Evening star., 1933-07-20
HOME LOAN BONDS
REFUSAL INDICATED
BY LOAN AGENCIES
Provision for Exchange of
Mortgages Is Held leopard
lied by Decision.
D. c. MANAGER LOOKING
FOR NEW OFFICE SITE
Insurance Companies Fear Losses
on Paper Held Lacking in
Guarantee of Value.

The principal feature Of the Govern
ment's home mortgagGrefinancing plan
that providing for exchange Of mort
cages held by financing companies for
bonds of the Home Owners Loan Cor
poration-was jeopardized today as in
surance companies and other lending
groups indicated they would refuse to
accept the bonds
The revelation came simultaneously
with another delay in the setting up OF
the local Office of the corporation, caused
when the Federal Home Loan Bank
Board failed to approve the recommen-
dation of Charles A. Jones, newly ap-
pointed District manager, that it be
established in the Commerce Depart
ment Building.
Office Site Refused.
The board, meeting for the first time
since the appointment of Jones Friday
with william F. Stevenson, board
chairman. presiding, informed the Dis
trict manager the Government would
require all available space in the Com
merce Department Building for the in
creasing activities incident to the ma
tional recovery administration. 1t will
now be necessary for Jones to select
other space and make another recon-
the meantime action on any applica-
tions by District home owners for Fed
eral aid.
Although bonds of the Home Owners
Loan Corporation have not yet been
offered. since no applications to date
have been approved by the Federal
agency here, leading finance men said
it is hardly possible the holders OF
mortgages would be willing to swap
their paper for bonds on which only
the interest is guaranteed.
A spokesman for a large insurance
concern said today: They cannot be
expected to be placed in the position oi
standing the chance Of serious financial
losses by accepting bonds on which
there is absolutely no guarantee OF
value"
Purpose Not Defeated.
1t was pointed out at the Office of the
Federal Home Loan Bank Board that
this attitude on the part of some COM
panies does not necessarily defeat the
whole purpose Of the legislation. There
is a provision in the law which makes
1t possible for the corporation to ad-
vance funds on unencumbered property
for the payment of taxes, assessments
and needed repairs. when an emergency
SITUATION eXLStS ana 1uQQS are uOt
available from private sources. Such
an advance, however. cannot exceed SO
per cent of the value Of the property
the law says.
1t was said also that the board has
been advised that there are many other
institutions. notably closed banks,
which are anxious to convert their
mortgage holdings into the corpora
tion's bonds.
Cash advances under the mortgage
reflnance plan are Of necessity limited,
since the corporation is empowered to
spend only S200,000,00 in cash for
leans, while it can issue bonds to the
extent Of $2,000,0 ,000
There are mortgages on homes in the
United States aggregating $2l 900. .000.-
600, 1t Is estimated, but comparatively
small proportion Of these are actually
in distress.
Mr.. Jones, in announcing the Home
Loan Bank Board had turned down his
recommendation for space in the Com
merce Building, said he was to confer
again with Col. James A. Woodruff,
director Of Public Buildings and Parks,
for other space in some Government
building. It will be impossible. he said
for the Washington Office to begin
functioning until the ffrst part Of next
week at the earliest.