Evening star., 1935-06-01
ANALYzE CHANGES.
IN LOAN FACILITIES.
Several Major Restrictions
Lifted by Amendment
!. Approved Tuesday.

President Roosevelt's signature Tues
day on the bill amending the Federal
Home Loan Bank act, the national
housing act and the home owners
loan act places further stimulus be-
hind the flow of mortgage money
from normal channels and gives
promise of more practical and wider
use of various Federal agencies in the
field.
A section -by-section analysis of the
measure is presented by Morton Bod
fish, executive vice president of the
United States Building and Loan
League, who &aS one of the chief
witnesses in hearings and has fire.
uuently been in conference with the
Federal Home Loan Bank Board on
some of the new provisions.
Amendments to the Federal Home
toan Bank act follow:
Section l. Makes mortgage on four
family home eligible collateral for
advances from a Federal Home Loan
Bank to member building and
loan association, whereas family
home was largest unit eligible before.
Section . Cumulative dividend pref
erence enjoyed up to now by United
States Treasury-owned stock in the
Federal Home Loan Bank system is
eliminated. Banks will pay stock
holding building and loan associations
and the Government at the rate out
Of current earnings.
Section 3. DireCtorates of - Fed
eral Home Loan Banks will now
consist of IL members, four chosen
by the Federal Home Loan Bank
Board and the other eight by the
stockholders. Banks at present have
IL directors, two chosen by the Fed
eral board.
Advisory Unit Created.
;. Section 4. Creates a Federal Sav-
fngs and Loan Advisory Council of
18 members to confer with the Federal
board on general business conditions,
request information, make recommen-
dations on the operations of the
system or the Federal Savings and
Loan Insurance Corp. Group will be
IN somewhat same role as Federal
Advisory Council is to Federal Reserve
Board Aim is to get the practical
point of view of the actual lender of
funds into the systems plans
Section S. Rewrites the collateral
provisions of the Home Loan Bank
act, making six-year amortized mort
cages eligible for security behind bank
advances up to 65 per cent of the
balance outstanding on such mort
cages. Formerly mortgages had to be
for eight years or more before they
enjoyed this preferred status.
All obligations guaranteed by the
United States are eligible up to their
face value as collateral for Home Loan
Bank advances
; Section g. Further amends the
collateral provisions of the act by
making 20-year mortgages eligible
security where Is years was former
outside limit. In same section the
$4,000 limitation on property value
securing collateralized mortgage is
shifted to apply to the mortgage itself
thus providing for use of mortgages
tn larger amounts as collateral
Section 7. Brings non-member in
etitutions into the pale of the Federal
Home Loan Banks advances by per-
nitting the regional banks to loan up
to 80 per cent of the value of mort
cages insured under Title II of the
national housing act, to any inStitu-
ton Offering them as security, pro-
vided such institutions are subject to
inspection and supervision of some
governmental agency, and do mort
gage lending chiefly with their own
funds
Section 8. Exempts the CONSOLE
dated debentures of Federal Home
Loan Banks from taxes.
Section 9. Provides that the Federal
Home Loan Bank Board may deposit
receipts. except from sales of bonds
and debentures. in the United States
Treasury and withdraw them to pay
salaries, expenses. ETC., without being
routed through the regular congress
slonal appropriation channels
Amendments to home owners loan
act are as follows:
Section 10. Makes dwellings for not
more than four families, used in whole
or in part as home or held as home
stead. eligible for relief activities of
the H. o. L. C. The former provision
of the law simply stated that the
dwelling must be used as home or
held as a homestead.
Section IL. Stretches the maximum
bond issue to s4,750. 900, 900. New funds
to be used in filling applications
previously filed and those filed within
80 days after the act is signed by the
President.
Section II. Prohibits deduction for
taxes and assessments not due from
loanable value in H. o. L. c. refinanc-
ing transaction, if such taxes and
assessments constitute a reasonable
annual burden in the discretion of
the board.
Limitation on Employees.
Section 13. Bans any individual
connected with a corporation lending
money on real estate from being en-
ployed as an officer or employe in the
H. o. L. C. offices, and provides that
all such officers or employees must be
residents of the State served by the
af6ao in, u,I