Evening star., 1935-03-16
FIJI. A. L|bERAL|zES
LOAN INSURANCE
Changes Expected to Aid
Both Home Owners
and Lenders.

Liberalization of rules and regula-
tons governing the mutual mortgage
insurance plan of the national housing
act making it more attractive both to
financial institutions and to potential
home owners, was announced today by
Federal Housing Administrator James
A. Moffett.
The outgrowth of advice and sug
gestions of mortgage experts and
accredited lending institutions. the
changes are expected to lubricate the
machinery of the long-term provisions
of the national housing act and to
bring increased benefit to both bor-
roWerS and lenders under the mutual
mortgage insurance program.
Under the revised regulations mort
gage companies with capital of S250,0OO
or more and trustees acting in a
fiduciary capacity are eligible as
mortgages with authority to obtain
insured home mortgages. Each COM
pany and trustee. however, has to be
approved by the administration indi-
vidually after submitting proof of its
ability to service mortgages Satisfac-
torily.
Seek to Expedite Insurance.
Under the new regulations, insur-
ance on mortgages, upon which the
Federal Housing Administration has
made a previous commitment. becomes
effective when construction is COM
pleted and the mortgage issued. A GER
tificate of completion must be signed
when the mortgage is formally
executed It was explained that this
provision avoids any delay between
execution of the mortgage and its
insurance. When the certificate Of
completion reaches the Federal Hous-
ing Administration the date on the
insurance contract is made to coincide
with the date on the certificate.
Several changes were made also In
the mortgage and note forms. Pro-
visions relating to the administrations
requirements are standard in both
mortgage and note forms for the
country as a whole. Other provisions
vary to a certain degree to conform
to the laws of practices in the indi-
vidual States and Territories, there
peing a standard form for each.
The chief changes are as follows:
/. If the premises covered by the
mortgage shall be damaged by fire or
other hazard against which insurance
Is held. the amount due from the in
surance company shall be paid to the
MORTGAGE Qending institution and at
its option may be applied to the debt
or released for repairing or rebuilding
the premises. Originally, specific au-
thority was not given to the mort
gagee to turn over. at its discretion,
all or part of the insurance money to
the home owner.
Grace of Month Allowed.
2. Privilege is reserved by the home
owner to pay the debt in whole, or
in an amount equal to the monthly
payment. or in multipleS OF this pay
ment. on the first day of any month
prior to maturity. provided he gives
written notice to the lending mStitu-
ton Of an intention to exercise such
privilege at least 80 days prior to pre-
payment Heretofore, there was no
restriction as to the amount of time
of such pre-payments, the lending in
stitution having to accept any amount
at any time.
3. The same grace period Of one
month is allowed in the notes as in
the mortgages. the note not being
in default if payment is made before
the next monthly installment is due
T. Interest is placed ahead of
amortization in the ALLEGATION of the
monthly payments to the various
charges to be met, as payment of in
terest logically comes ahead of amorti-
zation of principal. The order OF
form is as follows: Premium charge,
importance in the revised mortgage
service charge, taxes, interest, amorti-
cation of principal.