Evening star., 1925-04-30
PROPOSES
HOME LOANS PLAN
Favors Corporation to
Handle Second Mortgages
at Low Interest.

Formation of a second mortgage
finance corporation here to enable
Federal employees to obtain money for
home building at reasonable interest
rates has been proposed by Secretary
Of Commerce Hoover as a possible So
luton of the housing situation here,
when the Rent Commission goes out
of existence next month.
Mr.. Hoover made this known today
following a conference with the Presi-
dent. In his opinion, something def
mite must be done If the situation is
TO be met, even If only in part, and
the plan to finance home builders has
considerable merit, he thinks.
Secretary Hoover is of the opinion
that some of Washingtons public
spirited citizens who are financially
able to indulge in a little philantrophy
should take the initiative by forming a
corporation which would loan money
on second mortgages at rates of in
terest considerably lower than those
prevailing.
Success I'm Detroit
He stated that the idea is not ,origi-
nal with him. He is familiar with a
similar plan, he says, which was sue
y
Detroit corporation is going out of
business now, because the situation
no longer requires it's assistance, it is
explained.
Like the President and former
Senator Ball, now a member of the
Rent Commission, who is working on
a financing plan embodying the sec
ond-mortgage feature suggested by
Mr.. Hoover. the latter believes that
L. L.
large extent to the high rates charged
for second-trust money. According to
him, loans on second mortgages at
present are on a purely speculative
basis, and because of that the interest
ranges from u to 20 per cent He
thinks there are a sufficient number
of public-spirited citizens here who
would be willing TO invest money in a
corporation to finance these home
seekers without expecting large re-
turns on their money.
President Coolidge, who already has
let it be known that he approves the
proposal, thinks that a corporation
should be capitalized at about 81 ,OOG,-
600 to start business. II could be in
creased later, and, according to Mr.
Hoover, securities could be sold TO
raise additional money to loan.
Hoover Explains Idea.
Secretary Hoovers statement fol.
lows:
Il assume the reference to myself
in housing matters in the District
arises from the fact that some time
ago | made the suggestion that
Washington needed to emulate other
cities i'll the creation of a public
spirited cooperation which would
assist Government employees and other
workers in the District to build their
own homes.
There is any amount of capital
available from the insurance com
panies, savings banks and others 70
cover one-half the cost at low rates of
interest and long-term payment on
first mortgages.
What is needed is some limited
profit concern founded in public inter
est to help out, on second mortgages.
home builders, contractors and others
who are paying directly and indirectly
anything up to 25 per cent per annum
for second mortgage money.
This high figure may be eXcep-
tional, but the housing division of
this department informs me that 20
per cent is not uncommon. With an
exceptional body of regular salaried
people like the Government empIoye
a monthly installment plan for repay
ment of second mortgages is a sound
risk at much lower rates. The citi-
zens and financial institutions in other
cities have successfully carried out
such plan for some years"