Evening star., 1936-05-16
SMALL SOCIETIES
|. FINANCING HOMES
Insured Mortgage Field Is
Made Attractive to Groups
Funds.

For the first time small insurance
companies, benevolent societies ana
fraternal organizations, taking advan-
tase Of the Standardization OF the
nome mortgage as an investment, are
directing their funds into the mort
gage market.
This field has for years been domi-
mated by the larger companies win
ADEQUATE field forces for the close con-
tact it formrly was necessary to make
with properties that stand as security
and with the entire mortgage trans
action. Now that the Federal Housing
Administration has standardized the
home mortgage as an investment In
strument, the door has been opened to
the smaller groups with funds to In
vest in mortgages. The insured home
mortgage obviates the necessity Tor
close inspection and investigation OF
the particular transaction. Thus by
the very process of making that mort
gage standard instrument, the Fed
eral Housing Administration has sue
ceeded in diverting tremendous VOL
ume of new funds into the mortgage
market.
Transferable Instrument.
There is at the present time great
deal of traffic in insured home mort
cages and there is reason to believe
that the extensive marketing and
transfer of insured mortgages that
will take place in the future Is just
being noted. The insured mortgage Is
a transferable instrument and the
small investing groups, such as the be-
nevolent societies and fraternal orders
are finding it ideally suited to Their
investment needs,
This was not always the case here
tofore. Before passage of the ma.
tional housing act, an institution with
funds to invest in the mortgage mar.
ket could make only those invest.
: ments within its trading territory OF
those so located that it could examine
the property that stood as security, in
spect it at intervals and, in othel
words, keep an eye on it. Mortgage.
were not investments of uniform ane
standardized quality. Thus only th'
large insurance companies with felt
. stafis experienced in appraising th'
quality of such investments coult
make other than local mortgage in
vestments.
Risk Rating System.
The insured mortgage, however is {
standardized investment. The Fed
eral insurance itself is the Govern
ment's guarantee of quality. The prop
erty on which the mortgage is made /
subjected to the most careful ant
searching analysis and the degree o
risk involved is definitely established
by careful risk rating system.
The insured mortgage is, then, sal
able in any part of the country ant
the continual transfer of these mort
cages from one institution to anothe
keeps an adequate flow of mortgag
funds from areas where they ar
abundant to areas where they ar
: scarce.
There are a great many kindred
advantages to this healthy and desir
able condition, not the least Of which
is a growing tendency toward uniform
interest rates on mortgages. Unde
the old system 1t was not uncommon
to ind mortgage money exorbitantl,
expensive in some parts of the coun
try and very cheap in others. This
Of course, resulted from our inabilit,
to take funds from areas where the,
were abundant to areas where the,
were scarce. But we have even solve,
this problem now.