Evening star., 1938-07-09
DECREASE SHOWN
IN FORECLOSURES
Action Taken Only as Last
Resort, Fahey Replies
to Vandenberq,

foreclosures on homes authorized
by the Home Owners Loan Corp. have
declined rather than risen during the
recent period of slack business. Every
legal leniency is being shown delin-
Quent borrowers
John H. Fahey, chairman of the
Federal Home Loan Bank Board, made
these statements today in an answer
to letter from Senator Arthur H.
Vandenberg Of Michigan
I'm terms Of foreclosures authorized,
the record has been one of a marked
decline since the summer of 1886. at
which time authorizations to institute
foreclosure proceedings were running
at the rate of some 5000 monthly"
wrote Mr.. Fahey. This decline has
not been interrupted by the discourage
ing business and industrial trend that
set in last fall. In fact, after deduct
Ing the number of cases per month
where foreclosure, though once au-
thori7ed, has since been withdrawn,
net foreclosures authorized from jan
uary through April of this year have
averaged less than $500 monthly.
More significant is not the number of
properties acquired, but rather the
trend in the number of cases where
the corporation finds itself currently
obliged to authorize that foreclosure
proceedings be started"
Question of Middle Ground.
Senator Vandenberg, in his letter,
stated, mo one more than l realizes
the fundamental Importance of pre-
serving the public credit and of pro-
tecting the public Treasury (Which
must depend upon the integrity of
H. o. L. c. mortgages as a sound
asseD." Referring to the rate of
H. o. L. c. foreclosures, he wrote, Il
am wondering whether there is any
middle ground. I want to deal con-
structively with this problem, so far
as my own thinking goes in connection
with it. 1t is in this spirit that
am asking your views"
Mr.. Fahey explained that although
$4,000 properties were acquired from
April 80, 1887, to April 80. 1888, due
to the interval that necessarily elapses
between the time foreclosure proceed
ings are instituted and the time action
can be brought to conclusion, many
of these property acquisitions. repre-
sent the completion of foreclosures
started back in 1886 and 1887 and
cannot be thought of as having orig
mated in the recent months of the
business decline
When viewed from the collection
standpoint, the situation here again
is seen to be favorable one" MIR.
Fahey's letter states. Our collections
have held up well throughout this
period of declining business and in
dustrial activity. As Of April 80, 1888,
the corporation had received, cumu-
lative from the beginning of opera
tions, 1873 per cent of the total cumu-
lative amount due it from its borrow
ers. Significantly, this percentage has
advanced progressively with each sue
cessive month, including those since
the unfavorable developments of last
fall
Only as Last Resort.
You ask whether the corporation
has worked out any adjustment in its
servicing policies and procedures to
fit in with the circumstances of those
borrowers who had previously demon
strated with good faith, but who re-
Gently have again found themselves
in difficulty The corporation has al
ways followed the policy of foreclos-
ing only as last resort. When it is
evident that borrowers defaults are
unavoidable, it goes along with him
as long as it possibly can, approving
foreclosure action only when no other
more favorable solution can be found,
and only after every permissible con-
sideration has been fully exhausted
There is a point, of course, beyond
which it cannot properly go. The cor
poratlon has no authority under the
law to supply free housing for its
borrowers at the public expense 1t
is the province of other agencies of
Government to take care of those who
cannot themselves provide for their
shelter needs, a function which the
Home Owners Loan Corp. cannot
properly assume. The corporation is,
however, equipped with every author
ity, appropriate to the character of