The New York herald., 1920-01-25
ATTITUDE OF SAVINGS BANKS
TOWARD REALTY MORTGAGES

the income from which can be checked
at will. Neither capital value nor income
is involved with other property and both
are protected from the risks of manage
ment or production which accompany
business ventures.
Relation to Realty Market.
Third-What relation do the above facts
and conditions bear to the real estate
mortgage market?
In the first place, il Is for the banker to
determine as to how much risk the bank
should assume for any unusual change in
the market value OF property. The bank is
under no obligation to receive applications
OF any particular kind or description, nor
is it obligated to make loans on any snecial
base for appraisal. In fact, conservative
appraisals are required by both the letter
and the spirit of the bank act
In times of initiation what would be said
of banker who declined to acquire old
mortgages placed at low appraisals and
lpurchasable at an attractive rate of inter-
est in order to take loans upon new
construction which is at a cost which ad-
uittedly includes items of no substantial
value and quite probably will be temporary
in nature? Also, the quality of new con-
struction under these conditions may prop
erly be compared with that of the old day
when both material and labor charges
were far more moderate. The net yield, We
repeat, Is of minor consequence. Further
more. it is not for the savings banks to
risk violation Of the usury law in times
when the economic value of money may be
much more than the legal limitation.
Length of Loans.
The proper maturity of mortgage invest
ments is much discussed. but 1t is difficult
to fix any general rules. Some attempt to
raise a mooted question as to the compare
tive value of short term mortgages and
those for long terms. Such question as
exists must be solved according to Ameri-
can conditions rather than European ex-
perience. Also, the nature OF the loan
varies largely according to the kind and
use OF property which is offered as Sc
curity.
The amortization of mortgage loans on a
residence property as well as upon special
purpose property Is a principle OF ac-
cepted merit from a variety of viewpoints.
However, there still remains a large class
of mortgages which are practically indef-
mite In their term although drawn for
one, three or five years. In many cases
these mortgages are on demand or payable
one day after date. yet they amount to
permanent" loans which run longer than
any period thus far advocated by the
most enthusiastic exponent OF long term
urban mortgages.
AS a general rule the savings bankers
only to the extent that is required to pre-
serve the safety of the loan and 10 furnish
a proper liquidity of resources with which
to meet the demands of both depositors
and borrowers.
AS TO the peculiar satisfaction of a mort
gage of undoubted security upon real es-
tate additional comment is not required.
Such loans meet all the demands OF the
savings banker. whether working on the
mutual or capital stock basis. Tho larger
the bank the more attractive these mort
gage loans become.
HISS Certain Responsibilities.
II therefore appears that the savings
bank has certain responsibilities to indi-
viduais as we'll as functions In our eco
pomic organization which should not be
lightly considered. Our general interest
In housing for both persons and business
must not lead US TO assume conditions
which do not exist.
rho mutual savings banks OF New York
have endured a strain during the war for
which they we're unable to prepare, and
their present strength Is doubtless in cx-
cess OF what was anticipated by tho most
sanguine. Whether or not the conditions
which are assumed TO exist could be bet
tor met by institutions which are managed
for stockholders' profit rather thar by the
mutual savings banks raises appoint which
only can be answered in timo and by OBJ
serving the results OF competition
For tho present, and SO long as the
word savings" can be used In New York
by no bank other than a mutual savings
bank, II bels,oves tho real estate interests
and also the so-"-..ied uplifters TO conserve
their greateet present source OF mortgage
nunda