Montgomery County sentinel. [volume] (Rockville, Md.) 1855-1974, 1944-10-12
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Mortgage Money
sY GEORGE S. BENSON
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Board, in booklet by Miles Colean,
predicted last January that residen-
tial buildings in the United States
would approximate million new
dwellings each year for ten years
after the war, There was an 'if'
in the forecast: If the price could
be held down to an average of about
$4,000. Well, ten million 81, COO units
represent 40 billion dollars. which is
a lot of money.
The vision of q million people
planking down $4,000 each for
house in single year is a pipe
dream. People able to make such
cash OUTLAWS have houses already.
These new houses will be sold on
credit. Buyers will sign instalment
notes. Debts will be protected by
mortgages in the hands of life in
surance companies, loan associa-
tons and certain kinds of banks.
Uncle Sam may insure the mort
cages.
OnHt 70 hepeat
There is an old bromide about his
tory repeating itself but some his
tory is not good enough to repeat.
We told last week why 9.4G6 of
government-insured mortgages de-
faulted and cost the national treas
ury more than 5000 apiece. If that
should be repeated on ten million
homes to start building soon after
the war, governments loss alone
would shoot well above half billion,
and that's the small part.
Suppose only go Of ten million
new, postwar homes are lost by fore
closure; that would be 100000
homes. Hopeful owners usually pay
20Go down. which is $500 on a $4,000
house. Few buyers, living in such
a house year, could escape loss
of $1,000 at least. This proftless
payment for vain hopes would total
900 million dollars. Worst of all, it
would come from frugal, industri-
Gus, home-making people.
Need Not Happen
The foregoing simple arithmetic
would seem pretty gloomy if it abso-
lutely had to happen, but it does
not. 1t offers an idea of how much
tax money will be wasted if pre-war
methods are used in financing post
war houses. The danger is real. All
the controls affecting the quality of
building today existed during the
boom that followed World War One.
Sorry houses may still be built and
sold on payments.
1nstalment home-buying is practi-
cal economy. Discounting notes is
sound banking. Government insur-
ance of loans has been a blessing;
saved many q family from calamity
and many a lender from ruin. But
shoddy construction blights all this.
1t makes neither good homes nor
good security for a bank loan. Lend
ing is the cue. Mortgage money is
the key to better building.
houses WdrrantaDIe
Buildings under construction need
competent and impartial supervi-
sion and rating, somewhat as steam
ships are rated, or as a business
firms credit is rated. This is to
protect lender and borrower both
against mortgages far out of line
.r,i4b a h,,ilJiK n, . oof,,al x.,Orfh C,,oh
an agency exists, Certified Building
Registry, relatively little used, but
known to leading associations of
architects, engineers and general
contractors.
Few money lenders are qualified
to judge structural fitness. Many a
home buyer never sees his house
until its inner defects are hidden by
decorative enticements. Yet buyer
and banker both deserve the protec-
ton of rating that means ID a
home worth its price in a working
mans money, and 90 security for
the bank that holds the paper.
Protects the Buyer
In the interest of public safety
local governments require periodic
inspection of passenger elevators
and pressure boilers. Stock selling
schemes must stand rigid inspection
by state authority. 1t would seem
even more important that ready
made residences carry a seal of
merit. In the weller of buying
boom it would distinguish a specula-
tive builder to sell impartially rated
houses.