Evening star., 1935-02-09
NORMAL CREDIT
DEMAND PLANNED
Building and Loan League
Will Discuss Issue at
Session Here.

The Executive Committee Of the
United States Building and Loan
League will meet here February 25 to
determine why families and whole
sale home builders are not using the
available credit for new home con-
struction and to recommend a prac-
tical program to bring about a nor
NAL demand. They represent insti-
tutionS with hundreds of millions of
dollars to lend on homes with rela-
lively few legitimate calls for the
money.
The committee is made up Of ex-
perienced residential financierS in the
business from 10 to 40 years who rep
resent every State and the District.
I. Friedlander, Houston, Tex, presi-
dent of the league, and chairman of
the advisory council to the Federal
Home Loan Bank Board, will preside
He announces that one of the COM
mittee'S main discussions will center
upon the current public psychology
against going into debt which is be-
lieved to be partially responsible for
the laggard demand for home con-
struction.
Half Billion on Hand.
Building and loan associations are
In position and are anxious to make
credit available for half billion dol
lars worth of construction, with all
that this activity would imply toward
unemployment" Mr.. Friedlander
pointed out. I'VE are willing to CO.
operate in any program to induce the
people who normally use this credit
to avail themselves oft at this time.
"One of the first steps which can
be taken to bring the mortgage market
back to normal, will be the Servicing
by private capital of between $780,
100000 and S2,000,0O0,000 of floating
mortgage debt, largely in the form of
applications to the Home Owners
Loan Corp. The rearrangement OF this
debt by building and loan associations
and other institutions in the home
mortgage business can be Speeded up
by close cooperation between the Fed
eral Housing Administration and the
Home Owners Loan Corp. Let the
F. H A. examine the applications now
on file with the corporation, separate
them into two groups and turn back
to the II. o. L. G. those which are
really in distress. Let them insure
under Title II of the Housing Act
the others which are not distress
loans. The reflnancing of this dis
turbing mortgage debt problem can
then be speedily accomplished by the
private capital institutions fitted to
do the job.
"The latter can rewrite their notes
on the F. H. A. plan, and will be
willing to do this once the F. H. A. has
qualified these borrowers for insur-
ance. Such institutions as are unable
to carry their mortgages turned back
by the H. o. L. c., and approved for
insurance by the F. H. A. may either
secure funds from the Federal Home
Loan Bank System for that purpose
or may transfer their loans to other
institutions in a position to refinance
them.
People Afraid to Borrow.
"It is no longer possible to look
at the laggard home construction in
dustry without realizing that the mat
ter of stimulating a demand Is tied
I'D with the public feeling about get
ting into debt. Where people would
borrow for anything and everything in
1928 and '29 they will scarcely borrow
for anything in 1885. So long as
large group of home owners not in
the distress class are seeking ref1nanc-
ing and thus indicating disSatistac-
ton due to home borrowing, not many
prospective builders of homes will bor-
row for construction purposes. Even
If the bonding power OF the II. y.
L. C. is increased there is still a sub
stantial amount of Short-term mort
gage Indebtedness not in distress put
retarding the mortgage market until
satisfactory ref1nancing is arranged.
It is here that private capital can and
must arrange to show its hand. We
will then have taken major step
toward eliminating the public feel
ing about not going into legitimate
borrowing transactions. and there will
be a consequent larger demand for
new construction loans"
The committee arranging to discuss
these problems includes, besides the
national executive committeeman from
each State, the past presidents of the
league, chairmen of its five divisions,
advertising and business development,
accounting appraising, attorneys and
supervisors; the president of the edu-
cational organization, the American
Savings, Building and Loan Institute,
and officers and directors Of the
league.