Chanses in NFIA E]]ective July 1

Washington, D. C., June 21-For the next two years the building industry may still benefit from the FHA Insured Modernization Loan Plan (Title I), because of new Federal legislation which goes into efiect July l. 1939.

FHA will continue to insure modernization loans made by qualified lending institutions. But the new amendments to Title I of the National Housing Act change several details of the FHA Plan. Industry will probably be most interested in the maximum amount which may be borrowed and in the number of years a loan may run'

The top loan is now $2500. If the loan is to be used for alterations or repairs the longest term is three years. Both limits are in line with present lending practice. If the loan is to be used for constructing a new residential or farm building, the term may be as long as 10 years. This longer term, however, does not apply to loans for other new construction such as garages, wayside stands, etc., which come under the three-year limit.

Another point of interest in the rlew amendments is the insured premium charge G/+% o" modernization loans and Yz% if the loan is used for new residential construction). This charge is to be borne by the lending institution and does not increase the cost of the loan to the borrower. The maximum finance charge remains $5 per $100 for modernization loans and $3.50 per $100 for new residential construction under Title I.

As in the ,past, modernization loans will be available to responsible prospects with good credit standing who wish to fix up their homes by making repairs or certain "permanent" improvements. Renters, as lvell as owners' may modernize on this plan only if they hold sufficiently long leases.

The borrower, of course, must have a regular income in addition to good credit standing, for these loans are "income payment" loans. However, the dealer or workman who contracts for the job is not paid in installments. On the contrary, material and labor are paid for in cash with the proceeds of the loan. The customer repays the lending institution in installments which are figured according to his means. In this way the modernization loan plan can turn many a prospect into a "cash customer."

Having learned this profitable fact from past experience, the building industry is at present busy with a campaignboth through its advertising and its sals5rngn-fo tell the public about Modernization Loans. Many people with adequate incomes still live in homes that are in need of improvements. Others would undoubtedly modernize their property if they were told how the cost could be budgeted conveniently.

Repairs, redecorating, remodeling, landscaping, and various types of permanent installations and built-ins may be paid for with FHA-insured Modernization Loans. In addition, new structures may be built.

A partial list of "eligible" equipment follows. If a specific ruling is desired about any questionable item, the request, preferably accompanied by descriptive, illustrated literature, should be forwarded to the Federal Housing Administration, Washington, D. C.

Eligible Home Equipment: Boilers as a part of the heating system, coal stokers, doors (including storm doors and windows), driveways, fences, heating systems, heat control devices as a part of the system, landscaping, lighting systems, lighting fixtures if a part of the system, linoleum when cemented to the floor, oil burners, plumbing systems, Radiation, if part of the heating system, ventilating systems, walks, water heaters as a part of the water system, water softeners as a part of the water system, wells and cisterns. Built-in: Breakfast nooks, bookcases, cabinets, closets, cupboards, incinerators, laundry chutes, laundry tubs, lightning rods, medicine cabinets, mirrors, ironing boards, shelves, ventilating fans.

Eligible Commercial and Miscellaneous Equipment: Built-in-Air-conditioning systems, ash-removal equipment when part of the heating system, barn pens, bins, booths. burglar-alarm systems, dust collectors, elevators, escalators, fire-alarm systems, fire escapes, fire-hose system (mounted on reels and permanently attached to the water system), sprinkler system, stalls, troughs.

The exclusion of any item or work from this list does not in itself imrply that it is ineligible.

As already mentioned, Modernization Loans may be used for new construction as well as for improvements to buildings which already exist. The new amendments divide Title I loans into three classes:

Class I Loans

A Class I loan may be used to finance the cost of alterations, repairs or improvements upon or in connection with existing structures only. For example:

Repairs-Including carpentry, masonry, electrical and plumbing repairs. This means anything from a crack in the sidewalk to a new roof.

Redecorating-Floors, walls and woodwork can be refinished. New floors can be laid, or "permanent" floor coverings such as tile or cemented linoleum paid for.

Remodeling-Any structural change may be made, such as putting up or removing partitions, building additions, making "ne\iv" rooms out of unused attic or basement space, building porches, su'nparlors, 'etc. The loan may also be used to convert one type of building into another type. For instance, a si.ngle family house could be converted into an apartment.

Modernizing-Cabinets, shelves, and other conveniences may be built in. New plumbing, heating and wiri.ng sys. tems may be installed or old ones modernized. The installation of a septic tank or cesspool, or the drilling of a

Class 1: Alterations or Repairs to or in connection with existing structures

Class 2: Construction of non-residential buildings. (a) Non-agriculturel. O) well, together with the necessar/ pumpi,ng equipmeht, would also be eligible.

Landscaping-The ground on which the building stands may be improved by grading, laying walks, building fences and planting.

A Class I loan may not be used to finance the cost of completing an unfinished structure. This, however, does not exclude a loan for the repair of a building which has been damaged but not substantially destroyed by deterioration, flood, fire, or other casualty; nor the construction of an attached garage or other attached building in connection with a completed house or other completed building.

Types of buildings which may bet improved with a C'lass I loan are: homes, apartment houses, multiple family houses, hotels, office or other commercial buildings, hospitals, orphanages, colleges, churches, manufacturing and industrial plants' class z

Loans

Loans in this class are for financing new structures which are not used wholly or in part for residential purposes.' These include barns, g'arag'es, service buildings of various types, wayside stands, gasoline stations, tourist cabins and various industrial or commercial buildings.

The cost of the equipment used in the operation of a business occupying the structure may not be included in the loan, but the cost of heating or lighting systems and similar items eligible for Class I loans may be included. For example, if the loan is used to build a gas station, part of the

Francis Hanson On New York Trip

F. G. Hanson, head of the West Coast Screen Co., Los Angeles, left June 11 on a business trip to New York in connection with promotion of sales of the Hollywood door and the buying of new machinery for the plant. He was accompanied by Mrs. Hanson. They will visit the New York World's Fair and will be gone three or four weeks.

loan may be used to install a heating system but not to buy and equip the structure with pumps or other trade equipment.

No part of the loan may be used to purchase land or existing structures, but more than one new structure may be built o.n a single piece of property, if the total amount expended is not more than $2500.

Class 3 Loans

This class is for financing the construction of new buildings which are to be used wholly or in part as residences. Certain minimum requirements must be complied with to assure sound and habitable construction. These apply to any commercial structure, such as a wayside stand, which is used as living quarters for the operators. As in the case of Class 2loans, the loan may be used for new construction only, not for the purchase of land or for equipment other than that eligible under Class I, nor may the loan be used to complete an unfinished structure.

Buidings which may be constructed with a Class 3 loan include vacation cottages, roadside stands which contain living quarters, and other buildings used wholly or in part as residences.

Since almost 9O per cent of the volume of Title I loans made in the past have been Class I loans, it would appear that the majority of prospects are interested in the ordinary run of home repairs and improvements. However, the alert dealer will familiarize himself with all phases of the FHAInsured Modernization Loan Plan.

ED BIGGS WITH AMERICAN HARDWOOD CO.

Ed Biggs, recently with A. L. "Gus" Hoover, Los Angeles, and formerly with Union Lumber Co., is now a member of the sales staff of American Hardwood Co', Los Angeles. He has bee.n connected with the lumber business in Southern California for a good many years and is well known to the trade.