The Pensacola journal. (Pensacola, Fla.) 1898-1985, 1922-12-31

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featuring plant. The investor. tb,l
fore, or the banker acting for n
need only concern himself witt
relatively small piece OF proo,l
which is more easily watched n
more easily protected. in Gaze
unforeseen difficulty, than the I'd
and widely scattered property Of
big corporation.
In Case Of Foreclosure
Every mortgage, whether issaI
by a corporation or the builder
an apartment structure or no. !
gives the lender the right 10 70.
close on the property in case
terest or principal is not "a
While foreclosures on pEopGly
cured real estate mortgage bod
are extremely rare, yet ever
weston should ask himself vi
would happen in case fors:uI
should become necessary. Il
case of real estate mortse ge be-
the procedure would be very {
pie. There is a ready MARIE
buildings and the trustee wogs
the structure for the best pr!a
tainable. pay off the claims q
bondholders, including princiai
accrued interest, and turn 8
whatever balance remained d
original borrower. The faa
the building is always worth {
deal more than the amount 0! b
issued gives ample assurance
there will be enough realized
the sale 10 pay off the bonds
both the boudholders and the
rover can feel assured that
banker will exert every effort
obtain the highest possible prIaI
Only in extreme cases, howtV
wsuld foreclosure be Necessary
all. Ordinarily, if a boffoF
should get into financial trol
and be unable to meet his b
Obligations, the trustee hind
could solve the difficulty by TAM
over the property, giving it the
pert management of his organl
ton, stopping up financial leaks, ;
providing the money immedisa
necessary to pay interest and p-
cipal of the bonds as due. Hold
of the bonds would get their moa
promptly, as usual, and there Wo.
be no impairment of security, as /
mortgage would still remain
force. When the difficulties are
smoothed out, the management
the property would be turrtd b
to the owner who had temporar
surrendered if. This IS anothH
iustration of how it pays 10 i-r'
in bonds vouched for b. . bank
organization of wide experience :,
ample financial resources. r.
closure is not 4 pleasant Ten%
and If a banker is able TO pfsFz
it he is rendering a great scryla
his investors and to the borroT
When a corporation IS unable
pay interest or principal on I
bonds, however, the procedus
apt to be very different. II IS q
easy to find a purchaser for ar Z
tire railroad. II is still less esSF
find a purchaser for part u
railroad which often underliet
bond issue.
The difficulty IS still greater wi
several bond issues have been
out secured by FIRST, second :
third mortgages on railroad pc
erty. Holders OF the FIRST mortg.
bonds may want to do one taa
and holders of the other bonds n
want to do something else. Ihse
suit usually is compton.
Holders of each class OF bond' J
invited to deposit their bondi "
a protective committee. The q"
mittec draws up a plan OF coDe
mise whereby the bondhcldf ,
surrender a part of his holdinsa .
may be called upon to pay : :.
tain amount of money TO htlp, "
COMPANY out. and in the ea'
likely to find himself pockeuaF
considerable loss on the transa::ap
He realizes, however, that Il,
probably better to accept loss Us
to attempt to force foreclosT-G
| have pointed out the d'hes
between real estate mortgage -
and corporation bords IN tne
portant matter OF foreclosure.
cause this point splendidIy -
tratcs the simplicity and saIely
real estate bonds. 4 corpora.
bond issue usually runs Tor q {
siderable time. Real estate DO D.,
of a single issue may mature az I.
way from two to fifteen years Il
date Some railroad issues rrn
\ hundred years. During the
NJ fhe bonds conditions may cfl..
V W w materially from what t.
were when the bonds were hr5t
f.red 10 investors. 1t IS We'll. thss
fore for the investor TO realize
he must look far ahead and v" =,
rvery possibility OF changing
ditions which may affect BIZ j
ings.
Copyright. 1922. by c. l. I,..'')