Evening star. [volume] (Washington, D.C.) 1854-1972, 1932-05-28
HOME MORTGAGES
f, BIRTHDAY NEARS
First Successful Completion
of Idea Came 81 Years
Ago June 5.

The home mortgage that never comes
due and results in clear title for the
owner passed the experimental stage 81
years ago, June S, the United States
Building and Loan League points out.
Although the monthly repayment
mortgage Is 100 years old in this coun-
try, the paying OF Of the first mort
gage of its kind took place June S, 1841,
the first vindication of the safety Of
the plan, says Ward B. Whitlock
Springfield, III, first vice president Of
the league. Duration Of the loan was
nine years and three months, and the
oxford Provident Building Association
Of Frankford, Pa, was the lending insti-
tuition. Building and loan associations
have followed this example consistently
ever since, he said.
Investor Aided.
Not only the home owner has SUI
fered less stress under the 9l-year-old
mortgage plan," says Mr.. Whitlock, but
the investor in home financing inStitu-
lions which lend on this basis has en-
joyed unparalleled safety Of his prin-
cipal. BY continually decreasing the
amount owed to the flnancier this kind
Of mortgage safeguards loan on
home property, so that its fundamental
SOuuQueSS Is IlOI dl1cCtcQ ny ally uCSAAAC
in quotations on real estate.
"Sensibly q man should not undertake
home ownership unless he expects to
own the home outright within reason
able period and divest himself OF the
carrying charges. There has been little
emphasis on this feature when man
got credit to buy a home during the
past 10 years except by building and
loan associations. The idea seemed to
be that home ownership credit, like
credit for expansion of industry or for
capitalization of manufactures, should In
the nature of things run for perlcN OF
years, mature and be renewed, carrying
charges continuing, OF course. Avefage
renewal fees reported to the Presidents
Home Ownership Conference last De-
cember, 1853 per cent of the loan. helped
the popularity Of this kind of thinking.
There was no mention of paying off the
mortgage until credit became equally
tight for both debtor and creditor.
Wider use of the monthly repayment
loan which does not come due for re-
newal will undoubtedly result from this
example of what happens when home
owners have to take large amount Of
maturities to the credit market in tight
credit years. The increase in volume
of home financing done by building and
loan associations has shown that the
wisdom Of this mortgage principle was
perhaps more apparent to the home
borrower than to some Of the lending
institutions.
Long Time Loans Better.
I'm 1901 we financed $4,000 homes !;
in 1910 there were $1,000: in 1920 as
many as 100000, and in 1928 the peak
of 615, 900. At present count more than
half of the country's home mortgages
are held by our associations, 1900, 900
out of the 4,059 ,593 reported in the 1880
census. The average period of loans
now being made Is 10.15 years, accord
ing to association replies to the Presi-
dents Conference Finance Committee.
Replies to this committee from other
home lending agencies show that in
late 1881 there was increasing recogni-
ton that longtime loans and amorti-
zation features are more efficient in the
home mortgage field. Partial amortiza-
ton, usually on semi-annual or an
nual basis, however Is the extent to
which the change has gone. Replies
from Isl savings banks showed them
making amortized home loans ranging
in length from one to five years. Thirty
| four similar institutions reported home
loans from S to 20 years in length, par
TALLY amortized OF insurance COM
panies IA of those replying. make three
to five year partially amortized loans
and seven reported amortized home
loans on five, seven and ten year bases
Forty-five Of such companies give Their
straight loans from three to five years
to run, according to present policies:
When the oxford Provident Build
ing Association made its first loan of
1915, to run for a nine-and-a-quarter-
year period. with regular monthly re-
payments, it established a precedent
whose value has not been realized until
the present crisis Today the mortgages
on homes which are made on this basis
are the rocks on which our home credit
structure stands"