The Indianapolis times. [volume] (Indianapolis [Ind.]) 1922-1965, 1933-08-09
ROOSEVELT TO
RENEW APPEAL
TO M0RTCAC0RS
Patriotism Plea Prepared
as Home Loan Plan
Is Threatened.
By NED BROOKS
Times stan Writer


Times stan Writer
WASHINGTON. Aug. 9.-Presi-
dent Roosevelt. on his return 10
Washington this week, will scrutinize
the progress Of his debt relief pro-
gram for city home owners, about
which disturbing reports are being
circulated.
Reluctance of mortgage holders to
Cooperate IN the program is threat
ening the success Of the plan to ease
the debt burden and halt foreclos-
ures.
AT HYDE Park, the President has
been studying the problem, and
when he reaches the capital he will
De urged to put the program on a
patriotic basis similar to that of the
recovery administration and to voice
an appeal to mortgages to accept
bonds Of the Home Owners Loan
Corporation in exchange for mort
cages.
Stability Is Concern
Large banks. insurance companies
and other institutions dealing in
mortgages, according to reports here.
are giving close study to the 81
600 900 900 in bonds which the cor
poration is authorized TO issue. Their
chief concern. it is said, is over the
future stability of the securities, on
which the government guarantees
only the interest.
Home Loan officials defend the
worth of the bonds by pointing
out that behind them will be
s5,OOO.000,0O0 in home mortgages
based on values computed at the
ebb of the real estate market.
In its bids for more ready accept
ance of the bonds. the corporation
has adopted suggestion first made
by Henry G.. Drummer, Ohio, Home
Loan manager.
Tides Over Home Owner
The board has decided that mort
gagees and mortgagors may enter
INTO agreements for an exchange for
short period, three years for ex-
ample, at the end of which time the
mortgage holder would surrender
the bonds and receive back his
mortgage from the corporation.
II was pointed out that such an
arrangement would tide over the
home owner during the recovery pc
Rod and probably would be more
acceptable TO the mortgage holder.
who might not wish to hold the
bonds until their maturity in eight
cen years.
An additional benefit TO the dis
tressed home owner would be the
provision allowing three-vear
moratorium on the payment of
principal.
Success Rests on Holders
Thus. if the mortgage agreed to
accept the bonds for a limited ne
Rod, the home owner would paw
only the 5 per cent interest on his
debt and the bondholder would re-
ceive his 4 per cent interest on the
securities. At the end of the pc
rloo, the relationship between mort
gage and mortgagor would return
TO its original status.
The success of the relief pro-
gram admittedly rests on the will
ingness of mortgage holders to &C
cept the bonds. since the only
other avenue of relief to the home
owner is in the direct loan provi-
sion and the act provides only
$500 100000 in cash, an amount
which would be used up almost
overnight if this method were to
be used extensively
Furthermore. the direct loan pro-
vision allows advances only I'D to
40 per cent of the present value Of
the home, which automatically shuts
out most applicants. For example.
a home which in 1929 cost $4,000
might today be valued at only Sl0,-
O00 which would make it eligible for
loan of only $4,000. And as a
noted economist pointed out, the
man with a $4,000 house and a
$4,000 mortgage does not need re-
lief. he needs congratulations"