New-York tribune., 1922-02-13
Oppose Bill for
Home Building
By Risk Firms
Realty Board Asserts Life In
surance Concerns Would
Be i'll Competition With
Their Own Mortgages
Say Language Is Not Clear
Cite Possibility That Funds
Might Not Be Properly
Safeguardcd by New Plan

The Real Estate Board Of New York
made public yesterday its views on the
o'l which proposes to permit life In
surance companies to go into the busi-
ness of building houses to rent at IS
or less room per month. The hoard
contends that the bill. as drawn. is
ambiguous in its terms and that it is
not sufficiently clear in language OF
sneciNc in provisions to meet the re-
quirements OF plan involving so radi-
cal departure from the existing safe
guards heretofore considered necessary
for protecting the funds intrusted tc
the keeping of life Insurance com
paries.
Ia concluding series Of suggestions
submitted to the Joint leg slative com
mittee on housing and to the Legisls-
jlrt the board questions the dcs;rg-
billy of having the insurance con-
psnies embark on plan involving the
Aeenest competition with their own
mortgages.
See Two Results Of Plan
Such plan would have two obvious
results, according 10 the Real Estate
Board, namely, "to jedpa rdize the
loaned funds Of the insurance COM
panles and to discourage those plan
ning TO provide housing and thereby
70 prevent the construction of ten
houses that might have been built
privately for every one that would be
quit under the proposed plan"
lhe board is o. the opinion that the
housing emergency no longer exists
And that an almost unprecedented
amount OF housing construction in 1921
mas converted a temporary SHORTAGE
INTO an almost sufficient amount of &C
comm odations. th ough, il is admitted
TINS has been produced at costs which
'he average wage Garner cannot meet
Continuing. the boards ANALYSIS of
the bill says:
The history OF speculative building
IN this city makes clear the fac. that
thus form Of enterprise is frequently
disastrous 20 those who take the initial
step in producing housing namely
spccu atiVe builders. 1t Is now pro
posed to permit the life insurance com
penies to embark upon an enterprise OF
tnis character, ertailing the use, Writ
uslIy for speculative purposes, OF mil
lions Of dollars Of the savings Of The
poor and thrifty entrusted to these
companies for the benefit OF widows
and orphans against the time Of the de-
cease OF the brcadwinner
rs there not grave reason to think
tnat the Leg stature would be acting
uA"lseiy IN granting this authority
Cite Foreclosures on Mortgages
in the past it has been rot uncom.
mon for these fduciary corporations tc
Dc compelled. through errors in iudc-
ment or for other reasons, TO forec'ose
on property upon which they have
made loans and to carry these proper.
ties on their books and sometimes IS &c
dispose Of them at a loss. In an,
cent they have not willingly continued
10 mold assets Of this character. Sc
sacred has the Lcgis lature considered
sne trust placed in these institution.
thae 1T has prohibited their investing
ehem IN stocks and even in real estate
restricting such securities to certain
spec'hed investments, among them
mortgages upon real estate. Their rea'
estate holdings are confined oyc,usiveiA
70 such building IS may be Hecded i;r
tHe administration Of their business as
insurers
1T is now proposed to remove these
wise restrictions. And while no one
would question the conduct of these
operations under existing MANAGE
ment. this high standard Of eficicnc,
or probty is not necessarily cuaran.
iced FOR all time nor even for so lowe
f time as the Legislature night con.
siuer that an emergency existed
Practical builders and those havine
other than theoretical knowledge Of
re housing situation arc aware tina,
,hc cruN Of the matter is not lack al
housing but inability TO produce hous
ing at rents which the wage Garner
and others Of moderate means car
sHord to pay, ,and that the main reaso,
Tor this condition is the fact thu
wages Of labor in the building iudustr,
remain at wartime levels. while tn,
incomes of wage carNers generally ar.
declining.
"Thc proposed bill makes il incum
oent upon the insurance companies 7,
produce housing at an average ne
rental value OF SO or less per room
per month, and this on q bare estimate
OF cost at the time of commence emen
o. construction.
Question of Net Rental
Buy what Is an average net renta
value? To whom is it net? Uor
much is net? Does 1T mean that til,
"e' rent TO the tenant shall be 50 ne
room per month? Does it mean tha
,n'' IS TO be net after all operatin:
a'o q, .haiHtenance charges arc deducted
If 1t is net to the tenant j. !;
difficult TO sec how such housjnp ;s >,
be produced without assuming nhilan
'hropic aid indirectly from the insur
ahce companies but actually from thei,
polcyhoIders. And if. in any event
ene plan in practice should prove
lal1ure, the unsuccessful lands an,
houses would be among the mot ad
hitted assets Of the companies in
volved. 80
IF It is net 10 the insurance com.
pany or The owner. it assumes. first
gross rent. including all Of the coz,