Evening star., 1938-02-19
LENDING MARKET
. SURVEY IS MADE
Home Loan Bank Board
Move Held important
Aid to Building.

eral Home Loan Bank Board OF the
real estate and mortgage-lending mar
kets of 233 major American cities to-
day was characterized by the Archi-
tectural Forum as the most i'm
portant statistical contribution to
building since the Department of La
Dor began the collection of building
permits II years ago."
Declaring that the bank board has
provided a pattern by which local
and national institutions can make
invaluable market analyses ION their
own hook" the Forum added:
"Unnumbered surveys of these twin
markets have already been made; no
self-respecting mortgage lender con-
siders his Office complete without a
filing cabinet of data, map of the
city. and man with long memory
to help him judge his loans. The
trouble has been that the general
standard of these aids to good lend
Ing has been so low that only hand
ful OF lenders has ever bothered to
develop this technique of market
analysis beyond the squint and hunch
stage to really effective level.
In 239 cities, the Federal Home
Loan Bank Board is now giving a
splendid demonstration of what can
be done and how to do it. Nothing
on the building horizon is worth a
closer inspection"
Reviewing the 80 months work on
the survey, the Forum declared that
1t was made necessary by the real
estate problem of unprecedented di-
mensions" which faced the Home Own
ers Loan Corp, vast lending agency
under the bank board, which refi-
nanced more than 100000 mortgages
for more than S3,O00,000,0OO. And de-
failing the background of the director
OF the bank boards survey-Corwin
Fergus, director of the Division of Re-
search and Statistics, former preSi-
dent of the Real Estate Board of CO.
lumbus Ohio-the magazine cited the
effect of survey Mr.. Fergus made
there as indicative of the value COM
munities all over the country may
ind in the bank boards experiment.
Opinions and Figures Divulged.
The Columbus Real Estate Board
rubbed its eyes," the Forum said,
when the Fergus Survey-baSically the
same as the present one-was COM
pleted. 1t was discovered that every
bodys opinion deviated from the facts
in some degree; it was discovered that
detailed analysis of property hold
ings could serve as the basis for some
hitherto unsuspected but nevertheless
valuable conclusions; it discovered,
In short, that paper was infinitely
superior to the head as a depository
for facts"
Describing the Fergus operations
for the bank board, the Forum said:
Director Fergus set out to uncover
all the relevant facts he could along
three broad fronts: % Economic
background and prospects; CD the
real estate market, and 80 the mort
gage lending market.
indispensable companion piece to
each of these reports is a security
area map of the city. On this map
is shown not the price, age or type
curity for long-term mortgages by
areas.
Assuming that the 10-to-15-year
amortized mortgage is to be accepted
as a standard for residential financing,
the security area map is given four
gradations of value In establishing
these grades, typical factors taken into
account were the intensity of sale and
rental demand; percentage of home
ownership; soundness of construction:
age and type of building; economic
stability of neighborhood; uniformity
of area (by nationality and income);
sufficiency of utilities; accessibility of
schools, churches and business centers:
topography, and local restrictions for
the protection of the neighborhood.
Maximum Loans.
"First-grade areas are the realty
cream-areas which are not yet fully
built up, in new and well-planned
sections of the city. Here mortgage
lenders are willing to make maximum
loans
"Second-grade areas are, as rule,
completely developed-still good. but
not what the people who can afford
to get into the first-grade areas are
buying. Here mortgage lenders have
q tendency to hole their commitments
from 10 to Is per cent below the limit
: "Third-grade areas are character
tied by age, obsolescence and change
Of style; by expiring restrictions; by
the inflltration of lower grade of
population, and by the presence of
such adverse factors as inadequate
transportation, heavy taxes and Jerry
building.
"Fourth-class areas are those in
which the influences at work in third
grade areas have become we'll estab-
lished. There is low percentage of
home ownership, very poor mainten-
ance. frequent vandalism. Collections
are difficult and the income of the
residents is unstable. Fourth-grade
areas, however, must not be identified
with what are usually called slum
areas; the former are larger in extent.
Here some mortgage lenders will not
make loans at all; others on only a
very conservative and selective basis.
The larger number and identical
form of these surveys will in time pro-
vide the F. H. L. B. B. with the means
Tor drawing some basic comparisons
about real estate and mortgage prob
lens on national scale. Such COM