New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1916-01-02

the greater part is not consumed
Otherwise, we would have no buyers
for real estate, and with no buyers
there would be no incentive for I'M
proving properties, the result OF
which, II this plan had been adopted
wears ago, would be that we would
have practically no modern apart
ments or business buildings. There is
a field FOR amortization but It's so'nn-
tages must be mutual.
The period for amortization shouIu
be not less than twenty years. Inc
interest should be at the lowest pos
sible rate, which plus an amortization
nsvment will still leave the invest
mcnt mobile and attractive to the
owner. Property should be mort,
gagged for n limit Of say 60 per cent OF
its value. ,u,,u
Loans on special purpose buildings;
such as theatres, hotels. etc, which II
successful produce an unusually large
annual return, could reasonably s@ho
for a larger amortization payment
than a first class mercantile building
from which the net income Is much
smaller. In any event, nothing should
Be done which will put the owner IN
a position Of paying out practically
all Of his return for mortgage In
terest and principal.
The character of the loan should be
considered. II the land value is large
the amortization demand, II any,
should be materially less than where
the land value is small and a large
percentage Of the value Is in the
building, In which case the amortl-
cation should be for an amount suf-
fcient 70 cover any possible deprecis-
ton IN the improvement, such as Is
due from wear and tear, as well as
70 cover smaller income due TO more
modern buildings in the same neigh
borhood taking away the tenants.
Where TO begin and where 20 stop is
a question that will have TO be decided
in each particular case. 1t can best
be decided BY the negotiation of an
intelligent broker between the lender
and the borrower. II will be impossi-
Bile 20 fix a hard and fast rule.
The low of supply and demand will
In the future, as IL has in the past
10 q very largo extent, regulate the
terms and conditions OF each loan. II
there is q large amount Of money
seeking investment and few demands
for the same, the borrower Will IN
the future, as IN the past, find money
Ct reasonable terms and at low rates,
and to O very considerable extent will
be able to dictate terms 10 the lender.
II on the other hand, there is little
money and large demands from Dor
rowers the lender will be master of the
situation and will dictate terms and
rates 10 the borrower
The theory that many people have
that brokers are opposing amortization
because they wish 10 see loans written
for three or five year periods, so that
they may the more often get commits
sion by refunding them, is possibly in
some cases, especially with the narrow
minded and shortsighted broker, true.
II We consider, however, that the life
insurance companies and savings banks
in the City of New York had on jan
uary !, 1915, outstanding on property
IN greater New York the vast sum Of
s1859, 1872 ,060.37 in addition 10 which
hundreds Of millions of dollars are out
standing from trust funds, trustees,
estates snd private individuals, making
the total amount Of mortgage incum-
brance on property in greater New
York approximately S2,500,000,0OO, we
can readily see that not only would
brokers have the normal increase, but
probably S25,0OO.000 10 s50,000,000 per
annum available from amortization
payments for reinvestment, probably
as great sum az they now have from
refunding Of mortgages, as the per
centage Of loans shifted from one IN
stitution 70 another at the present time
is, as q rule, small. 1t would not there
fore be such a serious hardship TO
brokers as many Of them fear.
Usually loans made by purely invest
ment interests. e., life insurance
companies, savings banks, trust com
panies. trustees and individuals-sre
not called at maturity unless, in the
opinion Of the lender, the security is
impaired, but are readily extended for
another term, with 8 very small charge
in any event, and usually with no
charge at all.
l believe that the sober-minded in
vestor should consider this fact, that
the deprecistion in tbs value OF real
estate in greater New York in the last
two wears has been due generally 20
local conditions and that the actual
value Of real estate in the whole OF
greater New York is probably greater
gay than ever before. They do not
nav enough attention TO this fact. They
see that certain neighborhoods have
lost In prestige and in value, and i'm
mediAtely take q gloomy view OF the
whole situation. If they would but
realize that the bond investments