The Waterbury Democrat., 1937-12-13

This was a most important in- xovation and looked like Q real break for the hofnebuilder.
 But apparently 1t was too much. of an innovation for Moffett and Mcdonald, for they went back to their ofilces and promptly hoisted the rate so that 1t amounts now in the long run to about 2 per cent.
 This they did through the subtle wizardry of adding 4 of
 l per cent as service charge by the banlss,N then another 4 of
 per cent as an insurance charge by the FILA.
 These charges do not decrease aS the loan is paid oil. Thus if g t,ome-owner has borrowed $5,000 and at the end of twenty years has paid off all but $500, he still pays service charges and insurance not on the $500, but on the $5,. GOO. This is the same scheme practiced by ir1stallment finance companies and brings the actual interest rate up.
 Expensive Fund
 When Jimmy Moffett appeared before the Senate Banking and Currency Committee in 1885, there was some objection to such prac- tice. He explained, however, that the FILA service charge Is paid into the Mutual Mortgage Instir- ance Funds" from which the home-owaer would receive divi- dends.
 Any benefits accrue to the home owner," Moffett told the committee, whether we charge him ,a of one per cent or one per cent. On a twenty year mort gage 1t ought to pay out in about i7 years, and the accrual in the insurance fund would apply to the reduction of the principal"
 After McDonald succeeded Moi. felt, he informed the President that FILA was doing SO well that 1t would contribute $5,000,000 to- ward It's administrative budget previously voted by Congress, thus help the President balance his budget. But this $6,00O, ,000 was to be take out of the Mutual Mort. gage Insurance Fund, which MT. Moffett previously said was to accrue to the beneiit of the hone- owner. i5
 Housing officials claim that
 premium receipts have been
 coming in % beautifully that
 they can still dip into the mu-
 tual mortgage fund for admin-
 istrative expenses and at the
 same time carry out Moffetts
 promise of paying of In ID
 rather than 90 years.
 This, however, remains to be seen and if FILA continues to be as topheavy' as at present, 1t will take a lot of dipping into the mutual mortgage fund to keep it going. b
 Fancy Payroll
 Among those OH the FILA pay- roll is Wesley Zane, former Standard OH man, left as a pen- sioner by Standard oil Executive Jimmy Moffett. Zane draws SS,000 as auditor, spends much of his time at races, and being an ardent Republican, lost bet that Roose- welt would lose Congress ill the 1936 election.
 Another drawing an upper bracket salary is Charles c. Mc- Gehee, of Atlanta, ilicknained the Coca Cola Kid.p McGehee got his job through Jimmy Roosevelt, who when asked by Mcdonald what the young man could do, jokingly replied:
 T don't know, but he's an
 awfulIy good dancer"
 McGehee soon is slated to move into Ned McLean's one-time pala. tial mansion, famous for its at- inosphere of spending, to adrninis- ter Title 1 of the new FILA act.
 Title 1 provides for fioderniza- ton and repair loans, and has been the source of more graft than any other part of FILA. This part of the old act was drafted by Roger Stefan, vice president of the National City Bank of New York. and considered the greatest expert on character loans in the country.
 National City Bank
 It is unfortunate that most of the. graft regarding moderniza- ton loans later was uncovered in