The times-news. [volume] (Hendersonville, N.C.) 1927-current, 1933-12-27
chow ABOUT THIS HOME LOAN
BUSINESS?"

Under the above caption, P. D. Mclean,
in The State. Raleigh magazine, writes
about the operations of the Federal Home
Owners Loan Corporation and points OFT
what is regarded by the writer and many
other citizens as the chief defect of this
plan for aiding people in need of assistance
in, financing their homes. The Mclean al
ticle is as follows:
Perfection is seldom attained and criticism quite
properlv should be accompanied by suggested rem
edtes Nevertheless discovery Of detects oIteh
leads TO Improvement and therefore should not oe
discouraged.
All of which is merely prelude to turning the
spotlight on the operation of the Federal HomS
Owners Loan Corporation.
Conceding that this plan of home-owner rehef
v,asrconceived and pushed through the Congress
bv the nobest of motives it is nevertheless mi
possible to escape the fact that 1t sometimes OPP
crates in reverse.
To be sure. it has halted many foreclosures, as
the report of Alan s. O'Neal state manager OF the
corporation reveals. Approved loans IN North Gar
oIina recently reached grand total of 1,I5O with
a value of $3,997 ,6S8.15, the report shows.
The machinery of the plan is simple indeed on
paper. The federal government set up the corpo-
ration, authorizing it to issue bonds with the gov
eminent guaranteeing interest but not principal
These bonds were to be exchanged for home
MORTGAGES IN arrears and where possible the prin-
cfnal reduced by 20 per cent and the interest rate
lowered thereby making it possible for distressed
home-owners to retain their property. AT the same
time the mortgage-holder is often able to salvage
most of sorry bargain that might be getting
worse.
But the whole transaction depends upon the ac-
ouiescence of the mortgage. There Is no legal
method of forcing that worthy individual to eX-
change his mortgage for bonds of the loan corpo-
ration at a 20 per cent reduction OF principal and
lower interest rates
However. if the bonds look better than the mort
gagor's chances of paying and it does not appear
that repossession or sale would net even 81 per
cent the mortgage is naturally willing enough 10
swap horses Thus both creditor and debtor oene-
fit from the transaction and the government has
rendered real service.
But what about the man who is up to his neck
in other debts but has kept up the payments on MS
home? The fellow who wears holey socks and has
not bought a new car, new radio and has
made every sort of personal and family sacrlhee
in the struggle to retain equity in home? How
does he fare?
As a rule ne is out of luck!
Here is an actual case Raleigh home-owner
had met every payment his six-year-old mort
gage ON time but this fall he was unable to make
the grade His income had been greatly reduced
and the last three semi-annual mortgage payments
had been made from meagre reserves which were
ct last exhausted.
He made application to the Raleigh office OF the
Home Loan Corporation and waited. Home Loan
officials communicated with the mortgage-holders
in attempts to make an adjustment. The mortga-
gees replied that the account was not IN arrears
and that they were unwilling to trade this mans
mortgage for bonds of the corporation.
And then it dawned the Raleigh home-owner
that the Home Loan Corporation does not protect
a mortgagor from bankruptcy. 1t operates solely
for the bensft of in5Olvents. One man might con-
tinue his normal standard of living, letting the
payments on his home Slide and just foreclosure
is at hand make application for relief from this
government corporation and the mortgagor would
be perfectly willing to swap doubtful paper that
pays no interest, for bonds that at least, carry
guaranteed interest returns.
The Raleigh home-owner began to question the
wisdom of his thrift and sacrifice Would not it
have been better to have purchased those necessi-
ties, of glIfsT-that new car that new RADIO those
new clothes, taken vacation and enjoyed life gen.
orally and let the mortgage do the worrying? His
neiShbor did, and refnanced his home at lower in
tefess srates and 20 per cent reduction in prir