Evening star., 1936-04-04
MORTGAGE BANK
. NEED IS STRESSED
Head of Real Estate Boards
Association Urges Gen.
trail Agency.

The best meLQOQ OF dSSuIulS o1oeAS
progress of real estate and OF the real
estate mortgage market in the new
investment period ahead and through
the future is through central mort
gage bank, owned by its users, but
under proper governmental supervl-
sion. Walter w. Rose, Orlando, Fla,
president of the National Association
OF Real Estate Boards, emphasized, ad-
dressing realtors of five States, Wash
ington, Oregon, Idaho, Montana and
Wyoming, at the closing banquet OF the
Northwest Regional Convention OF
Realtors just closed at Seattle, Wash.
The national association, Rose
states, will continue to press for set
ting up such an institution. Mean
time, Edward A. MacDougall, New
York, chairman of the associations
Committee on Real Estate Finance,
points out that it is of Importance In
setting up sound conditions and con-
troll for the whole national real estate
mortgage investment structure to
establish an agency which would safe
guard lenders and borrowers alike
against a condition such as has been
experienced recently, when savings
held by lending institutions had all to
be made liquid at once. That meant
mortgage money supply for the whole
body of the country's real wealth be-
came for the time unavailable.
Destroying both capital earnings
and real estate values by this tempo
rary suspension of mortgage how is
held totally unnecessary.
For the people whose savings are
In insurance companies and savings
banks and the like, as we'll as those
whose savings are in real estate or In
mortgages, 1t becomes important that
we stabilize mortgage money flow"
MacDougall states.
MacDougall warns that in all the
necessary and valuable technical dis
cussion now going on regarding ad-
ministrative details of the proposed
mortgage discount bank owned by its
users, as it would be created by the
Fletcher bill now before Congress, 1t
Is important not to lose sight Of the
central purpose. That is to give the
people of the country in their largest
groups of normal investment a means
of assuring themselves that normal
sound mortgages can be realized upon
at all times under due and proper dis
count practice.
Reservoir of Credit.
MacDougall states:
THE mortgage structure as a whole
needs to be supported just as the
banking structure as a whole needs
to be supported by the Federal Re-
serve System in its entirety. The
central mortgage bank idea which
has been urged by the National Asso-
citation Of Real Estate Boards for five
years will take care of this need. It
will afford a reservoir of credit in
times of business depression and crisis.
But it will do far more than this-it
will act as a medium for the transfer
Of funds from parts Of the country
where money is available to sections
where 1t is needed. Thus it will bring
about an equalization of interest rates.
TT is natural that extremely
cautious examination Of the whole
measure should be made, as it is being
made by lending institutions which
fear lowering of their interest rates.
It Is significant that actual opposition
to the bill so far developed has been
almost without exception from such
lending institutions as are already
given at least measure of reserve
system through legislation already
enacted. 1t can hardly be said that
criticisms so far brought forth have
been centered at all on the broad
purpose or principle Of the proposed
agency.
Indeed, sudden dislocation of in
terest rates and certainly any dis
location Of existing private lending
agencies would be highly undesirable.
The measure will bring about an
p equalization of rates and a stabiliza-
ton of private lending such as will
most quickly enable the retirement of
the Government from any direct real
, estate mortgage lending and make
unnecessary its later re-entrance.
Further-and this may certainly be
hoped-it may and we believe it will
in the long run bring reduction Of
Interest rates"
Best proof of the need for the bill,
MacDougall says, are:
i /. Establishment of the Federal
Hone loan banks as a reserve system
for such loaning agency as are its
members. AS this system was set up
1t serves, unfortunately, only a very
small part Of even the home mortgage
investment field.
2. Recent agreement Of the Housing
Administration with the r. F. c. to
buy insured mortgages. This indica-
ton of the need which F. H. A. feels
tor such a marketing agency.
3. Recent amendment to the Federal
reserve act which, for the first time
opened mortgages In such banks to dis
count.