Evening star., 1934-01-06
NEW LOAN UNITS
ARE SET Up UNDER
FEDERAL CHARTER
Government Readiness to In
vest s1OO,000,0OO for
Building Finds Response.
BY VINCENT TUTCHING.


Decision of the Federal Home Loan
Bank Board to double the organization
staff of its savings and loan division,
announced this week, turns the spot
light on section of the home loan act
more or less obscured in recent months
by the activities of the Home Owners
Loan Corporation.
This obscurity, however. has been
confined to the public mind. Back of
the scenes at the Commerce Department
Building, the Federal Savings and Loan
Division of the Federal Home Loan
Bank System has been active in setting
up Federally chartered building and
loan associations. 1t was announced
Wednesday that 81 such institutions had
been formed in 20 States, and applica-
lions to form associations have been
received from 211 groups in 80 States.
After countrywide survey revealed
that more than half the counties in the
United States were without home
financing institutions of the building
and loan type. the Federal Government,
through the Home Loan Bank System,
stands prepared to invest up to $780,
C00000 in financing such establish
mentS.
Competition Avoided.
Tucked away in the home loan act
Congress authorized the Treasury to
make available this sum. and keep 1t
available until expended. for the pur-
chase of stock in Federal savings and
loan associations.
1t is pointed out by officials Of the
board that this feature of its work is
intended primarily to supplement pri-
vately owned and controlled mortgage
institutions with new Government
financing facilities. 1t is explained that
10 effort will be made to enter into
competition with established building
and loar companies. The new Federal
associations will be set up largely in
those areas where a lack of adequate
me-f1nancing facilities has been found
after investigation.
The Federal Government will be
major Stockholder in these associations,
being authorized by Congress to buy
so per cent of the shares in each, up
to 100000. Each of the new aSSocia-
tionS will automatically become men,
bers of the Home Loan Bank System
and thereby will be in a position to Sc
cure additional funds for investment
in home mortgages if the demand is
sufficient.
Model Associations.
With a home financing plan similar
to that in effect in the Home Owners
Loan Corporation, which provides IL
years for amortization, the Home Loan
Bank Board intends that the Federal
mortgage concerns shall become "model
building and loan associations" de-
signed to provide ready financing for
small home builders, and at the same
time lend aid to the mortgage financing
field.
The action of the Federal Home Loan
Bank Board in enlarging its organlza-
ton force in this department was
prompted, it was stated by widespread
private initiative, already shown In the
formation of these thrift and home
financing institutions under Federal
charter.
In adding more organizers to the
staff" said John H. Fahey, chairman
of the board, I'VE are guided by the
hundreds of inquiries received from
private groups in large and small cities
throughout the country, indicating their
desire to form such associations.
"The function Of the Federal organ
izers is to confer with these local busi-
ness men who contemplate applying 1or
Federal savings and loan charters, as
1t is necessary to place representatives
Of the home loan bank system promptly
in personal touch with those groups.
Majority in Small Cities.
"While many of the Federal savings
and loan associations so far chartered
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