate and radical action.
Nevertheless. II has seemed best TO the
mortgage loans committee, OF which III.
Morgenthau, jr., is chairman, TO postpone
all action until a very thorough consid-
GRAFTON OF all matters relating 10 this
proposition is had.
The mortgage loans committee has pre-
pared a careful summary of the sugges-
tons which have come before IL, and has
requested all those interested TO take part
in full discussion and TO lend the weight
OF their advice and cooperation.
The matters requiring most careful con-
sideratlon and full discussion are: First,
How can the supply Of mortgage money
be best increased? There seems TO be no
question as TO the advlsability OF col
lecting data and statistics 10 show that
first mortgage loans on well selected New
York City property are the safest and
best investments in the world. There also
seems TO be no doubt that the committee
will be able TO show this by statistics.
The Metropolitan Life Insurance Com
pany. which is perhaps the largest lender
on New York City property, reports that
il has never lost single dollar on Ne"
York City mortgage loans; that II has
acquired through foreclosure property val
ued az less than ! per cent OF the total
amount OF its present loans, and that
without doubt il will realize a handsome
profit on these properties so acquired.
The records OF the large mortgage COM
panles which sell guaranteed mortgages
are equally or even more convincing.
Thus. the Bond and Mortgage Guarantee
Company had guaranteed about 500 900
of mortgages up TO March !. 1913, and re-
ports total net losses of $500, which is
almost inilnitesima.
with these statistics in hand, II is
proposed." SAYS Mr.. Morgenthau, Jr.,
that We start a campaign to induce out
of-town life insurance and fire insurance
companies, large estates and savings
banks throughout the United States TO in
vest IN these securities. II has also been
suggested that some action should be
taken to infect clause in the new cur
Nr,t toFac ou on "
proved real estate in the large cities OF
the United States will be acceptable on
some basis as collateral by the govern
ment's reserve central banks. In order
To secure these much to be desired re-
suits Il will be necessary TO first accom-
plsh two things: a proper system or ap-
praisal must be introduced and well
advertised. which system must displace
the present one-man system. This, We
believe, can be accomplished by develop
ing the system which has already been
introduced by the Real Estate Board or
New York. whereby the opinions OF three
EXPERTS are obtained, two OF whom have
an intimate knowledge OF the section anG
one a broad knowledge Of the relation OF
the particular property To other property
ia the city. These opinions are then
passed upon by an expert in appraising,
who is chairman Of the appraisal COM
mittee OF the Real Estate Board. Second
In addition to this safeguarding with
reference to valuation, it Is generally rec
ognized that we must make our mortgage
securities more convertible. Various
methods for accomplishing this are under
consideration, but this more particularly
comes under the work of revising the
present form OF mortgage.
"a subcommittee to consider this phase
Of the situation has been formed by the
mortgage loans committee of the Real
Estate Board. and they will take up with
experts the matter of either making in
terest payable quarterly, or, as ii has
been recently suggested, making interest
payable semi-annually. but In advance
They will also consider the matter Of
making mortgage loans for longer periods.
and 1t is generally agreed that IL long
term mortgages are introduced their In
PRODUCTION must be coupled with "A sys-
tenn OF reduction OF the principal through
serial payments. This, IN turn. would
give us the opportunity of introducing u
system Of first mortgage bonds similar To
those in vogue in Europe and In Chicago.
secured by particular piece of property
1t Is felt that there is 10 reason why
these bonds should not be readily market
able here. especially as the Chicago first
mortgage bonds are now being sold with
success I'm this market.
"In connection with this proposition Of
first mortgage real estate bonds, 1t is felt
that the time has come to instruct and
protect the public with reference to the
difference between these bonds and the
bonds which are now foisted on them as
real estate bonds, which in reality are
merely equity bonds secured by real es-