The Washington times. [volume] (Washington [D.C.]) 1902-1939, 1928-09-12
PROTECTIONF0R'
INVESTORS !.
URGED

- - ~
CLEVELAND, Ohio, Sept. H.
Reserve funds for the protection OF
the investing public to be used IN
the event OF death or failure OF
mortgage bankers must be estao-
lished II this business is to continue
to prosper, said e. D. Schumacher,
president of the Southern Bond and
Mortgage Company and president Of
the Mortgage Bankers Association
speaking before the opening session
of the Fifteenth Annual Convention
OF the Association here today.
Mr.. Schumacher stated that his
recommendations applied to all
mortgage banking organizations
whether members OF the association
or not and said that several or the
association members had, already
created such reserve funds.
Mr.. Schumacher aStonished 400
members OF tho association, repre-
senting 10 States in the Union by
declaring that the men who mer-
chandise mortgages must in the
future set aside hundreds OF thou.
sands of dollars in order that inter-
est payments may be- made to in
Vestors after the bankers are dead
and gone.
Failure Protection
Such reserve funds would be used
to .'service" mortgages in the event
that the organizat ton handling them
suffered from death or failure, or
discontinued business. Servicing q
mortgage means seeing that the
mortgage gets his interest, that
the borrower pays his taxes, and
keeps his property in good repair
so the property will not depreciate
and therefore affect the value OF
the mortgage.
The creation OF such reserve
funds by the membership Of the
Mortgage Bankers Association OF
America would mean setting aside
millions OF dollars for this purpose.
Mr.. Schumacher stated that the
firm OF which /he Is president, as
well as others use such a reserve
fu-d plan now.
Mr.. Schumacher suggested a pro.
gran, Of research to ascertain what
would be a standard fair reserve
70 set up out OF each loan made
by the mortgage bankers.
Speaking on Better. Lending
Methods Through Research and
Service" the association president
described the work Of a research
committee appointed Is months
ago to study the economic factors
affecting the value and stability
OF the first mortgage or mortgage
bond. This committee, directed by
Mr.. Schumacher and on which
prominent financiers and economists
deliberated on the national agricul'
rural problem, the important mat.
ter of appraising the future value
OF real estate as affecting the con.
slant lift OF mortgages, the crea.
tion OF standard mortgage forms
and methods to conform to the
laws OF the various States and the
establishment OF clearing house
for long term credits similar to
the banking clearing houses for
short term credits that seek to
curtaiI the activities OF unscrupu.
lous persons or organizations re-
guessing loans.
Touching on the agricultural
situation which will occupy the at
tention OF the convention at sew.
eral OF the coming sessions, Mr..
Schumacher stated LnaI many OF
the organizat tons ende2voring to
cid the farmer do not seem to
realize that agriculture mas under.
gone radical changes even during
the preoent generation ard that
any relief must be along the same
modern lines that would be used
to solve present business problems.
Study Farm Problem
real farm problem lies in the mar.
keting OF Harnc products. He sus-
gested as possible solutions the
proper warehOusing OF crops TO be
graded, classified, and distributed az
consumption demands. The speaker
suggested that each State handle its
own farm problem rather than seek
national measures, inasmuch as con-
ditions differ in each State.
EMO one can question the ability
II the American farmer to produce
agricultural products" said Mr..
Schumacher. His problem Is that OF
marketing in an orderly way. at a
price that will provide him with
proper compensation for his labor
and that will give him an adequate
return for better grades. better
classification Of products, and wider
range in uses Of farm products may
stimulate efforts for a real depend.
able plan of procedure in the han.
ding Of farm crops"
Discussing the importance OF cor.
rect farm appraisals, Schumacher
said that the efficient appraiser must
have knowledge that will aid in de-
termining the true value Of farm
lands, taking into consideration loca.
tion Of security, classification OF soil,
earning power, necessity for modern
improvements and the success.
moral, and financial standing Of the