Evening star., 1934-11-15
new DEAL WISE
|NMORTGAGE HALT
Home Financing's Return to
Local Agencies Lauded
by Writer.
BY DAVID LAWRENCE.

Deal has given since its inception Is
to be found in an examination of the
reasons why no new applications for
the .refinancing of home mortgages
are hereafter to be approved.
The Government has performed its
emergency function as lender and
now retires from that capacity to as
sumo the role of insurer and helper of
private institutions organized for the
purpose Of handling the mortgages of
America.
Two classes Of people asked for
new mortgages from the Home Own
ers' Loan Corp.-those who were able
to pay interest and principal, but
wanted the benefit of the lower rate
Of interest given by the Governments
plan, and those who were in distress.
Many Wanted to Get Cash.
As a result of the Governments
aid, many thousands of people mere
ly wished to unload the mortgage on
their properties from a private lend
ing institution to the Government In
some instances, the lenders wanted to
get cash and make their positions
more liquid. 81
But the Home Owners' Loan Corp.
was organized to aid those in distress.
1t has taken care of about one-fifth
of the Nations small mortgages. This
was always regarded as the margin in
trouble.
The people who have applications
pending will have their requests
acted upon in due course. There Is
no disposition to shut them of. As
matter of fact, the law requires that
aid be given only to those whose
mortgages were in default prior to
June, 1893, anyway, SO everybody
who has had difficulty has probably
by this time brought his problem to
the attention of the Federal Gov
ernment's representatives or branches
throughout the country.
Permanent Lending Opposed.
The question has arisen as to
whether the law should be amended
to grant additional funds and to keep
on refinancing home mortgages, thus
setting up a permanent Government
lending system. It is this which
Chairman Fahey opposes. He be-
heves the field for private capital in
financing mortgages is one that should
not be invaded, except in emergency.
President Roosevelt has given assur-
ances to that effect, too.
The Governments plan for amor
tizing mortgages in IS years has given
longer time in which to discharge
obligations. Private banking institu-
tions now will find their customers
asking for longer terms in which to
pay of mortgages, and, in cases
where the customer has the capacity
to make monthly payments and can
pledge himself or herself to do so,
probably new loans will be arranged.
Experience to BE Valuable.
Unquestionably, the Governments
experience In handling small mort
cages will be valuable to the various
agencies throughout the country which
customarily lend money on mortgages.
Also, many Of them now hold Home
Owners Loan Corporation bonds,
which are the equivalent of cash, and
are therefore in position to lend
more freely or at least to fefinance
other mortgages which are not now
going to have the benefit Of Govern
rnent help.
Federal officials here feel that
splendid job in warding of fore
closures has been done and that real
estate values have been kept from
complete Generalization as conse-
quence Of what has been done IN the
last few years by the Government.
Approximately $4,000 o00, 600 will have
been disbursed to the mortgage in
stitutions Of the country when the
present work Is completed. This Is
about 20 per cent of all the urban
mortgage debt outstanding. Nearly
all of this money has gone to banks
and building and loan associations.
Hence, many Of them are now able to
resume normal lending.
Money Largely Credit.
'The money of this country" said
Chairman Fahey recently, sis largely
credit money. When credit is not ex-
tended freely the circulation of our
money is contracted, buying power is
limited and unemployment becomes
general. The wise and reasonable
use Of credit is essential to prosperity.
1t Is as necessary in mortgage finance
as it is in commercial banking. = .
THE sooner business men dis
courage further demands on their
Government for aid and rely upon
themselves the better it will be for
the country and for the future of
mortgage lending"
Mr.. Fahey is business man him.
self and was one of the founders of
the Chamber of Commerce of the
United States. He is q Democrat and
has been made a member of the Ma
tional Emergency Council by Presi-
dent Roosevelt.
Influence viii Be Long Felt.
ernment will for a long time have an
influence on the general mortgage
situation because there are other Fed
eral agencies besides the Home Owners
Loan Corp, which have a direct re-
lationship to the mortgage problem.
Thus, under the housing law, in
surance of individual mortgages up to
30 per cent of the appraised value Of
1lUlLcS ID given 10 NEUTRALITY-SUSPICIOUS.
institutions which apply for it and
pay premium. Then there's the Fed
eral Savings & Loan Insurance Corp,
which insures the shareholders of
building and loan associations up to
$4,000. Also there's the Federal Home
Loan Banking System itself, set UP
under the Hoover administration,
which acts as rediscounting agency
for mortgage associations of various
kinds.
Cooperation With Banks.
On top Of all this is the plan Of CO.
operation between the Housing Admin
istration and banks to help home
owners to modernize and repair. All
Of these facilities are based upon the
accepted practice of lending on mort
cages in the past, but with the Govern
ment in the background as an instru-
ment of insurance to encourage new
construction and to stabilize the whole