Evening star., 1940-07-20
Increased Activity
In Residential
Construction Seen
Home Loon Bunk Bourd
Examiner Also Praises
Financing Policies

Evidence of increasing activity in
residential construction, praise for
improved policies on the Nations
home-financing institutions and q
sharp rebuke for sub-standard con-
struction on mushroom" projects
In q few localities were contained
In an informal report today by
the chief examiner of the Federal
Home Loan Bank Board
A determination to keep their
houses in order" in view of world
conditions and their possible effect
on the national economy is evident
among leaders of the industry, &C.
cording to Verne c. Bonesteel, who
heads staff of ITS examiners for
the Federal Home Loan Bank Sys-
tenn and the Federal Savings &
Loan Insurance Corp.
Finds Officials Alert.
There is a tremendous amount
OF residential building in California
and greatly increased construction
in such cities as Denver and Salt
Lake City," said Mr.. Bonesteel, who
just returned from a trip to the
Pacific Coast But the outstand-
Ing impression I received was the
alertness of officials to the prob
lens which may arise from the war.
They show confidence and q
readiness to take a major part in
the very evident upward swing in
construction activity. But they
are trying to analyze the possible
effect of the war on interest rates,
mortgage loans and property values
and they obviously have studied the
trends during the last war.
Sound lending policies, tend
ency to cooperate on a community
basis in regard to dividend policies
and a determination to build up
reserves are evident"
Mr.. Bonesteel noticed tendency,
particularly in the Northwest, on
the part of the public to pay cash
for goods and services usually
bought on the installment plan
which has resulted in greater turn
over of the funds TO lending institu-
tions and the necessity for more
liquidity.
Funds for Financing.
But public investments in saw
ings and loan associations and other
member institutions of the bank
system have been steadily increas-
ing and there are ample funds avail
able for home construction in every
section" he declared.
Home financing institutions as a
whole are showing greater interest
In good design and are appreciat-
ing the growing need for inspection
and supervision of construction. At
the same time, in a few localities
found institutions financing flimsy
Observation-Disclosures which were not
good security for the prevailing
long term loans Supervisory au-
thorities have been forced to exert
a check on such practices, which
fortunately are not widespread"
AS whole, the 1000 thrift and
home-financing institutions of the
bank system, whose assets aggre-
gate maTASthaQ~$4, 300, 900 OQQ, are
gaininessn publie recognitioif and
playing a. dominant role in residen-
tial construction, Mr.. Bonesteel
said. He particularly noted the
progress of institutions insured by
the Federal Savings & Loan Insur-
ance Corp, which safeguards saw
ings of investors up to $1,000 each.
Legislation to aid the insurance
program has been enacted In sew
eral States in the past few years."
he said. "As matter of fact, there
has been general cooperation on
the part of most State authorities
to establish STRONGER and more
effective hcne-fno ncirr structure.
The great ma ior;ty of savings and
loan associations took the'~ losses
IN the early '30s. They now are
in a position not only to meet ali
competition, but to set the ccmpeti-
tive standards in home financing.
although the managers of some
institutions speak of more caution,
especially among younger people
who had planned to build homes,
there is no general evidence of post
ponement of such plans through un-
certainty over the future. Home
construction definitely is maintain