The New York herald., 1921-06-03

49,
that loan the borrower had to take back
big piece Of property
The witness admitted that several
parcels were involved in the transac-
tion, whereupon Mr. Untermyer read
list OF score or more properties In
widely separated sections of the city
which the witness said Levy bought
incident TO obtaining the loan. Mr.. IN
tsrmyer grew sarcastic.
you mean he went out looking for
loan and came home with this prop
erty?" The witness would not admit II
was anything but a legitimate sale lie
declined to subscribe to Mr.. untermyers
characterization of the property as a
lob lot" although he admitted some OF
ii was of '1ow" and poor" value.
Levy, or the Blockton. Realty Com
pany, 1t was shown, took these various
properties at lump valuation OF $685.
600. paying $100, 600 cash out of the net
proceeds OF the mortgage loan and leav-
ing the balance in a new mortgage for
$550,000. In addition Levy's concern
paid total of $4,000 in brokerage fees
to Hughes & Hammond, who also re-
ceived $1,000 from the Mutual Life as
passed on the Blochton Realty COM
pany.
Mr.. Untermyer wanted to know II II
was not probable that the Mutual Life
Insurance Company might have to fore
close on the mortgage for S5oO.0Oo get
the property back and trade 1t again.
Mr. Hughes said he had no information
as to whether the interest or instalments
on principal were being paid.
Forced to Buy other Property.
Replying To questions Mr.. Hughes ad-
nnitted that his firm did considerable
business Of q similar nature with the
Prudential Life Insurance Company.
One of these transactions was in behalf
of los West 55th Street, Inc. That
corpora ton desired to raise S55O,0O0 on
the property on the southwest corner OF
Sixth avenue and Fifty-ninth street.
Hughes Hammond sold the mortgage
to the Prudential Life, but only on the
condition that the mortgagor purchase
property at 6S Hudson street. Hoboken,
for s12S.00o. paying $4,000 cash anu
leaving the balance Of $4,000 on mort
gage with annual reductions OF prlncl-
pal.
Similarly when the corporation con-
trolling the property at 905 Vest Elid
avenue sought to raise $540,000 on 1t
condition imposed by the Prudential was
the purchase of property at Market and
Halsey streets, Newark, forA$22s,000,
paying SIS. 900 cash, leaving balance
of s213.000 on mortgage, prd1bding for
amortization in semi-annual payments.
Still another case was that of the Jat-
tison Construction Corporation, which
sought a loan of s650,000 from the Pru-
Dental upon the property at 1919 west
Thirty-seventh street. The property is
a sixteen story store and loft building
appraised at s1,100.0o0, but in order to
negotiate the loan the construction COM
pany had to agree to purch ase the nifty
year old frame building at Long Branch,
y. j.. known as the Tallahassee Hotel,
Cor t115, 900, of which $4,000 was paid
IN cash and deducted from the proceeds
OF the loan.
Similar cases were listed in the COM
uaittee record to the extent of two or
ehree Dozen Mr.. Unternnyer explaining
that II would be impossible to investi-
gate them ALL but that the committee
would take them indiscrirninately. Be-
sides the two life insurance companies
mentioned the mortgages that operated
IN a similar way included various trust
companies. the New York, Central
Union, and savings banks in Manhattan
and Brooklyn
The brokerage charges. which in some
instances went as high as two per cent.
on first mortgages on high class proper
ties together with the other charges
such as disbursement fees, mortgage
taxes. commissions. &c, frequently
brought the interest rate on loans made
rci. Jufposes of building construction to
an where from 10 TO 20 per cent.
;eorge M. Hubbard of the firm or
Illiam A. White & Sons revealed still
..other tentacls, on the octopus that
ms to have the building situation IN
It's srip. That is the practice of buying
second or third mortgages at a large
discount from their face value resulting
in tremendous profits for the holders.
$4,000 ON n $4,000 Mortgage.
Hubbard said he negotiated loan OF
$4,000 on a third mortgage for S25.ooo
= garage properties at 352 West
rst street and 351 West Forty
4intb The mortgage had one year only
10 y and in addition to the discount
tre r ,kerage firm received $3.50 In fees
ARID ommissions on the transaction.
hubbard admitted to Mr.. Untermyer
that the senior members OF his firm had
not been aware of this particular trans
action.
The most sensat tional testimony OF TINS
nature was given through Abel King, 81
Union square. a private dealer In sec
ond and third mortgages. Kings spe-
cialty appeared to have been the collec-
ton OF bonuses for investing in second
and third class mortgages. and accord
ing to the committees accountants these
bonuses have aggregated $337.OOO on
transactions involving loans or sl,foo.-
600 in the last three or four years. In
this way he got 20 per cent. rake off
at the beginning. and according to his
own testimony. he has not had to fore
close a single one of the mortgages he
and his partner. Isaac Schoss, took up.
Besides the bonus King shaved his
paper rather closely. Here Is an ex-
ample. On one mortgage for $4,000
that had three years to run, King ad-