Evening star., 1934-11-10
TITLE Z RULES
ONLY TENTATIVE
Experience Necessary to
Decide Extension or
Change Question.

Regulations for title 2 Of the ma
tional housing act must be TAKEN
practically, as tentative in a num-
ber of respects, pending actual ex-
perience as to the degree they may
require extension or change to effect
the great public purposes Of the act,
the National Association of Real Es-
tate Boards points out.
Meanwhile, they constitute a char
ter of definite Federal policy for fu-
ture home ownership, on basis
notably more stable than has ever be-
fore been known in any country, the
association continues. They become,
probably with some necessary amend
ments, an outline of Federal regula-
tion of home mortgage financing prac-
tices for what may be expected to be
the major sector of future home
mortgage activity. They envisage
some very radical shifts in business
practice. This must be realized to
guard against disappointment in slow
onset of the program.
This the National Association states
In an initial comment on Admins
traitor Moffett's newly outlined ad-
mlnistrative plan for federally super
vised mutual home mortgage insur-
ance. The regulations are receiving
close study by all private agencies
concerned with home building and
nome selling, as we'll as home financ-
ing.
Important Provisions.
The following provisions. the asso-
cation points out, will have partic-
ularly important bearing on the fu-
ture home-ownership structure of the
country, and shift considerably the
mortgage financing structure:
/. Interest rate regulations.
2. Amortization requirements: En-
pnasls on long-term mortgages. Pro-
vision Is required in case of all in
sured mortgages for the ultimate COM
piete Wlplng out of the mortgage debt
within the term of the mortgage.
Initial public discussion centered. of
course, on the per cent interest rate
required for all sections of the coun-
Try. Ihe low rate is very definitely
In line with the contention of the as
soclatlon for many years that home
mortgage rates, if they could be
built in exact correspondence to the
risk involved. might verv we'll he
consioeraoly lower than has been the
hitherto ordinarily prevailing prac-
uce. Federal insurance not only
distributes the risk. but through
standardizing practices, goes far To
determine the risk. It further pro-
Vldes that anything accruing over
the cost Of operation eventually goes
to the home owner to reduce his
mortgege.)
The complete wiping out of the
mortgage debt within the term of the
mortgage has long been contended for
by the National Association of Real
Estate Boards as best public policy.
out has never as yet been the ordi-
nary mortgage practice.
New Basis Judgments.
Home owners and prospective home
owners. in familiarizing themselves
with what is here offered. must learn
to make their judgments therefore
on radically new basis. The re-
quirement for amortization monthly.
which is in the new regulations an
absolute requirement., means some
what sitter annual expenditure than
would appear from the per cent
rate. Monthly payments would cover
both interest rate and required amor
tization, plus, of course, the cost of
the insurance premium. For new
home building this would be S per
cent for interest per annum, plus. in
the case of 20-year mortgage. ap-
proximately 3 per cent for amortiza-
tion, plus one-half of per cent for
insurance premium. For such mort
gage this is total of 8l2 per cent.
But good part of this would be the
plllng up of the home buyers equity
In his home, something which ordi-
nary home mortgages have not ef-
fected. In other words, a good part
of what must be paid each month is
compulsory savings toward the full
ownership of the home.
s. Rehnancing for homes. Absolute
requirement is made for eventual wip-
ing out of the debt, and for use of
standard mortgage Instruments. for all
refunding, as well as for all new home
projects. Since existing obligations
are ordinarily on payment terms very
different from this, such provisions as
F. H. A. yet makes for refinancing the
nome mortgage structure involves a
rewriting of practically all mortgage
instruments for which insurance cov-
erage may be sought.
OF interest primarily to the industry
but tremendously important to the
public as speeding up or slowing down
the purpose of the act:
l. Mortgages eligible to insurance
Only chartered institutions are as vet
Included. Private mortgage companies
are given no place, unless they be
engaged by some chartered institu-
tions as servicers of its mortgages or.
OF course, unless they change their
character, apply for and secure some
form OF national or State charter Gas
bank. trust company, etc.. Private
mortgage investors are cut off, as vet.
from the benefit of mortgage insllr-
ance unless they surrender their funds
Tor mortgage investment to a bank,
trust company or the like. In view
OF the avowed purpose of the act to
bring private capital into the home
mortgage field it may be expected that
future regulations will be set up to
extend the group of eligible mort
gagees. That is implied in the ad-
minlstrators covering statement.
which refers incidentally to such in
Vestors in mortgages as may be here
after provided for by regulations and
approval"
Mortgaging Services.
2. Servicing of mortgages may be
by any agency. The administrator i
announcement specifically notes that
while only chartered institutions may