New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1915-11-07
Successful Plan of the
limited States Mortgage
and Trust Company.
HAVE HAD TO TAKE
OVER ONLY a PARCELS
,,.. m the Loans Are for Five
Years, but Some Are for
Double That Period.

~ YEA estate, says Frank J. Parsons
Incident Of the United States
',ss~sgs & Trust Company, In
aO.'s - CYRUS G. Miller. chairman Of
.suS- ,.rtive committee % the Ad-
q. Council Of Real Estate Inter
80. The writer vas present az the
80. conference OF realty and imam.
- interests held for the purpose OF
G.,ussipg the sdvisability OF adopt
% ior New York long time mort,
.rs "a ,ri,h amortization features, and
l,. Litter 70 Mr. Miller he sets forth
- -sor+csge plan Of the United states
No-tosse and Trust Company IN eI-
a.. IN he thriving cities OF the west
and South. -,...i,. so ,.r
-. - The value Of the property we
go. centred that they be reduced by
-. ~ annual or semi-snnual and
....s;orsllv quarterly payments on &C
.s~,t ~ principal" adds Mr.. Parsons.
Wei mortgages running into many
-l,i;o-s made during that period and
....+.-ed over forty or fifty different
.s.iss IN widely separated sections OF
49, conrtrv. we have In the last fifteen
-, ,rouired but four parcels OF real
,,.s+s sggrerstinC about $4,000.
"Tb,s highly successful experience
.., ..,rihute IN large measure: First.
- ,be fact that We do not lend too
sur 50 as 20 leave the owner
g.,ls eouity for which TO contend
d., 5nii tines. and. second, that the loans
are reduced during their life by means
- .be annual or semi-annuRl payments
m point Of which we have been fully
us.fed in renewing them, and this not
rrfy with entire safety 20 ourselves
but without any embarrassment 70 the
narrower. Third. that ln all cases OF
mans 20 corp0la'c borrowers II is re-
o9'rsd that the responsible stookhold-
cr. endorse the notes.--in other words,
No loans are made on STRAW bonds:
These loans run ordinarily for I'VE
GEARS. but in the case OF centrally
located property they are sometimes
-~oIe for ten wears While in our
oo.rior no hard and fast rule can he
l,.d down with respect TO the amount
n the annual reduction, you VIII be
-terested go know that over long
reriod of wears we have required and
received unfortunately per cent OF
To pr.rcipa. Of our loans annually IN
la, ease Of an loans approXimating. 90
.e- cont of tHr ... roisal. TINS IN add
lion 20 frequent urstantlGl payments
made on account through privileges Of
rrrpavmer- granted m the mortgages.
Of. be- doubtless true that q smaller
-rpa' percentage might have been
os,d entirely adequate for safety IN
% great majority of cases. but the
Genital fact - chat u has been pos
lille 10 secure $50 large an annual re-
.rc-ior without -erious embarrassment
borrower ct ect'ons 20 this prin-
..gIs havc. OF r..r. been raised. some
ines br rd.. t.a.s and occasionally
tr arflr. -... mites. but il is all
natter OF .d-. ou and we have yet
20 find ca. re.e at the end Of
conn az ,r.- .c borrower was not
ratified .o hat he had materially
educed DIS debt and in q manner
which had no. seriously disconnected
him. Moreover, unpleasant community
situations have been 70 the extent OF
our influence avoided.
Another feature Of this plan IS that
no payments can be quite riRidly in
sisted upon i'm good times, even though
tter. nay appear no strong necessity
'or them. while when hard times ap-
proach more leniency can be shown in
enforcing the payments IL the loans
nave By that time been sufficiently
ssieguarded.
we are not unmindful Of the prac-
teal difficulties in the way of the ap-
plestion Of this plan-the problem OF
The disposition Of the small payments
as they are received, objections to
such obligations in the case of prop
erty held for sale. the advantage which
might be taken of these obligations in
hard times by INSCRIPTIONS lenders,
etc These. however. are largely mat
tefs Of custom and convenience and
offer no insurmountable obstacles. In
the case Of corporate lenders or large
individual lenders who have constant
.osning fund. there can be no serious
objection. and In the case of small In
crvdual lenders such payments can be
invested IN mortgage certificates or
placed In q special bank account until
they total sufficient amount for the
purchase Of a small individual mort
rage.
II Il be alleged that this plan might
exercise a deterrent effect upon prop
crty held for speculative sale. the all
sufficient answer, IN our judgment,
would be that a larger measure Of
safety must be secured, even at the
expense Of some matters OF conven-
itnee. In our experience mortgages
with provision Of this sort are not
popular with spectators or operators
n real estate, but our position has
been that We are not primarily inter
tsted Ia facilitating such operations,
lnssmueh as we IN no sense share in
ne profits II they are successful. while
On the other hand we are compelled 20
suser Il the enterprises are unsuc-
eessful Receiving as we do only a
hocerate interest return. our theory
mas hs been that we should properly have
Mite 70 DO with speculative districts
OF conditions. but confne our loans 20
S'aohshed sections where values and
'ents are reasonably stable. As
sss'hsi the theory that grasping lend
Z" might use the obligatory payments
"a oArd times as q means OF acquiring
property. 10 should be pointed out that
,uen payments usually result In reduc-
aS loans 70 point where a borrower
- no difficulty In replacing them II
"yyment Is demanded.
TN respect TO the term Of mort
Egg investment, our observation, based
,poh experience IN these other cities, is
ss generally speaking, a mortgage
10 longer period than ten years
vIo not be advisable, nor would It DO
seaL y is safe 10 Say that in the
i s1 majority Of cases in growing
t os .S cities the gradual amortiza-
aos through q long term OF years, said
s ~" applicable 20 slow growing Euro
ysan cities, would either be rendered
v,,viu'eiy unnecessary by the increased
ss.'.s or prove entirely inadequate 20
sst ne rapid depreciation due 70
s,ngss in the locality.
mil not eontended that principles
,n'sole % Western and Southern
I, T eould be adopted without change
New York City, but h is equally
~. ..s that the same factors which gov
me situation here are annIireble