Evening star., 1934-05-12
MORTGAGE CODES
. VITAL TOBU|LD|NG
Real Estate Association
Analyses SteagaII Acts
Provisions.


two factors now In the making that
will directly affect the hoped for re-
vival of home building and home re-
conditioning. the National Association
of Real Estate Boards pointed out
toda.,.
New home building conditions are
forming, according to the association.
with a proposed new major Federal
plan for stabilizing home mortgage
credit under discussion, with the new
Steagall act on the statute books,
giving considerable widening of the
possibilities rot only of H. o. L. c.,
but of the Home Loan Banks, and
with results of the first Federal real
property inventory now being issued
showing the degree to which three
years cessation of building has eaten
up vacancies.
Bank Act Analysed.
Important provisions of the new
Steagall act, approved April 81 and
now in effect, are analyzed by the as
sociation, as follows:
l. The much h-publicized central pro-
vision for guarantee by the United
States Government of principal as
well as interest for H. o. L. G. bonds
Cnow treated as Government securities
for trading purposes on the New York
Stock Exchange. and selling above
par). The amount of bonds auth
orized 1.-TWO billions) is the same as
in the 1888 act Six months term is
given for the refunding of previously
issued bonds.
2. Authorizati ton of not to exceed
so millions for purchase by the H. o.
L. c. of bonds or debentures of Fed
eral Home Loan Banks or of loans to
these banks.
This provision. the National Associ-
alton of Real Estate Boards points
out. is of Importance to the degree
to which it may be used for pumping
funds through these banks into new
home mortgages.
Restrictions Liberalized.
8. Liberalization of the restrictions
on Home Loan Banks in respect to
past due mortgages, opening to their
action home mortgages which at the
time of making were under so per
cent mortgages. or which have since
been reduced to under so per cent Of
the appraised value at the time the
mortgage was made.
a. Authorization of new cash loans
in total amount not to exceed 200 mil
Ion dollars for rehabilitation. modern
ization, rebuilding and enlargement of
homes securing the corporations mort
cages and other obligations or for nee
essary maintenance and repairs on
these properties.
5. Elimination of the three-year
grace period hitherto given H. o. L. c.
borrowers before payment of principal
must be made on theF loans.
s. ALLEGATION of S500,000 lin addi-
ton to the sl50,O0O provided in the
original H. o. L. c. act) for Treasury
to capital of locally ini-
tiated Federal building and loan asso-
Citations; further, provision that the
Treasury, on request from the Home
Loan Bank Board. must subscribe not
to exceed rs per cent of the capital
stock of such an association. Pre-
Nously the Treasury might subscribe
up to so per cent. It may now pur-
chase full paid income shares in addi
tion to the preferred shares previously
authorized.
Associations Retarded.
Difficulty in obtaining the hitherto
needed SO per cent of local capital has
retarded formation of these associa-
tions, 1t is said.
Any loan institution now member
of the Federal Home Loan Bank may
convert itself into a Federal Savings
and Loan Association upon majority
vote at legal meeting called to con-
slider such action, according to the new
act
7. Provision that the Federal Re-
serve Banks may act as repositories,
custodians and fiscal agents for the
Home Owners Loan Corporation, and
that any member institution of the
Federal Home Loan Bank System may
be employed as fiscal agent for the
Government or for any other instru-
of the United States. These
provisions evidently look to closer in
tegration of existing Government
financing agencies in relation to the
home mortgage structure.
8. Authorization for H. o. L. c.
loans to redeem owned homes lost by
foreclosure or by voluntary surrender
to the mortgage subsequent to jan
uary /, 1880.
The corporation, in its exchange of
its bonds for home mortgages or in it's
cash advances on homes, is limited to
cases in which the applicant was in
involuntary default on June 13, 1888,
or where the default, if after that date,
Is shown to be due to unemployment,
or to economic conditions. or to mis-
fortune beyond control. But no such
limitation applies to obligations held
by an institution which is in litigation.
Codes Important Factor.
The effect of N R. A. codes on the
land development and home building
business is an important factor in the
outlook for new home building. par
ticularly as they may effect G) en-
ployment and national income; (2)
costs.
Roy Wenzlick, economist for Real
Estate Analysts. Inc. ST. Louis. and
Tor considerable period economic
adviser to N. R. A, sitting in on dis
cussion of all real estate codes, will
analyze the effect of codes on home
building and the business of land
before the associations
coming annual convention The con-
vention will be held in Minneapolis.
June 25-30. Mr.. Wenzlick will speak
before the land developers and home
builders division.
The notable movement of the past
few years for standardizing the ap-
praisal of real estate is expected to be
tremendously accelerated by the
and refinancing of both ur-
ban homes and farms proposed or al
ready in process. A necessary pre-
liminary is general agreement on
Joseph B. Hall, Gin