Evening star., 1936-07-04
1,11S i. S. SAVINGS
UNITS NOW ACTIVE.
Three-Ye Period Finds In.
stitutions Operating in
a. States.

Just three years to the day after
they were first authorized by Congress
as a model type of the familiar build
ing and loan association, LIS Federal
savings and loan associations were
in operation in A States on June 13.
They were designed to afford in
creased protection to the public's saw
ings and to lower the cost of home
loans by augmenting the volume of
funds available for home financing
In districts where local funds were
inadequate. Existing building and
loan units were authorized to apply
for conversion into Federal savings
and loan associations if they chose
to do so.
OF the present 1,1l8 Federal asso-
Citations, 631 were organized since June
1888, and 487 represent old-established
State-chartered associations that have
adopted Federal charter Many of
the latter are the leading home
financing institutions in their COM
munities. Indicating their Importance,
the total resources of these aSsocia-
tions, both new and converted, amount
to $618, 16l,7 ,783. Their shareholders
number over 100000 persons.
More Counties Served.
In June, 1888, only 1913 of the
3,072 counties in the United States
we're served by local home-lending
institutions. Today, through the en-
couragement offered to citizens to
form Federal associations, more than
$500 counties are served by local
mortgage institutions. The remaining
counties are chiefly in the sparsely
settled regions.
The chief incentives to federaliza-
ton have been the value of the Fed
eral charter in regaining public conf
dence, the advantages of Federal
supervision, the uniformity of policies
and practices, and the various safe
guards provided for both investors
and borrowers. All Federal aSSocia-
tions. of course. remain privately
managed mutual groups.
Lending on reasonable terms by
Federal associations has been a strong
factor in the resumption of home
finance by private financing institu-
tionS and in the present Nationwide
revival of residential building. On
May 81, 1886, l,006 reporting Federal
associations held total of s404,721
Sl1 in outstanding mortgage loans.
~f
loans by Federal associations were
distributed as follows; For new home
construction, 20 per cent; for re-
conditioning, 66 per cent; for pur-
chase of homes, 222 per cent; for
retinancing maturing mortgages, 80
per cent, and for other mortgages,
90 per cent.
Benefits to Communities Cited.
Benefits to their communities cited
for Federal associations fall into two
classes:
ID for the investor-They offer
types of investment suited to
people of both small and large means.
Additional safeguards, including in
surance of investments up to $4,000
4OI tdCu dCCOutlI through tIle FeQeTdl
Savings and Loan Insurance Corp,
which is compulsory for Federal asso-
Citations. Attractive dividends.
~ For the borrower-Safer long
term loans Cup to 20 years. at
moderate and definite interest rates,
and minimum of incidental costs.
Use by almost all Federal associations
of the direct reduction" loan, by
which each monthly payment is
credited to principal and interest,
constantly reducing the balance due;
economical and convenient for the |
borrower, permitting him to pay off |
his debt by definite monthly payments |
In a definite period of time.
The numerous safeguards surround
1ngs their operation are attracting |
a new flow of money to these local
associations, expanding their capacity |
for loans in their areas. Federal as
sociations, as well as other qualified |
institutions of this type, have received |
investments of Government funds to |
expand their lending resources where |
needed. All Federal associations are
members of the Federal Home Loan
Bank System, the reserve credit struc-
ture for thrift and home financing
institutions.