Carolina watchman. [volume] (Salisbury, N.C.) 1871-1937, 1932-08-19
HOME LOAN BANK

Sponsors of the Home Loan Bank, passed at the re-
cent session of Congress, describe it of more impor-
-tance to the average man, perhaps, than other legisla-
ton enacted. 1t won't affect as many persons as the
tax bill, but as a means of restoring something like
normally to the household of the common people it is
thought to be the most important.
The High Point Enterprise has analysed in simple
and plain language some of the legal details of the sys-
tenn and presents the in formation in form that is easily
understood.
There are to be NOT less than eight district banks
and not more than II. North Carolina may get one.
Charlotte, Winston-Salem and Greensboro are all try
ing for it. The Enterprise says:
The plan provides for these district banks to
have a minimum of five billions of capital. The stock
will be subscribed for by the building and loan asso-
cations, savings and loan associations, cooperative
banks and homestead associations, savings banks and
insurance companies. The government also will sub
scribe to make up the minimum stock, if necessary,
to the specified limit of $125, 900, 900 as the govern
ment's part.
1.-The stock subscriptions by the home loan agencies
such as the building and loan, must be not less than
one per cent of the unpaid principal Of the subscri-
bers' home mortgage loans and, in no event less than
$1,000.
1.-The subscribers to stock will have, after the banks
are functioning, the power to borrow II times the
amount Of stock, using their mortgages as security.
1.-THE home loan banks will operate on a safe margin,
leading only up to 60 per cent of the unpaid principal
of the mortgage and up to 40 per cent. of the value
of the real estate securing the mortgage. Besides these
precautions, the mortgage offered for collateral at the
home loan bank must not be spread out over longer
than IS years and the mortgage payments must not be
more than six months past due when presented.
'Then, attesting the true purpose of this act to be
helping the average man to build and hold to his home,
the benefits of the home loan banks will be restricted
to financing mortgages on homes valued at $4,000 or
less. None valued above $4,000 will be eligible for
participation in the benefits of the plan.
Under the laws of some states, building and loan
associations would not be able to buy stock in these
banks. The federal act takes cognizance of that dis
ability and provides that such associations and agen-
cies otherwise eligible to participate in this plan, may
make deposits equivalent to their stock subscriptions
and borrow funds under the same terms as stockhold-
ers until the legislatures of their states have a chance
to act, enabling them to become stockholders.
North Carolina, for instance, will need some enabl-
ing legislation. ~
'These loans will call for a great volume of funds.
The loans will be twelve times the capital stock Of the
banks. How will the home loan banks secure the
money for such longterm fnancinga
'They will issue bonds, backed up by at least 100
per cent. of carefully chosen home mortgages. These
bonds must be sold to bear interest not more than
$ IL per cent. for the first seven years; and not more
than 5 per cent. thereafter. The bonds will be ex-
empt from local, state and most federal taxation"
AND IA etc A d e I1Apn