The Waterbury Democrat., 1939-04-10

Cation government has acquired 5000, ,0O0, 900 stake in the housing business. l. Through the Home Owners Loan Corporation, 1t has spent some three billions to buy dis tressed mortgages and save a million families from eviction. 2. Through the Federal H0us- ing Administration it has com mitted itself to make good mort- gages worth $1,40O, 100000 if the lending institutions which hold them find 1t necessary to fore close.
 3. Through the U. s. Housing Authority ard the Public Works Administrat ton 1t has loaned or given $161, ,0O0,0 900 to cities for slum clearance projects. This does not include some S640, 0,000, 900 ad- diti0nal which the USHA has ear- marked for disposal in the same manner.
 {. Through the Federal Home Loan Bank Board and it's mem- Der agencies 1t has used $525, 5,000,- coo to secure the credit reserves of building ard loan associations savings.
 s. Into various rehousing pro- jects now under the wing of the Farm Security Administration it has put S49,000,000. DOUBLE
 STANDARD
 The principal headache in all oi this has been the conflict of pur- poses between the Home Loan Bank Board and the Federal Housing Ad- ministration.
 With the former organization, the government has been trying to helr the building and loan associations; with the other, it has been pro. noting competition with them.
 This situation arose naturally enough. When the depression came the building and loan companie! were loaded with long term mort. gages which they couldn't liquidate They had borrowed, in turn, iron commercial banks on short tern notes-and their depositors were clamoring for their money. They began to go bankrupt in droves.
 The 12 Federal Home Loan Banks were set up 10 remedy mat ters. They have altogether some 4000 building and loan association members. who deposit mortgages as collateral and get long term loans at low interest rates iE re- turn. The Federal Savings Loan Insurance Corporation was set up to insure the deposits made by individuals in the building and loan associations. And the Home OwEers Loan Corporation went to work to clear up the debris by acquiring the mortgages that had gone or were going sour.
 So far, so good. Then the Fed. eral Housing Administration went to work to promote building through lower interest rates made possible by federal insurance of mortgages To date 1t has insured 335, ,099 mort. gages on private homes, represent. ing total investment of slightly more than ,400.000,000. But by making easy credit available, ant providing safety catch for the lender, it drew new agencies into the picture-insurance corporations big banks, and so on-and thus pro- vided the building and loan asso- citations with a new and spirited form of competition.
 CONGRESS
 JOINS ASSAULT
 Meanwhile. Congress has begun throwing brickbats at the Federal Housing Administration on its own hook. One complaint is that shoddy construction in encouraged because the builder need put up only 10 per cent of the total cost. He soon gets his own equity out: the FILA insured mortgage runs for 20 to 30 years. r'..
 In the end, say these critics, Uncle Sam will find himself pos- sessing title to more worthless real estate than ever cluttered up an investment portfolio in all his- tory.
 If FILA is accused of responsi- bility for cheap construction, however, congressman are accus- ing the U. s. Housing Authority of too expensive construction. USHA loans on housing projects run for 60 years.
 Naturally, buildings put up on that basis have to be solidly built or there won't be anything left of them when the loan is finally paid off. So, say congressional critics. USHA buildings tend to be pretty costly. Copyright, 1889, NEA Service, Incl