The Ely miner. [volume] (Ely, Minn.) 1895-1986, 1933-07-21

perienced by vast
numbers of solid, substantial citizens
as result of inability to continue
payments on their farms or homes In
towns and cities. They have strug-
gled, worked and saved to apply the
sums so accumulated on a home or
farm that they can call their own. In
the last three years, thousands upon
thousands of them have seen these
savings swept away, the homes or
farms taken by the holders of mort
cages.
1t has taken an extraordinarily long
time, observers here are agreed, for
that they gain very little by the shy
lock practice of exacting the pound of
flesh in the shape of foreclosure of
the mortgage. A good many mort
gage holders, such as life insurance
companies, began more than two
years ago to "go easy" in foreclos-
ing on property. but unfortunately the
number who pursued that policy were
entirely too few for the good of the
country or the good of the mortgage
holders as class, according to the
concensus l gather around the Ma
tional Capital.
The result of the failure, or refusal,
of mortgage holders to realize the
conditions confronting them-I speak
Of them as a class-is such legislation
as the home loan act One Of these
laws was passed at the request Of
President Hoover, but that was re-
vamped and new set-up made at the
request of President Roosevelt. If
the present law works, as it appears
it may, without too much of an ex-
pense upon the federal government,
lenders of money on farm mortgages
and on homes in towns and cities will
find themselves paying something of a
penalty in the end.
In any analysis of the mortgage sit
uation one cannot overlook the dan
gers inherent in any governmentally
managed institution that functions in
a halfway private fashion. The home
loan act and it's purposes are subject
to entirely the same influences and
face the same possibilities as the farm
loan act that was initiated by the
late President Wilson. That enact
ment has cost the government (Which
means the taxpayers) many millions
of dollars, yet it has done some good.
OF that there Is no doubt. But 1t
never does any good to deny weak
nesses. The results will be revealed
eventually, and they will be disclosed
in the home loan act just as they
have been shown in the farm loan
law
But the point of this consideration
is that extraordinary measures have
been and are necessary. One Of the
things that must be accomplished is
a revival of confidence. 1t is agreed
among students of the situation that
If the home loan act and the re-
vamped farm loan structure develop
any appreciable amount Of new con-
fidence or restore old confidence, 1t
will have been worth the price. If the
combined help extended by those two
laws can enable individual owners of
property to have a feeling of self
reliance, a feeling of security and in
dependence, they will have done much
to lead the country out onto solid
ground Of economic prosperity again.
The home loan administration is ex-
ceedingly slow in getting into motion.
Admitting that time
Frolun on always Is required in
Eorecyosures the development of
any organi i o n
that is predicated on a new law, it
does appear that the home loan board
has been guilty of too much delay.
1t may be said to the boards credit,
however, that it is trying to encour-
age holders of mortgages to postpone
mortgage foreclosures and to await
the time when the new structure has
been completely formed. The argu-
ment being used is to the effect that
II mortgage holders forego their
rights, as denominated in their mort
cages, for short while, they have
a chance to emerge from the situa-
ton with new bonds on which the
government guarantees the interest
payments.
Let US examine that privilege and
see how mortgage owners as well as
home owners may benefit. This must
necessarily be considered in conjunc-
ton with what the law offers to the
home owner, and which will lead him
to utilize its privileges.
The mortgage holder may surren-
der his existing mortgage to the home
owners loan corporation, the official
name of the agency which will ham
die the funds under the supervision
of the home loan board. He will get
In exchange new bonds, bearing 4 per
cent interest. The payment of the
interest is guaranteed by the govern
ment, but the principal of those bonds
remains In the same category as does
the principal of the existing mort
gage. The bonds are exempt from all
taxation and 1 think it is generally
agreed they will constitute a high
class investment.
1t is to be remembered that the law
limits the amount of the mortgage
that may be issued against any prop
erty to $4,000. The total loan may
not be more than so per cent of the
appraised value Of the home, so that
it may be said the security behind
the bonds is somewhat better than
average when 1t is remembered the
interest win be paid by the govern
ment If not otherwise. The mortgage
holder obtains long term bond, he
is freed from the necessity Of making
advances to keep the property in
shape or. pay taxes, ETC., and he takes
only the usual chance on the princi-
nal