The sun. [volume] (New York [N.Y.]) 1916-1920, 1919-10-27
REAL ESTATE NEWS,
NOTES AND GOSSIP
Mortgage System Inadequate
to Meet Strain Put on It.
Says f. j. Parsons.

That the existing mortgage system IL
inadequate to meet the strain imposed
upon It by the countrywide building
shortage is the opinion expressed by
Frank ]. Parsons, chairman of the
real estate securities committee of the
Investments Bankers Association Of
America in O report read at recent
convention in St Louis. Mortgages in
the United States, says Mr.. Parsons In
tho report, have. until a very recent
date, been handled in a relatively primi-
tive and archaic manner"
Nevertheless, Mr. Parsons takes an
optimistic view of the future. Within
the next few years he predicts the move
ment toward wider recognition of
mortgages as the basis for long term
bonds will have brought this type OF
property we'll within the classification OF
acceptable securities actively dealt in by
the members of his association.
In some cities Mr.. Parsons adds. II
may be necessary, however, for owners
of property to retain more substan-
tial equity and also consent to length
ening of the term of the loan and
reasonable amortization. Under such
circumstances he says those who profit
from the successful operation of the
property must be willing to be held
personally responsible for the repayment
of the loan.
''The handling by conservative bond
houses Of mortgage issues, whether upon
specific properties or upon a pool mort
gage" says Mr.. Parsons, lis a forward
movement and helpful sign. The real
solution. however. will come with the
establishment Of mortgage banks with
the highest backing and material re-
sources. which will issue their own Sc
curitiss based upon pool of mortgages
and sell guaranteed or unguaranteed
mortgage certificates based upon spe-
oihc properties to those who desire 1t.
Such companies could deal in both farm
and city mortgages and by their stand
Ing and the volume of their operations
would through the application of the
foregoing principles gradually create
Ruch market for mortgage securities
as to make them generally acceptable.
The mortgage business. by reason Of
certain fundamental defects in the man
mar in which II has been conducted, has
hacked the recognition to which it is en-
titled. Lenders. either through Excess
eive caution or narrow policy, have
chung to short terms. frequent commits
sions and renewal charges, and have
lacked the courage to agree on a COM
mon basis which would put the business
on higher plane. With more uniform
standards would come greater security,
uniformity in practice. ready market,
Increased confidence and more general
ecceptability of security which should
be the best in the world, having behind
Il the basis OF all security.
''Never IN the history of this country
has the demand for broader and more
scientific handling been more apparent.
There Is a retarded building development
extending over practically all of the
Omitted States. which when under way
VIII tax the capacity of existing agencies
to the utmost. Aside from this, con-
adorable portion of many OF our cities
notably New York, will practically have
to be rebuilt in the next twenty years
Existing mortgage machinery is made
quate for the purpose"