Evening star., 1933-12-12
MORTGAGE HOLDER
SECRECY IS LIFTED
BY COURT RULING
Obstacle to Refinancing of
Homes Set Aside by
Justice Let's.
AGENTS ARE DIRECTED
TO DISCLOSE IDENTITY
Action Expected to Release Dead.
locked Applications in Home
Owners Loan Corporation.

One obstacle to the refinancing of
mortgages through the Home Owners
Loan Corporation-the refusal of inter-
mediate agencies to divulge the identi-
ties OF the actual holders OF the mort
gage bonds-was eliminated in District
Supreme Court today when Justice F. D.
Let's held that Arms & Drury, Inc.
must give this information to a home
owner.
The decision was rendered in a suit
brought by Celia Albert, 237 Eighth
street northeast, who had endeavored
to reflnance a mortgage on her home
through the local branch of the Fed
eral corporation.
The plaintiff went to Paul ]. Frizzell.
district manager of the Home Owners
Loan Corporation, to have her mortgage
renamed, but was informed the regu-
lations required that she obtain the con-
sent of the holders of the various notes
secured by the mortgage.
information Refused.
Arms & Drury, which originally
negotiated the loan, refused to give this
information to the plaintiff or Frizzell,
but advised them that the noteholders
would not consent to exchange their
mortgage notes for bonds Of the corpor-
alton. Arms & Drury took the posi-
ton they were the agents Of the note
holders and contended the disclosure
OF their identities would subject them to
embarrassment, importantly and har-
assment.
that Arms & Drury collected interest,
taxes and insurance payments from the
plaintiff, paying such money as was due
the noteholders to them. These actions,
he said, made them the agents of the
plaintiff as well as of the noteholders
and compelled them to deal fairly with
the plaintiff, even to the extent Of
giving the information sought in this
case
1T would seem that Arms & Drury
has assumed a position of confidence
and trust mutual to all interested par
ties" the opinion said. This would
mean that it is not privileged to deal
at arms length with this plaintiff, but
Is under duty which requires fair deal
ing. The right of which plaintiff seeks
to avail herself is one which has re-
Gently been created by Congress. She
cannot avail herself Of the benefits
afforded except, and only when and
If. the holders of the notes consent to
accept therefor the bones of the Hcme
Owners Loan Corporation. If Arms &,
Drury is permitted to set itself up as
adverse party, plaintiff is without rem
edy and the relief afforded would. be
blocked and the administration of the
home owners loan act would be effec-
lively obstructed.
"Nullifes" Act.
1.-THE court thinks the right afforded
by Congress to home owners who are
in distress is a substantial one and
| that its beneficial effects should not
come to naught and be wholly nullified
by the unwarranted failure of an
agent to disclose to principal in
formation which Is necessary to the
orderly administration of the relief
act"
This case. which was filed through
Attorneys Daniel S. Ring and James
G. Crouch, is expected to serve as
precedent for other controversies of
this nature in the District.
Commenting on the effect of the de-
cislon, Frizzell said today many cases
in his Office, now on an inactive list. -
may now be revived for consideration.
The decision enables the corporation
to go direct to noteholders with a plea
that they accept bonds of the corpora
ton In exchange for their mortgage
paper, in order that the Federal agency
may help the home owner in distress
Heretofore, some of the finance COM
panies have refused to agree to an ex-
change and declined to reveal the
names Of parties to whom mortgage
notes were sold.