Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-07-25
j. S. HELP URGED
FOR HOME BUILDERS
President KisseIl of National
Realty Boards, Proposes
Finance System.

Possibility Of establishing in this
country a system which would serve
the needs Of existing home financing
agencies much as the Federal Reserve
system serves its member banks has
been brought before President Hoover
by Harry S. Kissell of SpringheldA Ohio,
president of the National Association OF
Real Estate Boards
Mr.. Kissell, in laying the matter be-
fore Mr.. Hoover and Secretary OF Com
merce Robert P. Lamont, acted persuant
to a resolution adopted by the delegate
body of the National Association OF
Real Estate Boards at its recent con-
yention in Baltimore.
The delegate body of the association,
stating that it would not appropriately
approve detailed plans prior to in
vestigation through proper accredited
channels, approved study of the sub
ject of establishing through Federal
legislation a system permitting the dis
count of mortgages on urban residences.
It further asked for study by the
Federal Government of long-term and
Short-term credit as applied to financ-
ing of home building and home owner
ship.
Offers to Help Study.
Mr.. Kissell offered the services of the
National Association of Real Estate
Boards through a committee of five to
be appointed by him to aid any study
or investigation that President Hoover
may see fit to make upon these subjects.
AS authorized by the delegate body,
he laid before the President and Mr.
Lamont for the purpose solely of
initiating discussion, a tentative Sug-
gestion for meeting the needs of home
financing outlined by the Executive
Committee of the association and unan-
imously approved by its board Of
directors.
The tentative suggestion outlines the
need as follows:
There has always been a weakness in
our system of home financing. Govern
ment has offered its facilities for the
development for various features of the
financial and business structure, but up
to this time the important field of home
financing has not received its proper
attention. Immediate consideration
must be given to this grave national
problem. A prompt solution will hasten
economic recovery.
Homes which have a permanent as
we'll as a resale value never have been
financed on terms as liberal as con-
sumption goods, the value of which is
destroyed in the use. Luxuries have
been purchaseable on easier terms than
one of the prime necessities of life
shelter
"Long-term financing, say 20 years.
with installment payments on principal
not exceeding per cent per annum,
and with certain rights of prepayment,
is a necessity, and would enable the
family to accumulate a reserve for
times of stress.
Such a system of long-term credit
requires that there be central banks of
discount to serve mortgage companies
building and loan associations, and
savings banks just as the Federal Re-
serve system serves the commercial
banks Such structure can be created
only by the Federal Government"
Suggestions Outlined.
It outlines suggested action as follows:
Long time real estate mortgage in
vestments should be made available as
collateral security for debentures which
would be sold on the open market and
would be comparatively liquid. To ac-
complish this purpose the following
tentative suggestions are offered for dis
cuSsion:
q. The Federal Government should
create a central residential mortgage
bank with regional discount branches,
the function of the central bank being
supervisory.
20. The members of the regional
discount banks shall be local mortgage
banks chartered under an act of Con-
gress. Such local banks would be au-
thorized to take subscriptions to their
stock from commercial savings bank,
trust companies, building and loan as
sociations, mortgage companies and
individuals dealing in mortgages under
certain uniform regulations laid down
In an act Of Congress for the control
and operation Of such units. These
local mortgage banks shall in no case
deal directly with the borrower. Their
functions shall be to determine the
availability of, and to submit to the
regional banks for purchase or redk-
count, those loans in the hands of
stockholding mortgage dealers or brok-
erS meeting its requirements for redis-
count. Each local unit shall be a men,
Der of its regional mortgage banks.
"3. The function of the regional
bank would be to purchase first
mortgage loans from its members only
and to issue debentureS secured by such
mortgages as well as by its own capital
and surplus. The regional bank would
secure its capital and surplus through
Uale SUBSCRIPTION OF the local units. Pur-
chaseable paper should comprehend
only first mortgages on urban residen-
tial property, long term and amortized.
Income from not exceeding $4,000
of these debentures might be made tax
exempt In order to stimulate purchase
by small investors.
a. Regional banks should lay down
certain regulations as to procedure and
appraisal which should be approved by
the central bank before becoming oper-
able in the region.
rs. 1t should be the policy of this
entire system by using conservative ap-
praisal methods and by requiring
amortization payments beginning i'm
mediately when the loan is made to
increase up to rs per cent the per-
centage of value that may be lent with
safety thus eliminating the costs and
hazards of junior financing"