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Evening star. [volume] (Washington, D.C.) 1854-1972, November 20, 1937, Image 25

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Persistent link: https://chroniclingamerica.loc.gov/lccn/sn83045462/1937-11-20/ed-1/seq-25/

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F. H. L. B. Review Holds
High Charges Reduce Value
of Mortgages.
The costly, time-consuming and
often unnecessary foreclosure pro
cedures required in many States have
hampered mortgage-lending activity,
according to the November issue of the
Federal Home Loan Bank Review.
The high cost of foreclosures in some
States serves automatically to reduce
the value of the mortgage security, the
articles states. Thus, it burdens the
borrower, who must pay higher inter
est rates and who receives more re
stricted loan terms.
The Review based these statements
on a study of samples of Home Own
ers’ Loan Corp. foreclosures taken
from every State. These samples may
be expected to reflect the cost of pri-,
vately instituted foreclosures, even
though the figures do not include the
cost of H. O. L. C. salaried personnel.
The H. O. L. C. is one of the agen
cies administered by the Federal Home
Loan Bank Board.
Held Unjustified.
The Review states that "compli
cated mortgage and foreclosure laws
benefit neither the mortgagee nor the
mortgagor and cannot be justified as
necessary. The average cost of fore
closure to the H O. L. C. varies from
$5 in Texas (not including salaried
attorneys) to $350 in Illinois. The time
It takes to complete that foreclosure
varies from 22 days in Texas to over
two years in Alabama.
In case of foreclosure in court, the
time has been computed from the date
of the filing of the petition to foreclose
to the date of acquisition of title, free
of all rights of redemption.
In case of foreclosure under power
of sale contained in the mortgage or
deed of trust, the time has been com
puted from the date of the first publi
cation of notice of sale or of intention
to foreclose, w here such is required, to
the date of acquisition, free of all
rights of redemption
Costs do not-' include salaried per
sonnel. In both Texas and Massachu
setts salaried attorneys handle fore
Cost Estimated at $2 Daily.
"In Illinois it costs over $300 to fore
close a $5,000 mortgage and takes over
a year and a half," the Review says.
• "The cost of the delay to the mortga
gee. including interest on the invest
ment, accrued taxes and insurance
and depreciation has been fairly esti
mated as $2 a day. The total cost,
then, is about one-fourth of the mort
“It is obvious that in this State a
lending institution which makes loans
of more than 65 per cent of the ap
praised value of the securing property
has inadequate protection It is also
obvious that a delinquent borrower
, oannot be carried when his accumu
lated taxes, interest, insurance and
other carrying charges have increased
the total debt to over three-fourths of
Value of the security.
"Compare these conditions with
those in Massachusetts, where it costs
about $30 to foreclose a $5,000 mort
gage and takes only two months The
total cost, including cost of delay,
amounts to only 3 per cent of the
mortgage Considering this cost, it is
not surprising that mortgage-lending
Institutions in Miassachusetts have for
many years been making loans up to
80 per cent of value Quite simply,
they can afford to.”
As a solution of the problem of find
ing an equitable substitute for existing
foreclosure laws, the Review suggests
the Nation-wide adoption of the uni
form real estate mortgage and fore
closure law drawn up by the Subcom
mittee on Law and Legislation of the
Central Housing Committee after two
years of study, which provides ade
quate protection for both the mort
gagor and the mortgagee and elimi
nates excessive delays and costs
The higher in the air one goes the
darker the sky and the brighter the
*un, at 50 miles up the sky prob
ably is black and the stars visible.
Large Dwelling Completed in Kent
New home at 5040 Lowell street N.W., Kent, ivhich has been purchased by Maurice Fillius
through the office 0/ Phillips & Canby, realtors. —Star Staff Photo.
(Continued From First Page.)
normal income tax. should be avail
able for the payment of debts con
tracted in the purchase of the land
and subsequent development, such as
the installation of street improvements
and utilities to serve such land, the
erection of homes thereon and the
erection of neighborhood shops to
serve such community. When used
for the payment of such debts, such
earnings should be wholly exempt
from both the corporate surtax and
the personal holding company tax.
The association is concerned that
there be no disastrous unintentional
tax penalization of bona fide real
estate companies, for whom eco
nomically sound operation, particu
larly m home building and the de
velopment of residential neighbor
hoods, often entails long-term oper
ations in certain stages of which un
distributed surplus or "earnings" may
be represented largely by mortgage
paper or by unsold structures and
could not. without breaking the busi
ness, be paid out as dividends. Heavy
and anti-social penalization would
occur if the percentage of their in
come represented by "interest” and
"rent" should under any circumstances
bring them under the classification of
personal holding companies. The
1937 act contains provisions whose
paralyzing effect on the building in
dustry in general and on home build
ing in particular the association be
lieves the framers of the act did not
realize. In fact, the Joint Committee
of House and Senate in its loop-hole
plugging recommendations stated spe
cifically that inclusion of the wfcrd
“rents" was being made in a way
which it was thought would not pen- I
alize bona fide and legitimate real !
estate companies.
asks ^pecmc r.xciusion.
The association's memorandum asks
specific exclusion from personal hold
ing company classification for all
"active bona fide operating companies
regularly engaged in the building,
creating, developing and marketing
of their products and properties rea
sonably necessary to the conduct of
their business in the manner in which
such business is customarily and us
ually conducted by others.”
Already specifically excluded from
personal holding company classifica
tion according to the 1937 act are i
banks, life insuraoce companies, I
surety companies, foreign personal j
holding companies, corporations other
wise exempt from taxation under the !
The association's memorandum to j
; committees of Congress is backed by
| resolutions adopted at the closing j
session of its recent annual conven- |
! tion. held in Pittsburgh in October.
If in proposed amendments there
should be left in the revenue act any
possibility that a bona fide real estate
company might be classified as a hold
ing company, the association in its
memorandum asks that interest re
ceived on evidence of indebtedness
obtained in the ordinary course of
business should not be included in the
list of income sources which if they
make 80 per cent of a company's gross
income now automatically bring it in
line for holding company classifica
tion, and that if more than 25 per
cent of a company's gross income con
sitsts of rent, that, company auto
matically be excluded from such clas
Small Firms Affected.
Many people have assumed that a
personal holding company is limited
to those holding stocks in other com
panies, or the "incorporated pocket
book" or the "incorporated yacht"
that is featured so often in the news,
and also that it would be limited to
the so-called "big" companies. Such
is not the case. The 1937 Federal
revenue law defines personal holding
companies through two main require
1. That more than 50 per cent in
value of its capital stock would be
owned by or for five individuals or
less. If stock be held by the brother,
sister, spouse, ancestors or lineal de
scendants of a stockholder, then all
such family members collectively are
regarded as one individual within this
2. That 80 per cent or more of its
gross income be derived from interest,
rents, dividends, royalties and annui
ties and (except in the case of regular
dealers in stocks and securities) gains
from the sale of stock or securi
ties. If rent constitutes more than
50 per cent of the corporation's gross
income, then it is not a personal hold
ing corporation.
Today's changed conditions and
practices in residential development
set up to make sounder conditions for
the home purchaser substantially in
crease the probability that the com
fi' =====
pany engaged in such development
will be subject to a penalized iax clas
sification in a way not contemplated
when the act of 1937 was enacted. The
cumulative volume of mortgages held
by a builder under today's long-term
payments is substantially greater than
would have been the case a few years
ago when shorter terms of payment
were customary. ‘Interest,” there
fore. now represents a relatively high
er percentage of the typical company's
operating income, principal payments
a relatively smaller percentage than
formerly. Affecting the item of
‘ rents," is, for example, the sound
practice through which the developer
of a residential neighborhood is likely
himself to build the necessary neigh
borhood shops, renting them, at least
for a period. During periods of de
pression. when a margin of profit on
sales is small or entirely wiped out,
j then interest income added to the
rental income, if any, would in many
cases be enough, as the sole factor, to
throw a legitimate operating company
into classification under the present
revenue act as a personal holding com
Large home for fine
living! Seven bedrooms,
four baths. American
Walnut trim ond other
attractive features to
suit persons of refinement
and discrimination. New
and entirely modern.
Development of National
Architecture Cited in Sup
port of Conclusion.
America has reached artistic ma
turity, Dean Leopold Arnaud of the
Columbia University School of Ar
chitecture declares in his annual re
port to Dr. Nicholas Murray Butler,
president of the university. The devel
opment of a national architecture
which is no longer imitative and the
increasing tendency of European ar
chitectural students to study In the
United States are cited by Dean Ar
naud as proof that art and architec
ture in this country have come of age.
“Until relatively few years ago
American students flocked to Europe
to study art and architecture, and
very few' Europeans were interested
in coming here to further their ar
tistic studies," Dean Arnaud says.
Europeans Come Here.
“Within the last 10 or 15 years this
state of affairs has changed consid
erably, for now comparatively few
Americans are going to European
schools of architecture, while Euro
peans are beginning to come to the
United States not only for travel and
investigation but also for matricula
tion in our schools. American archi
ture has reached maturity. It is no
longer a colonial or an imitative ar
"This is an obvious fact, even
though contemporary architecture in
this country does resemble in many
respects the contemporary architecture
of other countries. This international
resemblance occurred also during the
Gothic and Renaissance periods Yet
these styles were variously developed
in the different countries as the social
and cultural movement* of which
these style* gave evidence swept the
Western world.
Periods of General Change.
“The fact Is that at certain In
tervals there 1* a period of general
change and development during which
people in all the regions affected live
In somewhat the same way—on the
same level of civilization—with the
result that they build In approxi
mately the same way, using similar
structural and esthetic principles, but
allowing always for the many local
variations resuming from differences
of climate, terrain and traditions.
“In artistic taste America is very
conservative, and we do to some ex
tent look to Europe for models of ex
pression. y/e must concede the fact
that in Europe there exists a greater
capacity for creating new esthetic
forms. When we borrow, however, we
adapt rather than copy, which is an
entirely legitimate way of using de
rivations. The skyscraper, though it
1* far from typical of the majority
of buildings in the United States, Is
conclusive evidence that we are en
gineers of the first order and that
we ran vest our feats of engineer
ing with equally new, daring and fit
ting esthetic forms.
“In America the outstanding excel
lence of our contemporary architec
ture is in planning, the economic
and utilitarian value of which need
scarcely be expounded.
“But fine planning also in large part
determines the esthetic quality of the
$ , - %
i KcM
'ficfcXvf |
Phone for N A. 4147
Particulars ij
building; for the artistic form today
does not depend upon applied decora
tion but Is rather the expression of
structure, material and Interior ar
rangement of space. These elements
determine the composition of the
voids and solids and of the general
mass. We can justly say that In plan
ning and also in mechanical equip
ment America is well in advance of
most other national developments of
contemporary architecture."
Large crowds attended the opening
last Sunday of the first Kelvin elec
tric home completed in the Wash
ington area, located at 648 Highland
drive. Woodside Park, Md. The home,
which remains on exhibit, was built
by Smith & Gottlieb, Inc., and is be
ing shown by Waple Sc James, real
The dwelling has a number of un
usual construction features. One ol
these is that the entire structure, in
cluding side walls, is insulated w'ith
four inches of rock wool. Other fea
tures include: Douglas fir lumbei
throughout, quartered oak floors and
heavy Vermont slate roof. It L<
equipped with an air conditioner ol
the latest design.
I _ . ...
I §
s s
1 3
S =5
i 1
5 S
i a
i i
= Huntington Terraco. Bet heed a. Md. =
( $750 CASH (
| Balance Less Then
i Monthly Rental
3 THIS desirable Drive to =
= I new brick Cape £
£ Cod Is exception- Bank of Be- 3
= any well built. thesia, out £
s: Rock wool lnau- _, . ’ S
S lation. weather- Old George- ss
I ^fiTVe^ town Ri i
£ room*, built - In 110 0 block, rs
s chest of drawers. 1 m i f „ 3
3 basement, garage; * • 1 1 on —
£ lot 65xlR5. Southwick £
£ Open for Tour St. to ATO. £
£ Awroval. t to 8 fffl
= P*. =
| £ 907 16th St. Met. 1170 £
GSowc \£jmace
A 3-bed-room face-brick home with poured concrete basement, all-slate
electric kitchen, tile bath, with AUTOMATIC OIL
A Value So Amazing That We Cannot Dupli
I cate at This Price the 2 Now Available.
A 600-Home Restricted "City Within the City"
on Car Line, Adjoining Parking
Privr. out to ISth and H Streets N F Continue along
fffTMitns Kond just over the. Anacostia River Bridge Or lake, the
R^nilwoi^horDisUict Line, street car direct to River Terrace
Attractive and Sturdily Built
This New Home Represents Real Value
6705 Glenbrook Road, Bethesda, Md.
A lovely all brick home containing 4 bed rooms and 2 baths.
Toilet and lavatory on 1st floor. 2-car garage. Screened ond
weatherstripped throughout. Rock wool insulation. Automatic
oil heot. Beautiful landscaped lot.
This is an Electric Health Kitchen Home
Built by Bowling & Gardiner
Open Daily and Sunday
To reach: Out Wise. Ave. to Bradley Boulevard. West on Bradley
Bird, to Glenbrook Rd. and home.
Investment Building District 6092 |
Sixteenth Street Village
—sraa—+> Z**mm*Mm
Stunning Studio Living Room
(Step Dow*)
Cordwood Fireplace
★ Convertible bunk room of various uses.
★ Soft, indirect lighting.
★ Attractive, diagonal wood panelling.
★ Random-width plank floors (that are beoutiful).
★ Rugged field-stone and white brick.
★ Sidewall and ceiling insulation, vari-colored slate roof.
★ Flagstone garden court (still time to plant your bulbs for Spring)
and wide window sills for Winter plants, too.
W Delightful for a small family and it it such a bright and cheery
little place!
Out Sixteenth Street to District Line, right two squares
to Second Are., left to B street i9000 block/.
Has Breuninger Offered Such Value
in Shepherd Park
7911 13th Street N.W.
At Locust Road
Air-conditioned. Den and lavatory first floor. 3 bedrooms, dressing
room, large attic, recreation room, 2-car brick garage.
J $500.00 Cash
; $50 Monthly
| $6,750
: 2802 30th St. S.E.
j ^ I From top of Good Hope Hill go
| ♦ south over Naylor Road
♦ to 30th St.)
' ♦ Deto hed- six Jorge roorns—lot
X 50' '65—E*e■. lit i.en

♦ Nat'l Mortg. Cr Inv. Corp.
;♦ NA. 5833 1312 N. Y. Are.
■ i . jj.il ■ i
3 Built—2 Sold
1005 Fenwick Lone
• 6 rooms
• Automatic heat
• Copper gutters and downspouts
• T rees
I TO REACH Out Georgia Alt l3
block vast Silver Spring traffic light,
turn left on Fenwick Lane 1 a square.
Waple £r James, Inc.
S4o3 Georgia Ave SHepherd 5200
Silver Spring Office
You Will Find Character in
4944 Lowell St. N.W.
Especioliy designed with a view to producing
The Perfect Colonial Home. There are 9 rooms, 3
baths and lavatory, also maid's room and bath, rec
reation room with fireplace, storage room, 2-car
built-in garage, General Electric air-conditioning.
You will fall in love with the first-floor library and the
spacious living room, 15x24.
Kent is the "talk of the town"—it is highly re
stricted and commands an unsurpassed view over
the hills of Virginia.
Displaying some genuine antiques just
imported from England by the Old Antique
House, 817 Pa. Ave. N.W.
Drue through Weslev Height* on Cathedral Are to the entranre to
Spring Valiev, turn left on Little Falls Road to Lowell St. and propertv.
Phillips & Can by. Inc.
Na. 4600 1012 15th St. N.W.
I TT--—rr-1
an absolute On beautiful tree-imed street w thn snort d'Sta-re east of entrance
bargain at to Cnevv C^ose Chb I" setting of rr.ogn,- rent old ocks and pro*
G?"l CAA fusion of scrubber.'. Cenrer-ha:i ectron e, large U.ng room end
-1- s’udv, eoch w.th f.rep'c:*; cm ng room, kitchen, servants' sta.rway,
OPEN AND HEATED large ,rorf and 2 rear porhes, 4 Bedrooms, 2 baths; extra base
SUNDAY 11 to 5:30 meet bath; mads room 3rd foor, automat a heat end re*ngerafiOn;
Dm e nut Conn Are j>a*t circle to 2-car garage. Property has wonderful poss e ties Cost owner
ealtaonfQutncv'st!'tohcimeC‘Ub tt*6 Over $30,00C ShOud Sell ngef on the P'err ses ot price
1417 K St. REALTORS NA. 9.700
! 1
Don V 3Miss
In Chevy Chase Hills
| A carefully Protected Fast Growing \ew Community
! ___—_ •
[ Architect
Decorated by
Open, Heated and Lighted
Daily and Sunday
Until 9 P.M.

I Compare this home with any other in this price field and we feel sure you will
I agree that it is not only a delightful place to live but a very full value. The
section is new and growing, where values should continue upward. Low in
terest rates and time financing make the payments actually less than rent.
TO REACH PROPERTY—Straight out Connecticut Ave.
L past the East-West Highway to Development. Take
first left turn after passing Columbia Country Club.
| ......... „w Items „„

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