Evening star., 1933-08-06
FIRST HOME BONDS
READY FOR MARKET
Test of Federal Relief Agency
Issue Is to Be Made
This Week.
Continued From First Page.)

CONTINUED From First Page.)
also held unlikely that the bonds of
the corporation on which only the in
terest is guaranteed, will sell at par.
The Home Loan Bank act provides
that the corporation should have q cap
ital of S200,000.000, to be provided by
the Reconstruction Finance Corpora
tion, and Is authorized to issue $2,000,-
100000 in bonds running l8 years at 4
per cent interest, with the interest
alone guaranteed by the Government
Provisions of the act also specify
that the maximum aid which the cor
poration may give to a home owner,
through exchange of bonds for m ort-
cages will be the equivalent of 80 per
cent OF the. value of a mortgaged prop
erty. but not exceeding $4,000. The
corporation, in this reflnancing, will ex-
change its bonds up to the permitted
maximum for mortgages and win COL
lect from home owners interest not ex-
ceeding per cent on the refinanced
mortgages. and home owners must
amortize these loans within 18 years.
Cash Loan Arranged.
The act also provides that home
owners whose mortgage holders are re-
luctant to accept the bonds may bor-
row in cash up to 40 per cent Of the
value Of their properties for the purpose
OF refinancing their Indebtedness In
terest on these loans in no event will
exceed 6 per cent annually.
Cash loans are authorized up to so
per cent of the value of the homes not
otherwise encountered for the payment
OF taxes, assessments, necessary repairs
and maintenance. Also loans are pro-
vided to recover homes for original
owners who may have lost them by
forced sales in the past two years.
The principal criticism of the bonds
Is that they are not guaranteed by the
Government except as to interest Also
despite reports to the contrary the
board said yesterday its legal depart
ment has no direct knowledge of any
insurance company being unwilling to
accept the bonds in exchange for mort
cages.
In fact" Horace Russell, general
counsel, said, 'the legal department has
within the past few days called upon
two of the largest insurance companies
in the country for data which would
enable us to complete our lien forms
throughout the States, and the response
was prompt and generous
I'VE feel that if this prompt CO.
operation upon the part of two of tha
leading and largest insurance companies
in the United States is any evidence of
the attitude of the balance of them. we
shall from the outset receive splendid
cooperation in the administration of
the act
This mornings mail indicates that
parties with whom we are in corre-
Spondence are meeting with success in
getting the consent of mortgages to
accept bonds of the corporation, and
We think that it is fair to assume that
at least some of those who are consent
ing are insurance companies, as not all
OF them would be individuals.
Interest Not Collected.
ITO the one holding a real estate
lien who says Why should surrender
an obligation paying per cent for the
corporation bond which pays but
per cent We would say, But are you
getting per CENTS it not a matter of
fact that you haven't collected any in
terest on your mortgage in a long
time? He is compelled to reply in the
affirmative, then We say: Wouldn't
you be better off with our obligation
where the United States Government
guarantees the interest at per cent
legation where you are not receiving any
interest at all. assuming that you do
not want to load yourself down with
foreclosed property on a real estate
market like the present one?"
In 1882, the outstanding mortgage
debt on dwelling houses was estimated
by the Home Loan Bank Board at
S21 .450 100000, divided as follows:
Federal Reserve member banks, 81, l,450,-
100000; mutual savings banks. $685.
600, 900; all other banks, 1,044 900 600;
building and loan associations, s6484,-
100000; insurance companies, S2079,-
100000; mortgage companies. s3,000,-
100000; individuals, s4,000,000, 900.
The total number of dwellings in the
United States in 1880, according to the
Federal census, was 25,204 ,976. and the
number OF. families was 29,904 .663. AS
a dwelling is defined as any place
where one or more persons sleep regu-
larly, 1t may signify boat or tent,
and an apartment house sheltering
many families is counted as only one
dwelling. Owing to this method of
dealing with apartment houses. the
number of dwellings is considerably less
than the number of families Urban
dwellings totaled l3O46.6e9 and urban
families totaled 17,372.524.
It was pointed out that Of the more
than $21, ,00O, 900 900 in mortgages held
on homes, it has been estimated that
more than 5000, 5000 may be in de-
fault. officials said that the Govern
ment, therefore, could not hope to assist
in every instance; nor does 1t expect to,
since its relief will be available only
when funds for such aid absolutely are
lacking from any other source.
Instructions in Letter.
A. E. Hutchison, general manager of
the corporation, in his circular letter to
State managers instructed them as
follows:
"In your negotiations with mortgages
ON behalf of the applicants, there is GER
tain information concerning the bonds
which may be helpful to you. Later on,
we expect to send out complete circu-
lar on the bonds, but, meanwhile, there
are one or two points which may assist
you
THE bonds of the Home Owners
Loan Corporation have been made ac-
ceptable, at par, as security for the de-
posit of public money. A recent circu-
lar of the Treasury made this announce
ment. In other words, bank which
desires to secure Government deposits
may use the bonds of the Home Owners
Loan Corporation as security for such
deposits.
THE Federal Reserve Board has au-
thorized the Federal Reserve hanks to