Show X 0 0 r M washington many times in these columns I 1 have called attention to the confusion that more has come to be so confusion much a part of the federal governments ern ments general administration I 1 have talked about the bluster and the ballyhoo and the cross purposes at which so many pieces of the new deal program have operated and another outstanding example of this condition now appears two governmental agen agencies ces one a strictly now new deal agency the other with a beginning in the hoover administration find themselves working directly in opposition to each other and in the end taxpayers will pay it is not the fault of the home owners loan corporation that it finds itself in a position where it is going to be landlord to something like pieces of real estate largely homes when the government went into the business of loaning money on private residence it had experience upon which to base its program many years ago the farm loan system was organized with none too happy results in the late days of the hoover administration however three or four politicians were able to drive through the legislation creating a system of government loans on residences as distinguished from farms I 1 predicted in these columns some three years ago that the government through the HOLC was going to be the proud possessor of a lot of real estate my statements at that time were based upon what I 1 had seen happen in the case of the loans on farms the article brought me direct criticism from two or three places in the government but at this time I 1 can report that the HOLC before another year passes will own something like homes it is always difficult for a mortgage or bank institution privately owned to dispose of property which it has been forced to repossess through default of the borrowers it is much more difficult for the federal government to dispose of that type of property try as it may to get rid of the parcels so we find one governmental agency serving as a landlord on a wholesale scale and with signs portending moves by politicians that will in the end cost the taxpayers hundreds of millions of dollars these politicians are proposing legislation in congress to cut the interest rate on the loans now in default and other loans as well the principal of the loans on the defaulted mortgages and they are seeking means by which those in default may have unlimited time in which to make the payments in a way that superficially at least makes the proposals appear aau ally as an outright gift to those who have bought homes under the government loan plan there is no way to tell now nov what will happen to these various proposals undoubtedly most of them will fall by the wayside and receive no consideration in congress yet on the basis of observation of ma many ny such movements it does not seem far wrong to guess that the politicians in congress will accomplish something in the way of reduction of these debts where the defaulters default ers bring pressure to bear on the home town political machines now concerning the other governmental agency involved in the game of cross purposes cross that hat I 1 mentioned purposes I 1 refer to the federal housing administration like the home owners loan corporation it is not the fault of the housing administration that it finds itself in a tough spot it is commanded by the president and by congress to t 0 proceed with a gigantic housing program to loan money on ne new w homes wherever it can persuade contractors to build and individuals to buy it is to be remembered also that loans on these properties are guaranteed the legislation calls them insured loans and that makes the federal housing administration liable in case the new home buyers fail to meet their commitments the housing administration announced its program to encourage wholesale home building throughout the nation only recently and it was by coincidence I 1 am sure that the housing program was announced almost simultaneously with the determination mi nation by the HOLC to start foreclosure proceedings in order to maintain its own solvency thus to bring the picture re to a focus we find one governmental gency agency millions that has loaned hundreds of millions of dollars on residences being forced to foreclose in order to protect the money it has spent at east in part and a second govern cental agency y entering the field si with a gigantic pro ram ill u which more hundreds of millions will be expended and more people encouraged to place themselves in debt I 1 cannot criticize the housing administration policy any more than I 1 can criticize the program of the HOLC the point is that there is is simply no ordination coordination co in government policies as they con concern cern these two agencies and consequently one group is building new homes and another is taking over old homes for which the buyers have been unable to pay in my humble opinion it does not make good sense I 1 have heard considerable talk among influential new dealers to the effect that new homes will sell more easily than the old ones and therefore the housing administration plans are held to be justified yet it does seem to be a perfectly natural and logical thing that new homes become old homes as time elapses and there are many who believe that the government because it has guaranteed the loans on new homes will have to take over a large percentage of them as well that is it will have to take over at least a normal percentage because whether the loans are made by private financing companies or by the government a considerable number of buyers are unable to fulfill their obligations it is not always the fault of the buyers sickness loss of jobs or a thousand and one other circumstances may develop that prevents the buyer of a home from carrying through his cherished dream of own the roof overl over his head it is the way of life that a certain percentage will and of necessity must fall by the wayside I 1 never have hav b been een able to agree that the federal government has any business in the wrong field of financing principle homes or extending credit to individuals vi I 1 have always criticized the hoover administration for creating the reconstruction finance corporation and the roosevelt a administration d for expanding its operations the principle is wrong because it uses money either borrowed by the government or paid into thee the treasury by the taxpayers to finance to build up personal funds of individuals or corporations it seems quite clear to me that the HOLC following the experiences of the te farm loan system justifies the conclusion that the federal government cannot successfully engage in that field in the first iastan instance ce I 1 think it is bad business for government to go beyond the protection of life liberty and property with all the implications carried in those three words as a governmental policy further and with much more emphasis I 1 am sure that any time government engages in that held field it opens the way for politicians to be tempted to be forced to do things in a legislative way that cannot be justified as economically sound earlier in this article I 1 suggested the difficulty always surrounding the sale of property that has been taken back from the original purchasers officials of private mortgage companies and other financial institutions have grown many a gray hair in their efforts to recover money loaned in cases where the borrowers have met with unfortunate circumstances the government finding itself in the position of the private lender insofar as repossession of property is concerned has about one half the chance of liquidation that the private lender would have and beyond that there is too much chance for favoritism scheming and even crookedness when the government attempts to do a job like the HOLC now is facing I 1 say that regardless of the honest purpose that I 1 know characterizes acte the present HOLC management it may not have occurred to some but the fact that the federal govern ment through gh the U U A 3 a HOLC will own all taxpayer of these houses which had to be taken back means that the federal government becomes a taxpayer in every city county and state where it owns these homes at the rate things are going and assuming that the ratio of delinquencies and defaults continue as they do for private lending agencies another four years will see the HOLC in possession of a minimum of parcels of real estate of course I 1 imagine the local tax collectors will be glad to see the federal government taking over the property because ca use they will then collect their ta taxes aes but where does that money come from sooner or later directly or indirectly it comes from the taxpayers of the nation it is not a pleasant outlook and who knows but what there may be more decisions like that of the florida judge who refused to trant grant the foreclosure plea of the HOLC attorneys on a twelve hundred dollar mortgage on the home ox of a cr clenter caro enter 0 western newspaper union |