Program to Strengthen Home Financing and Lighten Burden of Taxation on Real Estate Published

With President Hoover's proposed Federal Home Loan Discount Banks as the first 1tep, detailed plans to correct the defects in home financing and to lighten the destructive burden of taxes on real estate are offered to the public with the publication today of volume two of the final reports of the President's Conference on Home Building and Home Ownership. The volume is called "Home Firiancing and Taxation" and contains the second part of the complete program formulated by the President's Conference at its meeting in Washington last December, to raise the standard of American housing. It is the product of a survey of existing conditions in the financing of homes and in taxation as it relates to home ovgnership made by leaders in the home financing field, tax assessori, and economists who composed the Committee on Finance and the Committee on Taxation of the Conference.

It is evident from the Finance Committee's report that if the high cost of homes is the greatest deterrent to sound home ownership, the high cost of financing is.at the heart of this evil. Two-thirds or mo.re of all home purchases, says the Committee, require second mortgages, for which it is not unusual for buyers to pay a bonus of 15 to 20 per cent. In considering remedies the Committee states. that "the development of reputable second mortgage companies is essential."

In an introductorv analvsis of the Committee's reoort the editors of the reports, br. John M. Gries, who is 'also Executive Secretary of the President's Conference, and Dr. James Ford, find that present legislation based on poor appraisals is the principal cause for most second mortgages with their exorbitant rates and frequent failures.

"In order to assure safety for investments," the eclitors state, "legislation has been enacted that precludes certain financial institutions from investing in mortgages amounting to more than 5O per cent of the appraised value of the property." While such legislation may protect investments, they say, it is nevertheless the cause of most second rnortgages.

In addition, the editors emphasize the significance of the Committee's recommendation toall home buyers of the advantages of long-term amortized loans. 'ushould mortgages be made up to 75 per cent of the appraised value of the property where needed and justified, and equitably amortized, the home owner rvould be much better protected than he rtow is, and much of the need for junior financing would disappear."

In this connection, also, legislation is found to be at fault. State banks in some States are forbidden to hold mortgages made for periods in excess of one year, and National banks are prevented from holding mortgages made for longer than five years. "From the standpoint of liquidity such l_egislation seems to be in line with sonnd public policy. On the other hand, the inability of the home owner to renew such short-time mortgages in times of depression results in heavy losses to home owners and in the depression of real estate below normal levels, and is not in line with sound public policy."

Herein enter the Home Loarl Discount Banks proposed by President Hoover and which are norv the sublecl of a bill before Congress. These discount banks would provide discounting facilities for mortgage paper and thus insure liquidity for commercial banks, which in turn would remqve the hazards of non-renewal of mortgages for the home owner. President Hoover's statement recommending the establishment of the banks is included in the vslume, and in a foreword Secretary Lamont, of the Department of Commerce, states that our home financing system will be needlessly weak until these banks are estlbfished.

Other factors that contribtrte to the high cost of home financing, such as bad foreclosure laws and clumsy ,mortgage acts, are studied in detail by the Committee and remedial measures proposed.

A call to reform state and local tax practices and to reduce public expenditure is sounded in the report of the Committee on Taxation. Hor,v great is the need is evidenced by the Finance Committee which lists increases in taxation and special assessments among the principal causes of foreclosure in the present economic crisis. The Committee on Taxation states that millions of homes are today paying taxes that exceed 3 per cent upon their full capital value. fn one State investigated by the Committee taxation takes 31.7 per cent of the rental income of prop- erty. As a result of these conditions tax delinquencies have risen sharply since 1920, and an accompanying br.eakdown in the machinery of enforced collections and tax sales is said to have occurred.

In addition to a thorough survev of corrective steps to reduce the cost of government, the report discusses substitute taxes, the eflect of a property tax offset under an income tax, and tax exemptions.

The first volume of the President's Conference reports entitled "Planning for Residential Districts" appeared in March. Nine more volumes, making a total of eleven, will be needed to include all the reports of the thirty-one committees that collected data on €very phase of fiousing for the President's Conference. They will appear in the course of the next few months. The volumes can be purchased for $1.15 each postpaid, from Dr. John M. Gries, Executive Secretary, President's Conference on lfome Building and I{ome Owne'rship, Department of Commerce Building, Washington, D. C.

San Fernando Vallev Dealers Meet

The San Fernando Valley Lumbermen's Club met at North Hollywood, Calif., on Wednesday evening, May 11. R. R. Leishman and E. E. Hemming, Los Angeles, field engineers of the California Redwood Association, addressed the meeting on the Association's trade promotional activities. The next meeting will be held on Wednesday evening, June 8. Chester Knight, San Fernando Lumber Co., San Fernando, president of the club, presided at the meettng.

FRANK O'CONNOR VISITS SOUTHERN CALIFORNIA

Frank O'Connor, Donovan Lumber Co., San Francisco, president and general manager of the California Wholesale Lumber Association, spent a few days in Southern California the early part of ihe month cailing on the wholesale dealers in the Los Angeles district.