Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-10-17
REALTY INVESTING
ISDECLARED SOUND
Chicago Financier Says New
Set of Owners Is Replacing
Former Ones.
BY ALVIN RESCH.
Written for the Associated Presa.


CHICAGO, October ia refuta-
ton Of the viewpoint that there Is
chaos IN the real estate and mortgage
field is made by Holman D. Pettibone,
president Of the Chicago Title & Trust
cial reorganization.
Instead OF chaos, there is q decided
order, says Mr.. Pettibone, with ade-
quate machinery set up for the re-
organization of large part of prop
critics on which mortgages or bonds are
in default
There is distress" in the real estate
fleld, he adds. only in so far as certain
owners Of real estate are holders of
junior liens on realty where there is
a default on a senior lien.
Mr.. Pettibone will analyze the pres
ent situation IN mortgage banking be-
fore the Mortgage Bankers Associa-
ton OF America at its convention in
Dallas, Tex, october %.
New Set Of Owners.
only those who do not understand
what Is going on in the real estate
and mortgage field describe it as
chaos" he says
What is really happening in real
estate is that a new set Of owners is
replacing former owners II bank
or broker sells collateral 10 satisfy q
borrowers debt. all that has happened
is that there is a new owner OF the
stock
That is exactly what is going on IN
real estate"
Foreclosures Of large bond issues, Mr..
Pettibone says, very abruptly have
created a condition of widely diffused
ownership.
1T does not appear to be generally
understood that during the next year
or two several hundred thousand people
in the northeastern quarter OF the
United States will become owners of
undivided interests in real estate
through reorganizations of properties
following foreclosure of bond issues
Soon they will begin to receive reg
ular income from these properties.
When that occurs these owners will
speedily be in a better frame of mind.
And when the mortgage bondholder
finally adds up the total he has re-
ceived from the property. he will be
glad he kept his bond after default in
stead Of selling it for a fraction Of its
real worth or trading 1t for something
Of unknown value.
ITO the extent that these new owners
Of real estate were former holders Of
individual mortgages, these persons
must now arrange for suitable manage
ment, but their problem in that regard
is no different from the problem Of the
former owner.
Management Available.
Management is available This new
owner will decide when to sell and at
what price. Meanwhile he is in no
trouble. He has an income producing
property. and the property is not clut-
tering up any market"
In the case Of bondholders, Mr.. Pet
tibone explains. this transformation
means that where three or four per-
sons previously owned" property
subject to large prior obligations, the
property Is now owned by a thousand
persons, scattered geographically.
They too. must look for manage
ment but management is available.
The chief difficulty of an individual
owner in such a situation Is his ability
to find a purchaser for his one-thou-
sandth interest in the property. With
the underwater out of business, where
shall the former bondholders go to
realize on these undivided interests?
ut is this difficulty which makes It
so desirable to have a sinking fund to
provide at least one market where a
holder Of an undivided interest may go
and realize on his investment, even
though the price Is low.
Some securities Of this type are be-
ing listed on curb exchanges Groups
are forming to pool several similar
properties. These are helpful But
again this property as such IS net
overhanging the market
An individual owner Of a fractional
share may want to sell. but until the
required number agree the property
will not be offered for sale"