The Daily Alaska empire., 1934-12-20
ANOTHER PHASE !. OF HOUSING ACT
 IS MADE PUBLIC
Are Announc- ed for Title II-Mort-
 gage Insurance

Alaska at an early date the benefits of the second phase of the Federal Housing Administrations program. This was known today when infor- nation regarding regulations per- taining to Title II of the National Housing Act was made public by John E. Pegues, Territorial Di- rector.
 Very briefly stated said MT Pegues, "the purpose of Title II is primarily to make it possible for the person of average means to construct his own home and to pay for it on what is substantially like a rental basis, and to refinance existing debts on homes already constructed. This title establishes a system of mutual mortgage insur- ance. It will encourage lenders of private capital to invest in home mortgages and its effects will be to promote an early resumption of construction activity.
 Insurance System
 Keystone of the plan is the mutual mortgage insurance system. This system is comparable in many respects to life insurance. It en- visions the payment of dividends to mortgagors, so that mortgage obligations may be satisfied in ad- vance of their due dates"
 This title seeks to and will, we are confident, cure fundamental ills now existing in the real estate field" MT. Pegues added. "A lead- ing objective is the stabilization of real estate prices, so far-as that is possible, at fair and reasonable values. In other words, the Na- tiona1 Housing 4AcS--wll4 do much to prevent prices soaring too high in boom periods and to prevent them from falling too far in times of depression"
 How Plan Works
 The following illustration of how the plan will work with reference to new construction is given:
 A person desiring to construct a new home and having cash or a lot representing 20 percent of what he estimates the appraisal value of the completed property will be, may apply to a bank which has qualified as mortgagee for con- struction loan. The bank will in- vestigate the applicants financial standing and building plans. If they are found satisfactory, and the bank believes the loan will be good one, it in turn applies to the Federal Housing Administra- tion for insurance on the contem- plated mortgage.
 To Review Facts
 The Federal Housing Adminis- tration will make careful review of all the facts which were first considered by the bank, and will also make additional surveys. If the Administration is convinced the proposition is a feasible one, it will undertake to insure the mortgage, thus enabling the bank to release construction funds.
 "The plan is not new" MT. Pe- gues explained. Tt has been tried with splendid success over long periods in other countries, notably in South America, as well as by some of the European nations
 Pertinent Points
 The following pertinent points were cited:
 l. Loans can be made only by qualified mortgages.
 They must, along other things, be chartered institutions having suc- cession; be located in urban com- munities having trading areas .em- bracing contiguous population of not less than 5000; and have oom- bined unimpaired capital and sur plus of not less than $100,00U, of which at least s50,000 is unim- paired capital. ..s
 20 Year Term nre 2. The original principal obliga- ton of mortgage may not exceed $16,000 nor 30 per cent of the ap- praised value of the property as determined by an appraisal of the Federal Housing Administration.
 3. The mortgage may have a term not to exceed 20 years.
 4. The mortgage is to be re- tired by monthly payments.
 5. The basic interest rate for new construction is 5 per cent. The maximum basic interest rate for refinancing operations is 51a per cent. To those rates there may be added in certain classifications, a service charge of one-half of one per cent. Insurance premiums range from one-half of one per cent to one per cent. Of course, the pre-