Evening star., 1932-01-23

loan DanK system Dill.
The disagreement over the pro-
posed new banking system, to be
devoted specifically to the purpose
of making liquid large sums for
home building and home pur-
chaseS, emphasized the impor-
tance of the legislation.
Fear Overproduction.
Fears that the Federal home loan
banks would have the effect of stimulat-
ing overproduction in dwellings in sub
seouent years, producing in turn a de-
preston of values of existing dwellings,
were voiced before the Watson Commit
tee of the Senate by opponents of the
measure, while advocates Of the bill
we're registering belief that the home
loan banking plan was necessary TO
provide needed funds for dwelling de-
velopment.
Hiram S. Cody of Chicago, president
of the Mortgage Bankers Association of
America, told the committee he could
not make his opposition to the legisla-
ton too outspoken. He said he could
see little need of it even as an emer-
gency measure, and was opposed to it
as a permanent unit of the Nations
banking system.
On the other hand, H. j. Lofgren of
South Orange. NJ j., and Theophilus
White of Baltimore, both representatives
of mortgage concerns, declared they saw
no immediate hope for new funds for
home financing unless the law be en-
acted. The administration proposal
also was supported by w. H. Wood,
Charlotte, N. c., banker.
Do Not Challenge Sincerity.
Concluding his testimony against the
Federal home loan banks, Mr.. Cody Of
the Mortgage Bankers Association de-
clared:
I'VE do not challenge the sincerity
of the sponsors of this measure. We do
not assert that the organizations back
of it are actuated by selfish motives, but
in behalf of the unorganized home
owners, our partners, we earnestly pro-
test against any permanent legislation
like the Federal home loan bank, which,
in cur judgment, would adversely af-
feet the security behind the S26,000,-
600, 900 of mortgage assets Of our flnan-
cial institutions, and would result in the
loss of an untold number of homes,
which the owners, in the face of every
obstacle, now are struggling to protect"
The statement quickly brought tele-
gram from Harry S. Kissell, president of
the National Association of Real Estate
Boards, who last week testified in strong
support Of the proposed home banks.
This telegram, read at the committee
hearing by Senator Watson, voiced OBJ
lection to the statement by the head
of the Mortgage Bankers Association
that he spoke on behalf of the urban
home owners. Mr.. Kissell reiterated
his belief that the home owners of the
country are in need Of the proposed
legislation.
No Source of New Funds.
Testifying last week, President KisSell
of the national realtors declared: There
is no reason why the Federal Govern
ment should not lend its help. Com
merce and industry have great reser-
voir of credit in the Federal Reserve
system, to which their bankers can go;
the private home owner cannot do that,
for the agencies with which he deals
have no source of new funds and credit
is dried up at this time"
Mr.. Cody, speaking for the Mortgage
Bankers Association, told the Senate
committee that advocates of the Fed
eral home loan bank system are con-
tending:
/. That it will relieve the home owner
who now fears foreclosure, owing to the
alleged inability of financial institutions
to refinance existing mortgages.
2. That it will help the manufac-
turers of building supplies and members
of the building trades. According to
estimates made public by the Federal
Government, it would be possible to
construct 100000 residences within
the next five years, if the plan should
be put into effect.
3. That it will revive the real estate
market and stabilize existing values.
Arguments Against Plan.
Mr.. Cody then presented as the argu-
ments against the proposed plan the
following points:
/. The normal rate Of construction Of
new homes is between 900 and AGO.
600 per annum. The advocates Of this
bill estimate that the Federal home
loan banks will make possible the con-
struction of 100000 homes within the
next five years or 100000 annually. The
present rate of population growth and
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