Evening star., 1933-11-29
MORTGAGE ruling
CALLED VITAL STEP
Victory for Holders in New
York Court Affects En-
tire Nation.
BY CHARLES F. SPEARE.
;recial Dispatch 10 The Star

Special Dispatch 10 The Star.
NEW YORK, November 29-The de-
ciSion rendered by Supreme Court JUS
tice Frankenthaler of New York relative
to the status of holders of guaranteed
mortgage certificates has cleared the
air of some of the legal uncertainties
hinering progress in situation that
involves over $1,000, 100000 and the
fortunes of thousands of investors dis
tributed throughout the United States.
The opinion of Judge FTankenthaler
is accepted as a victory for the holders
of mortgages, as it permits them to
bring foreclosure proceedings and main
tains that the guarantee of the mortgage
companies is not abrogated by accept
ance OF the mortgages by their owners.
Since the superintendent of inSur-
ance in New York State took over the
mortgage companies last April there
has been period of confusion and slow
progress in adjusting the affairs of prop
critics against which guaranteed certifi-
Gates had been issued. 1t is understood
that originally there were over $4,000
separate property units to be dealt with.
Each had its own problem with respect
to rents. taxes, etc.
Classed in Three Groups.
The companies in rehabilitation had
sold more than $4,000 issues of certifi-
Gates. These are classified in three
groups. First are those in which the
mortgage is on one piece of property,
quite frequently large apartment
house, and in which the insurance COM
panies and savings banks held the en-
tire investment. Second, properties of
substantial size against which many
certificates were issued and of which
the general investing public was the
chief buyer. Third, numerous prop
| critics, and those of the poorer type,
which were assembled under one linden.
ture and certificates issued against it.
1t is claimed that in some issues there
were as many as 5000 separate certifi-
cate holders
date, in two counties of Greater New
York, not one CrTtl1lCatc mortgage nad
been fully adjusted since April If this
is true, it reflects the o confusion fusion in
rqegsa a and the lack Of
tion between the different interests
concerned in it. This aspect has now
changed. In the last two weeks, ac-
Schaick. over 200 issues were in process
of being worked out. He predicts that
by the end of the year. if holders CO.
operate, more than 5000 600, 900 of GER
tificates will be on the way to corporate
reorganization.
Under the ruling of the Department
of Insurance the mortgage companies
were forbidden to pay out to their certi-
ficate holders more than the current
yield on properties covered by their
mortgages This has resulted in COM
plete defaults of interest in many cases.
On the other hand there are a sur
prisingly large number of certificates on
which disbursements are fairly regular,
either at the full rate of 51z per cent
or at scale down to or per cent
annual basis.
Follows Usual Procedure.
This is in line with procedure in
various parts of the country where in
stitutions that have issued mortgage
certificates have been able to gain con-
sent to a temporary reduction in the
interest rate to 4 or Az per cent.
One of the smaller mortgage COM
panies, the Mortgage-Bond Co. of New
York, has just published plan of re-
organization in which communication of
the interest rate is the leading feature.