Evening star., 1939-04-08
Home Mortgage Debt
Increased in 1888,
First Time Since 1890
Choirmon Foley Sees
Long-Term Turning
Point in Small Rise

funds invested in home mortgages
over the Nation increased in 1888
over the previous year for the first
time since property values started
their toboggan slide in 1929 and
1880, the Federal Home Loan Bank
Board revealed today.
This increase. from $1,000 900 900
in 1897 to S17,600O0 100000 in 1898.
marks an encouraging turning point
in the phase of the Nations eco
nomic life. the board asserted. The
principal reason for welcoming it,
the board declared, rests on the fact
that the home mortgage debt OF
the country today is unquestionably
on a much sounder and safer basis
than any time in recent history.
1.-The leveling off of property
values from their unsound imitation
during the so-called boom days and
the widespread substitution of the
long-term amortized loan for the
dangerous short-term loan have en-
tirely altered the situation" said
John H. Fahey, chairman of the
Bank Board.
1.-THE expansion of the urban
home mortgage debt from 1921 to
the record total of S21 900 000,000 in
1929 obviously represented great
imitation of values. The real estate
speculation which attended it
which was just as dangerous as the
security speculation which ended in
the 1929 crash-would have caused
serious national difficulties even if
there had been no troubles elsewhere
In our financial system.
No Such Trend Seen Now.
"The home loans which are being
made today do not represent any
such dangerous trend-providing, of
course. that they are made with
discretion as to proper valuations
and the responsibility of the bor-
rowers, and providing that new
homes are soundly constructed so
as to represent real underlying
security.
1.-The fact that amortized loans
are reduced with the home buyers
monthly payments does more than
gradually liquidate his own debt
Not only does each individual loan
become safer each year, but each
repayment provides funds for new
construction, without increasing the
total mortgage debt.
If We could reach the point where
$4,000 100000 in home mortgages
was being amortized at the rate of
even 5 per cent year that per
cent would mean S50O,0O0 900 for new
construction. The important fact is
that a very great sum OF money
properly placed in amortized loans
may be considered safe, and total
home mortgage debt equal to that
which existed in 1929 and 1880 would
not represent the danger that it
did in those disastrous years."
High Fees Disappearing.
with the writing of s12 ,OOo, ,00o, 900
Of new mortgages since 1888. mil
lions of home owners have placed
their Indebtedness on an Namortized
basis said Mr.. Fancy. "Llqulda-
ton of distressed properties has
progressed steadily and has brought
greater stability to the real estate
market, while public reinsurance
has also been strengthened by the
gradual disappearance of the old
short-term note with it's high renew
al fees, and second and third mort
cages with their intolerable charges
and their replacement by liberal
terms and low interest rates.
Although the increase in the
mortgage debt from 1887 to 1888 was
only s30O,000OO0, Mr.. Fahey stressed
the belief that it indicates a def
mite turning point
In analyzing the trend of the
mortgage debt against 1-to-4 fam
lily non-farm homese the BOARD list
ed figures for 10-year period.