Evening star., 1936-05-02
BUILDING TREND
BAROMETER CITED
r. H. A. Chief Holds Mort
uaue Commitments Indi-
cate Activity.

Commitments to insure home mort
cages afford the best barometers of
the Nations residential building &C
tivity, according to Federal Housing
Administrator Stewart Mcdonald, who
today announced that complete re-
ports from all over the country bear
out his recent indication that at least
three times as many dwelling units
would be constructed in the United
States during 1886 as in 1885.
Administrator Mcdonald announced
that through the week ending April Is
home mortgages accepted for insurance
numbered 63,118, with dollar volume
OF $254,365, ,064.
Commitments to insure mortgages"
McMcDonald said, have to a certain
extent taken the place sof building
permits as the indicator of actual
home building that is to come, since
the commitment is often issued before
the contractor applies for building
permit. The commitment to insure
a mortgage starts the hammers and
saws going. We cannot, of course,
insure a mortgage on building that
doesn't exist, but when our experts
have examined and approved the plans
and specifications for home. We is
sue a commitment to the lending in
stitution agreeing to insure the mort
gage on that structure.
Mortgage Is Insured.
'The lender, with that commitment
in hand, turns the cash over to the
builder, who Immediately starts his
men to work. Upon completion of the
structure, which our experts have in
spected at least three times during
the operation, the mortgage is auto
matically insured. This is the reason
for the gap between mortgages ac-
cepted for insurance and insured
premium paying mortgages. This gap
Is constantly widening. and we hope
1t will continue to widen, for it is a
very healthy sign and real barometer
to the intelligent business man as to
the prospects tor actual building in
the immediate future. The more COM
mitments we issue to insure mortgages,
the brighter the outlook for the build
ing construction and durable goods
industries. Briefly, today's commit
ment is tomorroW's premium paying
mortgage.
When it is remembered that al
most the entire business of the world
Is done on commitments and credit
1t is the solid foundation of our resi-
dental building structure today
Without the insured mortgage sys-
tenn. lending institutions would not be
so ready to make construction loans
and we would be back where we were
a little over year ago when there
was practically no mortgage money
available anywhere. in spite of the fact
that our great lending institutions
were bulging with cash"
S4,371 for Appraisal
On April 25, 94,371 mortgages with
dollar volume of $367 ,287,4 ,482 had
been selected for appraisal by the Fed
eral Housing Administration. One
third of this amount, or S117,594, ,735
represents new home construction
The remainder represents the ref
nancing of mortgages on dwellings
already constructed, and the change
from the old multiple mortgage system
to the new insured single mortgage
system Of the Federal Housing Ad-
ninistration.
The national housing act author
lies the Federal Housing Administra-
tion to insure $1,000. 900 900 of mort
cages on existing structures and ST.
o0o,0o0,000 on mortgages for new
construction. OF the total mortgages
selected for appraisal as Of April 25,
mortgag s accepted for insurance to-