Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-05-30
MORTGAGES CALLED
BEST INVESTMENTS
Returns From Real Estate
Loans Claimed Higher Than
+, Less Safe Securities.

First mortgages are more readily
convertible, dollar for dollar, than Wall
Street securities, M. Morganthau, jr..
president and manager of the National
Realty Service Corporation, New York.
declared in an address before the Ma
tional Association of Real Estate
Boards at It's convention in Baltimore
this week.
The speaker cited the records of some
OF the largest investment institutions
In the country to back up his conten-
ton not only that returns on mort
gage investments as made by these In
situations were higher over a period Of
time than the returns obtained from
stocks and bonds, but that mortgage
holdings, despite the fact that real
estate is not technically liquid asset,
meet the test of convertibility as we'll
as it can be met by other holdings
without heavy sacrifice of capital value"
Outlines Survey.
Mr.. Morganthau, former president
OF the New York State Association Of
Real Estate Boards, outlined statements
made to him by investment institutions
in a research he has been making into
the subject of mortgage security. mort
gage convertibility and mortgage re-
turn Is part. as follows:
Several Of the large savings banks
have given me their figures in conf
dence and these show that their re-
turn from mortgage investments has
been nearly 20 per cent higher than on
their bond holdings and in almost
every case this difference has amounted
to l per cent of the total amount in
vested
I During periods of depression, that
the margin in favor Of mortgages con-
stantly increases. This is due to the
fact that rates on mortgages never
decline as rapidly or as severely as on
money loaned on so-called Wall Street
securities.
No Cause for Loss.
There has been no occasion for any
loss whatsoever on mortgage invest
ments during the last decade, or say
since the war. This does not mean
that there will not be foreclosures or
delays In collecting interest and prin-
cipal in certain cases. But let me
just point to the record of an insurance
company. Their record shows that they
have placed about A per cent of their
total assets of about $4,000 SOC, 900 In
first mortgages, distributed all over the
United States.
They tell me that they nave never
taken a piece of property under fore
closure which they have not afterwards
resold at profit. In other words. in
stead Of losing money, they have ac-
tually made money in addition to the
!. interest which they have obtained on
these investments
Remember that they have nearly
$500, 100000 invested In first mort
cages, which yield over sig per cent,
against 81 1888 600, 900 invested in other
securities yielding less than 5 per cent
Greater Return, Greater Safety.
"In other words, whereas, you might
expect on account of this extraordinary
safety of first mortgages that the re-
turn would be less, we find the reverse
to be the case and that mortgages stand
up not only as yielding a larger re-
turn, but as proving to be almost 100
per cent safe.
There can be no safe rule as to the
percentage which may be safely loaned
on all classes of property. A loan OF
60 per cent on certain properties, as
YOU know, would be excessive, whereas
a lon Of 80 per cent on other properties
would be perfectly safe.
II cannot too strongly urge those
interested in first mortgage real estate
bonds to consult experts before making
any such investments, and also urge
the realtors Of the country to provide
such an expert service for bondholders
in their localities"