Evening star., 1932-01-20
Monthly Payment Plan
Urged for Home Loans

There has been considerable rhetoric
and slluring phraseology wrlttch ana
much silver -tongued oratory about
home building, home ownership ana
methods for financing such undertaK-
ings. To me home ownership Is one OF
the most important assets OF any
family. Books can be written In ex-
planation of this statement showing
the effect on ourselves and our chlidren
and on society as whole.
The question of financing such homes
is what many wish to solve. No doubt
quite a number can be helped by the
methods of financing which nave so
far been suggested. However, neileVe
the vast majority of prospective fnal
home owners, and by final home owners
l mean those who will complete their
contracts, can best be given the much
needed assistance through a different
financing arrangement.
Most loans made at present are for
short periods of time and naturally
must be renewed or paid in full. The
cost OF renewals In commissions is
large and an added cost to the pur-
chase of the home. One source OF such
loans is from private parties, mSur-
ance companies and trust companies.
Another source of loans Is from building
o'it AOaAi uSHbkidblCllos titSoo AoSAAo eSiAA
amortized are repaid at SO much each
month including interest for the dura-
tion Of the loan without any renewal
charges. Loans made in this manner
are usually for not to exceed so and in
a few cases as high as go per cent OF
the cash value and in many cases Will
not be made on houses over 10 years old,
which means that very many desirable
and deserving prospective home owners
are actually prohibited by present
financial methods.
Then there are those who have been
paying on their homes for some years
and through illness or unemployment
or both or for business reasons actual
~ need money, but, although the prop
erty is worth more than is needed and
the security perfectly good, but because
It is II to Is years old or some other
tfumped-up reason are unable to ob-
tain loan sufficient for their needs.
The plan I suggest is this A corpora
ton be formed that will make loans
on homes, either new or old, up to rs
per cent of their marketable value
such loans to be amortized on 10 to
20 year basis, which will include the
payment Of real property taxes. In
making such loans, however, the prop
erty value alone should be only one
OF the factors considered. The ability
OF the borrower to keep up payments,
his character and habits, and anything
else that will tend to show whether
ne VIII, under normal conditions, COM
plete his contract, should certainly be
considered.
If information obtained is favorable,
then the loan would be made and
the borrower would at once begin his
monthly payments. This would apply
TO purchases Of either old or new homes
ana 10 persons who have already pur-
chased their homes and wish to re-
finance them or obtain money for
other legitimate uses, such as paying
Dllls or to use in business. As an in
stance, L know party who purchased
a very desirable home in 1922 for
S6,ooo The down payment was small,
due to continued illness in the family
OF f1ve. A bank held the first mortgage
OF $4,000 at per cent, payable semi
annually, and the seller took a second
mortgage for the balance This party
mas been paying ON this home from
that time to this and has reduced the
second mortgage to about 81 800. This
last year two of mis- family have had
major operations and one very little
work. The head of the family has
a fairly good position and, in order to
pay up his doctor bills and a few
other debts, including taxes, he has
tried to obtain a sufficient loan to pay
on the two mortgages and pay these
debts. He went to the bank that holds
the first trust. Their reply was that
at this time they did not care to in
crease the mortgage. He went to in
surance companies and their reply was
the place was too old. He went to
building and loan associations, which
required a deposit of $25 with the re-
turn Of $40 If the loan was not made.
These offered sum Of money, but not
enough to even pay off the two
mortgages, and returned his deposit
less their fee for looking over the prop
erty. This party has so far been un-
able to get this needed help, although
he has been paying for 10 years on
his home and no doubt would carry his
contract to completion.
Why can person such as the above
not obtain a loan? That is the reason
suggest a plan as above. Beginning
with the first month after obtaining
the loan, on an amortized plan, the
borrower begins his monthly payments
and the reduction of the loan. There
viii be fair return on the invest
ment, interest being at per cent, and
there will be more than ample protec-
tion. Let something constructive be
begun without delay.
E. c. FARWELL.