Evening star., 1937-06-12
BORROWER GUIDES
MORTGAGE LOANS
Each a Case Calling for
Separate Appraisal, Of
fiCiaI Saws.

Value OF the house and lot Is the
second consideration in mortgage
lending instead OF the nrst, as pres
ent-day lending policies in some quar-
ters tend to imply. The borrower
himself is the backbone of the trans
action. and each is a case calling for
separate appraisal as home-owner
timber.
This suggestion from Morton Bod
hsh. executive vice president of the
United States Building and Loan
League, In his latest bulletin to men,
Der thrift and home financing insti-
tutions, throws light on the way the
old-timers in the home-lending busi-
ness look at today's trends. Bodf1sh
represents an organization which has
many men in its ranks as much as rs
and 80 years seasoned in savings,
building and loan activity. as we'll as
many who have come into 1t in the
last 10 or IL or even the last years.
years
without trying for = minute to
discount the value of accurate ap-
praisals, do feel that the harping
on per cent of loan to property
value which seems to be an increas-
ingly popular criterion OF mortgage
decisions is just a repetition OF the
middle and late 20s when some
OF the most glaring rtgage-lending
mistakes were made" he said.
Banking troubles were augmented
with the increasing attention to COL
lateral and decreasing search into the
borrowers character. Home lending
agencies are susceptible to the same
error.
THE lenders only interest in the
value OF the property should be as q
safeguard In case his judgment Of
the borrower as credit risk goes
aVry through error or through eco
nomic emergency. 1t is always an
error to make the thing you fall back
on IN emergency the only yardstick
by which you measure probable out
come OF the transaction. This is a
sure way to hasten the emergency
with regard to home loan"
He said that every loan is a case to
be studied for itself and not to be
merely submitted to some arbitrary
rule such as a set percentage of loan
to value. The correct appraisal of
the value OF the property, he suggest
ed, should be sought as much to make
sure that the borrower is not going
into water over his financial head as
to safeguard the loan from the Sc
curity side Of the fence.
When the family Is in earnest about
paying for q home and can qualify
for the undertaking by its habits, and
: record OF other economic relationships
the savings and loan association which
lends its money Is making a sound in
vestment," he claimed "On the 9TH
er hand most conservative loan to a
family which cannot qualify for a
mortgage loan in the opinion OF an
experienced lender is bound to be q
gamble"
The league executive referred to the
recent conference on consumer credit
at the University OF Chicago when
emphasis was placed on the charac-
ter Of the person borrowing money,
Tor all purposes and from all sources.
as the surest way to safeguard credit
economy. He pleaded for = realiza-
ton Of this factor in all mortgage
lending activities at the present time.
The recent plans Of associations in
volving variable interest rates for Diff
ferent types Of loans give As much
weight to differences In the borrowers
character and habits as to differences
between properties submitted as loan
security. he indicated.
He said that the United States
Leagues Committee on Trends will
give its first attention TO recommended
tions on mortgage loan policies, which
recommendations will take into con-
sideration the safety from the point OF
view OF the credit and real estate price
structure OF the criteria being used In
mortgage lending today.