Evening star., 1936-10-10
PROPERTY TY0WNERS
GIVEN YARDST|CK|
Mortgage Banker Official
Tells Ohio Realtors
of Plan.
epeeisl Dispetch to The Star.

epeeis' Dispatch to The Star.
TOLEDO, Ohio, october 10.-A
yardstick for the Nations prospective
home builders and property owners to
use in determining whether to make a
loan through the Federal Housing Ad-
ministration or through a private
mortgage banker was set up here this
week by George H. Patterson, secre-
ry-treasurer of the Mortgage Bank
ers' Association of America, in an
address before members of the Ohio
Real Estate Association, at their 9th
annual convention at the Hotel Secor.
1.-TWO years operation of the F.
II. A" he declared, clearly indicates
that the rule-of thumb to follow in
making real estate loans in that
property owners or home builders
wishing to make mortgage based
upon IS per cent, or less, of the ap-
praised value of the property should
do so through private mortgage deal
ers because they can do SO consid-
erably cheaper and secure many other
advantages. For loans of more than
IS per cent of the appraised value go
to the Federal Housing Administra-
tion." he said, because such loans are
considered speculative by private
banking and the borrower must expect
to pay high service charges and more
than per cent interest" In fact. he
added, loans based on greater than IS
per cent valuations must almost Of
necessity be made through F. H. A.,
because the past experience of pri-
vate lenders has shown that, gener-
ally speaking, they are unfair for the
lender and borrower as well.
Mortgage Money Ample.
There is ample mortgage money
available everywhere in the country
today" Patterson declared, 80 that
any property owner or prospective
home builder who is employed need
have no difficulty in securing a loan.
Two avenues are open to him: The
Federal Housing Administration in
sured mortgage plan and the stand
ard mortgage lending plan offered by
most reliable lending institutions. The
=. H. A. plan is intended for those
who want large loans. The risk is
greater and the cost to the borrower
is more. A monthly premium is re-
quired and the borrower must pay
every month portion of his princi-
pal, interest, insurance premiums,
servicing charges, fire and windstorm
insurance and collection expense.
The interest rate is around 6.38 per
cent and not per cent as advertised
widely by F. H. A. Some even con-
tend the rate is over per cent. So
for risky loans, F. H. A. is best. and
1t is best. too, for thGse borrowers who
otherwise would be forced to make a
first and second mortgage.
Standard Plan Offered.
"The standard mortgage lending
plan is offered by many mortgage
banking institutions, insurance COM
panies, banks and building and loan
associations, and in most instances it
is considerably less costly than F. H. A.
insured mortgages. Interest rates vary
with the section of the country. but it
Is most likely that you can borrow at
from Az per cent to per cent easily,
charges or mortgage insurance pre-
miums. In addition, this plan carries
no burdensome. restrictions such as
' attached to F. H. A. mortgages. For
example, F. H. A. makes a borrower
pay a 2 per cent penalty if he is as
much as is days late in making a
monthly payment, and charges him a
] per cent penalty if he pays off his
loan before maturity. If he gets be-
hind in his payments for 30 days he
can be foreclosed and foreclosure is
mandatory after defaults of one year.
There are literally thousands of peo-
pie who can recall even in the gloomy
days of 1880. 1881 and 1882 that
private holders of their mortgages
waited far beyond year before fore
elosure.
Despite the many complex prob
lens affecting the mortgage banking
business today, it is obvious to every
one in the business that conditions are
improving rapidly. New construction
was almost the last of the major lines
to feel the upswing, but it is going
ahead now as never before in the past
decade. 1t will take the equivalent of
two or three years of abnormal con-
struction to make up for the deficien-
cies created by the lack of building
during the depression years, even
though new building continues to forge
ahead at the present rate. Home build
ing today is now at 51a-year peak, so
! think that any one engaged in real
estate financing or construction may
well afford to look optimistically to-
ward the coming 10 years"