Evening star., 1932-07-14
HEBERT, ON FORUM,
LAUDS HOME LOANS
Proposed Bill Will Afford Re-
lief to Million of Investors,
He Says.

Iell6I 10 utSIdlIy uuLAoiio Va Ai'SoeiA'S
members of building and loan assocla-
tions," and will relieve distress among
home owners, Senator Hebert OF
Rhode Island said last night in dis
cussing the proposed Federal measure
in the National Radio Forum, arranged
by The Washington Star and broadcast
over a National Broadcasting Co. net
work. r-..
Senator Hebert also expressed the
opinion in his speech, which was
broadcast locally from Station WRC,
that the bill would afford solution,
to a large degree, of the present prob
lens with which financial INSTITUTIONS
which have loaned money on mort
cages are confronted.
The speaker emphasized that 1t must
be borne in mind that there are some
very desirable ends 1t will not reach
now tnr instance:
"It EN not create unlimited FUNDS
TO ptuVide against the needs of all our
citizens in distress.
1T will not provide for the building
of new homes, at least in the lmmedi.
ate future though ultimately 1t Will
have that effect.
TT has been urged that the passage
of the bill will encourage building pro-
vide employment in many industries
and revive business activity. In my
opinion, it will not do that until the
pres mt emergency has passed, put II
will 70 so Immediately on the return OF
norrAal conditions.
TIE full text of Senator HebertS
speech. in which he discusses IN detail
the provisions of the measure, follows:
Senator Hebert's Address.
The text of Senator Hebert's address
follows:
The Washington Star, I am privileged
to speak on a subject OF interest TO
most of you. I am asked to tell you
about the Federal home loan bill which
passed the Senate yesterday. 1t passed
the House quite some time ago.
About one-half of my listeners own
their own homes. and many others look
forward to the day when they can call
some house, however modest, their
"U:der present conditions many peo-
ple fe5r that they will lose their homes
and incidentally, the savings Of a lie
time. ! should like those people to
listen 10 the message I have for them,
q heaftening message, think tney WILL
agree. when am done. What l have
to say will not affect the owner OF an
expensive home-but I do want the
owner of the small. modest family home
to listen to me while I tell him how
Congress expects to assist him in cas-
ing his present burdens and relieving
him of his anxieties.
Thousands of people who have bor-
roWed money on their homes are nav
ing difficulty in meeting their con-
tractual obligations With the investors
in the lending institutions Withdrawing
money. pressure IS created which pre-
vents the lending institutions from ex.
tending credit to the borrower. II
these institutions had a source from
which to secure funds on the mortgages
they hold. they could assist the bor-
rowers by carrying them along in times
of depression like the present and show
greater leniency as regards their mort
gage payments, as well as in the pay
ment of their taxes. their insurance
premiums and the necessary repairs.
MANY homes are being lost through
the calling or refusal to renew what are
commonly called short-term mort
cages. That is, mortgages that are not
payable by installments over con-
siderable period Of years. Owners who
have never failed to pay interest
charges are denied renewals and
threatened with foreclosures as banks.
trust companies, bank receivers, and
insurance companies demand the re-
turn of their funds. For example, in
1881 10000 families lost their homes
through foreclosures. In one city with
a population Of one and one-quarter
million people, the foreclosures upon
homes in the year 1925 totaled 400; in
1927 there were sos; in 1928, 759; in
1929, 9Oe; in 1880, 127e, and in 1881,
1855 1t is believed that the operation
of the home loan bank system will
remedy this situation and place at the
disposal of the owner Of home valued
at not more than $4,000 sufficient
funds so that he can prevent foreclos-
ure and the consequent loss OF his
home. Today the people of moderate
means cannot borrow to tide them
through the vicissitudes of unemploy-
ment and the consequent reduction of
income Reasonable credit is practi-
cally unknown. Banks are unable to
make further advances upon mortgages
because they are not liquid and be-
cause of the demands that come to
them from their depositors for with
drawal of their deposits. Hundreds of
small banks which have made a prac-
tice of loaning on real estate mortgages
and which have closed during the pres
sent period of depression could have
maintained their activities II they had
had some means of raising money upon
the mortgages which they held. In the
case of building and loan associations,
while they have been able to carry on
because of the peculiar nature of these
institutions-yet they have had to dis
appoint thousands of their investors be-
cause they have been unable to return
their savings within a reasonable time
after notice. These home loan banks
would provide for such contingencies.
Let me cite you an example to show you
how they would operate In given
case.
Difficulty of Position.
Let us assume that a building and
loan association or a savings bank has
invested a considerable part of its de-
posits in home mortgages. The deposit
tors are calling for the return of their
funds. Necessarily the bank or build
ing and loan association needs liquid
assets to meet these demands. They
must find a market for their mort
cages and if unable to do so they must
cease making further advances, or, as
the last resort, call them In for pay
ment as they mature. The mortgagorS
themselves. that is, the home owners,
are without funds and are unable to
pay. Unless Scme means can be found
to provide funds to meet these de-
mands the bank will be confronted
with the necessity of closing its doors
and applying for the appointment of a
receiver. When receiver is appointed