, 1935-03-24
REFINANCINC
IS OFFERED

In order to assist 100000 urban
home owners throughout the United
States who are not in financial diff
Guilty, but whose short-term mort
cages fall due this year, John II.
Fahey, chairman Of the Federal
Home Loan Bank Board, stresses
the desirability Of refinancing these
obligations as long-term amortiz-
ed loans. He points out that ample
long-term funds r now available
through private lending agencies,
particularly the $3.50 member inSti-
buttons Of the Federal Home Loan
Bank System, with its present re-
serves OF nearly $3.50, 0 1000 az the
disposal Of members for loans 70
home owners Fahey's statement fol-
lows:
Nearly z billion dollars In short
term mortgages. representing some
5OO,o 600 city homes. mature in 1885.
Many borrowers under present con-
ditions find 1t difficult TO make the
large lump-sum payments required
on the loans. Such a home owner
will readily see the advantage OF
refinancing the troublesome loan
now falling due by means OF q new
long-term mortgage which he can
pay off over a term Of from Z TO Is
years in small monthly installments,
each combining a partial payment
on principal with interest on the
unpaid balance.
Lending institutions In certain
parts of the country are now offer
ing long-term loans at even lower
interest rates than r carried by
the lump-sum mortgages now fall
ing due. This partly reflects the am
pie credit reserves available at low
rates to member institutions OF the
Federal Home Loan Bank System.
ITO illustrate the advantage Of
refinancing q maturing mortgage
through a new amortized loan, sup
Dos that a home owner has a $4,000
mortgage at 6 per cent interest CON-
ing due next month, which he Is un-
able TO pay off in full and will have
difficulty in renewing through the
present lender. BY refinanclng the
$500 loan as q 12-year amortized
loan, through a local building and
loan association or other member
Of the Federal Home Loan Bank
System, the present $1,000 obllga-
ton Is paid off in full. The new
loan which replaces 1t will require
a monthly payment Of principal
and interest Of only $50. In IL years,
the entire $1,000 loan viii have been
repaid without Q single payment OF
more than $50.
The $3.50 member home-financ-
ing institutions Of the Federal Home
Loan Bank System. mainly build
ing and loan and Federal Savings
and Loan Associations, specialize
in making long-term amortized home
loans to people Of sound credit
standing. Many of these institutions
are now actively seeking TO make
loans Of this type. They have album
dant funds On hand. through the
investments OF their own share
holders and the Hole bonds which
they have recently received in ex-
change for distressed mortgages.
Over a billion dollars in Hole
bonds have been disbursed in the
past is months to building and loan
associations and savings banks
which are members Of the Bank
System, or are eligible for member
ship.
Member institutions also have &C
cess to nearly $780, 00. 900 Of fur
Their credit through their regional
Home Loan Banks. permitting them
to borrow from the Banks at low
interest rates 10 make loans to home
owners in refinancing maturing
mortgages or for other purposes.
Members Of the System r located
in practically every city In the Unit