Evening star., 1932-09-01
Encouraging Home Ownership.

| One of the immediate purposes Of
the Federal Home Loan Bank Board is
to revive activities Of lending institu-
tions IN helping the home owner. Its
task just now is two-fold. First the
board is attempting to prevent the fore
closure of mortgages, especially those
that are foreclosed because of refusal
to renew or continue loans. Second, the
board wants to stimulate new leans.
There are two types of loans which the
public must have and which, If made,
will speed the general recovery" Chair
man Fort told the Business and Indus
trial Conference here last week Re
i covery from depression begins when
! things wear out and must be replaced
or repaired. That's why textiles and
shoes usually lead the Way-are leading
it now. Real estate repairs to preserve
! the value of property will be the first
/ help the building industry can get. The
funds must be found. Then our munlc-
ipalities are starved through failure to
4
! taxes help that problem and save in
| terest and penalties. The nor
NAL lending institutions should begin to
; make new or additional loans for re-
; pairs and taxes at once"
Why not enlist the cooperation of
! employers in this latter activity? Some
private institutions have with benefit
made loans available to their employees
for home repair work and for meeting
such obligations as taxes and interest
: Others would like to do so but may
! lack the cash. II cash could be made
available to regular lending institutions
through the Home Loan Banks, could
not these lending institutions, in turn,
make available to employers loans for
the benefit of employes-the employer
indorsing its employees notes?
A bank or other lending institution
may find it inconvenient to handle ten
$l00 notes for such loans. But it will
handle a single 1000 note from the
employer, this note covering the
amount the employer, in turn, has
loaned to ten employees. Such plan,
| followed to any extent by employers
in industry, would obviously expedite
the lending and would popularize the
whole movement in manner that
neither the Federal board nor its men,
ber banks and institutions can do.
Industry as a whole must step in and
help the small-salaried employe. The
problem can never and should not be
handled by the Government alone.
Two years ago, in September, 1880,
President Hoover addressed the Plan
ming Committee of the Conference on
Home Building and Ownership. In the
course of that address he remarked
that "the finance Of home building.
especially for second mortgages, is the
most backward segment of our whole
credit system. 1t is easier to borrow
IS per cent on an automobile and repay
! it on tie installment plan than to buy
a home on that basis and generally
the home requires higher interest
rate The whole process of purchase
and finance involves a ceremony like
treaty between governments, and yet
the home is certainly as good collateral
as an automobile; it depreciates more
slowly If at all. and its owner will
make a harder fight to keep it
The original Home Loan Bank law
was framed to provide liquid fund Of
mortgage capital to flow where needed;
to give institutions engaged in extend
ing long-term credits on real estate a
degree of liquidity that commercial
banks enjoy under the Federal Reserve
System. The depression was at its
worst before legislation was framed, so
that the bill finally enacted, as Mr..
Fort puts it, made Of the Home Loan
Bank Board a composite of relief
organization and a permanent institu-
ton"
1t is now fulfilling it's relief function.
Soon, one may hope, it will be able to
turn its attention to the real encour-
agement OF home buying and home
ownership. Here. too, it should be able
TO depend on employers TO assist in
some of those ceremonies incident to
home purchase, so aptly described by
the President. Employers, knowing the
character and fitness of an employe, are
sometimes in better position to extend
him necessary credit-difficult to obtain
anywhere else-than a regular lending
institution. They might be able to fill
the gap that now exists between the
man of good character, earning a mod
: crate salary, and the institution that
necessarily demands a cash payment
beyond his immediate ability to fur
niSh. Such a plan need not divert
= business from regular lending institu-
tions. 1t would add to their business
l and at the same time encourage desir-
able home ownership with its stimulat-
> ing and steadyins effect on industry.
The Home Loan Bank Board has &
large, almost limitless field TO cultivate
= as permanent institution. 1t should
= consider every feasible plan for encour.
e aging and making possible home owner,
l. ship on a large scale.
: The Eclipse Reviewed.
&c f,A.