Evening star., 1932-10-13

ments Of the home loan bank. act,
placing a definite and conservative limit
on the size of its loans in relation to
the value of the properties which secure
them these bonds will have a security
of $50 back of each 500 loaned by the
banks.
In addition, the building and loan
associations, the mutual savings banks
and the mutual insurance companies, to
which the loans are made, will guaran-
tee the payment Of the bonded indebt-
edness. Such institutions, ne reported,
have an unblemished record in pay
ment Of their creditors over long
period OF years.
Furthermore, he pointed out. the Sc
curities will be properties valued at less
than $4,000. The bonds will be tax
exempt.
Mr.. Fort said that while the new ma
tional banking institution had been set
up in the brief period since August 9,
last. when the board was sworn in, the
new agency is not sudden thought nor
one solely the product Of emergency.
There is a historical background for the
system, he said, in that in 1921, when
Herbert Hoover became Secretary Of
Commerce. he brought DR.. John M.
Cries to Washington to start compre-
hensive studies which led to the creation
of the system.
A fundamental objective of the sys-
tenn. he said, is to make it more easily
possible for the person Of modest in
come to acquire home in the earlier
buyer must have long-term credit and
cheaper money also Is necessary, he
declared
Home finance funds heretofore. Mr.
Fort explained, have come from COM
mercial banks in short term credit.
With the exception of stock mortgage
companies and individual lenders, the
longer term credit has come from the
life insurance companies, building and
loan associations and the savings banks.
Such institutions hold $40, 900
Of mortgages. hut their operation has
oeen too restricted to cover the demands
Of the country as whole, the speaker
explained. In many States II per cent
legal interest rates prevail as result,
and higher mortgage interest charges
may be levied under contract.
The home loan banking system was
designed to remedy the shortage OF
mortgage capital and to stop 1.-The
ership that was inevitable under II per
cent interest charges"
Emphasizing that long term credit
is favored definitely under the methods
Of the new banking system, Mr.. Fort
announced that money for new con-
struction will be available at about Az
per cent interest in loans to its mem
bers, these agencies to reloan such
| funds to the public at reasonable rates
Appeal Broadcast.
He said the board has broadcast an
appeal to the holders Of sound mort
cages on homes to abandon foreclosure
proceedings. declaring the new banking
system stood ready to grant loans a,
cheap rates to fill the needs.
IF the lending institutions do their
duty and make use of the aid offered
! by the reservoir of credit of the Homo
Loan Banks there should be no more
needless foreclosures after November
| l." he asserted.
William A. Van Duzer. director OF
| traffic, announced plans for the distri-
button of 1888 automobile tags which
will be started November 20. Applica-
tions will be mailed shortly to motor
lists which they should return with 2
check to cover the cost. plus 10 cents
If the tags are to be mailed or de-
livered.
Mr.. Van Duzer also cited the need
for more care and consideration en- the
part Of drivers. reporting that one sur
vey made recently indicated that IL
per cent Of the drivers Of cars art
careless.
Musical entertainment was furnished
ny the Chesapeake g. Potomac Tele-
phone Co. Glee Club.