Evening star., 1934-11-30
CAPITAL INVITED
BYHOUS|NGPLA
Fedora! Insurance Of Mort
cages to Full Cost an
Inducement.
By the Associated Press.

By the Associated Press.
The Federal Housing Administra-
ton today invited private capital to
step into the low-cost urban housing
picture, with the inducement OF FED
eral insurance of mortgages up TO
the full cost of the buildings.
The invitation was based on a new
set of regulations for insurance on
such projects, issued by James A.
Moffett, housing administrator, and
the move generally was interpreted
ss further clarifying the housing sit
uation over which Moffett and Sec
retary Ickes clashed last week.
MoffettS rules definitely defined
the low-cost housing field into which
he hopes to bring private capital.
President Roosevelt made clear We'd
nesday that the Government in
tended to help those whose pocket
books were too slim to build their
own homes.
The Chief Executives announce
ment was interpreted to mean, how
ever. that the Federal funds would
not be thrown into competition with
private capital. Thus both the 1ckes
and Moffett plans would be kept from
collidlng.
Full Insurance Plan.
The Housing Administrations an
nouncement held out the hope in
some instances of full insurance of
mortgages on the second of the two
classes of property with which 1t
deals, namely, properties comprised
in low-cost housing projects occupied
by a large number of family units,
in either one building or a group of
buildings"
Previously it had issued regulations
on properties occupied by one to
four family dwellings" providing in
surance up to 80 per cent of the
value of property on mortgages not
exceeding $4,000.
In the announcement, the admin
tstration said:
Long time mortgage loans on low
cost housing projects up to the full
value of the buildings. exclusive of the
land, which must be unincumbered,
may be insured under section 207 = =.
capitalization Of loW-cOSt projects
Is limited to actual investment by the
stockholders. On this they may re-
Ceive regular annual dividends not to
exceed per cent and special disburse-
ments not to exceed 2l2 per cent a
year, provided an amount equal to
that paid in such special diSburse-
ments is returned to the tenants in
the form of rebates or rent.
Accumulation of Earnings.
Earnings in excess Of regular
per cent dividends and 212 per cent
special disbursements to stockholders
and tenants must, under the rules
governing insured mortgages. be al
lowed to accumulate for distribution
to the tenants at such times and in
such amounts as the administrator
in his discretion shall determine"
1t was further provided that no
capital stock can be retired during the
lifetime of the mortgage, which may
run up to 90 years
The low-cost housing corporations
may be financed either by private cap
ital or by municipalities or States. or
the Federal Government. Rents,
charges, capital structure, rate of re-
turn and methods of operation may
be regulated by the administrator.
In further defining its rules the
Housing Administration said:
mo applicant or proposed applicant
need be represented by professional
advisers or by any Washington rep
resentatives and any statements to
the contrary should be ignored. The
payment by any applicant to any such
adviser or representative of any fee or
commission upon a contingent basis
for services in connection with the
submission of its application is dis
approved"
To obtain insurance in excess of 80
per cent of its value, it was stated, a
property must be exceptionally we'll
located, the corporation must have at
least per cent working capital and
an equity in the completed property
of at least the value Of the land.
The basic test, for determining the
lnsurability of a mortgage, it was
added, will be the social and economic
soundness of the project rated on the
following basis:
Social and economic trends of the
community as whole and of the
neighborhood in which the property
Is located.
Satisfactory corporate structure and
other legal considerations.
Physical structure of the building or
buildings.
Design and INABILITY of structures.
Pattern of mortgage, value of prof.
ect. capital structure. probable income
and expense. credit of borrower,
method of financing.
Management, supervision and ac-
counting of project after completion.
Present and probable taxes and
bonded debt of the community in
which the project is located. probable
trend of zoning legislation and legis-
lation affecting the rights and rem
edies of debtors and creditors also will
be considered.