Evening star., 1933-10-07
AMENDMENTS SEEN
TO MORTGAGE RULE.
Federal Trade Commission
Decision Is Expected
In Several Weeks.
Continued From First Page.)

transaction wnere the notes or bonds
secured by the mortgage or deed OF
trust are transferred to more than one
person in more than one sale, the num-
Der of notes or bonds so secured not to
exceed 25.
= Changes asked today by the associa-
tion to remove unnecessary SnagS in
regard to both above classes included
elimination of the present requirement
that plot be contiguous if mortgage
made on it is to be exempt from regis
tration. A road running through a
farm, if the fee to the road was to the
State or municipality, would throw the
mortgage on that farm under the neces-
.sity of registration, under existing re-
. quirementS, the body states.
); Asking the commission to specifically
exclude title guarantee and continual
tion of abstract from the list of ex-
penses to the borrower for procuring the
Joan now required to total under S per
cent for exempted mortgages and mort
+. gage issues, the association says the
cost of these necessary items is ordi-
narily fixed, and outside the control of
{; the maker or seller of the mortgage.
:: Substitution of the phrase zap
/. praised fair market value" for fair
market value" in the exemption re-
quirement that aggregate face value of
=. notes and bonds may not exceed IS
per cent of the fair market value Of
the underlying property or leasehold on
: their date of issue, also is requested.
Since the maker or seller must necessa-
Filv be guided oy the appraised market
value, the question ought not, in good
faith, be opened up later and he be
then subject to proving fair market
value as of the date of issue, the asso-
ciation maintains.
!: Change in the regulations so as not
:. to exclude from exemption mortgages
otherwise eligible in those large sections
of the country, as in Pennsylvania. Illi-
. Iois. Oklahoma. where a very large
proportion of urban land is subject to
subsurface oil or mining rights, and
. provision that in the case of construc-
.tion mortgages where the notes or
bonds are not subject to prior mechan-
les and other liens, no statement that
.they are so subject shall be required,
+: are also asked.
:: Present Regulation.
:. The present regulation provides that
ell construction mortgages, notes of
. bonds, in order to be exempt, must be
!, plainly stamped or inscribed with a
statement that the security underlying
them is OF the nature of a construction
mortgage, subject to prior mechanics,
material mems and similar liens Many
. companies, in making a construction
mortgage. make it rule to take a
waiver Of such liens. In some States a
.enortgage cannot be issued If it is sub
ject to mechanics liens. In either of
these situations. mortgages. if they are
40 meet present exemption require
nents, would have to be stamped with
a statement that is, in their case con-
frary to fact.
= With respect to single mortgages the
Association asks the commission to ex-
empt without any restrictions whatever
a IL renewals or extensions of a mortgage
where the renewed or extended mort
gage is to be held by the holder Of the
present mortgage.
J. In the case Of notes or bonds sold to
more than one purchaser at more than
Dne sale, the association asks that
the exemption be raised to include all
ISSUES of not to exceed 100000. The
present regulations allow in the eX-
. empt class only issues whose face value
!. or offering price do not exceed $780,
600. Single first mortgages are ex-
eHmpt if not of more than 100000.
The commission was asked also to
cut out entirely the requirement that
. the underlying real estate be not far
ther than $50 miles from the residence
or place of business of the purchaser
OF the notes. Under the present regu-
lation no individual or firm dare sell
this type of security without personal
knowledge of where the buyer lives in
respect to the property securing the
bond.
Request was made also to hberalize
the requirement limiting the number
of notes or bonds in the issue to 25.
"A 100000 issue divided into not more
than 25 notes or bonds, it was pointed
out, would mean a S2400 denomina-
ton. Using ordinary $100 bonds, the
issue, if to be exempt, could not total
above $4,000. The association sug-
gested that the commission allow Is
per cent of an issue to be S100 bonds
and the remainder to be in $500 bonds.