Evening star., 1937-04-10
HOME BORROWERS
BENEFITS VARIED
Preliminary Guidance and
Other Features Explained
by F. H. A. Official.

Direct benefits derived by borrowers
under the terms of the Federal Hous-
G1s Administration insurance of mort
cages were outlined today by Frederick
M. Babcock, chief of the underwriting
section.
General preliminary guidance in
home planning, protection against
inferior materials and methods Of
construction were discussed by Mr..
Babcock, who also explained the bene-
t,ts derived from the Federal Housing
Administrations system of location
rating borrower rating, compliance
inspections, Government insurance
and the general financial set-up on
an insured mortgage.
Mr.. Babcock said: "In most every
Instance safeguards required by the
Federal Housing Administration as
protection for the mutual mortgage
Insurance fund automatically act as
a protection to the borrower himself.
These elements in proposed resi-
Dental project which may be ac-
ceptable for mutual mortgage in
surance are also elements that assure
sound construction, Inability and COM
tort to the borrower as well.
Helpful Literature Available.
AT the outset" he said, when a
person is contemplating the purchase
or construction of a home, preliminary
guidance and helpful literature are
available from the Federal Housing
Administration. In addition, when
he plans for proposed home which
is to be the mortgage collateral Sc
ourity are presented to the admin
istration for examination to determine
The quality of the security offered,
they must conform to definite prop
erty standards set up by the Federal
Housing Administration and the speci-
ficationS must meet the administra-
TONS construction requirements before
Government insurance will be allowed
on the mortgage that is to finance
the project. Another specific field of
activity, under the insured mortgage
system, which provides safeguards for
home buyers is the examination Of
methods of construction and building
techniques utilized, this examination
being made on several occasions while
the building Is being erected. Such
properties must also comply with other
requirements in the rating Of the
location, the borrower and other fea-
lures
Many Features Embodied.
The financing method under the in
sured mortgage system embodies many
features wherein the borrower benefits
TO great degree.
The long-term, fully amortized sys-
tenn Of payment is of great convenience
and protection to borrowers. Under
traditional practice, first mortgages
we're for short periods and rarely ex-
ceeded go per cent of the appraised
value. This often required expensive
refinancing and costly second mort
cages. Under the insured mortgage
system mortgages are made for 30
per cent Of appraised value and are
paid of in equal monthly installments
over periods that may be as long as
20 years unde- certain circumstances.
Each payment includes part of the
principal, interest, current taxes and
fire and other hazard insurance, as
well as service charge, if any, and
mortgage insurance premium. This
budget method of financing, in INSTALL
ments similar to rent, with no re-
financing costs, makes home owner
ship possible to thousands of indi-
viduals who, heretofore, were unable
TO afford home ownership because of
the requirements Of outmoded, expen-
sive first and second mortgage
financing Of the past.