Evening star., 1934-08-20
HOME BORROWERS
NEEDNODEP0S|TS
Not Required by Federal
Housing Administrations
Improvement Insurance.
BY G. T. KELLOGG.


who want to take advantage Of the
Federal Housing Administration Is
home improvement insurance need not
have a deposit in the bank from which
they borrow funds for home renoviza-
ton.
The F. H. A, of course, will not
make regulations contrary to the char
ter of any lending institution-and
some of them do require that borrow
ers have deposits-but there is nothing
in the housing agencys regulations
which require a deposit in the bank
making loans for reconditioning.
This Qualification should give even
more encouragement to homeowners
wishing to renovize and enter The
Stars 81 900 Better Homes Contest.
There are many WaShingtonians who
bank in nearby suburban communities
and many who live in the nearby COM
munities who bank in the city.
Dovetailing Apparent.
The complete "dovetailing" of plans
of the Housing Administration and
The Stars contest is each day becom-
ing more apparent, and the organiza-
tion of Washington by The Stars COM
petition is serving as model for F..
H. AS organization of similar cam
paigns in other cities throughout the
Nation
workmen today began improving
the home of Miss Alma McCrum,
1852 Thirty-third street Miss Nc
crum was the first home-owner in the
United States to obtain loan under
the F. H A. insurance plan, and has
entered The Stars contest.
This is one outstanding example
of possibilities offered by the Hous-
ing Agency for home owners wish
ing to improve their residences and
at the same time enter The Stars
$1,000 competition.
Other applications are coming in
to the Districts banks and lending
institutions, and are being gone over
preparatory of actual loan making.
The Star plans to contact all those
to whom loans are granted under the
home improvement program, and in
vite them to join in the contest.
Prizes in Two Glasses.
Prizes In the contest are divided
into two classes. One is for improve
ments to homes valued at $4,000 and
less, and the other for homes valued
above this figure. In each class
first award of $3.50, second 500 and
third, $50 Is being offered. and four
honorary mention awards of $25 each
will be given. In addition, the WASH
ington Board of Trade Is offering
prize of s100 for outstanding land
scaping improvement, and another
500 will be given that citizens
association whose members show the
greatest interest in the contest
measured In terms of entries.
Other clarifying" announcements
came today from the Housing Ad-
ministration. One was detailed In
terpretation of regulation No. 18 OF
the modernization credit plan, which
defines Government insurance protec-
ton of banks and other financial IN
stitutions which make loans in con-
nection with modernization of homes.
It follows:
"a more detailed Interpretation is
being requested Of the Federal Hous-
ing Administration from some States
concerning regulation No. ID OF the
modernization credit plan, which de-
fines the insurance protection afforded
financial institutions participating.
Protection Against Loss.
"The contract of insurance will pro-
tect financial institutions against 100
per cent of all losses incurred on loans
made OF notes purchased by them,
provided the total of all such losses
does not exceed 20 per cent of the
total loans made or notes purchased
by them while the insurance contract
is in force. This does not mean that
IL single note goes bad the Federal
Housing Administration will only re-
imburse the financial institution for
20 per cent of the loss on that note.
1t means that the financial institution
will be reimbursed 100 per cent of all
its losses so long as the aggregate
amount of such losses does not exceed
~ pei Ctilt VI lllc tOIdI uHIUullt Va
loans made or notes purchased by it
during the entire time the insurance
contract was in effect.
This insurance reserve is figured
on the total amount of loans made or
notes purchased during the time the
insurance contract is in effect, and
is not figured on the face amount of
notes outstanding at any particular
time. Notes paid of or matured, in
the event of default, are not deducted
in determining the amount of the
reserve.
The extent of the security provided
by this insurance may be judged when
it is realized that the highest known
loss ratio on similar types of receiv-
ables in the past has not exceeded 8
per cent, even in the worst depression
years. 1t is hardly conceivable that
these credits. extended by prudent in
stitutions, could result in losses greatly
exceeding this previous experience.
Therefore. the insurance provided is
tantamount to a complete guarantee
for financial institutions"