Evening star., 1934-11-02
HOUSING PROGRAM
PLANS ANNOUNCED
President Sets so Interest
Rate on All Loans
on Homes.
(Continued From First Page.)

means for the execution Of such
program as have outlined"
At present the housing act limits
the total amount OF mortgages on
new homes which may be insured to
s. ,000, ,0O0, 900, but gives the President
power to increase that sum II he
deems advisable. Just now the loan
insurance Is limited to homes In or
near urban communities.
While the approved basic interest"
rate for loans for constructing one
family to four family houses was set
at S per cent, the maximum basic rate
for refinancing existing homes will be
5h.
Mortgages calling for higher basic
rates would not be insurable under
the Governments mutual plan.
Insured mortgages may range as
high as $4,000 each and may run for
periods up to 20 years.
Moffett made public letters ex-
changed between himself and the
President. He had proposed that S
per cent can be fixed as the rate in
sections which already had a mini
mum interest rate and 6 per cent in
other sections. After finding the
President thought otherwise, he wrote
him that submit this matter for your
decision"
The President replied that he real
lied a uniform rate at the begin
ming might cause less response in
some sections of the country. but de-
clared "the national housing act
should not foster the continuation of
high interest rates on insured mort
cages in any part of the country"
Text of Presidents Letter.
Exorbitant second mortgage rates
were cited by the President in his let
ter, the text Of which follows:
Dear Mr.. Moffett:
IT have before me your letter Of No.
vember 1. raising the question Of in
terest rates to be permitted on mort
cages to be insured under title II Of
the national housing act.
"One Of the major purposes of the
national housing act was to encourage
a greater uniformity in mortgage in
terest rates throughout the country
and especially to eliminate as far as
possible exorbitant and usurious rates
charged in many places. The mort
gage system embodied in titles II and
III Of the national housing act ought
to make for greater uniformity,
especially In insured mortgages.
II realize that your task and pro-
gram do not involve the lending of
Government funds. You are seeking,
rather, to encourage the investment of
private capital in the home mortgage
field.
II am aware that a uniform rate
may IN the beginning cause less re-
sponse to your program on the part
of lenders and investors In some Sec
tions Of the country than in others.
Nevertheless. the national housing
act should not foster the continuation
of high interest rates on insured mort
cages IN any part Of the country.
I'VE all know that even in those
sections where drst-mortgage money
has been available at reasonable costs
home ownership has had to struggle
under the handicap of exorbitant sec
ond-mortgage interest rates.
Cites High Interest Rates.
almost everybody knows of prac-
tices, far too widespread, where lenders
have demanded and received per
cent, 10 per cent and IL per cent on
first mortgages and much higher rates
on second mortgages.
These methods and practices in the
field of home financing have been the
opposite Of comendable.
Your special task in putting title
II into operation is to call the atten-
ton of lenders and borrowers in the
home mortgage field first to the Gov
ernment's policy of keeping home
mortgage interest rates as low as pos
sible and, secondly, to the excellence
and security Of this type of invest
ment.
"I am firm In the conviction that
every practical attempt at lowering the
cost Of homes to the great mass Of
our people is worthy of our best
efforts. It Is time to make these lower
interest rates apply to every part Of
the country.
II think, therefore, that you should
announce the program for the whole
country on the basis Of a basic maxi |
AAANAAA VA " PSA SCilt ulUCl Gov.
The housing administrator letter |
to the President had revealed that the
difference Of opinion between himself |
and the Chief Executive over interest .
rates came at the Executive Council |
meeting Tuesday. This prompted |
Moffett's letter, dated October 81. in |
which he said that "in view of your |
comment Of yesterday, submit this |
matter for your decision"
Insuring Of Mortgages. !
Title 2 Of the act provides for in
suring mortgages on new homes for |
one to four families throughout the
country. Title 3 authorizes setting |
up Of mortgage companies with cap !
ital stock of $1,000, 900 upward to buy
such mortgages and issue mortgage
certificates against them to be sold to
the public.
Mortgages are required to make
the mortgage at maturity.
The act requires that all buildings |
on which mortgages are insured must
be located in or near cities and that
no mortgage shall be accepted for in
surance unless the administrator finds
that the project is economically |
sound.
The Housing Administration, pre-
pairing to receive insurance applica-
tions for mortgages, announced today
that they may be filed in 50 ofdces
throughout the country. including |
Washington. Baltimore and Richmond
IN this section.