The Wheeling intelligencer. [volume] (Wheeling, W. Va.) 1903-1961, 1921-06-03
RTE RANKS AND LIFE INSURANCE
COMPANIES COMPEL BORROWERS
T0BuY UNDESIRABLE PROPERTY
Sensational Revelations Made
in Testimony Before the
Lockwood Investigators
Sure Thing Finance AL
legged

New York. Jun" 2--So1e y N"
largest SAVINGS harks and hr" 'nS":-
aEcs companies IN America. the Lock
wood Legislative committee learned TO-
day. have frequently c"lnH'i"'i n'r-
rowers who wanted to ercr, ou;'d:nEs
70 purchase undesirable real estate hc'u
by these Institutions before t7'y would
grant ~" requests for loans.
Tho rva, estate uulnaGch in this way
rar,c into the possession If these cor
pa"at!on through foreclosures. and tney
were ANXIOUS t. L. RID ~ u.
Corporations Accused
Among the corporations accused oy
witnesses Of having done business III
tniS Way were the Prudential l.'cS IN
>uranrc company. New York SAVINGS
Hank, Manhattan Life Insurance COM
pauy. Mutual Life Insurance company.
;mptr" CITY Sat'nrS ii'rk. bro"N'H
SWINGS Bank. Dim" Savings B'Cih ot
Etnnklyn. and others.
II some G: ~" ,ran*a Ct;"n& N" lend
;n- cn-Hora,irn4 .,iSo compelled Dor
-nv,r$ /, accept liberty bonds at par
witnesses said. although these securities
rr.lucrtly wc", worth ten per Crt DC
low par and less.
Coming and Going"
BROKERS acting - go;"c;w'rH IN
:h.. deals often took commissions from
III. Banks AMI Insurance companies Tor
;irt;r: buyers for their un6cS'rao'e
r.a, estate. and then turned around ana
collected from IL" borrowers because
they hcipvd procure IN" loan. yet II
WAS All one transaction. and IN" loan
,,;,, runI;tinuri on the purch;.S" OF
o,Lrr prop. CtN. one OF ihc:" hr"N''N'
S,rr.v II. Hughes. admitted IL irc COM
m:tt,c. -
III, Arntcd however. that his hrm
made, = speciality Il looking ar"un" I"r
.,.nurn?ics that had real "*'"i" lhey
wanted e. unload. and then nEd1nS
h";!drr who desired borrower |" Dor
r,yr SON. monr% and could not hnu any
ether way to get 1t.
Transactions Described
Mr.. Hughes went into detail IN &C.
srrihtnS many such transactions III
=, htrh h. had beer in charge OF arrange
,rnnts. In ono OF them fsphralm Levy.
head Of !. realty business. was required
-. purchase al <GIn.u"U som" real estate
r,,r.d hy the Mutual Lii" Insurance
company, in order to obtain Sl.o"O.Oc"
at S!> percent on property appraised ~
S29J0.Ch0
In similar fashion nc described how
I
unioadcd an old fashioned fran" h";eI
for $4,000 on 4 loan OF s650,ren.
Extoraon Cited.
Dealers in real estate mortgages ike
wise drew the committees interest. Abel
King, one such buyer. admitted he had
paid an average OF twenty percent less
than tho face value OF ftty-seven mort
gags. aCCrrgating Sl.700. 900. In some
instances the face Talue Of the mort
rIGe--thn amount upon which the bor-
rover paid him intercst-waS nifty per-
cent higher than what he paid for II.
TIL" borrower paid interest on the entire
amount. however. Thus. as he paid OF
the principal In quarterly inSta!lmcnts
ard continued TO pay six percent on the
face value. the actual interest rate rose
ui=hcr and higher.
In one OF Mr.. Kings transactions II
reached l2G percent Oh thr eighth pay
mcEt and IN another 10 perez nj. II was
testified ny T.. II. Parsons. certified
accountant who examined tho books.
Samuel Cntcrmyrr. counsel for the
committee. inquired OF Mr.. King how he
thought building construction ever could
20 on with proper speed in New York
whom men like him carried on such
practices.
Mr.. King defended the practices. He
""ntsndcd that builders would be unable
10 carry on construction work if he and
"th"rs similarly engaged did not pro-
vide additional working capital by buy
ing their mortgages.