Evening star. [volume] (Washington, D.C.) 1854-1972, 1933-07-18
Saving the Homes.

The Home owners Loan COIpoIS-
ton, set up In conformity with the
home mortgage act passed by Congress,
is soon to be in operation tn the Ma
tional Capital and In the States. It
is designed to aid hard-pressed owners
Of small and moderate priced homes
in the cities Of the United States who
are in danger of losing their homes
through the foreclosure of mortgages
or the failure to pay the taxes due. 1t
is to render assistance which home
owners have not been able to obtain
through other channels. If 1t fails to
give such assistance, the law, indeed,
will be Of small value. Yet the Home
Loan Bank Board and the Home Own
ers' Loan Corporation are faced with
the necessity of operating the business
of the corporation-which Is the max
ing Of loans to homo owners-in q
sound manner Members Of the board
are confident that this may be accom-
pished. Businesslike appraisal Of prop
erty ON which loans are to be made is
the key to the whole question. II
politics is to creep In, If 1t is to gov
ern In the making Of loans. then the
Jig IS up. Strenuous efforts, however,
will be made to avoid any such politi-
cal favoritism.
Assistance to home owners who are
in danger Of losing their property may
come In three ways. First, there IS .
fund Of $500, oo0, 900 which may be
used to loan homo owners to pay OF
mortgages which are not in excess Of
40 per cent Of the value Of the homes.
From this fund, too, loans may be made
to home owners of unencunbered prop
erty to pay of back taxes and to make
repairs that are essential, up to so per
cent Of the value Of the property. The
third method of assistance is the ex-
change of bonds of the Home Owners
Loan Corporation, bearing 4 per cent
interest with the interest guaranteed
by the Government, for the mortgage.
These bonds may be exchanged up to
80 per cent OF the value Of the prop
erty.
It Is quite clear that the fund Of
5000 100000 is far too small to take
care Of the tremendous problem of all
the home owners in distress in the en-
tire country, and also that the limita-
ton of loans from that fund to 40 per
cent of the value Of mortgaged property
and to so per cent Of unencumbered
property on which taxes must be paid
or repairs made would exclude from aid
thousands upon thousands Of persons In
danger Of losing their homes. The
crux of the successful operation of the
law lies, therefore, in the establishment
Of the bonds Of the corporation on q
firm basis, and the willingness of own
ers of mortgages on homes to exchange
those mortgages for the bonds.
Under the home mortgage act. bonds
up to $4,000, 100000 may be issued by
the Home Owners Loan Corporation
for exchange for mortgages. If these
bonds are freely accepted great aid
may be rendered home owners by the
operation Of the law. The bonds have
the advantage Of being tax free, except
for surtaxes They will bear per cent
interest, which is guaranteed by the
Federal Government Furthermore,
there is no provision in the law which
would relieve the Government from con-
tinutng to pay interest on these bonds
If at the close of the period for which
they are issued they are not paid on
by the Home Owners Loan Corporation
The readiness with which the bonds
are accepted is likely to depend to q
considerable extent upon the ease with
which they may be marketed in the
future. Well understanding this fact,
the Home Loan Bank Board is to exert
every effort to see that the bonds are
issued only in exchange for mortgages
on property that has real value.