Evening star., 1934-05-19
POOR RHOMES HELD
CAUSE OF CRIME
Resulting Cost Declare d
Probably More Than That
of Correct Houses.

llC Nlldl aSbNA VA hbiNiANu ~ 6NAi6
degraded by the houses in which most
Of our population live. Horace Russell,
general counsel for the Federal Home
Loan Bank Board and Home Own
ers' Loan Corpora ton, told the Amer
ican Institute of Architects in con-
vention here this week.
'The resulting crime probably costs
us more than the right kinds of
houses would COST" he continued. Il
had a vision of the kinds of houses
which would fairly express American
character. I hope the influence of
governmental agencies on housing
may be an influence toward produc-
ing the kinds of houses, small as well
as large, which will express the best
in American character"
All Jobless Needed.
Russell declared that to build the
houses that would properly express
the best in the life of the American
people would employ constructively
nearly all of the men now idle in the
country. He continued:
Mortgage lending has had probab-
ly greater influence on the charac-
ter of the homes of our people than
any other one thing which affects
housing. AS our great country has
developed, the insurance companies
have generally declined to make con-
struction loans and have insisted
upon having nothing to do with the
financing of a home until it is COM
pleted, at which time they appraise
the property and say how much they
will loan This in general has been
the practice of other mortgage lend
ers. The result has been that the
home owner is unable to choose an
architect and submit plans and ar
range for financing and build the
kind of house he really desires. The
home owner has heen compelled to
take a ready built house from con-
tractor who has deliberately left off
the employment of professional serv-
ices not only to save the cost Of such
services. but in order to be able to
make other savings at points which
would not be discovered at the time
of appraisal.
This type of mortgage lending has
not contributed to better planning or
better design or to better conStruc-
ton. On the other hand. from a
practical standpoint for the average
home owner. it has eliminated the
possibility of his securing exactly the
kind of home he would like in these
respects. Furthermore, most mort
gage lending upon homes has pro-
Ceeded upon the theory that the
lender would make such terms as
suited it best and this has too fire.
uuently been a Short-term straight
mortgage and upon the theory that
at maturity, If the owner would not
pay. the lender would get its money
by foreclosure. Instead of this prac-
tice, hope that the influence of gov
ernmental agencies upon housing will
be to encourage a type Of loan on a
sound home with such terms that the
home owner can pay the same off
over a period of years without re-
newal. The short-term mortgages of
the past have not only prevented the
construction of sound homes. but have
created a large proportion of the
present distress in the mortgage mar
ket.
Home Loan Bank Influences.
"The Federal Home Loan Bank act.
approved July %, 1882, was the first
effort at a Nationwide organization
Of the home mortgage business, then
$500 lending institutions holding ap-
proximately one million mortgages on
homes, amounting to about three bill
lions of dollars, have joined this bank
system in the past 18 months. The
system is designed to encourage the
long-term monthly amortized loan at
q reasonable rate upon sound con-
struction made by local home mort
gage lenders. These banks now have
outstanding advances in excess of the
total commercial loans of all of the
Federal Reserve Banks. They are
having a substantial influence in the
development of a sound program.
LAS we develop institutions making
10 to 20 year loans at 5 per cent and
per cent interest, it will become
necessary to have homes properly
planned, we'll designed and soundly
constructed to carry such loans. The
next step in this program by the
most enlightened of these institutions
should be to decline to make loans
upon new homes unless the same are
properly planned, designed and con-
structed. Furthermore. a more de-
srable loan ought to be offered on
such homes than is made available
on existing obsolete and poorly con-
structed houses.
Federal Savings and Loan Associa-
tions are rapidly being organized and
will become a strong factor in the
financing of homes. They are de-
signed to finance homes on a month
ly amortized basis up to 20 years and
will find 1t perfectly essential after
they get into operation to secure
proper planning, designing and con-
struction. Such will be not only to
the interest of the home owner, but
perfectly essential to the interest of
the lender.
THE thing that has affected all of
us interested in real estate has been
the failure of the real estate market.
Home Owners Loan Corporation was
organized to take off the market and
finance III plOpei HlaAilei doou'
100000 homes to prevent a complete
breakdown of the house market This
1t Is rapidly doing and normal mort
gage lending should be possible again
before the end of this year.
Opportunity Splendid"
ri have pointed out the Importance
to American life involved in the ques-
ton Of sound and beautiful homes
and what we hope to accomplish
through the Federal Home Loan Bank