Evening star., 1938-02-12

house developments, are ready to start
at once, but the nature of such
projects is such AS to indicate that
progress is not likely to be AS rapid
as the smaller group projects under
section 2l0.
Ninety per cent loanS-Financing
OF individual homes, especially those
under $4,000, is extensively liberalized
by the new act. Never in history has
it been possible for builder to sell
a $4,000 house with a down payment
of only $500, the balance paid off over
a period of Is years, as is provided
in this act. The interest and amorti-
zation charge on such a house will
amount to only s32 per month. bring
ing it within the reach of millions OF
wage earners.
Building men consider the interest
rate of 5 per cent fairly reasonable,
and under the new act the former
p per cent service charge has been
entirely. dropped and the insurance
premium charge has been reduced
from ? per cent to |. per cent on the
decreasing balance of the loan on
houses under $4,000. Above that
figure the premium charge remains
p per cent per annum on the de-
creasing balance.
Liquid mortgages.--Of far-reaching.
fundamental Importance are the pro-
visions relating to setting up of ma
tlonal mortgage associations. The
formation Of such associations is made
highly desirable by making them ex-
empt, as well as the debentures they
issue, from State. county. municipal
and Federal taxation. These mort
gage associations will be able to pur-
chase mortgages originated anywhere
in the country. thus providing for a
flow of funds into areas not now prop
erly serviced. They can also make
direct mortgage loans
Can Originate Mortgages.
One such national association is to
be set up under Federal auspices.
financed with s50,O00.OO0 of R. F. c.
money. In addition to purchasing
mortgages made by others. this asso-
citation can originate mortgages on
groups of 10 single-family dwellings
or more and on large or small apart
ments and rental projects.
1t is of great significance that small
town banks and other financial in
stitutionS will thus be able to sell the
insured mortgages they make at any
time. In addition. important changes
in regulations of the Federal Reserve
Board and the Federal Deposit Insur-
ance Corp. make it possible for local
banks to borrow on or discount insured
mortgages quickly and easily The ef-
feet of these combined changes is to
make long-term insured mortgages a
highly desirable liquid form Of invest
ment Ample funds for modernzation.
Improvements and new constructions
should be easily available on reason
able terms in any part of the country
Immediate ef1ect.-The effect of the
new housing legislation on general
business should be felt in many areas
in a comparatively short time In
suburban areas, such as surround the
largest cities, operative builders al
ready have plans and specifications
prepared. and in many instances have
already started work on groups of
houses in anticipation of F. H. A. ap-
prevail One Long Island operator
began work on a group Of 80 houses
the day after the bill was signed by
the President.
In other parts of the country it will
take time to put some Of the provi-
sions into action and for builders to
fully appreciate the possibilities Of the
act. Undoubtedly quick impetus will
be given to modernization work Of all
kinds. Building of camps and sum-
mer cottages should flourish this