Evening star., 1935-06-07

cities, serving hundreds Of thousands
Of investors and home owners. Many
more charters are pending, particular
ly for former State-chartered asso-
Citations converting to Federal asso-
Citations
The legislation which for the first
time made charters granted by the
Federal Government available to
mutual savings and loan associations
marked an important epoch IN the
history Of home ownership and the
announcement Of thrift In our coun-
try. Under the law, the accounts In
these associations have to be insured
in the Federal insurance fund which
the Government has provided. They
also have to be members of the Home
Loans Bank System so that they may
easily and quickly secure ample cash
when they may want 1t. Membership
in the bank system also places them
in a position to borrow from the bank
system to loan again on good mort
cages when there Is need for the
money. To help and encourage the
development of these associations, the
Government has provided q large
fund which for the present allows our
board to take shares In these ass0cia-
tions on exactly the same basis as the
smallest shareholder. We can when
conditions warrant take q larger pro-
portion Of shares than the locaf share
holders. In q word. through these as
sociations the Government Is enter
ing into partnership with honest
savers in providing money for home
financing and safety for investments
in such associations. As q result Of
the amendments to our act just passed,
we can also take shares or make de-
poSits In State-chartered building and
loan associations or savings banks If
they are members Of the bank system
or insured. We are prepared to treat
all these institutions alike provided
Quoted.
Savings and Loan Corporation.
We now come to the fourth and
final institution administered by the
Federal Home Loan Bank Board. In
some ways it Is the most important
of them all for the future. That Is
the Federal Savings and Loan In
surance Corp, created in June, 1884,
under which the savings Of every
person held in any Federal savings
and loan association, or in an insured
State e-chartered association, are pro-
tected against loss up to 5000, In
somewhat the same way that bank
deposits are insured by the Federal
Deposit Insurance Corp. There are
already 800 insured associations, and
more than a million small investors
will soon have the safety Of their
savings insured In this way.
! Such insurance for thrift associa-
tions f1lls q long-felt need. 1t should
permit thousands OF local institutions
throughout the United States to
attract q large volume Of private
savings at reasonable dividend rates
BY doing so they can make loans to
home owners on more liberal term.
because their investors know that the
safety of their money is properly
provided for. Never before has any
such mutual protective measure beer
| developed on a Nationwide scale. In
any country, for the encouragement
of thrift and home finance through
institutions Of this type.
Your Government in your interest
has furnished the 100000 900 insur-
ance fund which is available te
safeguard your savings in the institu.
tion to which you have entrusted
them or in which you may now place
them. Government has done its part
1t is now up to you and to the oficiali
OF the associations in which you holt
or contemplate taking shares to se.
cure the advantages Of the powerful
protection Of the Federal Savings and
Loan Insurance Corporation.
Task Largely Completed.
Now we can begin to see how these
four separate agencies fit together
into a definite plan for the benefit oi
| the home owner and to provide secur.
ity for great numbers Of people whose
savings depend upon the safety Of
home mortgage loans. The urgent
task two years ago was to solve
the emergency OF widespread home
mortgage distress and restore homt
finance to strength. This has nov
been largely completed through ths
Home Owners Loan Corporation
which, by saving q million or more
homes from foreclosure, has removed
a grave threat to our social AND
economic structure.
When I spoke last year on thu
National Radio Forum hour I men
toned that q vital change was takini
place in the whole practice of Ameri.
can home mortgage lending, through
the agencies operating under thl
Federal Home Loan Bank Board.
would like to emphasize what tha
change Is and how 1t benefits not onl!
the home owners. but investors II
home mortgage loans and the public
as a whole.
What is happening is that the ole
style home mortgage, which was mad,
out for 4 short term Of from one Il
five years. and then falls due In full
at maturity, Is being rapidly replaced
by an entirely different type Of mort.
gage, which has had . better recort
in the test OF depression. 1t Is known
as the long g-term amortized loan. II
IS safer for the lender and very much
more convenient for the borrower who
wants to own his home free and cleal
of debt. On an amortized loan ths
! borrower never has to pay of . heavy
principal sum at any time. Instead
his mortgage loan extends over q
period of from to Is or even 2C
years. 1t Is paid of gradually ir
regular small installments, month By
month, from the very time the loar
is contracted. Ordinarily, q monthly
payment of only about $40 is sum-
cient to pay both the interest and
the entire principal Of $1,000 loan
in 10 to IS years, depending upon the
interest rate.
Cause Of Distr ess.
More than two-thirds Of all the
tC1 mn O0n nm ~ Apnerfcan hov,o