Evening star., 1934-08-09
BY JAMES A. MOFFETT,
Federal Housing Administrator.

Federal Housing Administrator.
CopyriEht. 1884. BY the Associated Press.
We Of the Federal Housing Admin
Istration have been convinced since
the first day we undertook this task
that If we are to achieve results of
real value to the Nation in developing
the property modernization plan,
there must first of all be strict con-
Torrance to the principles Of sound
banking. For, essentially this is q
program which has for its real foun-
dation multiplicity OF banking trans
actions
Let us consider a typical American
community. On the law of averages,
there will be in this community many
buildings that are run down or are In
need Of more modern conveniences.
ManifeStly it Is sound practice to
keep buildings in good repair or i'm
prove their efficiency. Therefore,
loans of this type may be considered
within the scope Of good banking II
the repairs are needed, If the sums
borrowed are applied only for the pur-
pose intended, If the value and de-
STABILITY OF the property is enhanced
and il the borrower Is in a position
to pay the amount borrowed.
Bankers VIII Exercise Care.
While the regulations of the Federal
Housing Administration do not re-
quire specifically that the lending in
stitutions must determine whether or
not the property owners have spent or
intended to spend the proceeds of the
loan wisely, 1t will be apparent, of
course, that the soundnesS Of the
project will have a strong bearing on
the property owners willingness to
meet the payments on the note.
Therefore, from the standpoint OF
their own self-interest, bankers will
exercise care in making sure that the
property owner in securing a modern
iZation loan is furthering his own in
terests.
And beyond these transactions be-
tween lender and borrower, there is
envisaged an endless chain of other
interests. am told, for example,
that in these projects rs cents of
every dollar will go to labor-44 cents
at the site. 81 cents at the factory,
mill or dealer, cents at the source
of material, and 4 cents in trans
portation; the balance will 60 to the
building supply dealers, manufacturers
and for raw materials and transporta-
ton.
1t requires no stretch of the imagi-
nation, therefore, TO see how the
money that is to be drawn from the
banks in the modernization program
will move from person to person with
considerable velocity and prove of
direct immediate benefit to every busi-
ness interest in the community.
But the good work will not stop
there. The loans, having been made
on sound banking principles, will be
of such a nature as greatly to enhance
the value and attractiveness of the
properties involved, and this, in turn,
will create new standards of values
for the community as a whole.
The entire real estate field will be
improved and the value of the security
behind all real estate loans viii be
enhanced.
All of these individual and composite
benefits viii be possible because the
practices of good banking will per-
meate each individual transaction in
the entire modernization program.
The advantages to an owner of
modernizlng his property are obvious
and readily understood by the general
public.
Advantages to Owners.
What is less well understood, per-
haps, is the added advantage to be
gained if group of owners in a given
block or neighborhood alter or mod
ernize their properties as part of q
general scheme of neighborhood i'm
provement.
1t should be clear that all property
is helped by this improvement Of
buildings on the block, and this ad-
vantage Is all the more marked when
a co-ordinated improvement scheme
Is undertaken for an entire neighbor-
hood.
In projects of this sort, agreement
of the owners to act simultaneously
and in conformity with the general
scheme is essential. leadership is
necessary to accomplish any desirable
results, and it must be disinterested
Civic-minded, disinterested men and
women whose integrity is not ques-
toned should lead.
Collaborating with them should be
a second group who, although they
have selfish interest in the project,
should represent no particular prop
erty owner. They can be of great use
in securing cooperation. Such q