| Show Soundness of Banking I Principles Necessary in Federal Housing Plans Multiplicity of Transactions Real Foundation Foundation Foundation tion of Home Repair Program A The home repair phase of or the federal recovery prop program Is about to be thrown Into operation The why and the how of it has been written for lor The Salt Lake Lako Telegram by the tho man In charge Ills His second article is given below Two others will wilt follow By JAMES A. A MOFFETT Federal Housing Administrator Copyright 1934 by the Associated Press WASHINGTON Aug 9 AP AP We Wc of oC the federal housing administration tion have been convinced since the first day we undertook this task that If we are to achieve results of real value alue to the nation in hi developing the property modernization plan there must first of ot all be In strict conformance to the principles of sound banking For essentially this Is a n. program which has for its real foundation a n. multiplicity of banking transactions Let us consider a typical American community On the law of ot avera averages es there will be in this community man many buildings that are run down or are arc arcIn In need o of more modern Manifestly it is sound practice to keep buildings in good repair or improve improve im im- prove their their efficiency Therefore 10 loans of at this type hpe may ma- mabe be considered within the scope of at good banking if the repairs are needed if iC the sums borrowed sorrowed are applied only for the purpose intended if iC the value and desirability ability of oC the property is enhanced enhanced en and if iC the borrower is in a position to pay the amount borrowed While the regulations of the federal housing administration do not require specifically that the lending institutions institutions must determine whether or not nol the property owners have spent pent or intended to spend the proceeds of ot the lo loan n wis wisely 1 it will be apparent of course that the soundness of the project will have a strong bearing on n the property owners owner's willingness to o meet the payments on the thc note Therefore from irom the standpoint of their own self interest bankers will vilI exercise care in making sure that the property owner in securing a mod mod- loan is furthering his own in interests Direct Benefit And beyond these transactions between between be be- tween lender and borrower barrower there is js envisaged an endless chain of at other interests I am Im told for example that in ire these projects 76 cents of every dollar will go to labor labor abor 44 cents at the site 21 cents at the factory factory fac lac- tory mill or dealer 7 cents at the source of at material and 4 cents in transportation The balance will go goo goto goto to o the building supply dealers manufacturers manufacturers manu manu- and for raw materials and transportation n nIt It requires no stretch of the imagination nation therefore to to see how the money that is to be drawn from the banks in the modernization program will move from person to person with considerable velocity and prove of direct immediate benefit to every ery business interest in the community Increase Values But the good work will not slop stop there The loans having been made on sound banking principles will be beof beof beor of or such a n nature ture as greatly to enhance the value and attractiveness of the properties involved and this in turn will create new standards o of values for the community as a whole whole The entire real estate field will be improved and the value of ot the security security secure ity behind all real estate loans willbe will willbe willbe be enhanced d. d All of or these individual and composite com corn benefits will be possible be be- I cause the practices of or good banking will permeate each individual transaction transaction transaction trans trans- action in the entire modernization program The advantages es to an SIn owner of or modernizing his property arc are obvious and readily understood by the general general general gen gen- eral public Group Projects What is l less ss well understood per per- haps laps is the added advantage to be gained if a group roup of or owners in a R given block or neighborhood alter or modernize their properties as part of ofa a general scheme of neighborhood improvement It should be clear that all aU pr prope property p perty erty is helped by this improvement of or buildings on the block and this advantage Is all the more marked when a coordinated Improvement scheme schema is undertaken for an entire neighborhood In projects of at this sort agreement of the thc owners to act simultaneously and in conformity with the genera general scheme s essential Leadership is necessary to accomplish any desirable desirable desir desir- able results and it must be disinter disinter- ested Civic minded disinterested men and women whose integrity is not questioned should lead Cooperation Vital Collaborating with them should be bea a second group who although they have lave selfish interest in the project should hould represent no particular properly property property prop prop- erty erly owner They can be of great use useIn useIn usein in se rin cooperation Such a group would include representative e architects archi arch i-I i teds builders city planners material material mate mate- rial men realtors and bankers The success of any attempt at group modernization depends upon th the measure of cooperation obtained from property owners They must be made to see not only their advantage advantage ta tage e in this scheme which is great but also the large social picture The federal housing administration will wilt be glad to do whatever it can to promote and develop in cooperation with local loca authorities projects of this sort Social Character Wherever possible this program should take on a social character as aswell aswell aswell well as economic and to make it sound banking to loan mone money for these purposes It is apparent therefore that the interests of the property owner are lre very much involved with community pro progress ress The value o of property is to toa a considerable extent determined by bythe bythe bythe the neighborhood factors and the complete suc success ess of the modernization tion plan will depend to a considerable ble extent on group improvement ac ac- ac- ac In the next article in The Salt Lake Telegram the housing administrator administrator adminis adminis- will explain the value and desirability de I de of group roup projects |
