Evening star., 1934-01-27
LONG TERM LOANS
TO FINANCE HOMES
BECOME POPULAR
Governments Activities Spur
Movement Away From
Short Mortgages.
u. S. METHOD MAY BE
MODEL FOR FUTURE
Home Loan Bank System Cites
Figures Showing Buying
Plans Are Changing.
BY VINCENT TUTCHING.

The Federal Governments activities
in the home financing field are giving
decided impetus to the movement away
from the short-term mortgage method
OF home buying to the sounder. safer,
long-term amortized financing plan.
While the type of mortgage offered
by the Home owners Loan Corpora
ton. Uncle Sans home refinanCing
agency, may not be exactly the home
mortgage of the future. certainly it
offers a model that will be closely
loan up to 80 per cent. repayable in
IS years in monthly installments that
might well be less than rent" is seen
as providing the groundwork for a
sounder stabilized home financing
structure.
Concrete evidence Of the metamor-
phosis is now taking place in home
buying methods is contained in figures
of the Federal Home Loan Bank Sys-
tenn, of which the Home Owners Loan
Corporation is but one department.
Huge Gain in Resources.
At the close of 1898, total resources
of the 2,065 member institutions in the
system amounted to s2,600, 100000, or
"a per cent of the entire assets OF all
building and loan associations in the
United States This figure compares
with less than per cent year ago,
when only 1l6 institutions were men,
bers of the system.
The act of Congress creating this
system itself gives recognition to the
superiority of home loans which are
paid off over a long period. in moder-
ate monthly installments. rather than
maturing in 3 to years
The Federal Home Loan Bank Board,
in a statement this week summarizing
its work. said:
Home loans of amortized long-term
character are qualified, as collateral,
for larger advances to members from
the regional banks than are short-term
loans. American building and loan
associations, for more than a century.
have confined themselves almost en-
tirely to long-term, amortized loans
Such institutions constitute over 95
per cent of the membership OF the
Federal Home Loan Bank system.
indicative of the inherent soundness
of ,amortized long-term loans is the
fact that the loss ratio among such
associations has been less than "A OF l
per cent of their assets in any one year
of the depression. Even in 1882. when
credit for home financing was almost
non-existent. these associations MADE
loans to home owners aggregatng over
half a billion dollars.
Trend Declared Significant.
1.-THE recent trend from short-term
home loans to long-term amortized
loans, on the part OF savings banks,
insurance companies and other instl-
tutions is one of the most s1gnlhcant
Developments in the creation of home
mortgage structure which Will be SAFE
for investors and economic for nome
owners. The Federal Home Loan Bank
system is playing an important part IN
assisting member institutions to make
home credit more flexible and more
readily available. The Savings Banks
Association of Massachusetts, only
few weeks ago strongly recommended
that its member banks join the Federal
Home Loan Bank System. and last
week the oldest chartered mutual saw
inps bank in the United States. and
one of the largest, became member
OF the system.
"The American urban home mort
gage debt aggregates over S2l ,0O0,0OO,-
0O0 That field of finance must be re-
stored to strength and activity. not
only in the interest of home owners
and financial institutions. but likewise
as the most essential step IN recovery
and permanent prosperity 1or tne
building trades and construction m
dustries. upon which American eco
nomic welfare so largely depends. Ihe
Federal Government in creating the
Federal Home Loan Bank System, and
in subscribing s124, 700 900 to the stock
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