New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1916-03-12
Measure To Be Discussed
at Meeting Arranged
for March "a.
DESIGNED TO REMOVE
THE faint OF USURY
John Finck, Speaking of Pro-
posed Law. Believes Ii Would
Stimulate Lending.

A. the suggestion OF John Flnek, the
Advisory Council OF Real Estate In
terests has prepared bill which, 1t
is said will remove the faint o. usury
from interest on mortgages. This bill
has been introduced into the Legisla-
ture by Senator Slater and Assembly
man Ellenbogen, and a joint hearing
will be held shortly at Albany. The
bill. amended. reads:
Interest permitted on collateral
security. In any case hereafter, IN
which advances Of money, repaysble
on demand, 10 an amount not less than
$4,000, are made upon warehouse re
ceipts, bills of lading, certificates OF
stock, certificates of deposit. bills OF
exchange. bonds or other negotiable
instruments, pledged as collateral Sc
curity for such payment, or IN any
case hereafter where advances or loans
arc made. 10 an amount not less than
1000. repayable either on demand or
on a specified date, and secured By
mortgage upon real estate IN any city
of this state of the first class, or IN
any city Of this state Of the second
class. II shall be lawful TO receive or
to contract TO receive and collect, as
compensation for making such sd-
vances or loans. any sum 10 be agreed
upon Dn writing By the parties TO
such Transaction
4 conference will be held in the
library Of the Chamber of Commerce
on Friday, March "a, 81 3 p. m, and
prominent lenders and borrowers will
discuss the different aspects Of this
bill. Any one who is interested in this
particular aspect of the mortgage ques-
ton ia invited TO attend for plans will
also be prepared for a public hearing
a. Albany. Senator Slater and Assem-
blyman Ellenbogcn will speak at this
time rs TO the merits Of their measure.
Speaking Of this bill, John Finck said
yesterday:
"Only those who are engaged in the
negotiations OF second mortgage loans
can fully realize the difficulty Of sue
cess in a field limited by reason OF
the many hazards, such as reduced
equity and the strong temptation OF
borrowers when mortgages are called
to intcrpose the defence Of usury in
order 10 postpone the payment. If this
bill passes II will do much 70 lift one
OF the most onerous burdens Of the
property owner and enable him more
readily to protect an otherwise i'm
paired security.
cit is universally recognized among
real estate interests that some rene
dial legislation is essential to free sec
ond mortgages from the faint OF usury.
Al the present moment only purchase
money or corporation mortgages are
The courts have frowned
on the many subtorfuges employed by
second mortgages lenders until these
transactions have been considered
little less than criminal. As result,
second mortgage lenders have generally
from the market, so that
among lenders but one in 500 will loan
on second mortgages.
THE field is limited. and, excepting
in the two instances above named. II is
almost impossible 20 obtain q loan eX-
cept on conditions that are prohib-
tive. A second mortgage lender has
much TO contend with and must use
caution in making his in
vestments; especially whereas first /
mortgage lender will loan on two
thirds basis, he must meet basis OF
so ner cent, and sometimes better. The /
margin of security left for second |
lender is seldom more than
20 per cent. and he must be prepared
to meet all defaults in payment of in
crest on the first, and in addition taxes
and arrears of taxes, general deprecis-
ton. fuctuation Of values and foreclo- F.
sure expenses.
"A first mortgage lender would DE
amply compensated with per cent in
terest. but a second mortgage lender,
in consideration Of reduced equity
and the extra alertness necessary TO
protect his margin, must receive re
nuneration in proportion to his great /
Pr risk. II these loans were placed on I
The same plane as bank loans and .
sanctioned by proper legislation the .
field of lenders would be enlarged and .
he ability 10 secure mortgages greatly .
strengthened As a rule, the ordinary .
property owner has all his ready money .
invested in his particular piece OF real
estate. and if first mortgsgess called .
Tor payment the only opportunity TO
meet this is 10 raise a second mortgage
md use it to reduce the first.
Frequently this Is the only means
he property owner has 20 protect his
equity. and If proper legislation could .
De had, eliminating usury, the second .
mortgage field would be stimulated and .
he extortionate prices now charged by
he timid lender would be considerably /.
reduced and the number OF lenders in
.reased when assured that their loans
would have the sanction OF the law