Evening star., 1939-01-21
Insured Mortgages
As Opportunity for
Investment Cited
Buying by More Than
1900 Institutions
Stressed by Mcdonald

Emergence of the insured mort
gage from obscurity four years ago
to its present place with the elite
of liquid marketable investments
was traced this week by Admins
traitor Stewart Mcdonald of the
Federal Housing Administration.
In an address before the Munic-
'ipal Bond Club of New York Mr.
Mcdonald observed that the free
flow of mortgage funds, considered
of prime Importance in the mort
gage pattern established by the Ma
tlonal Housing Act, has now be-
come fact.
This pattern has given the in
sured home mortgage, from the in
vestment standpoint, a uniformity
and stability that enable those
mortgages to change hands and
pass through the regular channels
of investment in a manner quite
impossible for the old-type of mort
gage. which the F. H. A.-inSured
mortgage has almost completely
replaced, at least for small-home
financing" Mr. Mcdonald declared.
Bought by Lending Groups.
More than 1900 lending institu-
tions have bought insured mort
cages which they themselves had no
part in originating he continued.
These purchasers are made up of
life insurance companies, savings
banks, commercial banks, trust
companies and other fiduciaries,
building and loan associations and
so on.
"All told, about $40O,0OOOOO of
these mortgages have changed
hands. This market in home mort
cages is a thing hitherto unheard
of in the investment business" he
said.
Mr.. Mcdonald suggested that
"some of the large banks" which
complain of their inability to find a
profitable outlet for their surplus
funds should investigate F. H. A.
mortgages, and that bond men could
perform a real service by acquaint-
ing institutions of the high invest
ment estate of insured mortgages.
He stated that about 500 lending
institutions had each made more
than S500,000 of F. H. A-insured
mortgages.
Sees Whole Cities Benefited.
The municipal bond field and
the general credit of many cities
are also reaping benefits from oper-
etions of the F. H. A. through its
insistence on neighborhood and
town planning, Mr.. Mcdonald said
In this connection, he said that
these problems are being tackled
. In long-range way, on the prem
Use that F. H. A. operations consti-
tute much more than merely ap-
praising real estate, or collecting
premiums and paying insurance on
mortgages.
''Uppermost in our minds is the
question of price stability in real
estate" he declared. 'Leveling real
estate cycles and creating sound
homes and neighborhoods, are ques-
tions which must be studied and
somehow solved.
For as every student of municipal
affairs knows, neighborhood blight
with its devastating repercussions
on values and tax income is the
glaring weakness of our American
cities, and rising tax rate with
inability to collect is the nemesis
of every municipality-for as we
say in the F. H. A., neighborhoods
go to pieces long before the
houses do.
Good new construction, neces-
sary repairs to properties, reason
able building standards, sensible
neighborhood policies, careful land
planning and regular collection of
taxes are all within the scope of
the F. H. AS program. and all con-
tribute to stable real estate values"