The potters herald. [volume] (East Liverpool, Ohio) 1899-1982, 1938-08-18
Economic . . /.
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The federal government, says the
United States News, is today the
nations largest single owner Of homes
and farms.
This is one of the fruits Of the fed
eral building and lending program. 1t
all began in 1888. At that time, de-
preston was at it's peak, and private
mortgage holders were foreclosing on
properties by the thousands, because
the mortgages could no longer make
their payments. The government then
came forward with its credit, and took
over the mortgages, giving the hold
ers bonds in their place. In most
cases, the principal was scaled down
before the deal was made.
This work was done principally by
the Home Owners Loan Corporation,
which made loans to the extent of
nearly $3,OOO,OO0,OOO. Afterwards,
about $2,0O0,O00,000 in loans on a
similar basis were made by the Fed
eral Credit Administration
The government made it clear that
in no instance were mortgages to re-
gard the loans as gifts or as obliga-
tions which could be paid at some
vague future time. Interest rates
were reduced to 5 per cent and the
length of time in which payment could
be made lengthened-usually to Is
years, on a monthly installment basis.
In 1886, largely because of the series
of great droughts which seriously i'm
paired the income of Middle Western
farmers, the interest rate was reduced
to 3l2 per cent by act of Congress.
At the same time, Congress made pro-
vision whereby borrowers, if necessary,
could defer the time when they must
start reducing their principal obliga-
ton.
To a large part of the borrowers,
these remedies proved sufficient, and
they have been able to make their in
stallments as specified. But to an
other large part, even the easier
terms were not enough. 1t is this fact
which has put the government into
the farm and home business on an un-
prccedented scale. And the situation
has been growing worse, not better.
Between 1888 and 1886, inclusive,
the government foreclosed on 0,lSG
properties, whose original loan value
was $780, 100000. BY the end of 1887,
the number Of foreclosures reached
l24,S 1903, with an original loan value of
$49O, ,000 And by July, 1888, in
elusive, the total was 160,0S3 fore
closures, with an original loan value
in excess of S657 100000.
Thousands of other farm and home
lovncrS are also. tenlnd III their loans,
and are in danger of foreclosure.
On the credit side of the ledger is
the fact that three-quarters of the
borrowers have managed to meet their
contracts-and every one of them
was in distress at the time the gov
ernment loans were made. Also to be
credited is the fact that the HOLC
has never experienced deficit, and
has actually earned modest profit.
There is the lending picture as it
exists today. There is strong Con-
gressional drive in prospect for fur
ther reducing interest rates and per-
haps extending the time of payment,
especially on urban homes, which in
the past have been less favored than
farm properties. The Hole, whose
officials are apparently trying to
keep their bureau operating on busi-
ness basis, oppose this, and insist that
it would cause operating deficits, and
would not materially lower the rate of
foreclosure.
Which point Of view will win, re-
mains to be seen. I'm the meantime,
the government has 100000 home and
farm properties on its hands-which
make it the biggest real estate dealer
in American history.