Evening star., 1934-12-01
HOME MORTGAGES
FURNISH SECURITY
79 Million Investors Pro-
tected by Paper, Report
Indicates.

The three institutions holding the
majority of American home mortgages
have given their 100000 investors
the highest degree of security found
in privately capitalized finance organ
izationS.
Naming the building and loan asso-
Citations, mutual savings banks and
life insurance companies as the big
three" in safety. A. D. Theobald, di-
rector of education and research for
the American Savings, Building and
Loan Institute, said today that the
home mortgage has been the balance
wheel for their safety in every case.
The institute is the research enter
prise maintained by the building and
loan industry through its national
organization, the United States Build
ing and Loan League.
Taking the depression years $780,
1888, Mr.. Theobald pointed to the
good fortune of investors in these
institutions.
'Of the total assets of building and
loan associations at the beginning of
1880, representing investments of
IL 100000 people, 9872 per cent sur
vlved the four years of depression
intact" he said "Of the total life
insurance companies assets at the
same time, money paid in by some
55,000,000 people, 985 per cent were
safe at the end of 1888 The safety
record of mutual savings banks who
were investing the funds of $1,000, 900
people at the beginning of the de-
&c ,nt
to require compiling of figures.
Record Is Cited.
Investigating the relation of this
safety to the holdings of home mort
cages We find that these three insti-
tutions held s12,OOo,O0O, 900 of the
total $2l 900, 100000 home owner debt
when the Federal Home Loan Bank
Board made its first complete survey
Of the urban mortgage field. Building
and loan associations which averaged
throughout the depression about 81
per cent OF their assets in such mort
cages held the greatest volume,
S6,484 100000. Mutual savings banks
investing SO per cent of their assets in
urban mortgages show S3,393 900, 900
of the total. and life insurance COM
panies, devoting an average of 25 per
cent of their assets to home mortgages,
held $2O79 ,0OO0 900.
In these three institutions the
American investor and small saver
had at the end of 1929 about
,000,0000O0 so secure that only a
little more than per cent of this
sum has been jeopardized during the
depression and a little over l per cent
actually written off as loss There is
no record of any financial institution
or any investment outside of the
Government block which could stand
up against that. 1t is significant
that a third of that total volume of
safe investments had been loaned to
the American home owner and de-
pended upon his stability and
honesty
while it is true that only the
building and loan associations of this
group invest exclusively in home
mortgages and can therefore trace
their full safety to this type of loan,
the other two institutions have found
in their home mortgages a lever of
safety which had more to do with
their splendid record than any of
their other holdings with the excep-
ton of Government bonds.
Role of H. o. L. C..
THE point naturally arises as to
the role played by the Home Owners
Loan Corp. in making this safety
possible for the investors. The rec
tn lota hor
$4,000, 100000 of the home mortgage
Indebtedness has been transferred
from private hands to the Govern
ment refunding corporation and prob
ably not much more than a billion
dollars of that refunding has gone
into the hands of those three insti-
tutionS. large per cent of the
Home owners Loan Corporation relief
has had to do with mortgages held
by private individuals and CONNER
cial banks, so that by and large the
safety of building and loan associa-
tions, insurance companies, and mu-
tual savings banks has been Que to
the stability of the home owners who
borrowed from them and the con-
SerVative management exercised by
the institution.
Since the home mortgage has per-
formed in this extraordinary fashion
during the four drastic depression
years there should be no fears that
the future American investor will keep
his money out of the home lending
field. Our problem in providing home
financing facilities for town and city
population is rather one of mobilizing
that type of investment to the best
advantage Of all.
"All indications point to the future
dominance of the home mortgage
field by the long-term monthly in