Evening star., 1933-11-30

JOHN II
threatened with the loss Of that home
| through foreclosure of the mortgage.
In such cases there are usually taxes
overdue as well as the mortgage itself.
Very frequently, also, repairs have not
| been kept up during the last few years
because the home owner has not had
| the money to make such repairs. 1t is
in these cases that the corporation can
render a great service not only to the
home owner but to the Nation as a
whole, since this work is an important
part of the national recovery program.
If the fair appraised value of the
home Is not in excess Of $4,000, the
| corporation can make a new loan on
! that home, If necessary, up to 80 per
/ cent Of its valuation, or a maximum of
$4,000. 1t can include in this loan the
unpaid taxes, and 1t can also advance
| enough money to make necessary re-
pairs.
This does not mean that in every case
the total amount of the loan will be
| 80 per cent of the valuation. That
maximum amount will be granted only
where it is clearly necessary to do 1t
in order to take care Of the fair value
of a mortgage. the taxes. and absolutely
| essential repairs In most cases the
new mortgage will and should be sub
stantlauy less than 50 per cent Of the
! valuation.
Bonds Offered in Return.
In making this transfer Of a mort
gage, the corporation offers its bonds
to the person or mortgage lending in
stitution which at present holds the
| r1nrtDaQa the home word 1T
exchanges these bonds for the amount
| of the mortgage. For the taxes and
repairs. the corporation will advance
| the cash.
The bonds, which are offered to the
present holder of the mortgage, run for
| 13 years. The interest on them is at
| the rate Of 4 per cent and is guaranteed
| by the United States Government. The
investment Is tax free, except for in
heritance, estate, surtaxes and gift
taxes.
holder is not only certain Of his inter-
est, but may be equally sure Of full pay
ment of principal when due. They are
the bonds of a mortgage bank with the
largest subscribed capital Of any such
Institution ever organized, and all that
capital - 5000, ,000, 900 represented by
stock, Is provided in cash by the United
| States Government-your Government.
The corporation has the right to
issue s2,0O0,0O0,000 in bonds which,
| 1t is to be remembered, are backed not
only by this large cash capital, but by
first mortgages on American homes
owned by honest and industrious Amer
leans. The good faith Of your Govern
ment is behind these securities. for It
stock and IS responsible for the ef1lcient
conduct of its affairs.
Income Must Be Applied.
Because of monthly payments of in
| terest and principal by mortgagors,
large sums of money will regularly flow
into the treasury of the corporation
when it is in full operation. Under the
law. this money must be applied to
the regular retirement of the bonds. As
the bonds decrease%in amount and those
who owe the corporation regularly re.
duce their debt, the security behind
the loans increases. Aside from this
it is evident that as the corporation
| takes two billions of real estate out OF
market which has been hopelessly
depressed, the value Of homes mus1
rise. The margin Of protection behind
the corporations bonds Is thus IN
creased steadily while its operations
benefit every motgage lender and home
owner in the country by increasink the
value of their assets.
collateral rating by the Reconstruction
Finance Corporation and the United
States Treasury The Reconstruction
Corporation will advance 80 per cent Of
their par value to any established
financial institution. The Treasury
Department accepts the bonds at theil
par value as security for United States
| Government deposits. The corporation
itself must accept the bonds at theil
face value in payment Of interest OF
principal on mortgages at any time
There are few securities anywhere bet
ea. ter pro protected or more carefully SAFE
The success of the Home Owners
Loan Corporation is as important tt
every savings bank, building and loar
association insurance company ant
other mortgage lender as 1t Is to all
home owners and real estate interests
since the continuance of condition
under which IT is practically impossible
to sell homes at anything like fall
value is a menace to the safety OF every
financial institution. We cannot ex.
pect to attain that prosperity which
| this country has q right TO enjoy If w
are to deprive hundreds Of thousands
of people of the homes they have strug-
gled so hard to cwn and turn armies
Of our citizens into the streets.
Absolute Cooperation Needed.
i The task in which this corporation
is engaged calls for the unreserved co.
operation Of every home owner and
their own interests as well as the in
| terest of those who are in difficulties
We are glad to say that with compare.
\ lively few exceptions the banks and
ether mortgage institutions. as they
have come to appreciate the true in
vestment worth OF the corporations
bonds, are readily making exchanges
for mortgages which otherwise they felt
they should foreclose. Many which die
not at first understand the situation
fully now realize that they assume a
grave responsibility which invites bitter
public hostility when they take mans
home away, while they have the alter.
native of receiving fair value for theil
claims in the bonds Of this corpora
ton.
|! Some there are unhappily, who de.
mand their pound of flesh and seek by
variety CT devices to take contemp.
tible advantage of the unfortunate
home owner. It is to the lasting credit
of American mortgage lenders that thi'
number Is small.
The corporation cannot force mort
gagees to take its bonds. There is nc
law which makes this possible. Only 9
thoroughly aroused public sentiment
can reach the mortgage lender who will
|, not play fair, and every right-minded
citizen should consider it his duty te
help in making such sentiment effective
AGAINST the uillful exnlniter. *. -.