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FHA Form. No. 12 FEDERAL HOUSING ADMINISTRATION MEMORANDUM DATE TO: SUBJECT- Honorable J, M. Daiger Room 610 - Shoreham Building Washington, D # C. Dear Daiger: The attached is Dr. Fisher's report on the Brooklyn savings banks situation that you spoke to me about. Si/irerely yours, Stewart McDonald Administrator 5-26-36 SITUATION IN BROOKLYN AND LONG ISLAND Cm ItdttMday and Thursday, May kQ and 21, I was in Xork ana called on eoiae of UM tfflotri Qt Dc-,vlngs and of In* bavinga B&ak Trust Coap&ny to discuus with the® the situation in Brooklyn and Lon^ Island in winch w*s hftT« mutual interests. The attitude that I tooc: was til ..x, you hzQ »AlDt(l • • to :o Hew Etefe to inaicatfc to maibl« offieam of savings banicii aur desire to cooperate with tasa in acaieving shat we conceive to be our •ntmiil oDJ^ctivea of aaintaining a sound mortgage rasrk:et and improving bousing conditions. I particu,. liclt#d c r i t i c i a a s o. our pm procedure in BrooJtlyn tnd uong I»Xaai enci the opinion of tlieae offici&is 10 to tha changes ifHich vould wVI^ a chaser coordination Xiieieu b l t t m as . The principal criticis r i» or Qujectian& MMtMTCd &i'ound ti'iree points, i.©.s 1. SaviB| Ui laroociyn aad ijoiag 1SI&.OG p< 1 or are about to pom 1 cjnsi1 number of propert i e s at a coet of a«<iui#iti«o which i s hlglbsr than the prices at «hich n&» b0VM9 on saich we are i n suring — r t | Lag sold. TlMM ofan^s are concerned, therefore, about tlM wraantity of new houses placed on the Market «.t tn«se prices, ih&y ere oilerlag, however, to make m lMMIf i^na i baiieve that this a t t i t u a e on their pert e&n be ehftBf^ll by careful aegotiation* 2* Soae of these official* I In connection with isose of the MB.t* in viiuc' -iriag aortgages oux1 »t«»t<rd< are sot being enforced. Some •boddjr conatraction i s being biilit &nc pwilMara being deceived u to the q«fclity 01 coastruction of nouses ^hey pare 1 air. McDonald M&y 2$, 19>6 AHB LONG ISLilHD blTUAI'IOH — patJe ^ . In connection ssitfc this critici&ai I strongly urged that y submit i f 111 fir cases to WM to enable xm u> sake careful investigation tad ta&e action &ccortiingly on our findingiJ^^Ij.eaiphaaized tkat general statements we eould do ho things iiut that ra would take prompt action on any eases that sere brought tc our attention* 3. i>ome very bittor opinions wera expressed about the a c t i v i ties of Faderal Savings tfti Loan Asaoci&tionE in this area. In the opinion odt UXMM sdtn whoa i talked., fu&da to lend on sound f i r s t aortt;ac;ss tat9 very abundant. There therefore f no need for tha .organisation of Federal Savings and I»oan Associations in the area, I t was pointed out tfcftt t i j>ci::,tioai» oper-->. te with reiati¥ely l i t t l e r e s t r i c t i o n . They can ma&e loans up to 75^ oi* their own appirmiamlSj whether iasur^so or not insured. They are not obliged to aftfe* any inspectiafis to insure sound construction on "aninsm-ed loans, and no lissiuitions are winced opon ins ¥o^um.e ox' m bttildlni; */U.eh they aay Mh> courage through their If the unbridled coa^tstition far VOIIUM of Itmam which in the l 20 f i de'veiops in tula or other areas, the MHM unsound situation will be created shich brought aboul mil i f in the 20*8,. I t i s on the method ox ooep«zmtlag in ouch & way as to prevent this unsound d©«r©iopaent that we wish to meet with the olfic&rs of IJMM si&vings b&aks* they reply that no ioa^ at a jr'@d»raily controlled and partially Federally financed institution i s creating t h i s uncontrolled and imrestrictsd competition for loans both u to quality and quantity they see no point la mutiny roiy efiort to cooperate in our program, in other words, they uty "Let the fi'¥tm—lit i«t i t s own house in order, and th«n private landing institutions will be ready to cooperate." Mr. McDonald • * J 2 5 , 1936 BSOO&LXXAD LOIG ISL l e are B — ftopln • mprtlititiTt ^roup rill be willing to meet at an Mtrlj oate to Giscutse wilese mutual probleas. Mr« Daiger iMUl agreed to go a l t h Hie or vith any else whom you d««lfBat« to such a eani'erence. Ernest iU ilshar
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