Evening star., 1934-01-13
HOME LOAN BONDS
GUARANTEE BY j. s.
SEEN AS IMMINENT
Backing for Principal Would
Remove Objection of Lien
Holders.
PROPOSAL is STUDIED
FOR CONGRESS ACTION
Difference in Interest Rate Would
Then Be Sole Obstacle to Ex-
change of Mortgage Paper.
BY VINCENT TUTCHING.

BY VINCENT TUTCHING.
One of the main objections of mort
gage holders to the per cent bonds
of the Home Owners Loan Corpora
ton is expected to be removed shortly
by enactment of legislation guarantee
ing the principal as we'll as the interest
on these bonds.
Already it has been limited that the
President will ask Congress to guaran-
tee the bonds in the same way that
he asked it to amend the emergency
farm credit act of 1888 so as to pro-
vide responsibility by the Government
Tor the payment of principal on farm
loan bonds, as well as interest.
The effect Of these indications on
the bonds during the last week has
been to boost their quoted value on the
speculative market to SO and above,
from the vicinity of 83 few weeks
ago. officials of the Home Owners
Loan Corporation report heavy invest
ment in the bonds of late Guarantee
of the principal, it is felt will bring
the market value of the bonds up to
almost par.
Would Remove Obstacle.
The failure of the Government to
guarantee the principal has been a
troublesome obstacle in the path of
those charged with administration of
the home owners loan act in recent
months. It has been a powerful argu-
ment which note holders have used in
declining to accept bonds in exchange
for mortgages on distress properties.
Removal of this feature by Govern
ment guarantee of the principal would
leave only one other objection to the
bondS-the difference in interest rate
as compared with the mortgage paper
itself
The Home Owncr~' T0an Corpora
ton announced Z, through
John H. Fahey. Cl # its board,
that 1t was STUDY Tor legS-
lation guaranteeing principal OF
the bonds.
Method Undecided.
Mr. Fahey said:
The board of directors of the Home
Owners Lean Corporation is now work
ing on a plan looking toward Govern
ment guarantee of the principal of its
bonds We are considering various
possible forms of legislation but have
not reached any final conclusion. We
hope to dispose of the matter soon
but we are unable to say yet what form
our recommendation will take. Only
a comparatively small part of the ST.
600 1000. 900 of bonds which the corpo-
ration is authorized to exchange for
mortgages has yet been issued and the
character of any guarantee OF our
bonds must be given careful considera-
ton Finally. of course, the whole
question relative to such guarantees
loa nf nv C0nOTpSS
Our board is definitely opposed to
any speculative activity in the corpo-
ration's bonds and is interested only
in the maintenance of an orderly and
natural market for these securities"
1O4 Loans Completed.
The District Office of the Home Own
ers' Loan Corporation has closed 1O2
loans for 1888 485 in bonds and two
for S3,159 in cash. the headquarters
Office of the corporation announced
yesterday
Loans closed by this Office during the
week ended January totaled $4O,284
for FIVE cases Forty-six loans have
been closed since December l for a
total of s294 .937, the Federal office re-
ported During this same period 343
applications were rejected.
During the five-Week period ended
January a total Of $71 ,579,l3 In
loans to urban home owners was closed
by the Home Owners Loan Corpora
ton. it was revealed in report of the
corporation. The figure. the report
stated, amounts TO els per cent OF the
entire volume of $ll6.467, 700 in loans
closed since the beginning of national
operations of the corporation and en-
phasizes the accelerated rate OF clos
ings made possible by the increase OF
personnel of the corporation.
Applications Approved.
With a total of 40993 loans closed
to date. the report also shows that the
corporation has tentatively approved
PAT ,642 applications for mortgage re-
funding loans or the smaller cash loans
authorized by the home owners loan
act to pay delinquent taxes or assess
ments or make essential repairs on un-
mortgaged homes. The total of these
amounts to S698, $40 ,293. Applications
tentatively approved are those in which
the property has been found eligible
under the act and the mortgage has
consented to accept bonds of the cor
noration in exchange for his obligation
due. Detailed appraisal of the home
and search of title follow in each case.
In the week ended January 5, which
included the New Year holidays, 4,683
loans aggregating sl3,209,922 were
closed. simultaneously an additional
1857 mortgages signed agreements to
accept bonds of the corporation. per-
mitting the properties involved to enter
the tentatively approved class. The
amount represented by these agree
ments was S35,852,33 During the
past five weeks period such consents
obtained" numbered 70,901, amounting
to sl98, ,625 in mortgage obligations.