Evening star., 1934-03-22
HOME OWNER BOND
MARKET IMPROVES
Senate Passage of Guaran.
tee Clears Obstacles to
Federal Aid.
Special Dispatch TO The Star.

Special Dispatch to The Star.
NEW YORK, March 22.-Passage
by the Senate Of the bill guaranteeing
principal as well as interest of the 4
per cent bonds of the Home Owners
Loan Corporation has caused a further
slight advance in the price of this
Government obligation. 1t is still at
a small discount from par. Its status
is such that it can never enjoy the
favor or approach the market value OF
the regular obligations Of the Treas
ury. AS working medium, however
all that Is required OF 1t is that it shall
sell at par.
While they were quoted in the lower
80's it was difficult to interest the real
estate investment class in home
owners bonds. Even when the Sc
curity they held on home property
was In default Of interest and taxes,
the traditional buyer of mortgages was
unwilling to exchange his per cent
investment nominally and with no
market for one selling at heavy dis
count and whose interest alone was
supported by Government contract.
Consequently, during the first
months after the corporation set up
its Offices in various parts of the coun-
try the exchanges were small. The
delay in effecting arrangements was
another handicap. This was due in
no small part to the character of the
administrative personnel, in which
politics frequently played larger part
in appointments than knowledge OF
real estate values or sympathy for the
home owner.
Demand Is Quickened.
AS the market for the home owners
bonds strengthened, there was a
notable quickening in the demand.
Banks became more willing to take
them in exchange for mortgages with
a poor prospect from an income
standpoint. In January the bonds
suddenly rose from the middle 80's to
the lower COS. They now are quoted
between SO and 90. AS a result, mort
gage holders, according to the report
OF New York State officials, are now
coming in focks" and seeking to
transfer their present investment for
that sponsored by the Government.
In the last two months % 900 consents
have been given in this one jurisdic-
ton. The time and work involved in
the negotiations has been materially
reduced. A transaction that formerly
required seven weeks to complete is
now brought down to five weeks. Mort
gage holders and home owners are
both being satisfied.
The latest report of the Home
Owners Loar Corporation shows that
since the inception of this Govern
ment agency, loans involving over
S325 100000 have been made to nearly
$4,000 distressed home owners
throughout the United States. There
are half a million more who have
made applications for relief.
Loan Making Increases.
There has been a progressive rate
OF increase in loan making. The home
owners act became effective June l3.
last. BY the middle OF December less
than S75,000,000 had been loaned. In
the next month loans. amounted to
S62,ooo,000. from January IL to Feb
ANo-y y IAlCy NCAC SOOtOUU,UUU, anu
between February 9 and March 9
about sl05,000,00O. The prospects are
that in the March-April period they
will be SUFFICIENT to raise the total
amount Of the corporation loans to
approximately s5o0,oo0,00O
The home owner is not the only
beneficiary Of the new arrangement.
The municipal treasurer has been re-
lieVed OF many embarraSSments by it,
as one Of the first acts in the trans
action is the payment of past-due
taxes. 1t has also offered opportunity
to various building and loan associa-
tions to thaw out some of their frozen
assets.
Meanwhile the general real estate
situation shows signs of improvement
A meeting of New York real estate
men few days ago was the most
cheerful in Several year. Much evi-
dence was presented to show that the
decline in values had ended and that
investment buying of sound properties
had been begun by institutions and by
private investors There is a stronger
rental condition, improved occupancy.
and apparently an end to the era of
wholesale foreclosures.
(Copyrisht. 1o34)