The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
Eighth Annual Report
FEDERAL HOME LOAN
BANK BOARD
for the period
JULY
1,
1939,
through JUNE 30, 1940
covering operations of the
FEDERAL HOME
FEDERAL
SAVINGS
LOAN
AND
BANK SYSTEM
LOAN ASSOCIATIONS
FEDERAL SAVINGS
LOAN
HOME
INSURANCE
OWNERS'
AND
CORPORATION
LOAN CORPORATION
Eighth
Annual Report
FEDERAL HOME LOAN
BANK BOARD
covering operations of the
FEDERAL HOME LOAN
FEDERAL
SAVINGS AND
BANK SYSTEM
LOAN ASSOCIATIONS
FEDERAL SAVINGS AND
LOAN INSURANCE
HOME OWNERS'
CORPORATION
LOAN CORPORATION
for the period
JULY I, 1939, through JUNE 30, 1940
_
~
LI
__
_~
sl~l~
Letter of Transmittal
FEDERAL HOME LOAN BANK BOARD,
Washington, D. C., October 1, 1940.
The
SPEAKER OF THE HOUSE OF REPRESENTATIVES.
SIR: Pursuant to section 20 of the Federal Home Loan Bank Act,
we have the honor to submit herewith the Eighth Annual Report of
the Federal Home Loan Bank Board for the period July 1, 1939,
through June 30, 1940, covering the operations of the Federal Home
Loan Banks, the Federal Savings and Loan Associations, the Federal
Savings and Loan Insurance Corporation, and the Home Owners'
Loan Corporation.
During the fiscal year 1940, the war abroad had little direct influence
on housing and mortgage finance, the two broad fields of activity
with which the Federal Home Loan Bank Board is principally con
cerned. Residential building activity continued at a fairly high
level and exceeded the total volume of the preceding fiscal year. The
flow of savings into financial institutions continued to increase, and
home mortgage lending activity by both private institutions and
individuals reached a new nine-year high.
New mortgage loans made on one- to four-family dwellings, during
the calendar year 1939, totaled approximately $2,871,000,000-an
increase of 16.6 percent over the preceding year and an all-time
peak since 1930. Selected types of long-term savings, which con
stitute the principal source of home mortgage credit, increased sub
stantially during the calendar year 1939. The first section of the
present report, entitled Survey of Housing and Mortgage Finance,
analyzes these developments and other trends equally important to
the operations of the Board.
The Federal Home Loan Bank System has completed its eighth
year of operation as a central reservoir of credit for thrift and home
financing institutions. From the fall of 1932, when the twelve
District Banks were organized, through June 30, 1940, advances
totaling $631,033,292 have been made to member institutions. Of
this amount, $473,636,245 has been repaid, leaving $157,397,047 in
III
IV
LETTER OF TRANSMITTAL
advances outstanding on June 30, 1940. During the same period,
the Federal Home Loan Banks earned a net income of $24,536,799,
of which $10,264,036 has been allocated to reserves and undivided
profits, thus strengthening the capital structure of the Banks. The
remaining $14,272,763 was distributed in dividends to stockholders,
of which $11,183,336 was paid to the U. S. Treasury and $3,089,427
to member institutions.
During the fiscal year 1940, the number of member institutions
declined from 3,946 to 3,914, due principally to mergers and other
improvements in the financial structure. The aggregate assets of
members, however, increased 7.1 percent, totaling approximately
$4,930,000,000 on June 30, 1940. New mortgage loans made by
member savings and loan associations during the reporting period
totaled $894,212,000, or an increase of 30 percent over the preceding
year.
On June 30, 1940, there were 1,429 Federal savings and loan asso
ciations as compared with 1,386 associations operating under Federal
charter a year previous. Federal savings and loan associations are
private thrift and home-financing institutions which operate under
the supervision of the Federal Home Loan Bank Board as provided
by the Home Owners' Loan Act of 1933. Federal associations are
established either by conversion from State to Federal charter, or
by granting charters to newly organized institutions. There was a
dual purpose in the establishment of these institutions: (1) To make
available facilities for savings and home-mortgage lending in com
munities where such facilities were formerly lacking or inadequate
and (2) to combine under Federal charter the best practices developed
in over one hundred years' experience by the savings and loan in
dustry. Private capital entrusted to Federal savings and loan asso
ciations on June 30, 1940, totaled $1,268,000,000. New mortgage
loans made by these institutions during the fiscal year amounted to
$457,816,000, or an increase of 30 percent as compared with the
preceding fiscal year.
The Federal Savings and Loan Insurance Corporation was estab
lished in 1934 under Title IV of the National Housing Act. By
guaranteeing the safety of investments of $5,000 or less in insured
savings and loan associations, the Corporation has strengthened
public confidence in these institutions and stimulated the flow of
savings into the thrift- and home-financing field. The number of
LETTER OF TRANSMITTAL
savings and loan associations insured by the Federal Savings and
Loan Insurance Corporation increased from 2,170 to 2,235 during
the fiscal year 1940. During the same period, the number of indi
vidual investors in insured institutions increased from 2,236,000 to
2,591,600, and the amount of private capital invested rose from
$1,657,859,000 to $2,019,808,000.
On June 30, 1940, total resources of the Corporation amounted to
$124,917,101 as compared with $119,400,262 a year previous. In
addition to the capital stock of $100,000,000, the Corporation's bal
ance sheet at the end of the reporting period showed $23,620,811 in
surplus and reserves. This represents an increase of $5,337,467 in
the surplus and reserve accounts during the fiscal year. From the
beginning of operations to the end of the reporting period, only 16
insured associations have experienced difficulties which necessitated
corrective action by the Corporation.
Assistance given by the Home Owners' Loan Corporation to home
owners was broadened during the fiscal year 1940. Under the terms
of an amendment to the Home Owners' Loan Act, approved August
11, 1939, the loan amortization period was extended up to a maximum
of 25 years for a substantial number of HOLC borrowers. By reso
lution of the Board, provision was made to accept interest on loans
at 4% percent on all payments due on and after October 16, 1939.
A procedure was established to enable borrowers to remit taxes and
insurance premiums to the Corporation in periodic payments with
their loan installments. The progress toward liquidation of the
Home Owners' Loan Corporation was marked by a decrease in the
total balance of loan and property accounts from $2,629,952,937 to
$2,436,945,646 during the fiscal year 1940. Rapid progress was
made in the sale of owned properties. The number of properties
owned and in process of acquisition declined from 99,354 to 70,780
during the fiscal year 1940. The vast majority of the Corporation's
original borrowers continued to make steady progress in repaying the
indebtedness on their homes. On June 30, 1940, the average loan
balance outstanding per original borrower was $2,268 as compared
with an average original loan of $2,930 at the time the loans were
refinanced-a reduction of 22.6 percent.
Since July 1, 1939, the Federal Home Loan Bank Board, the Home
Owners' Loan Corporation, and the Federal Savings and Loan Insur
ance Corporation have been grouped with certain other Government
agencies under the Federal Loan Agency.
VI
LETTER OF TRANSMITTAL
During the fiscal year 1940, as in the past, the Federal Home Loan
Bank Board and the agencies under the Board used no appropriated
funds from the public treasury. Although operating under budgets
and appropriations approved by the Congress, the actual income of
each of the agencies is obtained from interest on loans and invest
ments, insurance premiums, and similar forms of revenue.
Respectfully,
JOHN H.[FAHEY, Chairman,
T. D. WEBB, Vice Chairman,
FRED W. CATLETT,
WILLIAM H. HUSBAND,
FRANK W. HANCOCK, Jr.,
Members.
_ __
__
__
~
__
Contents
Page
III
LETTER OF TRANSMITTAL ---------------------------------
I.
1
SURVEY OF HOUSING AND MORTGAGE FINANCE---------
1. Residential construction and the real-estate marketContinued increase of residential buildingPrivate versus public construction
Predominant position of single-family houses----Changing frontiers---------------------------Mixed trends in the real-estate market
Decrease of foreclosures_
Reduction of real-estate overhang
Building costs-still a problem
Stability of rents and vacancies
Neighborhood conservation ---------2. Mortgage finance and savings ------------------Increased volume of home-mortgage lending- - - - Savings and loan associations in lead --------Regional variations of mortgage-lending activity - Increase of construction loans
-Decline in refinancing
Lowering of financing costs ---------------Lending policies in a competitive market ------Continued rise of home-mortgage debt ---------Abundance of savings ----------------------Declining return on savings- ------------------Dividend policy of thrift- and home-financing
institutions -------------------------------
II.
48
51
FEDERAL HOME LOAN BANK SYSTEM -------------------
1. Summary-----------------------------------2. Membership -----------------------------Changes in membership----------------------The consolidation in the savings and loan industry 3. Operations of member institutions ------------New high of lending activity ------------------Retirement of Government investments ---------
2
2
4
6
8
10
12
13
16
18
19
22
23
25
29
32
33
35
38
40
44
46
VII
51
52
52
56
59
59
62
VIII
CONTENTS
II. FEDERAL HOME LOAN BANK SYSTEM-Continued.
Page
3. Operations of member institutions-Continued.
Condition of member associations -----------66
Statement of operations ---------------------71
72
4. Operations of the Federal Home Loan Banks------Decline of advances outstanding- --------------- 72
Shifts in advances --------------------------74
Statement of condition -------------76
Income and expenses -------------------------81
Administration of the Bank System -------------83
Examination and supervision -----------------85
87
Federal Home Building Service Plan ----------III. FEDERAL SAVINGS AND LOAN ASSOCIATIONS ---------89
Place of Federal associations in the home-financing in
89
dustry----------------------------------------91
Growth in number and assets------------------ ---94
Private capital displaces Government investments
97
Increased lending activity- -----------------------98
Statement of condition and operations --------------100
Legislation-_------------------------------- ---101
IV. FEDERAL SAVINGS AND LOAN INSURANCE CORPORATION Summary_ --------------------------------------- 101
102
Extension of insurance protection
104
Operations of insured associations ------------------107
-----------------Community programs-----------_
110
Results of reorganization cases ---------------------111
Examination and supervision ------------------112
Settlements-------------------------------------114
---------Operation of insured institutions in default
117
------------------personnel
and
condition
Financial
120
------------------------------State legislation--121
-V. HOME OWNERS' LOAN CORPORATION----------------1. Summary_------------------------------------- 121
122
2. New aid to home-owners -----------------------122
Reduction of interest charges --------------123
Loan extensions and revisions ------------Execution of the extension program-------------124
127
Tax and insurance deposits-_ --------------129
3. General operations during the fiscal year ---------129
Shifts in status of accounts ----------------Collections----------------------------------131
132
-------Loan service _
CONTENTS
IX
V. HOME OWNERS' LOAN CORPORATION-Continued.
3. General operations during the fiscal year-Contd.
Foreclosure operations-------Decline of real-estate holdings
Increase of vendee accounts
Reconditioning ----Appraisal activity -------------Insurance-------------4. Survey of HOLC finances
---
-
Risks assumed by the HOLC
Debt liquidation by original borrowers
Recoveries and losses of the Corporation
6. Administration and personnel ---------LIST OF CHARTS -------------------------
LIST OF EXHIBITS---------------------------------
Exhibits-----
------------------------------
IN DEX - - ---------------------
134
138
142
143
145
146
148
Financial condition---Income and expense-----5. The process of liquidation-
Page
148
151
153
153
155
157
161
165
168
173
249
ORGANIZATION
FEDERAL
CHART
HOME
OF
THE
AGENCIES
LOAN
OF
THE
BANK
BOARD
(Created by Federal HomeLoanBankAct-ApprovedJuly22 1932)
FEDERAL HOME LOAN BANK SYSTEM
(Created by Federal Haom Loon Bank At
(As Amended)
FEDERAL
An instrumentality of the United States est
ablished to*insure the safety of investment to a
maximum of $5000.00 for each investor in each
Federal savings and loan association and in each
state-chartered institution of the savings and loan
association type which applies and is approved.
The members of the Federal Home Loan Bank
Board constitute the Board of Trustees of the Fed
eral Savings and Loan Insurance Corporation
inatitutions.
TWELVE
LOAN
HOME
MEMBER
INSTITUTIONS
INDIVIDUAL INVESTORS
AND BORROWERS
|
BANKS
r
HOME OWNERS' LOAN CORPORATION
(Authorisedby Home Owners' Loan Act . Approved Jne 13, 1933)
(Created by National Housing Act 1934 Approved Jane 27, 1934)
(As Amended)
A credit reserve organizaton for thrift and
home financing institutions. Regional Federal Home
Loan Banks, subject to the regulations of the Federal
Home Loan Bank Board. Make short-term and long-term
advances to and accept deposits from their member
PFEDEAL
SAVINGS & LOAN
CORPORATION
INSURANCE
.- Approved Jly 22, 1932)
FEDERAL SAVINGS-&
(As Amended)
An emergency orgammnization
created to extend
relief to distressed home owners who were ia danger
of losing their homes through foreclosure. Since
June 12, 1936
has been engaged chiefly m servic
its loans, liquidating its assets and dischargingits
responsiblities to bond holders and the Government.
Members of the Federal Home Loan Bank Board con
stitute the Board of Directors of the Home Owners'
Loan Corporation.
ang
st
LOAN SYSTEM
(Authorized by Home Owone*' Loan Act - Approved June 13, .933)
(Ao Amended)
Local mutual savings institutions, chartered
and supervised by the Federal Home Loan Bank
Board, and operated under boards of directors elected
by their members. They encourage long-term thrift
accounts and the financing of homes on long-term
amortized first mortgage loans.
INSURED INVESTORS
APPROVED
11-1539
o$
E LO
Chairman,
FEDERAL HOME LOAN BANK BOARD
270198-40
(Face p. 1)
a_ _____
~
I
__I
~_
__
~
Survey of Housing and Mortgage Finance
THE fiscal year
1940 was overshadowed by the armed conflict in
Europe that came to have effects of varying intensity on eco
nomic conditions in the United States. The fields in which the Fed
eral Home Loan Bank Board operates were not directly influenced
by the war during the reporting period. Investment of funds in
home mortgages, the construction of new homes, activity in the
real-estate market, and operations of home-financing institutions con
tinued in much the same manner as might have been expected had
there been no war in Europe.
Upon the outbreak of the war, there was a widespread inclination
to look for analogies with the last World War in which housing and
real-estate financing had been progressively handicapped even before
the United States became a belligerent. When the fiscal year 1940
drew to a close, neither the fears nor the hopes derived from such analo
gies had come to pass. The flow of savings into financial institutions
continued unabated. A brief flurry of withdrawals in some areas
during the first few weeks of the war was quickly reversed. Lending
activity on home mortgages by private institutions and individuals
reached a nine-year high, and financing costs of home ownership
dropped further. Residential construction remained on a reasonably
high level and exceeded even the substantial volume of the preceding
fiscal year.
On the other hand, optimistic expectations of a marked rise in real
estate values because of war psychology failed to materialize; prices
for old properties were stable at best or continued to decline. The
only direct and continuing effect of the war was a sharp increase
in many building-material prices during the latter half of 1939-a
dislocation which unfortunately was little corrected in subsequent
months.
Inasmuch as war orders and increased exports to neutral countries
helped to sustain the improvement of domestic business that appeared
to be in the offing in the summer of 1939, they aided in the rise of na
tional income which is one of the factors determining the volume of
home purchase and home building. Toward the end of the reporting
2
REPORT OF FEDERAL HOME' LOAN BANK BOARD,
1940
period, moreover, the American defense program added a new stimu
lus.
The absence of marked repercussions on housing and mortgage
finance in the first twelve months of the European war through Sep
tember 1940 (when this report goes to press) does not, of course, pre
clude substantial interferences in the future should the war be pro
tracted. In any evaluation of war effects, the time element is a most
potent factor. In addition, the defense program may raise new
problems in the fields in which the Federal Home Loan Bank Board
operates.
Whatever the future may bring, the home-financing structure today
is better prepared to face an emergency than ever before. The mem
ber institutions of the Federal Home Loan Bank System can draw on
the resources of the Bank System to obtain funds for the payment of
withdrawals or for making mortgage loans. Certain Government
agencies are especially equipped to provide a market for mortgage
Commercial
loans insured by the Federal Housing Administration.
banks are permitted to obtain advances on the security of mortgages
as well as other acceptable collateral. Insurance of accounts in
savings and loan associations has a beneficial effect on investors' confi
dence. The preponderance of long-term amortized mortgages in the
present home-mortgage structure reduces hazards that would result
from large-scale maturities of straight loans calling for renewal.
1. RESIDENTIAL CONSTRUCTION AND THE REAL-ESTATE MARKET
Continued Increase of Residential Building
General business conditions were highly erratic throughout the fiscal
year 1940. A hectic buying wave upon the outbreak of the war gen
erated a steep rise in industrial production which resulted, however,
in inventory accumulations rather than in a concomitant increase of
consumption. This was followed by a sharp reduction in output from
January to April, which brought the level of industrial activity back
to that of the fall of 1939, and by a subsequent recovery engendered
mainly by defense orders or their anticipation. Nonagricultural in
come as a whole moved less irregularly and rose from $61,541,000,000
in the fiscal year 1939 to $64,938,000,000 in the fiscal year 1940, or
by 6 percent. Since the cost of living during' the past fiscal year re
mained fairly stable, there was an approximately equal increase in real
income-a condition favorable to the building and purchase of homes.
Taking the fiscal year 1940 as a whole, residential construction
continued the major upswing that has been under way since 1935,
but the expansion was at a much lower rate than during the previous
3
SURVEY OF HOUSING AND MORTGAGE FINANCE
CHART I
INDICES
OF RESIDENTIAL
CONSTRUCTION
~NDE
AND INDUSTRIAL PRODUCTION
1926=100
INDEX
BY MONTHS
ANNUAL AVERAGE
--o-
\
120
80
V
f-I
INDUSTRIAL
PRODUCTION
%
00,
--
---
RESIDENTIALCONSTRUCTION
-
---
20
1926
1927 1928 1929 1930 1931 1932 1933 1934 1935
I'36
1937 1938 1939
MAR. JUN
SEPT DEC
1939
MAR JUN
1940
DIVISION
OF RESEARCHAND STATISTICS
FEDERALHOME LOANBANKBOARD
CHART II
CONSTRUCTION
OTHER THAN
CONSTRUCTION CONTRACTS
INDEX 1926 =100
BY YEARS
,NDEX
120
RESIDENTIAL
AWARDED
BY MONTHS
---
-
---------------
so --
-
80
60o
-'"'
-
-
------ "--
-
-
--
-
-
--
--
--
-
--
4C-------------------------------.
0
20
-
-
-
-
-
-
K
I
1926 1927 1928 1929 1930 1931 1932 1933 1934 1935 1936 1937 1938 1939
Source Board of Govenorsof the Federal Reserve System,
based on reports of the FW DodgeCorporation
I
MAR
!
JUN
II
II
SEPT DEC
II
MAR. JUN.
1939
1940
DIVISION
OFRESEARCH
ANDSTATISTICS
FEDERAL
HOME
LOANBANK
BOARD
4
REPORT OF FEDERAL HOME LOAN BANK BOARD, 1940
fiscal year. As evidenced by building permits, construction was
started on 482,804 nonfarm dwelling units as compared with 419,539
in the fiscal year 1939, and the dollar cost of these units was estimated
at $1,639,270,000 as against $1,483,148,000 in the preceding fiscal
year. This was an increase of 15.1 percent in the number of units
and of 10.5 percent in dollar volume, as compared with increases of
53.3 and 41.1 percent, respectively, in the previous year.
The larger volume of residential building operated to offset, to a
certain extent, a decline in nonresidential construction during the
year.
Private nonresidential building, especially factory construction,
reflected some increase over the fiscal year 1939. On the other hand,
public nonresidential construction, which looms very large in total
nonresidential construction,
CHART II
showed a substantial decrease due
DISTRIBUTION OF RESIDENTIAL CONSTRUCTION
to the completion of the Public
PRIVATE AND U S H A
(NUMBER OF NONFARM DWELLING UNITS)
Works Program of 1938. As a
n rs e i
FISCALYEARS 1938-1940, BY HALF-YEAR PERIODS
result,
THOUSANDS
[- uSHA
nonresidential
construc
tion as a whole was lower than in
the preceding fiscal year.
Private Versus Public Construction
-
50so
During the fiscal year 1940, pub
-
~
-
licly
financed
building
was
an
important factor in total resi
dential construction. The num
ber of dwelling units provided
00
under the slum clearance provi
PRIVAE
so -
-
011"
d
-
1937
d
t
2n Half I Half
1938
2
...
n Half It Half
1938
1939
d
n
n Half 11940
Half
1939
2
AND STATISTICS
DIVISIONOFRESEARCH
sions of the United States Housing
Act of 1937 was 58,716 as com
pared with 25,505 in the preceding
year. This rise was augmented
by some State and locally spon
sored projects such as those under
taken under the New York Public Housing Law of 1939.
All in all, it is estimated that over 12 percent of the nonfarm dwelling
units on which construction was started in the fiscal year 1940 was
provided by projects financed through the United States Housing
Authority. The bulk of this activity was concentrated in the period
from July to December 1939. In the first few months of 1940, the
volume of publicly financed building declined.
5
SURVEY OF HOUSING AND MORTGAGE FINANCE
The following table compares the expansion of USHA-financed con
struction with the increase in private building activity in nonfarm
areas:
Comparison of private residential construction with USHA-financed construction
Total construction
Fiscal-year period
1938
---------..-------------1939 ..-----..-----------------1940
----------- ------------
Dwelling
units
started
Increase
over
preceding
year
Private construction
USHA construction
Dwelling
units
started
Dwelling
Increase
started
preceding
year
Increase
over
preceding
year
Number
Percent
Number
Percent
273,742 .........-----273,022----...-419,539
53.3
394,034
44.3
482,804
15.1
424,088
7.6
Number
Percent
720 25, 505
3,442.4
58,
716
130.
2
These figures indicate that more than one-half of the 1940 increase
of total residential construction was accounted for by projects financed
through the United States Housing Authority. Private building rose
only by 30,054 dwelling units, or as little as 7.6 percent.
The relatively small expansion of private building activity during
the fiscal year 1940 raises the question whether new private construc
tion is not approaching a period of relative stability. It is true of
course that the effects of the defense program may change the present
relationships between the supply and demand for housing. How
ever, it appears that at the present level of family incomes and building
costs, an annual supply of approximately 450,000 dwelling units is
about all the effective demand, resulting from normal replacements
and increases in the number of families, can absorb. Further expan
sion of private building seems to be predicated upon (1) a material
rise in national income, without corresponding increase in building
costs, (2) a marked reduction of building costs, or (3) a further
decrease of financing costs. For a number of years, private home
building has been supported by an ample supply of funds and a con
tinuous lowering of financing costs through reduced interest rates.
Amortization periods have been extended and down payments
reduced. The 1940 experience may indicate that this impetus has
spent its force, and it is an open question whether substantial general
reductions of financing costs from the present low level will be forth
coming.
Essentially, however, and barring unforeseen events, the situation
remains favorable to private building. The following chart indicates
that the oversupply of nonfarm dwelling units in relation to the
number of nonfarm families, accumulating since 1925, had been
6
REPORT OF FEDERAL HOME LOAN BANK BOARD,
1940
absorbed by 1938. Since then, the number of total available housing
units has been moving closely parallel to the number of nonfarm
families, with an indicated slight shortage of dwelling units in 1939
and 1940. In fact, 1938 was the first year showing a deficiency in
available family units since 1924.1
CHART IV
TOTAL FAMILIES AND TOTAL AVAILABLE DWELLING UNITS IN NONFARM AREAS
MILLIONS
1920
UNITED
STATES - DATA AS OF JAN I EACH YEAR
1930
1925
Source NotionalResourcesCommittee, Residential Building
BdDIVISION
1940
1935
AND STATISTICS
OF RESEARCH
FEDERAL
HOMELOANBANKBOARD
Predominant Position of Single-Family Houses
The single-family dwelling continues to hold a predominant position
in new construction.
This is not only indicative of the strength of
traditional preferences of the average American, but should also
be an encouragement to local savings and loan associations which
from the very beginning have specialized in financing this type of
dwelling.
1 Chart IV measures the total number of available dwelling units and the total number of families. The
fact that an oversupply of dwelling units is revealed for the period from 1925 to 1938, and that the under
supply thereafter is only small, does not preclude serious local shortages; nor does it preclude shortages for
certain income groups. In addition, the number of available housing units includes substandard dwellings
as well as others. The doubling up of a large number of families also influenced these trends. The two
curves in the chart are based on: National Resources Committee, Housing Monograph Series, No. 1, Resi
dential Building, Table VI. The underlying estimates of the number of nonfarm families and the number
of nonfarm dwelling units were brought up to date by the Construction and Real Property Section of the
Bureau of Foreign and Domestic Commerce.
7
SURVEY OF HOUSING AND MORTGAGE FINANCE
In past building cycles, an upswing was usually accompanied by a
disproportionate increase in the erection of apartment houses, attend
ant upon the growth of our cities. In the Twenties, for example, the
proportion of new dwelling units in apartment houses to total dwelling
units built rose from 18.6 percent in 1922 to 22.2 percent in 1925 and
to 31.7 percent in 1928, with both an absolute and relative decrease
in the construction of one- and two-family houses. In fact, the boom
in apartment-house building came into full swing from 1926 to 1928
when total residential construction was already on the decline. The
present building recovery thus far has distinguished itself by a con
sistently high share of single-family dwellings in total construction,
and a large proportion of these dwellings is designed for owner
occupancy rather than rent. Cities still grow in population, but the
expansion is mainly in outlying metropolitan areas where there is
enough open space for the desired single homes, rather than in the
congested central districts where apartment-house building pre
viously was concentrated. Improved highway facilities and increasing
per capita ownership of automobiles have accelerated this movement
toward suburban single-family homes.
CHART V
NUMBER
NONFARM
'23'
24 '25
'26
'27
'28
'29
Source -National Bureau of Economic Research 1921-1936
U S Department of Labor 1937 - 1940
270198-40-2
DWELLING UNITS
BY TYPE OF DWELLING;
THOUSANDS
'1921 '22
OF NEW
'30
'31
BUILT
1921 - 1939
'32
'33
'34
'35
'36 '37
'38
'39
DIVISION
OF RESEARCH
AND STATISTICS
HOMELOANBANKBOARD
FEDERAL
8
REPORT OF FEDERAL HOME LOAN BANK BOARD,
1940
In contrast to the steady decrease in single-family home construction
during the Twenties, dwellings of this type, including row houses,
constituted between 73 and 79 percent of all units built from 1933 to
1940. Even the recent increase in publicly financed construction,
which is concentrated in the larger cities, did little to change this
picture. Approximately 56 percent of the dwelling units in USHA
financed public projects started during the calendar year 1939 were
in one- and two-family houses, including row houses.
Another significant long-term trend in residential building is the
declining importance of two-family dwellings. In the early Twenties,
two-family homes represented from 15 to 20 percent of all newly
constructed units. The Census of 1930 still showed 15 percent of
existing homes in this type of dwelling. In the last few years, the
share of two-family homes in total new construction has decreased
to less than 5 percent. Coupled with the difficulties of financial insti
tutions in disposing of old properties of this type, this indicates clearly
that the demand generally has turned away from two-family houses.
Exhibit 1 shows the actual figures underlying Chart V.
Changing Frontiers
In last year's Annual Report, the Federal Home Loan Bank Board
called attention to the unequal distribution of new residential build
ing over the country. In the fiscal year 1940, construction of dwellings
remained "spotty," depending on widely varying local conditions.
In fact, the upswing of residential building activity in the last few
years seems to have been the combined result of predominantly local
needs, reflecting in part changing frontiers. In past decades, the
extension of our external frontiers and the settlement of new terri
tories led, of course, to great regional variations in home building.
This pushing forward of our external frontiers has long since come to
a close, but our regional and local frontiers are still in flux due to
migrations of peoples and industries, to new technical developments,
and changes in the age structure of the population. As a result,
certain areas and cities show phenomenal growth, while others decline
or remain stagnant. Preliminary findings of the 1940 Census show,
for example, the following changes in population of selected cities from
1930 to 1940, in the face of a 5.1 percent increase in total population
of the 405 cities for which Census data had been released through
September 13, 1940.
9
SURVEY OF HOUSING AND MORTGAGE FINANCE
Changes in city population, 1930-40
30 cities with growing population
City
Population
P pui
1930
1940
Corpus Christi, Tex
27, 741
57,443
Austin, Tex..------53,120
87,878
Miami, Fla.--------- 110,637 170, 877
St. Petersburg, Fla
40, 425
59,178
Santa Monica, Calif
37, 146
52, 828
San Diego, Calif 147, 995 202, 038
Washington, D. C
486, 869 663,153
Phoenix, Ariz ----48,118
65, 434
Jacksonville, Fla .-129, 549 174, 336
Houston, Tex .---292,352 386,150
Glendale, Calif-....
62, 736
81, 744
Jackson, Miss .------ 48, 282
61,965
Shreveport, La-.-..
76,655
97, 964
Dearborn, Mich .-50, 358
63, 655
Columbus, Ga- .
43, 131
53,104
Charlotte, N. C .
82, 675 100,327
Los Angeles, Calif --- 1,238,048 1,496,792
Amarillo, Tex ---43,132
51, 497
San Jose, Cahf 57, 651
68, 298
Montgomery, Ala- ..
66,079
78,008
Columbia, S. C ---51, 581
60, 505
Fresno, Calif-----52, 513
60, 644
Madison, Wis -. 57, 899
66, 802
Long Beach, Calif -- -142,032
163,441
Memphis, Tenn253,143 291, 312
Durham, N. C ----52, 037
59, 731
Mobile, Ala------.
68, 202
78,324
Galveston, Tex- .
. 52,938
60,334
Charleston, S. C-..
62, 265
70, 869
Stockton, Calif 47,963
54, 513
30 cities with declining population
Population
Percent
increase
107.1
65.4
54. 4
46. 4
42. 2
36. 5
36. 2
36.0
34. 6
32 1
30. 3
28. 3
27. 8
26.4
23.1
21.4
20. 9
19. 4
18. 5
18.1
17. 3
15. 5
15. 4
15.1
15.1
14. 8
14.8
14.0
13.8
13. 7
City
tydecline
Percent
_____
1930
Bayonne, N. J -88, 979
Hamtramck, Mich_ - 56, 268
Schenectady, N. Y_..
95, 692
St. Joseph, Mo ----..
80, 935
El Paso, Tex-102,421
Holyoke, Mass .- -- 56, 537
Jersey City, N. J.___ 316, 715
Covington, Ky--..
65,252
Akron, Ohio --------255, 040
Union City, N. J-58, 659
Elizabeth, N. J-----114, 589
Highland Park, Mich_ 52,959
Lynn, Mass .----102, 320
Atlantic City, N. J - 66,198
Troy, N. Y ------ - 72, 763
Toledo, Ohio ----- 290, 718
Flint, Mich--------156,492
Newark, N. J.---442, 337
Cicero, II-ll -66, 602
Irvington, N. J- .. _56,733
Hamilton, Ohio
52,176
Grand Rapids, Mich_ 168, 592
South Bend, Ind-..
104,193
Passaic, N. J ------.
62,959
Brockton, Mass- ..-63, 797
Cleveland, Ohio- ....
900,429
Altoona, Pa ------_
82,054
Cambridge, Mass---. 113, 643
Pawtucket, R. I-.....
77,149
Scranton, Pa.----143, 433
1940
78, 905
50,160
86, 226
75,642
96, 677
53, 569
301,012
62,014
243,130
55,947
109, 396
50, 727
98, 072
63, 787
70,117
281,096
151, 275
428, 236
64, 438
54,955
50, 632
164,061
101,410
61,341
62, 262
878, 385
80,071
111,120
75,449
140, 393
11.3
10.9
9.9
6.5
5.6
5.2
5.0
5.0
4.7
4.6
4.5
4.2
4.2
3.6
3.6
3.3
3.3
3.2
3.2
3.1
3.0
2.7
2.7
2.6
24
2.4
2.4
2.2
2.2
2.1
1 Includes cities with 50,000 population or more for which Census data had been released through Sept. 13,
1940.
Although final Census data are not yet available, it is note
worthy that with few exceptions the largest increases in city population
were in the West and in the South, while declines in city population,
again with few exceptions, were concentrated in the East and in the
North Central sections.
In a number of cases, the decrease or stagnation of city population
is, of course, due to shifts of residents to suburbs beyond corporate city
limits and does not denote a population decline in metropolitan areas.
At any rate, divergent population trends such as those revealed in the
foregoing table naturally generate a widely varying demand for hous
ing. As a result, mortgage lending more than ever before must be
based on a careful analysis of regional and local market factors.
Continuing the trends observed over the last few years, the rate of
private residential building during the first six months of 1940 was
highest in the Pacific and Mountain States and in the South. The
lowest rates of residential construction in terms of population were
10
REPORT OF FEDERAL HOME LOAN BANK
BOARD,
1940
found in New England, the Middle Atlantic States, and in the East
North Central and West North Central regions.
Private residential construction in nonfarm areas during the first half of 1939 and
1940, by geographic divisions
[Rate per 100,000 population 1]
First six months of-
First six months of
Geographic division
Geographic division
1939
85.0
New England-----.----------Middle Atlantic--------------170.1
East North Central------..----..
141.5
178. 4
West North Central ....--South Atlantic_..---------------.....
320 1
180. 2
East South Central ..-----------
1940
105.3
144.8
174. 3
188.4
379.7
212.6
1939
West South Central..---..
Mountain.-----------------Pacific-----------......---------United States total--...
-
318.0
299.1
594.3
-220. 9
1940
305.2
352.7
664.4
238.1
I In the compilation of this material, building-permit data collected by the U. S. Department of Labor
have been used; publicly financed units are excluded. In order to provide a basis for comparison of residential
building activity between various sections of the country, a ratio of the total number of new family dwelling
units to existing population has been computed instead of the absolute number of dwelling units provided.
Population estimates used in computing the rate of building are based on the U. S. Census of 1930, with
adjustment for population increases since that time.
Closer analysis shows even more striking variations of building
activity. Of the metropolitan areas throughout the country, Miami
ranked first with 3,235 dwelling units built per 100,000 population in
the calendar year 1939. Washington, D. C., was next with a rate of
2,000 dwelling units, and Los Angeles, where 1,581 dwelling units
were constructed per 100,000 population, ranked third. On the
other hand, the metropolitan districts of Altoona, Scranton, Wilkes
Barre, and Johnstown, Pennsylvania; and Kansas City, Missouri,
showed abnormally low rates of residential construction, with less
than 100 dwelling units per 100,000 population. If USHA housing
is excluded, Utica and Syracuse, New York; Trenton, New Jersey;
and Reading, Pennsylvania, ranked in the same group. As an
example, private residential building in Miami was almost 100 times
as large as in Utica, in terms of population.2
Under the impetus of the new defense program, regional and local
shifts in residential building may become more accentuated.
Mixed Trends in the Real-Estate Market
The real-estate market still is in a stage of incomplete convalescence
from the shock of the early Thirties. Real property by its very
nature is a "slow moving" commodity, and liquidation in this field
requires a longer period of time than for other commodities which can
be more or less quickly consumed. In addition, the market at the
beginning of the Thirties did not reflect the true extent of the real
estate depression. Values dropped, but there were relatively few
sales on the lower price level from 1929 to 1934. Property owners
'For detailed data, see Exhibit 2.
SURVEY OF HOUSING AND MORTGAGE FINANCE
11
generally held to their investments because of the very heavy sacrifice
which would have been suffered in event of sale. When the market
failed to rise, when foreclosures mounted and an accumulated overhang
of real estate began to be liquidated, a growing volume of sales tended
to reduce prices of old houses further. Consequently, we have today
the phenomenon of increased real-estate transactions at continuously
depressed prices.
Furthermore, it cannot be ignored that the real-estate market in the
last few years has been influenced by Government activity to mitigate
the after effects of the depression from 1929 to 1933. Moratorium
laws in most of the States prevented or postponed foreclosures on
many properties which otherwise would have been an immediate drug
on the market. The Home Owners' Loan Corporation refinanced
mortgaged loans on approximately one million homes, most of which
otherwise would have passed into the hands of mortgagees and been
placed on sale. The foreclosure policy of the HOLC, dictated pri
marily by efforts to salvage its borrowers, again reduced the potential
number of distressed properties on the market. All this has alleviated
conditions brought about by a crash of disastrous dimensions.
Meanwhile, depreciation and obsolescence have exacted their toll.
Finally, the tax burden in many communities has become an
obstacle to a complete recovery of the real-estate market. In the
early Thirties, assessed values were not sufficiently adjusted to the
declining real-estate values, and since 1934 they have remained prac
tically constant, although the trend of market values continued to be
downward. Tax rates, on the other hand, increased after 1933, al
though the rate of increase )has been diminishing in the last two years."
Overvaluation of properties in terms of present prices and revenues,
outmoded tax appraisal methods, high tax rates, excessive costs of tax
collection through the 175,000 overlapping tax jurisdictions discour
age owner-occupancy and investment in real estate alike. Existing
properties are not only taxed out of proportion to other forms of in
vestments, but in many cases bear a heavier burden of taxation than
equivalent new houses which generally are in outlying districts and
satellite communities enjoying lower tax rates than cities, and which
do not carry inflated assessments of bygone days. Differences in tax
burden alone, in fact, sometimes determine the home purchaser's pref
erence for a new suburban house. The tax situation has thus become
a factor in the competition between new and "second-hand" properties.
Taken together, these factors go far in explaining the belated and
prolonged depression in the real-estate field when other sectors of our
aBased on comparative data for 287 cities; National Municipal
Review, December 1939.
12
REPORT OF FEDERAL HOME LOAN BANK BOARD,
1940
economy had more or less passed that stage. Under their influence,
the real-estate market in the fiscal year 1940 continued to show mixed
trends. On the one hand, there were predominantly declining prices
for old properties, reflecting increased competition of new moderately
priced homes sold on easy terms, the preference given by home pur
chasers to attractive new neighborhoods and modern designs and con
veniences, and the above-mentioned tax differentials. Also, local
overbuilding was indicated by difficulties that arose here and there in
disposing of new houses built by real-estate operators.
On the other hand, sales activity in general was substantially higher
than the year before, particularly in low-priced properties; the real
estate overhang held by financial institutions was reduced; and fore
closures dropped to the lowest level in thirteen years.
Decrease of Foreclosures
Nonfarm real-estate foreclosures continued the downward trend be
gun in 1934. However, the decline from the fiscal year 1939 to the
fiscal year 1940 was in part accounted for by the drop in foreclosures
brought by the Home Owners' Loan Corporation, attendant upon the
latter's extension program, 4 and did not reflect regular market con
ditions. To disengage the effect of HOLC policy from the general
trend of foreclosures, the following chart shows total estimated fore
closures as well as HOLC and other foreclosures separately:
CHART VI
NONFARM
REAL ESTATE
FORECLOSURES
BY YEARS
IN THE UNITED STATES
BY
1936
QUARTERS
1938
1939
1940
DIVISIONOF RESEARCH
AND STATISTICS
FEDERALHOMELOANBANKBOARD
4 See the report ofthe Home Owners' Loan Corporation, page 123 ft.
13
SURVEY OF HIOUSING AND MORTGAGE FINANCE
The chart indicates that foreclosures other than those instituted
by the Home Owners' Loan Corporation levelled off during the fiscal
year 1940 and that the decline of these foreclosures throughout the
last two or three years had been at a very low rate. It appears that
with a volume of foreclosures approaching the 1926 level a more
"normal" foreclosure situation has been restored.
However, while nonfarm foreclosures for the country as a whole
were back to more normal levels, this was not true for several States
which, from the point of view of real estate, are "problem areas."
The foreclosure rate for the States of Massachusetts, New York, New
Jersey, and Pennsylvania is still much higher than the national rate.
By and large, the States listed are those in which real-estate holdings
of financial institutions are concentrated and where the situation of
the market as a whole is still unsettled.
CHART VII
RATE OF FORECLOSURES FOR THE UNITED STATES AND SELECTED STATES
ANNUAL RATE PER 1,000 NONFARM DWELLINGS OF NONFARM
REAL ESTATE FORECLOSURES, 1934-1940
NUMBER
25
'-
20
2
0MASSACHUSETTS
NEW YORK
S--^.,S
b
°^
°*
INEW
^
^
JERSEY
.
UNITEDSTATES
UNITED STATES
1934
1935
1936
1937
NPENNSYLVANIA
1938
* For first 6 months on an annual basis
1939
1940* 1934
1935
1936
1937
*ft
004016
1938
1939
1940*
DIVISION
OF RESEARCH
AND STATISTICS
FEDERAL
HOMELOANBANK
BOARD
Exhibits 3 and 4 present data on nonfarm real-estate foreclosures
for the United States and for each of the Federal Home Loan Bank
Districts.
Reduction of Real-Estate Overhang
For the country as a whole, the decline in foreclosures and substan
tially increased property sales resulted in a reduction of the real-estate
overhang-that is, in the volume of residential properties held by
14
REPORT OF FEDERAL HOME LOAN BANK BOARD,
financial institutions and other mortgagees.
the following figures:
1940
This is illustrated by
Estimated overhang of residential properties held by selected financial institutions
Type of lending institution
Dec. 31, 1938
Dec. 31, 1939
Decrease
Dollars
Savings and loan associations
- - - - -2------- - - -
Mutual savings banks
- - ----
-- -
-- -
Commercial banks 3
Life insurance companies 4---------
- - - -- --- - -
Private mortgage lenders ------------.
Home Owners' Loan Corporation 5 - --
Grand total----..........--
...----------------
$890,320,000
Percent
$684,547,000
205,773, 000
23.1
290,000,000
576,282, 000
245, 000,000
563, 507, 000
45,000,000
12, 775, 000
15. 5
2. 2
2,256, 602,000
488, 997,499
1,943,054, 000
462, 229, 879
313,548, 000
26, 767, 620
13. 9
5. 5
2, 745, 599,499
2,405,283,879
340,315, 620
12.4
500,000,000
450,000,000
50,000,000
10.0
1Revised.
2 Estimate based on reports of operating associations received by the Federal Home Loan Bank Board.
Estimates based on the reports of the Comptroller of the Currency and the Federal Deposit Insurance
Corporation. The estimate for commercial banks excludes trust departments, but includes an allowance for
investments and other assets indirectly representing bank premises or other real estate.
4 Estimate of the Federal Home Loan Bank Board based on a questionnaire survey of the largest life
insurance companies.
6 Capital value.
3
In the calendar year 1939, estimated'residential real-estate holdings
of the above-listed institutions were reduced by $340,315,620, or 12.4
percent. All types of institutional lenders registered declines in real
estate owned, but savings and loan associations showed the greatest
dollar decrease and the greatest percentage reduction in holdings.
It is true, of course, that the reduction in holdings of savings and loan
associations is influenced to some extent by the number of State institu
tions placed in liquidation. Although these estimates do not include
real estate owned by individuals and by closed banks and other finan
cial institutions and remain, therefore, short of the total overhang,
they probably indicate in a fair measure the declining trend of involun
tary real-estate holdings. They illustrate, at the same time, the mag
nitude of the task of liquidation that still confronts mortgage-lending
institutions.
In the past year, the disposition of real estate by financial institu
tions appears to have been larger in volume than at any time before.
This was the result of changed policies rather than a reflection of
improved market conditions. Belatedly, financial institutions have
come to realize the danger of holding real estate indefinitely; a larger
number of them have priced their properties realistically, have placed
them in condition for sale by repair and modernization, and have
instituted carefully planned sales programs. 5 However, any transfer
of these holdings to a sound, more permanent ownership basis is
wholesome in itself. Moreover, the absorption of a large volume of
5
In one instance savings and loan associations have organized a central property bureau for that purpose;
see Exhibit 49.
SURVEY OF HOUSING AND MORTGAGE FINANCE
15
"overhang" properties in the low-price groups indicated a substantial
demand for single-family houses by middle- and low-income families.
This is demonstrated by the experience of the Home Owners' Loan
Corporation which has been able to dispose of its low-priced properties
at a faster rate than was possible for properties in the higher value
groups. Through June 30, 1940, the Home Owners' Loan Corpora
tion has sold 30,513 properties priced at $2,000 or less, equivalent to
29 percent of its total property sales. As the usual terms on proper
ties sold by the Corporation include fifteen-year amortized loans at
4% percent up to 90 percent of the sales price, it can readily be appre
ciated that the monthly payments on these low-priced homes are well
within the reach of families with incomes of less than $1,000. 6
The sale of "overhang" properties is of particular importance for
housing large families of moderate income on an ownership basis. In
an effort to cater to the modern small family and to reduce costs, new
construction in the last few years has shown a preference for houses
with five rooms or less. This leaves unsolved the problem of larger
families which need suitable accommodation. In most cases, existing
properties, if reconditioned, are better adapted to provide quarters
for these families than small new houses.
Like so many elements in the real-estate market, the "institutional
overhang" is largely a problem of specific regions and communities.
To a very great extent, the institutional holdings of residential property
remain concentrated in the northeastern section of the country.
Four States, New York, New Jersey, Pennsylvania, and Massa
chusetts, in approximately that order, show the most serious situations.
At the end of 1939, these four States accounted for 62 percent of all
HOLC holdings, for 70 percent of the residential properties owned by
insured commercial banks, for 43 percent of the one- to four-family
dwellings held by life insurance companies, and for approximately
54 percent of real estate owned by savings and loan associations. At
the same time, the vast majority of residential property held by
mutual savings banks is in these States. For the Home Owners' Loan
Corporation, mutual savings banks and life insurance companies, the
New York situation gives the most concern. Between one-quarter
and one-half of the residential properties owned by these institutions
are in New York State. For commercial banks, Pennsylvania
appears to be the worst problem area; that State accounts for more
than one-third of the residential real estate held by insured commer
cial banks. For savings and loan associations, the situation is most
serious in New Jersey where about 30 percent of their total holdings
are located.
* For further information, see page 141
16
REPORT OF FEDERAL HOME LOAN BANK BOARD, 1940
Exhibit 5 shows data on residential real estate held by selected
financial institutions, segregated by Federal Home Loan Bank Districts
and by States.
Building Costs-Still a Problem
In the last few years, the demand for homes was supported by a con
tinuous decrease in financing costs. Lower interest rates, smaller
down-payments, and longer amortization periods together operated to
make homes available at easier terms than at any other time in the
history of American mortgage finance. 7
In contrast, building costs have failed to show any appreciable
reduction. On the down-grade of the business cycle, from 1929 to
1933, prices of building materials fell less than prices of most other
commodities. Nevertheless, when prices generally turned upward
after 1933, building materials rose more rapidly in price than other
commodities. From 1935 to 1939, the index of building material
prices fluctuated between 85 and 95 percent of the 1926 level, that is,
about 10 points above the general wholesale price index. Following
the outbreak of the war, prices again showed a rapid increase from
this high level. The index of building material prices rose from 89.7
in July 1939 to 90.9 in September, 93.0 in November, and 93.4 in
January 1940.
Although the war-created scramble for commodities had come to
a halt as early as November 1939, prices for many building materials
remained on a high level, and in June 1940 the index compiled by the
Department of Labor still stood at 92.4, or 2.9 points above the in
dex for June 1939. The price rise of some individual building ma
terials was even more marked than the average, as evidenced by the
following data reported by the Reconditioning Section of the Home
Owners' Loan Corporation, beginning September 1939:
Prices of selected building materials1
First of month
1939
September. ------------October----------------November
---------------.
December--------------
Lime 2
3
Crushed
stone
Siding
i
4
CommonSheathing
boards
Sheathing
$0.49
.51
57
.58
$1. 43
1. 72
2. 00
1. 89
$67. 01
69. 45
70. 45
75. 76
$45. 51
46. 40
47.16
47. 92
$1.17
1.27
1 33
1.37
. 58
. 58
59
.58
.57
56
1.91
1.93
1.93
1.87
1.91
1 84
76. 52
76. 64
78.21
78.07
77.29
77 06
48. 61
48 82
48.51
50.50
48.11
47.84
1. 38
1.40
1.39
1.43
1.41
1.38
1940
January
--------February
March--.------------------April.-------------------------May-----------...
-----------------------June ---....
...-----------------.
1 National averages, based on prices paid by contractors for materials delivered on the job.
23 Hydrated (finishing) 50-pound bag.
8 4-inch trap rock or gravel, ton.
45 B & B Beveled 4-inch thick, 8 inches and 10 inches wide, 1,000 board feet
No. 1, 1 x 6 S4S D & M-1,000 board feet.
6 Rosin-sized, 40 pounds per roll of 5 squares each.
7 For detailed info rmation on the trend of financing costs, see pages 35-38.
17
SURVEY OF HOUSING AND MORTGAGE FINANCE
The only important building material showing a substantial price
reduction in that period was window glass. Prices for window glass 8
fell from $6.33 in October 1939 to $4.78 in June 1940.
The following chart, which shows the FHLBB index of the cost of
constructing a standard six-room frame house reflects the rise in
building material prices only in part as dealers' prices (which form
the basis for the price curve) increased less than manufacturers'
prices. Nevertheless, the cost index for materials used in the standard
house increased from 102.5 in June 1939 to 104.4 in June 1940. Labor
CHART VIII
COST INDICES FOR CONSTRUCTION OF A STANDARD SIX ROOM FRAME HOURE
AVERAGE
INDEX
MONTH
1936 = 100
115 ------
4
LABOR\
,
TOTAL COST
/
MA TERIA L
10
100
-
-
DEC MAR
-
-^
JUN
1936
SEP
-
-
DEC
MAR
--
JUN
1937
-
SEP
-
-
DEC MAR
--
--
-
JUN
1938
SEP
-
,-
DECG MAR
-
-
JUN
1939
SEP
DEC. MAR
1940
JUN.
DIVISIONOF RESEARCHAND STATISTICS
HOMELOANBANKBOARD
FEDERAL
costs moved downward from 111.3 to 109.7, or approximately 10 per
cent above the average of 1936. The index of total costs in June 1940
was slightly higher than in June 1939 and 6.2 percent above the level
of 1936.
Exhibit 6 presents these cost indices from January 1936 through
June 1940.
In the fiscal year 1940, the Anti-trust Division of the Department
of Justice undertook various actions against local monopolistic prac
tices in the building trades with the view to freeing the industry
from price rigidities and restraints of competition. From the begin
ning of its investigation to June 30, 1940, according to reports of the
8
10 inches by 12 inches SSA--one box, 60 pieces
18
REPORT OF FEDERAL HOME LOAN BANK BOARD,
1940
Department of Justice, 95 indictments involving 1,265 defendants,
and 16 consent decrees involving 331 parties were effected. The
investigations covered the whole range of the building industry:
manufacturerS, distributors, and dealers of building materials, con
tractors, subcontractors, and labor unions as well. As a result,
local costs for specific materials and jobs in a number of communities
were reduced, and although this failed to bring about a general
decline in building costs, it may have prevented a further rise.
Despite some experimentation with technological improvements,
new materials, and large-scale production, a real cost reduction which
would bring new homes within the reach of families of average income
has not yet materialized. Thus far the approach to the mass market
for new homes-commendable in itself-has been mainly through the
construction of homes of smaller size, less rooms, and simpler design.
In some cases, cost reductions were accomplished at the expense of
sound building standards-a false economy for which the home
owner has to pay in the form of higher expenses for operation, main
tenance, and repair.9
Stability of Rents and Vacancies
For the United States as a whole, available data indicate that rents
and vacancies have remained practically unchanged over a period of
almost three years-evidencing that the newly built dwelling units
could be absorbed without inroads into the occupancy and rent
structure. However, in 1939-40, a number of communities reported
lower rents and higher vacancies for apartments-danger signals
pointing to local oversupply in this type of dwelling, as measured by
present effective demand.
As is demonstrated by the chart on the opposite page, rents on
the average advanced from 1935 through the end of 1937 and have
been moving sideways ever since.
Local statistics compiled by the Department of Labor for 32 individ
ual cities by and large confirm the movement of national indices.
However, a number of cities showed some drop in apartment rents
due to local overbuilding in this type of dwelling and to the movement
of families from apartments in central districts to single-family houses
in suburbs.
9The reduction in the number of rooms is well illustrated by the statistics for new single-family homes
accepted for mortgage insurance by the Federal Housing Administration (FHA Sixth Annual Report,
page 57):
Average number of rooms in new single-family houses
Calendar year-------------.
------------------------1936
1937
1938
1939
Number of rooms-......---.....---------------------------.-----5.8
5.5
5.3
52
19
SURVEY OF HOUSING AND MORTGAGE FINANCE
CHART IX
INDEX OF RESIDENTIAL RENTALS
1926 =100
1926
Source
1927
1928
1929
1930
1931
1932
1933
1934
1935
U S Department of Labor
1936
1937
1938
1939
1940
AND STATISTICS
DIVISIONOF RESEARCH
FEDERALHOMELOANBANKBOARD
Likewise, the scattered vacancy data available at present indicate
a remarkable degree of stability. The general decline in vacancies
that began in 1933 came to a halt in 1936 and since that time changes
upward or downward were small and determined apparently by local
rather than national conditions. Of the 35 cities for which comparable
surveys were made in 1939 and 1938, 20 reported a lower percentage
of vacancies last year, 14 showed a higher percentage than in 1938,
and one indicated no change. To judge from the few cities reporting
vacancy data for different types of structures, vacancy ratios in
apartment houses have been consistently higher than in single-family
houses, and in 1939, there was a noticeable tendency for vacancies
in apartments to increase, 10 communities out of 14 showing larger
vacancies than the year before. This is in line with the decline in
apartment rents registered in a number of cities. In contrast, va
cancies in single-family houses were on a low level, ranging from 1 to
3 percent, and showed predominantly fractional decreases during
the last year.
Neighborhood Conservation
The need for rehabilitation of our older urban neighborhoods, em
phasized in the last two Annual Reports of the Federal Home Loan
Bank Board, came to be more generally recognized in the fiscal year
20
REPORT OF FEDERAL HOME LOAN
BANK BOARD,
1940
1940. Private attempts to undertake large-scale rehabilitation on a
profit basis increased in number and received wide publicity. As a
result of the first comprehensive "Neighborhood Conservation Survey"
for a residential section of Baltimore, Maryland, initiated by the
Home Owners' Loan Corporation in cooperation with other Federal
and local agencies and organizations, a cooperative neighborhood
improvement plan was developed, the execution of which is now under
way. Meanwhile, a similar survey has been started in the Woodlawn
area of Chicago, Illinois. The Federal Housing Administration, on
March 1, 1940, changed its regulations under Section 207 of the
National Housing Act to liberalize insurance of mortgage loans for
rehabilitation projects. The New York Public Housing Law of 1939
authorized municipalities to make loans for rehabilitation of multiple
dwellings. In the spring of 1940, the Legislature of the State of New
York passed an "Urban Redevelopment Corporations Act" (which,
however, was vetoed by the Governor) providing for rehabilitation
by private corporations equipped with special privileges and operating
under public supervision. In several States, the adoption of Neigh
borhood Improvement Acts has been urged by organizations interested
in the control of urban blight.
Naturally the agencies under the Federal Home Loan Bank Board
have a vital interest in a program of urban neighborhood conservation.
The Home Owners' Loan Corporation holds mortgages and properties
of approximately $2,500,000,000, a large number of which are in
districts undergoing various phases of blight. The member institu
tions of the Federal Home Loan Bank System possess outstanding
mortgage loans and real estate in the amount of $3,900,000,000, a
substantial portion of which is on properties in older neighborhoods.
The Federal Savings and Loan Insurance Corporation has insured
about $1,900,000,000 of investments in home-financing institutions,
and the safety of these investments depends on the soundness of real
estate loans. Hence, the Federal Home Loan Bank Board has a
tremendous stake in the whole fabric of residential real-estate values
and has long sought a remedy for neighborhood decay.
More, however, is involved in the rehabilitation of urban districts
than the salvage and maintenance of property values. Conservation
of natural resources has become a recognized national policy. Far
too long a similar program has been lacking as applied to those man
made resources which have been created in the past, particularly in
urban neighborhoods which represent a considerable part of the total
national wealth. As a result, in almost all American cities there have
developed slums which are beyond cure and must be eradicated by a
major surgical operation, and other districts diseased by incipient
SURVEY OF HOUSING AND MORTGAGE FINANCE
21
blight which, if not halted, will transform them into slums. In the
meantime, while the process of deterioration takes its toll and partly
because of this very process, families move into outlying districts
where new city and utility services have to be established: streets and
sidewalks, sewers and water mains, gas and electrical equipment,
schools, fire and police protection, and so forth. Many of the existing
services in the central districts, on the other hand, cannot be reduced
proportionately, with the result that increased overhead causes higher
tax burdens. This has contributed in large measure to the increased
total cost of local government.
The problem of neighborhood conservation thus is closely related
to the progressive decentralization of our cities. It is true that many
factors are responsible for decentralization. The reaction against
modern city life, and the popularization of the automobile are among
the most important. However, physical obsolescence of houses,
changes in the character of neighborhoods, traffic hazards, lack of
parks and playgrounds, encroachment by business uses, excessive tax
burdens on old districts are also contributing causes. And yet, be
cause of their location close to business centers, many of the blighted
areas represent potentially desirable neighborhoods and can be sal
vaged by a determined cooperative effort, if the individual properties
are structurally sound and not too obsolete.
Neighborhood deterioration and decentralization of cities move,
indeed, in a vicious circle. Blight of central districts drives people
into suburbs and this in turn fosters the progress of blight. Similarly,
high taxes in city centers cause families to move toward the urban
rim; as community services must nevertheless be maintained, this
increases the per capita tax burden on the centers or is at least an
obstacle to tax reduction. As a result, more families are induced to
leave the centers. Unless these problems are solved, actual depopu
lation of central city districts will continue unchecked.
The problem is aggravated by the declining rate of population
growth. Decentralization of cities in past decades was accompanied
by a rapid influx of immigrants and an increase in total population
with the result that families of lower income moved into the neigh
borhoods vacated by the original home owners. Also, the expansion
of industry and commerce transformed widening zones of the city cen
ters into business use. With few exceptions, this is no longer taking
place, and industry shows a definite tendency toward decentralization.
These observations make it clear that urban neighborhood conser
vation is not only a matter of repairing groups of properties (although
in some cases this may suffice), but touches upon the broader aspects
of city planning and includes rezoning, street adjustments, parks and
22
REPORT OF FEDERAL HOME LOAN BANK BOARD,
194 0
playgrounds, and modifications of traffic. Based upon such broad
concepts, a conservation program will not only maintain urban prop
erty values, but increase the social usefulness of our older neighbor
hoods and advance housing standards.
As an example, the plan for the Waverly area in Baltimore provides for two
parallel but not necessarily integrated programs. The first program calls for the
early physical restoration-by means of the minor repair and the major recon
ditioning, remodeling, modernizing, embellishment, and landscaping-of all
depreciated housing within the area, supplemented by continued maintenance
thereafter, at the level established for the neighborhood. The second program
provides for the adjustment of zoning regulations and street patterns, as a parallel
but separate step, requiring confirmation by the residents of the area and con
currence by the Plan Commission and the city. This part of the Plan is, there
fore, to be developed over a considerable period of time.
Upon the preparation of the survey and master plan for the Waverly area, 10
a permanent neighborhood organization has been formed designed to inspire
and supervise the completion of the physical rehabilitation of the area. Even
before the program was fully launched, however, the volume of repair, recon
ditioning, and remodeling already undertaken throughout the area greatly
exceeded that for any like period in former years. A considerable measure of
this activity has been attributed to the interest aroused by the survey and
planning stage of the project.
The Waverly survey, it is hoped, provides a pattern which can be applied to
the treatment of similarly threatened, small home neighborhoods everywhere and
will stimulate local leadership on which the attack on blight largely depends.
In view of the vast amount of funds ready to be invested at reasonable return,
financing problems should be no obstacle to an early execution of rehabilitation
plans.
2. MORTGAGE FINANCE AND SAVINGS
Operations of home-financing institutions during the fiscal year 1940
were dominated by the same general trends at work during the past
two or three years; and these trends became, if anything, more
accentuated. The flow of savings into financial institutions and the
piling up of surplus funds were unbroken, while home-mortgage loans
continued to be one of the very few investment outlets utilized by
lending institutions. In consequence, the home-mortgage market
showed increased activity and greater intensity of competition.
Interest rates on mortgage loans and the rate of return on savings
declined further. A considerable net growth of the home-mortgage
debt during three successive years furnished evidence that the abrupt
cancellation of debt by foreclosure has come to a halt and that new
loans now well exceed foreclosures and repayments of principal.
10The survey and master plan have been published under the title, "Waverly-A Study In Neighborhood
Conservation." Copies may be obtained from the Superintendent of Documents, Washington, D. 0.
($1.25).
23
SURVEY OF HOUSING AND MORTGAGE FINANCE
Increased Volume of Home-Mortgage Lending
Home-mortgage lending remained one of the most active segments
of our otherwise sluggish capital market. The estimated volume of
new mortgage loans made on one- to four-family dwellings during the
calendar year 1939 was $2,871,000,000-an increase of $408,000,000,
or 16.6 percent, over 1938 and an all-time peak since 1930 in private
lending activity." As in the past few years, the volume of new home
mortgage loans exceeded the total amount of corporate financing.
During 1939, corporate securities issued for new financing and re
funding by railroads, utilities, and all other corporations aggregated
$2,099,000,000, that is, 27 percent less than total home-mortgage
lending in that year.
CHART X
HOME MORTGAGE LENDING ACTIVITY
DWELLINGS
LOANSMADEON NONFARMONETO FOUR-FAMILY
VOLUMEOF MORTGAGE
ESTIMATED
1929 THROUGH1939
BILLIONS
OFDOLLARS
E O/WNTOTALLOANS
LANS
1929
30
31
32
33
34
35
B
Y ALL OTHERS
36
37
38
39
AND STATISTICS
DIVISIONOF RESEARCH
FEDERALHOMELOANBANKBOARD
All types of lenders increased their activity during 1939. Savings
and loan associations originated new home-mortgage loans in the
amount of $986,000,000-an increase of $188,000,000, or 23.5 percent,
over 1938. Commercial banks and their trust departments loaned
a total of $610,000,000, or 9.1 percent more than in the preceding
year. Life insurance companies placed home-mortgage loans in the
11From 1933 to 1936 the total lending volume was inflated by the refinancing operations of the Home
Owners' Loan Corporation.
270198-40---3
24
REPORT OF FEDERAL HOME LOAN BANK BOARD,
1940
amount of $274,000,000 which was 13.2 percent above the 1938
level. The volume of new home-mortgage loans made by mutual
savings banks was $112,000,000, as against $105,000,000 the year
before. Individuals and others accounted for $740,000,000, or
$71,000,000 more than in 1938. Loans originated by the Home
Owners' Loan Corporation aggregated $149,000,000 as compared
with $89,000,000 which reflects increased sales of properties against
CHART XI
ESTIMATED VOLUME OF MORTGAGE LOANS MADE ON NONFARM
ONE TO FOUR-FAMILY DWELLINGS, BY TYPE OF LENDER
CALENDAR
YEAR 1939
SAVINGS
BANKS
DIVISION OF RESEARCH AND STATISTICS
FEDERAL HOME LOAN BANK BOARD
purchase-money mortgages and advances made to HOLC borrowers.
Exhibit 7 gives a complete survey of estimated home mortgage
lending activity from 1929 through 1939, by types of lenders.
Mortgage recording data, compiled since the close of 1938 by the
Division of Research and Statistics of the Federal Home Loan Bank
Board, reflect recent developments in mortgage-lending activity in
greater detail. The coverage of these data has been extended gradu
ally until in June 1940 actual reports (which serve as a basis for the
estimated totals) were received from nearly 600 counties, containing
SURVEY OF HOUSING AND MORTGAGE FINANCE
25
63 percent of the total nonfarm population and located in every
State and the District of Columbia. 1 2
Although mortgage recordings reflect not only new lending, but
include mortgage registrations attendant upon alterations in the
terms of existing contracts, their movement over a period of time is
indicative of changes in the lending volume. The data are designed
primarily to measure activity in the field of small and medium-sized
mortgage loans and are, therefore, confined to loans of $20,000 or
less on nonfarm property. Hence, mortgage recording data com
prise not only home mortgages but mortgages on other types of
properties which fall within the $20,000 limitation.1 3
In the following analysis of lending activity, these are the most
conspicuous facts:
1. Within total nonfarm real-estate financing in the loan class of
$20,000 or less, savings and loan associations represent the largest
single group of lenders, accounting roughly for one-third of all mort
gage recordings.
2. Lending activity in the first six months of 1940 was consider
ably above that of the corresponding period in 1939, and savings and
loan associations have increased their share in the larger total volume.
3. With the expansion of home building in the last four or five
years, loans for new construction have increased more rapidly than
any other type of loan; in contrast, refinancing loans though still
large in volume have declined in relative importance.
Savings and Loan Associations in Lead
During the fiscal year 1940, mortgage lenders throughout the coun
try recorded 1,402,365 nonfarm mortgages, of $20,000 or less, in the
total amount of $3,854,449,000. Institutional lenders were responsible
for 76 percent of the number and 83 percent of the dollar amount of
these mortgages, while the remainder was accounted for by individual
mortgagees.
12
Reports are received each month from field cooperators. Summaries of these reports are prepared for
each State, by type of mortgagee, and from the totals of reported statistics, estimates representing total
mortgages recorded in each State are developed on the basis of the relation of the nonfarm population in
the sample to the total nonfarm population in the State. Adjustment factors are employed in the calcula
tion to correct for the concentration of type of lenders and for the influence of metropolitan areas.
13Mortgage recording data are not directly comparable with the estimates on home-mortgage lending
presented in Chart X and Exhibit 7. As pointed out in the text, recordings include mortgages on one
to four-family homes as well as mortgages on other types of properties within the $20,000 limitation. More
over, the period covered by mortgages recorded and loans made is not necessarily the same. Lending
statistics are reported as of the date of loan commitment, while recording figures reflect the actual date of
loan registration. Finally, alterations in the terms of an existing contract may necessitate a new registra
tion. In the case of refinancing an institution's own mortgage, for example, the face amount of the instru
ment would appear in the recording totals, whereas only that portion which represented an increase in
funds loaned would be included in lending figures.
26
REPORT OF FEDERAL HOME LOAN BANK BOARD,
1940
Total recordings of mortgages of $20,000 or less on nonfarm property, fiscal year 1940
Type of lender
Number
Savings and loan associations ..----------------------Insurance companies-.. -------------------------Banks and trust companies --------------------Mutual savings banks- ------------------------Individuals-----------------------------------Others
------------------Total---
------------ ------------------
Percent
Amount
Percent
484,670
64, 641
293, 504
43,004
339, 871
176,675
34
5
21
3
24
13
$1,221, 562, 000
325, 936, 000
941, 061, 000
157, 637, 000
638, 530, 000
569,723,000
32
8
24
4
17
15
1,402,365
,
100
3,854,449,000
100
Savings and loan associations led all other types of lenders, with
484,670 mortgages recorded in the total amount of $1,221,562,000,
or 34 percent of the number and 32 percent of the aggregate volume
of all mortgages recorded. Banks and trust companies, which were
responsible for 21 percent of the total number and 24 percent of the
total dollar amount, ranked next, followed by the group "other
mortgagees" which comprises miscellaneous lenders such as mortgage
companies, estates, receivers or conservators of financial institutions,
and the Home Owners' Loan Corporation. Life insurance companies
and mutual savings banks were of relatively minor importance in the
CHART XII
ESTIMATED VOLUME OF MORTGAGE RECORDINGS ON NONFARM PROPERTY
(MORTGAGES
OF $20,000 OR LESS)
FIRST HALF OF 1939 COMPAREDWITH FIRST HALF OF 1940
35
--
30
,,lk,
939
1940
DIVISION OF RESEARCH AND STATISTICS
FEDERAL HOME LOAN BANK BOARD
27
SURVEY OF HOUSING AND MORTGAGE FINANCE
small-loan field; however, it should be remembered that life insurance
companies have always been more active in the financing of larger
projects, and that mutual savings banks operate but in a limited
number of States.
Mortgage recordings by Federal Home Loan Bank Districts and
by States during the fiscal year 1940 are given in Exhibit 8.
For the first time since the establishment of the mortgage record
ing service, data are available permitting a comparison over a year's
time. They show that in each month, from January to June 1940,
the volume of recordings exceeded that of the corresponding period in
1939. All together, nonfarm mortgages recorded from January to
June 1940 numbered 689,338, in the amount of $1,886,998,000, a
gain of 82,111 in number and of $246,147,000, or 15 percent, in amount
over the same period in 1939. Although all types of mortgage lend
ers participated in this larger activity, they did so in varying degrees
as will be seen from the following table and Chart XIII.
Recordings of nonfarm mortgage loans of $20,000 or less, first half of 1940 compared
with first half of 1939
_
Type of lender
Januar toJunPercent of total
January to June
nuary to
e
_
Increase
1939
1940
1939
1940
Number of mortgages recorded
198, 049
Savings and loan associations---------Insurance companies------------------------25, 935
Banks and trust companies
---------133, 296
238,672
30, 556
147, 651
40, 623
4,621
14,355
32. 6
4. 3
22 0
34.6
4. 5
21.4
Mutual savings banks
Individuals
--------Others
--------------------
17, 003
154, 953
77, 991
19, 859
164,867
87, 733
2, 856
9,914
9, 742
2.8
25 5
12.8
2. 9
23. 9
12. 7
607,227
689,338
82,111
100.0
-----------------
Total...------------------------------
100.0
Dollar amount of mortgages recorded
(in thousands of dollars)
-------Savings and loan associations
Insurance companies---------------------Banks and trust companies
-----------Mutual savings banks
-----------------------Individuals
Otheis .-----------------------------Total----------------------
$481,916
130, 523
424,817
60,674
289, 007
253, 914
$598, 766
151, 498
465, 342
75, 557
312, 861
282,974
$116, 850
20,975
40, 525
14,883
23, 854
29,060
29. 4
7. 9
25. 9
3. 7
17.6
15. 5
1,640,851
1,886,998
246,147
100.0
31.7
8.0
24.7
4 0
16.6
15.0
100.0
Savings and loan associations scored the largest gain in both number
and dollar volume of mortgage recordings, with the result that their
share in the total dollar volume of recordings rose from 29.4 percent
in the first six months of 1939 to 31.7 percent in the first six monthe
of 1940. Mutual savings banks and life insurance companies also
28
REPORT OF FEDERAL HOME LOAN BANK BOARD,
1940
raised their positions slightly. Recordings of banks and trust compa
nies, of individuals, and of "others" increased less than proportion
ately; consequently, their share in the total declined.
CHART XIII
PERCENT INCREASE IN THE NUMBER OF MORTGAGES RECORDED,
BY TYPES OF LENDERS
FIRST 6 MONTHS OF 1940 COMPARED WITH FIRST 6 MONTHS OF 1939
PERCENT
INCREASE
5%
0
10%
15%
SAVINGS
ANDLOANASSOCIATIONS205RESEARCH
INSURANCE
COMPANIES
I 78
MUTUALSAVINGS
BANKS
168
OTHERS
125
BANKSAND TRUSTCOMPANIES
108
INDIVIDUALS
20%
ANDSTATISTICS
64
DIVISION
OF RESEARCH
ANDSTATISTICS
FEDERALHOMELOANBANKBOARD
Mortgage recordings for nonfarm loans of $20,000 or less as well as
the estimates of home-mortgage lending proper demonstrate that
savings and loan associations, despite the increased competition in the
mortgage market during recent years, have been able to hold their
position as the largest single group of lenders on residential mortgages,
accounting for more than 30 percent of the total dollar volume and for
38 percent of the aggregate volume of institutional lending in the
small-loan field. (See Chart XIV on opposite page.)
In line with the time-honored emphasis of savings and loan opera
tions in the small loan field, the average mortgage loan made by
savings and loan associations is lower than that of any other type of
lender, except for individual mortgagees.
Average size of nonfarm mortgage loans recorded, January 1939 through
June 1940
Type of lender
Average
size
of loan
Individuals.------------------------
$1, 874
Savings and loan associations -------Banks and trust companies-----------....
2,495
3,200
Average
size
of loan
Type of lender
Other mortgagees---------------
-----
Mutual savings banks------------. .
Insurance companies -------.---------
$3, 234
3,638
5,040
SURVEY
OF HOUSING AND MORTGAGE FINANCE
29
It is interesting to note that the average loan registered by insurance
companies was approximately twice as large as that made by savings
and loan associations, and that the average loan recorded for banks
and trust companies was almost 30 percent higher than the average
savings and loan mortgage.
CHART XIV
DOLLAR DISTRIBUTION OF MORTGAGES RECORDED
BY TYPE OF MORTGAGEE
JANUARY TO
JUNE
1940
DIVISION OF RESEARCH AND STATISTICS
FEDERAL HOME LOAN BANK BOARD
Regional Variations of Mortgage-Lending Activity
Earlier in this report, it was emphasized that residential construction
and real-estate conditions vary from region to region and from com
munity to community. Likewise, mortgage-lending activity shows
marked local differences. This is indicated in the following table
presenting the number of mortgage recordings per 1,000 nonfarm
dwellings, or, in brief, the rate of mortgage recordings in each of the
Federal Home Loan Bank Districts and in the 48 States.
30
REPORT OF FEDERAL HOME LOAN BANK BOARD,
1940
Rate of mortgage recordings by Federal Home Loan Bank Districts and by States
[Number of mortgages recorded per 1,000 nonfarm dwellings,' January to June 1940]
Bank District and State
Number
ofrecorded
mortrecorded
United States---------...
Rate
per
,0
1
Bank District and State
Number
ofmortgages
recorded
Rate
er
1,000
689, 338
36
No. 7-Chicago - -----
46. 306
28
--...
51, 324
39
Connecticut......-----Maine-----------Massachusetts- --New Hampshire ----Rhode Island-------------..
Vermont
------------
9,792
5, 092
28, 693
2, 698
3, 391
1,658
37
38
42
31
30
30
Illinois...
-----Wisconsin ....
30, 860
15,446
26
35
No. 8-Des Moines. --------
54, 516
38
No. 2-New York --------
55, 674
25
12, 297
15, 142
23,389
1,899
1, 789
32
42
42
32
25
New Jersey-------------New York----------
21, 639
34, 035
31
22
47, 423
33
46, 682
22
1, 873
36, 904
7, 905
41
20
29
4, 645
9, 905
3,880
2,168
26, 825
26
33
28
35
34
96,169
35, 252
35
44
7, 735
8, 522
6,060
12, 935
42
2q
31
40
32,496
43
3,011
2,172
7,647
3, 727
14, 586
1, 353
49
27
40
47
47
36
96, 588
70
3. 330
92,573
685
39
73
33
No. 1-Boston----------
No. 3-Pittsburgh ..---.-Delaware ....----------Pennsylvania.....-----------West Virginia..........
No. 4-Winston-Salem-.....
Iowa----------Minnesota- -------Missouri---------North Dakota-----------South Dakota....-----No. 9-Little Rock ---Arkansas -----Louisiana------------Mississippi------New Mexico ..---------Texas ...---------No. 10-Topeka----
-
Colorado--- ------Kansas
Nebraska ------------Oklahoma ..............----
Alabama. ------------...
.
District of Columbia ..---Florida....
-------Georgia...---------Maryland....------------North Carolina---------South Carolina ----------....
Virginia-..........------
7, 597
6, 739
15, 262
12, 061
11,372
20,180
7, 995
14, 963
No. 5--Cincinnati .....------
76, 755
Kentucky--------------Ohio
----------Tennessee----------------
10,748
54, 612
11,395
26
79
52
35
38 No. 11-Portland ----60
43
Idaho --------46
Montana.-------Oregon_--------------.
41
Utah--------Washington --34
Wyoming--- ------43
36 No. 12-Los Angeles----
50,153
34
24, 633
25, 520
41
30
No. 6-Indianapolis ........---Indiana----------------Michigan-------------
Arizona-----------------California--------------Nevada-------------------
I Based on 1930 Census.
It is no mere coincidence that the rate of mortgage recordings is
highest in those areas and States where the rate of residential construc
tion is highest, generally in the West and in the South.
Also, the share of the various types of lenders in total mortgage
lending activity varies considerably in the different parts of the coun
try. The position of each type of lending institution in a given State
or region is determined by a large number of long-term and short-term
factors. In many areas, savings and loan associations have tradition
ally been more numerous and stronger than other types of mortgage
lenders. In a few areas, on the other hand, commercial banks have
predominated in the mortgage-lending field. Mutual savings banks
are concentrated in a few States, mostly in the Northeast. Mortgage
lending by individuals may be related to local concentration of private
31
SURVEY OF HOUSING AND MORTGAGE FINANCE
capitalists or the lack of financial institutions. In States with very
large cities where apartment houses predominate, savings and loan
associations naturally are less active than in States with a more equal
distribution of population and wider home ownership. In each
District and State, the different types of financial institutions have
shown varying degrees of recovery from the depression. Finally,
the extent to which banks and insurance companies have entered into
the field of mortgage finance depends in many cases on local conditions
and individual management.
The following chart shows the relative importance of the various
types of lenders for each Federal Home Loan Bank District; Exhibit 9
presents the same classification, by Federal Home Loan Bank Districts
and by States.
CHART XV
MORTGAGE RECORDINGS FROM JANUARY TO JUNE 1940,
BY F. H. L. B. DISTRICTS
PERCENT OF TOTAL DOLLAR VOLUME, BY TYPE
-..SAVINGS
ANDLOANASSNS
....... ..
OF LENDER
BANKSAND TRUSTCOS
INSURANCE
COS
.......
1 .MUTUALSAVINGS
BANKS
INDIVIDUALS
-.OTHERMORTGAGEES
PERCENT
0
10
20
30
40
50
60
70
80
90
100
I- BOSTON
2-NEW YORK
3-PITTSBURGH
4-WINSTON SALEM
5-CINCINNATI
6-INDIANAPOLIS
7-CHICAGO
DIVISIONOF rSERC-
AD
TAISIC
8-DES MOINES
9-LITTLE ROCK
10-TOPEKA
II-PORTLAND
12-LOS ANGELES
DIVISION
OF RESEARCHAND STATISTICS
FEDERAL
HOMELOANBANKBOARD
In all but three Federal Home Loan Bank Districts, savings and
loan associations ranked first as lenders on residential mortgages of
$20,000 or less. In the Pittsburgh, Indianapolis, and Los Angeles
Districts, commercial banks were the most important lenders in this
32
REPORT OF FEDERAL HOME LOAN BANK BOARD,
1940
field. As to States, savings and loan associations accounted for 50
percent or more of total mortgage recordings in Maryland, North
Carolina, Kentucky, Ohio, Louisiana, and Nebraska. In Massa
chusetts, New Hampshire, Indiana, North Dakota, Kansas, Okla
homa, and the District of Columbia they were responsible for 40 to 50
percent of the total.
Increase of Construction Loans
During the last few years the emphasis in home-mortgage lending has
changed greatly from refinancing loans to construction and home pur
chase loans. This shift was occasioned by the largely increased
volume of new building, on the one hand, and by a decreasing demand
for refinancing, on the other.
CHART XVI
HOME BUILDING COMPARED WITH CONSTRUCTION LOANS OF SAVINGS & LOAN ASSOCIATIONS
LOANS
DWELLINGS
ANDOF CONSTRUCTION
CONSTRUCTION
OF ONEAND TWO-FAMILY
INDICESOF PRIVATE
JUNE1940
1936 THROUGH
MONTHS,
JANUARY
AND LOANASSOCIATIONS-BY
MADEBY ALL SAVINGS
1936 = 100
INDEX
1936
1937
1938
1939
1940
DIVISION
OF RESEARCHAND STATISTICS
FEDERALHOMELOANBANKBOARD
The increase in construction loans is illustrated by the mortgage
lending data for savings and loan associations-the only type of
institution for which current loan classifications by purpose are
available. The volume of construction loans made by savings and
loan associations was $298,628,000 in the fiscal year 1940, as against
$219,726,000 in the preceding period.
33
SURVEY OF HOUSING AND MORTGAGE FINANCE
The volume of construction loans made by savings and loan associa
tions has increased with the gains in home building since 1936. As
indicated by the above chart, savings and loan associations have not
only been able to hold their own, but have expanded their activity in
the financing of new home construction although competition in this
field has been particularly keen.
Construction loans rose not only in dollar volume, but their propor
tion to total lending activity of savings and loan associations increased
year by year from 1936.
Distribution of loans made by savings and loan associations, by purpose of loan
Amounts in millions of dollars
-
-
-
-
-
1936
1937
1938
1939
1940 1
1936
1937
1938
1939
------
$178.4
230.1
178. 0
65.4
103.1
$234.1
326. 6
180.8
62. 2
92.9
$220. 4
265. 5
160. 2
58. 6
93.3
$301. 1
339. 6
182.0
59. 5
104.2
$172. 6
197.9
101.4
30. 2
56.3
24
30
23
9
14
26
37
20
7
10
28
33
20
7
12
31
34
18
6
11
31
36
18
5
10
---------
755.0
896.6
798.0
986. 4
558.4
100
100
100
100
100
Construction-Home purchase
Refinancing
Reconditioning
Other-----------Total
Percent distribution
--
-
Purpose of loan
---
19401
1 January to June.
In 1936, less than one-fourth of the total amount loaned was for
newly built homes. In 1939-40, almost one-third of the aggregate
loan volume went into new construction. The increased demand for
owner-occupied homes is also reflected in the larger proportion of home
purchase loans to the total. From 1937 to 1940, between 33 and 36
percent of the aggregate loan amount was for home purchase as com
pared with 30 percent in 1936.' 4 All together, in the first six months
of 1940, construction and purchase loans, that is, loans for the acquisi
tion of homes, accounted for 67 percent of the total volume of loans
made as against 54 percent in 1936.
Decline in Refinancing
The above table reveals, at the same time, a continuous decline in
the relative importance of refinancing loans made by savings and loan
associations. While still large in dollar volume, refinancing loans in
the first six months of 1940 constituted only 18 percent of total lend
ing as compared with 23 percent in 1936. Although no comparable
data are available for other types of institutions, the decline in loans
14It may be noted that a certain number of loans listed for home purchase were really for new construc
tion; some reporting associations classify as purchase loans such mortgage loans that were made on homes
erected by operative builders to be purchased and financed after completion, although such transactions in
reality represent the first permanent financing of new construction. To that extent, the volume of con
struction loans is understated.
34
REPORT OF FEDERAL HOME LOAN BANK BOARD, 1940
on existing properties insured by the Federal Housing Administration 15
would seem to corroborate the general observation that the period of
wholesale refinancing in the home-mortgage field is approaching its
end and that a more normal situation is about to be restored.
Since 1933, the volume and character of refinancing have been un
usual in the history of American home-mortgage finance. It is true
that in previous decades the proportion of refinancing to total mort
gage-lending activitiy was high because of the predominance of short
term straight loans calling for frequent renewals. This, however,
was far from being a refinancing "program" and rarely included a
decisive improvement of loan terms for the borrower; in numerous
cases it was a change for the worse. In contrast, refinancing in the
last seven years was accompanied and prompted by an easing of the
borrower's burden and has changed the whole structure of the home
mortgage debt.
Major refinancing activity was concentrated in the period from 1933
to 1936. In these three years, the Home Owners' Loan Corporation
alone refinanced 13.6 percent of the total home-mortgage debt existing
in 1932, at lower interest rates and on an amortized basis. In addi
tion, private institutions refinanced some portion of the short-term
loans which prior to the Thirties had normally been extended at
maturity, and converted them from straight loans into amortized
loans. Likewise, when second mortgages fell due, borrowers sought
refinancing by consolidation of the senior and the junior lien. In many
cases the mortgagee was faced with the granting of concessions to
borrowers, involving refinancing or recasting of loans, as the only
alternative to foreclosure. In more recent years the refinancing proc
ess was prolonged and fostered by the large amount of idle funds seek
ing investment and by the resulting intense competition of mortgage
lenders and the sharp decline in interest rates. In the case of savings
and loan associations, refinancing or recasting connoted frequently
i5 The following table shows the amount of home mortgages accepted for insurance by the Federal Housing
Administration, distributed over new and existing homes:
Am
of doinmill i o s
Percent distribution
Year
Newhomes
1935 -------------------------------------------------1936
----------------------1937
1938 -------------------------------------1939
...----------------..
..-----------------------
$60.2
212.3
248.9
451.0
562.0
homes
Newhomes
$110.3
226.2
200.6
199.2
179.1
Source: Sixth Annual Report of the Federal Housing Administration, p. 48.
35.3
48.4
55.4
69.4
75.8
homes
64.7
51.6
44.6
30.6
24.2
SURVEY OF HOUSING AND MORTGAGE FINANCE
35
the transformation of loans made under the old sinking-fund plan into
direct-reduction loans which are more advantageous to the borrower.
It may roughly be estimated that from 1933 through 1939, between
five and six billion dollars of home owners' indebtedness was re
financed, including the $2,700,000,000 refinanced by the Home
Owners' Loan Corporation. 16 In addition, where changes in owner
ship of properties occurred, the mortgage loan was frequently re
financed by the same or by other mortgagees. Finally, many existing
loans were recast and numerous informal concessions made by
mortgagees.
Nearly all of the loans outstanding in 1932 have either been paid off
or have been recast or refinanced.) Since 1933, new loans written total
$16,000,000,000. It is therefore obvious that a substantial percentage
of the $18,420,000,000 in home-mortgage debt outstanding at the
end of 1939 has been contracted since 1933. The majority of these
loans are written on the long-term amortized basis and carry interest
rates lower than at any time before. Accordingly, the demand for
refinancing has tapered off.
The large volume of home-mortgage refinancing throughout the
Thirties had its parallel in many other sectors of the capital market.
Billions of public bonds, including Federal, State, and municipal debt,
have been refunded in the past decade. In the field of long-term farm
finance, the Federal Land Banks and the Federal Farm Mortgage
Corporation carried out a huge program of debt refinancing with Gov
ernment assistance. In the field of corporate finance, more than two
thirds of the total amount of corporate securities issued by railroads,
utilities, and other corporations from 1933 to 1939 was for refunding
purposes, and less than one-third went into new financing.
Lowering of Financing Costs
The lowering of financing costs of home ownership during the past
decade has been little short of a revolution in home-mortgage finance.
Interest rates of first mortgages on homes have been reduced from a
typical range of 6 to 8 percent at the beginning of the Thirties to a
typical range of 4% to 6 percent today. Further interest savings, not
appearing in the contract rate, were effected by the more general appli
cation of the direct-reduction loan plan under which monthly interest
is charged only on the constantly reducing balance instead of on the
original principal of the loan. At the same time, loan limits for first
16The remainder of the approximately $3,000,000,000 loaned by the Home Owners' Loan Corporation in
its original refinancing operations was applied to the payment of taxes, reconditioning expenditure, and
appraisal and other fees.
36
REPORT OF FEDERLAL HOME LOAN BANK BOARD,
1940
mortgages have been extended to a point where junior financing is less
necessary than before, and as interest rates on second and third mort
gages in the past had been as high as 10 and 12 percent, the conversion
of senior and junior liens into one single mortgage has resulted in far
greater interest savings than is apparent from rate comparisons for
first mortgages alone. Through longer amortization periods, the
monthly amount of principal repayments has been diminished. All
these factors have operated, in typical cases, to reduce total monthly
financing charges on identical dwellings by one-third to one-half of the
customary charges in the early Thirties. Likewise, discounts and
charges incidental to the making of home-mortgage loans, such as
commissions, fees, and bonuses, are now better fitted to services
performed.
It is estimated that total savings to borrowers of the Home Own
ers' Loan Corporation alone represent an annual amount of approxi
mately $100,000,000, including interest rate reductions, savings
accruing from the average write-down of 7 percent on the principal
indebtedness at the time of refinancing, and the elimination of second
and third mortgages. The combined total of estimated savings to
all home-mortgage borrowers throughout the country, due to lower
interest rates and the reduction of second and third mortgages, is
in the neighborhood of $300,000,000 a year, comparing financial
charges in 1939 with those in 1933. Even more important than the
actual amount of savings is the fact that lower charges to borrowers
helped to preserve homes that otherwise would have been foreclosed.
During the fiscal year 1940, financing costs continued to decline.
To an increasing extent, moreover, financial institutions in the quest
for loan volume competed not only by interest rate reduction, but by
extending the term of mortgage loans, by lowering down-payments,
and by assuming some of the initial loan expenses. In localities
where competition was particularly sharp, there was even some
tendency to make concessions in the form of liberal appraisals.
As in previous years, the lowering of financing costs was the com
bined effect of keen competition in the mortgage market resulting
from the abundance of investable funds, and of various actions by
public agencies. In August 1939, the Federal Housing Administra
tion reduced the maximum interest rate for all home mortgages
insured under Section 203 of the National Housing Act from 5 to 4%
percent (plus %2 of 1 percent insurance premium). In October 1939,
the' Home Owners' Loan Corporation made provision to accept,
until further notice, interest payments at the rate of 4X percent
instead of 5 percent.'7 Effective January 1, 1940, the Federal
37
SURVEY OF HOUSING AND MORTGAGE FINANCE
Housing Administration liberalized its provisions for insurance of
loans on new residential properties costing $2,500 or less, under Title
I of the National Housing Act.
The following statistics of interest rates on mortgages recorded in
Cook County are a fair illustration of the movement of interest rates
from 1936 to 1939:
Interest rates on mortgages recorded in Cook County, Ill.
[Percent distribution of the amount of mortgages recorded, by interest rates]
Interest rate
1936
4.8
4 percent or less----------------------------------------------43 percent---------------...........-----------------------------11.8
39.2
5 percent
..--------------------------------------------53/2 percent---------------.........-----------------------------10.1
30.3
6percent--------------------------------6e percent and higher -----------------------------------1.0
Not reported--------------------...-------------------- 2.8
Total------------------------------------------100.0
1937
1938
4.8
14.2
45.3
7.5
25.6
.4
2.2
5.1
13.2
49.0
5.8
23.5
.3
3.1
100.0
100.0
1939
7.6
23.5
38.6
5.0
18.2
.7
6.4
100.0
1 Nominal rates as listed in the mortgage instrument. Data underlying the table were compiled by the
Recorder's Office of Cook County. Although the coverage varied from year to year, the percentage figures
given in the table are believed to represent a fair approximation to the trend of interest rates.
The decreasing proportion of 6 percent loans over the four-year
period, the increase of 5 percent loans from 1936 to 1938, and the
growing importance of loans at 4% percent or less in 1939 all point
in the direction of lower financing costs. The above data indicate
at the same time the large variety of existing interest rates. The
pace is set by loans on newly built structures located in first-class
neighborhoods of the larger cities where money is particularly plentiful.
Even when the personal credit risk is equal, loans on properties in
less desirable neighborhoods, or on older properties, or in small cities
where the market generally is narrower, demand higher interest rates.
Likewise, smaller loans which generally involve proportionately higher
service costs justify somewhat higher rates. In a period of declining
interest rates, moreover, existing unmatured loans for some time may
carry higher interest rates than new loans. In fact, any such state
ment of general principles falls short of the multitude of factors deter
mining rates, since money costs are the product of varying local
conditions which persist in spite of the greater leveling of interest
rates accomplished, in recent years, by the uniform rates of the Home
Owners' Loan Corporation and the uniform maximum rates established
by thelFederal Housing Administration.
Of the many elements entering into home-financing costs, two over
which financial institutions have little control have thus far resisted
any change: title examination fees which are a direct part of mortgage
loan expense, and foreclosure expense which is one of the risk factors
38
REPORT OF FEDERAL HOME LOAN BANK BOARD,
1940
to be included in lending costs. Title examination in many States
is still loaded with excessive expenses and cumbersome procedures.
Likewise, exorbitant foreclosure costs in many States are a deterrent
to liberal terms of mortgage loans. 8s Some further reduction in the
cost of financing home ownership could be accomplished if title
registration and foreclosure systems were thoroughly reformed.
Lending Policies in a Competitive Market
In the last few years, the Federal Home Loan Bank Board has at
tempted in various ways to aid in a realistic adjustment of interest
rates. As a matter of general policy, the Board has advocated that
savings and loan associations establish and maintain such interest
rates as will enable them to attract and hold the best mortgage loans
available in the community, since any other policy would result in
inferior mortgage portfolios. It 'has recommended the adoption of
variable interest rates for different classes of loans in order that associa
tions may be able to compete for first-class loans and obtain a diversi
fied portfolio. It suggests that equal treatment be given to old and
new borrowers and that loans already held be refinanced at lower
rates to preserve loan volume and good will. Because of the close
relation between the cost of money and mortgage interest rates, the
Board has urged associations to revise dividend rates where they are
out of line with the generally decreased rate of return on savings. In
these educational efforts, the Board has found the most gratifying
support by the Presidents and the Boards of Directors of the twelve
Federal Home Loan Banks who have devoted much time and energy
to bringing these general principles home to the institutions in their
respective Districts.
Moreover, the Board and the officers of the twelve Federal Home
Loan Banks, in their supervisory capacity, have repeatedly taken
steps to correct local situations. These measures were necessarily
on a case basis. They were prompted by a desire to assure policies
of "sound and economical home financing" as prescribed by Section
4 (a) of the Federal Home Loan Bank Act and Section 403 (c) of the
National Housing Act, and in an attempt to forestall such difficulties
for the associations themselves as result from the acceptance of poor
risks at high interest rates.
Furthermore, the Board exerts considerable influence on interest
rates and initial loan charges through the eligibility requirements for
associations applying for insurance of accounts by the Federal Sav
ings and Loan Insurance Corporation. The conditions for approval
18For details, see Seventh Annual Report, pp. 134-135.
SURVEY OF HOUSING AND MORTGAGE FINANCE
39
of insurance include the requirement that the associations adopt
lending policies, terms, and rates satisfactory to the Board. To
clarify this requirement the Board, on July 18, 1939, adopted a reso
lution stating
that it is the policy of the Board to approve an application for insurance of ac
counts only when it is supported by evidence that the applicant association will
establish and maintain such interest rates on loans as will enable it to attract
and hold the best mortgage loans available in the territory it serves and that,
consistent with its purpose of providing economical home financing, the associa
tion will continue to reduce interest rates and initial loan charges whenever
feasible.
Last, but not least, the rules and regulations for Federal savings
and loan associations which are under the direct supervision of the
Federal Home Loan Bank Board, have done a great deal to reduce
premiums and other initial loan charges which enter into the cost of
home financing. As Federal associations account for over 40 percent
of the total current lending volume of savings and loan associations
throughout the country, these provisions have a considerable effect on
lending practices, and in addition, they have to an increasing extent
set the standard for progressive home-financing institutions.
The Board recognizes that as long as competition between the
various types of local mortgage lenders prevails, this in itself will
operate as a major safeguard for economical operations and reasonable
charges to borrowers. Such competition is not lacking in the mort
gage market. The fact that savings and loan associations as a group
have maintained and improved their relative position in total home
mortgage-lending activity-analyzed earlier in this report-is per
haps the most eloquent proof of their ability generally to meet the
highly competitive situation. Under these circumstances, the proper
realm of supervisory authorities seems to lie in the establishment of
general policies designed to insure the soundest [type of lending
operations.
On the other hand, horizontal reductions of interest rates, or the
establishment of over-all maximum rates would fix only one of the
many conditions in the loan contract which determine real financing
costs. The ratio of loan to property value, provisions for amortiza
tion, different loan types, commissions, and other elements of the
contract are of equal importance. Hence, from a practical point of
view, the direct regulation of mortgage interest rates would be ex
tremely difficult. Moreover, home-mortgage lending is primarily
a local activity and local money is its main source; interest rates are,
therefore, subject to many local influences which cannot be ignored
without tampering with the free flow of money into investments.
270198-40---4
40
REPORT OF FEDERAL HOME LOAN BANK BOARD,
1940
Thus, uniform maximum rates throughout the United States might
be inequitable and in some instances harmful; if they were too low,
they would deprive those localities where money is scarce of mortgage
investments which otherwise would be made at the prevailing local
rates; if they were too high, they would fail to benefit those legions
where the "natural" rate is below the maximum. To giade maximum
rates by regions or size of communities, on the other hand, would
introduce an element of unjustifiable arbitrariness. Furthermore, ex
perience has shown that maximum prices, stamped with official
approval, tend only too easily to become minimum prices.
Finally, mortgage loans are far from being a standardized product.
The personal credit standing of the borrower, the age, location, and
physical condition of the property securing the loan, the term of the
loan, and the ratio of loan to property value are some of the many risk
factors determining interest rates. The size of the loan is an important
consideration as to the relative cost of servicing it. Maximum inter
est rates cannot possibly take all these factors into account unless
they are restricted to loans of prime quality. Thus, borrowers who
are not in this group but who are worthy credit risks would be ex
cluded from the assumed benefits of controlled interest rates.
Continued Rise of Home-Mortgage Debt
During the calendar year 1939, the estimated private mortgage debt
on nonfarm one- to four-family dwellings continued the increase begun
in 1937. In fact, each of the last three years showed an increased rate
of debt expansion. During 1937, the home-mortgage debt rose by
only $55,000,000; in 1938, the increase was $317,000,000; and 1939
recorded a growth of $694,000,000, thus bringing the total debt to
$18,415,000,000. If the Home Owners' Loan Corporation, which
has been liquidating since 1936, is excluded, the expansion of home
mortgage holdings by all active types of mortgage lenders is even
more conspicuous.
Estimated balance of outstanding mortgage loans on nonfarm one- to four-family
dwellings
[Millions of dollars]
Increase or decrease
Classes of lenders
Home Owners' Loan Corporation__
All others (institutions and indi
viduals)--------------Total--------------- -----
1936
1937
1938
1939
1937
1938
1939
1936
through
1939
$2,763
$2,398
$2,169
$2,038
-$365
-$229
-$131
-$725
14,586
15,006
15,552
16,377
+420
+546
+825
+1,791
17,349
17,404
17,721
18,415
+55
+317
+694
+1,066
SURVEY OF HOUSING AND MORTGAGE FINANCE
41
From the low of 1936, the mortgage portfolio of all lenders, excluding
the Home Owners' Loan Corporation, increased by $1,791,000,000, or
12.3 percent, but since the holdings of the Home Owners' Loan Cor
poration in the same period declined by $715,000,000, the net gain of
total debt was only $1,066,000,000, or 6.1 percent. Even so, the up
ward trend of the home-mortgage debt was in distinct contrast to all
other types of private long-term debt which remained stagnant or
continued to decline through 1939.
CHART XVII
ANNUAL CHANGES IN ESTIMATED PRIVATE MORTGAGE DEBT ON NONFARM
MILLIONS
OFDOLLARS
ONE TO FOUR-FAMILY DWELLINGS
1930 THROUGH 1939
DIVISION
OF RESEARCH
ANDSTATISTICS
FEDERAL
HOMELOANBANKBOARD
The net growth of home-mortgage debt from 1936 has been due to a
number of factors. One of them, of course, was the increased volume
of home building which was financed mainly through mortgage debt,
supplemented by low equity capital. Another factor was the sub
stantial sale of real estate acquired by mortgagees in previous years
through foreclosure or deed in lieu of foreclosure. The acquisition of
such real estate from 1930 to 1936 had been accompanied by the extinc
tion of mortgage debt, as creditor claims were exchanged against
ownership rights, and this was one of the principal causes of debt
liquidation. To the extent that financial institutions dispose of these
properties, the process works in reverse. Real-estate holdings of
financial institutions are normally sold for small down payments
42
REPORT OF FEDERAL HOME LOAN BANK BOARD,
1940
against purchase-money mortgages, and these mortgages enter the
balance sheet as home-mortgage loans. At the same time, the ab
normal debt liquidation of the depression years, through foreclosure
and maturity of short-term loans, has come to an end, and liquidation
is now more or less limited to the regular annual amortization of loans.
In the period from 1936 to 1939, savings and loan associations
scored the largest dollar increase in home-mortgage holdings-from
$3,361,000,000 to $3,957,000,000, or by approximately 18 percent.
Commercial banks showed a similar growth in dollar amount, from
$1,230,000,000 to $1,810,000,000, or an increase of 47 percent. Hold
ings of insurance companies rose by more than 19 percent during this
three-year period, and amounted to $1,490,000,000 at the end of 1939.
Holdings of mutual savings banks remained almost unchanged.
CHART XVIII
ESTIMATED BALANCE OF OUTSTANDING MORTGAGE LOANS ON NONFARM
ONE TO FOUR-FAMILY DWELLINGS, BY TYPE OF LENDER
DECEMBER 31, 1939
. ""
\
INDIVIDUALS
*''""
ISAVINGS AND LOAND
ASSOCIATIONS
AND
OTHERS,
> NSURANCE
'
"
. .
.* .
.
COS.
MUTUAL SAVINGS
,. . ..
*.
.* ."*
,
BANKS
14.5%
GOMMERCIAL BANKS
DIVISION OF RESEARCH AND STATISTICS
FEDERAL HOME LOAN BANK BOARD
Among private institutional lenders, savings and loan associations
continued to be the largest holders of home-mortgage loans, accounting
for approximately 40 percent of the total home-mortgage portfolio of
private financial institutions in 1939, and for 21.5 percent of the total
balance of home mortgages outstanding. That the field of home
mortgage finance is far from monopolized by a few types of financial
SURVEY OF HOUSING AND MORTGAGE FINANCE
43
institutions is indicated by the large share of the group "indi
viduals and others" which represented 35 percent of the total balance
of home-mortgage loans outstanding in 1939.
The relative importance of the Home Owners' Loan Corporation
has declined from 1936 because of the progressing liquidation of
HOLC loans; at the end of 1939, HOLC loans outstanding constituted
only one-ninth of the total home-mortgage debt. A complete survey
of the estimated home-mortgage debt from 1929 to 1939, by types of
lenders, is presented in Exhibit 10.19
The increase in home-mortgage debt during the past few years is
no cause for alarm. At the end of 1939, this increase had brought the
debt volume back to the level of 1933, which was clearly a depression
level. Under modern conditions, moreover, debt financing is the nec
essary companion of any expansion of economic activity although it
raises, in the realm of real estate as well as in other investment fields,
the question of a desirable balance between debt and equity financing.
However, more important than the mere quantity of debt is the qual
ity of the debt structure, and from this point of view, the debt increase
in recent years may be held to be much sounder than in any compara
ble period in the past. - The rapid debt expansion during the Twen
ties was occasioned and accompanied by a continuous stepping up of
real-estate prices, by widespread speculation, and by superficial and
defective appraisals; it was financed to a large extent by short-term
or medium-term loans and by junior mortgages; it occurred in the face
of serious weaknesses in the home-financing structure such as an al
most complete absence of marketability for mortgages and lack of a
credit reservoir for home-financing institutions. In the meantime,
great strides have been made toward remedying these defects.
A more critical attitude toward real-estate values has evolved; the
technique of appraisals has been improved; and most of the new loans
1sIn passing, it may be noted that the increase in home-mortgage holdings of savings and loan associations
was really greater than appears in the available statistics. A large portion of their holdings has been trans
ferred in recent years from the share-account sinking-fund planito the direct-reduction loan plan. Under
the share-account sinking-fund plan, the balance of the loan on the books of the associations was somewhat
inflated. The borrower pledged shares against the loan and paid periodic installments toward the maturity
of these shares; instead of applying each installment immediately to a reduction of the principal of the loan,
the now outmoded plan provided for cancellation of the loan'againsttheaccumulated shares only as the lat
ter matured. Thus, the balance of mortgage loans held by savings and loan associations in past years appears
to be higher than it actually was. When loans based on the sinking-fund plan are transformed into direct
reduction loans under which the principal is reduced with each periodic payment, the amount of pledged
shares, in one operation, is deducted from the principal amount of the loan. To the extent that such trans
formations took place in recent years, they tended to deflate the balance of mortgage holdings and to offset
increases in these holdings. While no reliable figures are available on the total volume of such transfers,
they have been substantial, running into several hundreds of millions of dollars from 1933 to 1939. As one
indication of the trend, certain statistics compiled by the Massachusetts Cooperative Bank League are of
interest. According to the League, the percentage of sinking-fund loans in Massachusetts cooperative banks
declined from 81 percent of all loans in October 1938 to 30 percent in May 1940. (Cooperative Banker, July
1940.)
44
REPORT OF FEDERAL HOME LOAN BANK BOARD,
1940
made during recent years are on a long-term amortized basis. In
the Federal Home Loan Bank System, a credit reservoir has been
provided to assure greater elasticity of credit for home-financing insti
tutions. Opportunities for the marketing of home-mortgage loans
have been created; and lending practices of home-financing institu
tions have been reformed. All these reforms, necessary in themselves
after the collapse in 1929, have at the same time assured a sounder
basis for recovery.
Abundance of Savings
The recovery of home-mortgage finance, reflected in the expanded
home-mortgage debt, has been supported by a continued flow of
savings into financial institutions. To an ever increasing extent,
savings and loan associations have been facing the problem of surplus
funds that has confronted other financial institutions for years.
CHART XIX
AMOUNTS
OF SELECTED TYPES OF LONG-TERM
SAVINGS HELD BY INDIVIDUALS
1920
OFDOLLARS
60
THROUGH
50-------------------m
0
1920 '21
22 '23
1939
al
'24
'25
26
27
28
'29
30 '31 '32
'
33
'34 '35
'36
'37
'38
'39
DIVISION
OF RESEARCH
AND STATISTICS
FEDERAL
HOMELOAN
BANKBOARD
The above chart shows for the past two decades the quantitative
changes in selected types of long-term savings which individuals have
accumulated. Only such savings are included as are potentially avail
able for investment in home mortgages or as are directly competitive
to share investments in savings and loan associations: savings deposits
SURVEY
OF HOUSING AND
MORTGAGE FINANCE
45
in banks, savings in life insurance companies, and savings and loan
associations, postal savings, postal savings bonds, and United States
savings bonds.
The growth of these individual long-term savings from 1921 to 1930,
reflecting the prosperity of the Twenties, was followed by a period of
decline from 1930 through 1933. Since then, a substantial recovery
has taken place which carried the total volume of these types of
savings far beyond the predepression peak of 1930. The increase of
over $14,000,000,000 from 1933 to 1939 indicates not only the prevail
ing propensity to save, but probably denotes a shift of investment
CHART XX
ANNUAL NET CHANGES IN SELECTED TYPES OF LONG-TERM SAVINGS
OIOLLNS
1921 THROUGH
1939
DIVISIONOF RESEARCH
AND
ISTICS
FEDERALHOMELOANBANKBOARD
habits on the part of savers. In brief, savings are being institutional
ized. In previous decades, a large portion of such funds had been
invested by savers directly in enterprises, mortgages, commercial
loans, or securities. The Thirties have witnessed a growing dis
inclination toward, or lack of opportunity for, such direct investments
with the result that proportionately larger funds have been entrusted
to banks, insurance companies, and savings and loan associations for
investment by them; in addition, postal savings grew in popularity
in the early Thirties, and the U. S. Savings Bonds, issued since 1935,
have attracted substantial amounts of individual savings.
46
REPORT' OF FEDERAL HOME LOAN BANK BOARD,
194 0
During the calendar year 1939, individual long-term savings of the
above-mentioned types increased by $3,000,000,000 as compared with
$2,000,000,000 the year before. The increase during 1939 represents
a new post-depression high.
As in previous years, United States savings bonds showed the
largest relative growth-53.2 percent. Savings in life insurance
companies, represented largely by their legal reserves, made the
largest dollar gain during the year-$ 1,5 23, 000,000, or '7.0 percent.
However, new life insurance sales were lower than in both 1938 and
1939 as evidenced by the following figures:
New paid-for life insurance'
[Excluding group insurance]
1936
-------------------------
1937 -------------------------------1938 ------------------------------------1939 ------------------------------------1 Face
amount of policies.
$7,344,349,000
7,533,468,000
6,526, 610, 000
6,425,633, 000
Life Insurance Sales Research Bureau.
Savings deposits in insured commercial banks increased by 3.5
percent during 1939 and in mutual savings banks by 2.4 percent.
Postal savings gained by 2.2 percent. Private investments in all
savings and loan associations rose by 0.6 percent. Exhibit 11 furnishes
detailed information on the distribution of individual savings of the
long-term variety over the various types of institutions and invest
ments mn 1938 and 1939.
Of the different classes of savings and loan associations, member
institutions of the Federal Home Loan System showed an increase in
private repurchasable capital by 11.2 percent during the calendar
year 1939, whereas nonmembers experienced a decline of about 7
percent. Within the membership of the System, Federal savings and
loan associations continued to record the largest growth-29. 1 per
cent. State-chartered insured members registered a gain of 1'7.9
percent, while private repurchasable capital in State-chartered non
insured members declined 4.4 percent.
Declining Return on Savings
Easy money conditions in the fiscal year 1940 led to a further decline
in the rate of return on savings. The average dividend rate paid by
mutual savings banks (on a weighted basis) stood at 2.04 percent at
the end of June 1940 as against 2.17 percent a year previous. A
number of mutual savings banks in New York City revised their
dividends to 1Y2 percent for the second quarter of 1940. In several
insta~nestheip.return on savings dposits in commPeial banks was
SURVEY OF HOUSING AND MORTGAGE FINANCE
47
reduced by agreement among the institutions and is now in many
cases substantially below the 2% percent maximum permitted for
members of the Federal Reserve System and nonmember insured
banks. Further, less visible reductions were effected by "scaling,"
through which balances exceeding a stated maximum received declin
ing rates of return. Operating ratios of member banks of the Federal
Reserve System for 1939 showed an average interest payment of 1.6
percent on time deposits. In New Jersey, the Department of Bank
ing and Insurance, on July 1, 1939, limited the maximum interest rate
on savings deposits for banking institutions, including savings banks,
to 1 percent, and the interest rate on postal savings in that State was
likewise reduced from 2 to 1 percent-the first revision of the uniform
rate of 2 percent which has been in effect since 1911 when the Postal
Savings System was created. In not a few cases, financial institutions
have actually limited the amount of individual savings accounts they
are willing to accept. In the case of United States savings bonds,
however, for which the return is 2.9 percent on ten-year maturities
there has been no change since 1935 when this new type of Govern
ment bond was introduced.
Bond yields experienced a somewhat erratic movement during the
reporting period. In the first few weeks of the European war, yields
CHART XXI
BOND YIELDS
........
JULY 1932 THROUGH JUNE 1940
DIVISIONOF RESEARCH
ANDSTATISTICS
FEDERALHOMELOANBANKBOARD
48
REPORT OF FEDERAL HOME LOAN BANK BOARD,
1940
on long-term bonds turned upward but they reverted quickly to lower
levels. In May 1940, when the war entered into a dramatic stage, a
second upturn began which continued through June.
Whether the flurries in bond yields during the fiscal year 1940
presage a definite reversal of the downward trend of interest rates
observed since 1932 depends on many unpredictable circumstances.
Even a more permanent increase in bond yields, however, may not
lead immediately to rising yields on other less flexible types of invest
ments, just as the downward movement of bond yields in the early
Thirties was slow in transmitting itself to other investment types.
Dividend Policy of Thrift- and Home-FinancingInstitutions
For a number of years, dividend rates paid by savings and loan associ
ations have shown a tendency to decline, but the movement has not
been uniform throughout the country. Many savings and loan man
agements have assumed that any reduction of dividend rates must be
avoided lest confidence and the flow of money into home-financing
institutions be impaired. They have been reluctant to concede
the general and radical nature of the reduction in investment yields
during the last five or six years. However, the downward adjust
ment of dividend rates has recently become more pronounced. As
an example, the average annual dividend rate paid by Federal savings
and loan associations was 3.39 percent for the calendar year 1939 as
against 3.49 percent for 193820 and 3.69 percent for 1935.
The rate of return paid to savers in thrift- and home-financing
institutions cannot, of course, be forced down to the point where
thrift is discouraged. As mutual institutions, savings and loan asso
ciations are bound to pay a return to savings members which is as
high as is consistent with sound business practices. The money
placed in savings and loan associations and other savings institutions
comes in small amounts from average working people. Since such
funds make possible most of the home building in this country, a
decrease in the flow of their savings into mortgage-lending institu
tions must inevitably have serious repercussions. It must not be
overlooked that the function of the Federal Home Loan Bank System
and of its member institutions is twofold-to encourage thrift and
with the funds thus accumulated to develop home ownership.
Dividend rates which are uneconomically high, however, necessarily
hamper associations in the present sharp competition for loans and
may force institutions to make mortgage investments of the second
or third class rather than first-grade loans which can be obtained only
20For more detailed data on dividends in 1938 and 1939, see Exhibit 46.
SURVEY OF HOUSING AND MORTGAGE FINANCE
49
at low interest charges. Inasmuch as interest rates are being reduced
as a result of competition in the mortgage market, high dividends
tend to narrow the margin between cost of money and income. Con
sequently, they limit the amount that can be added to reserves.
Moreover, the experience of associations which have reduced their
dividend rates in recent years clearly indicates that such reductions
have only a temporary adverse effect on the volume of funds invested
in the associations, and that the generally sound condition of an
institution and its competitive strength are more effective in main
taining investors' confidence than high dividend rates.
Within its supervisory authority, the Federal Home Loan Bank
Board has corrected local situations in those cases where individual
associations paying high dividend rates were pursuing questionable
lending or reserve allocation policies. In addition, the Board and the
Presidents of the twelve Federal Home Loan Banks have continuously
called to the attention of the savings and loan industry the necessity
of realistic revisions of dividend rates to conform with prevailing
money conditions. In general, the Board advocates annual dividends
at the present time at a rate of not more than 3 percent which would
enable associations to meet loan competition, to pay operating
expenses, and to strengthen reserves. In some regions, particularly
in the New York City area, competitive conditions permit and require
dividend rates of 2) percent.
Finally, the Federal Home Loan Banks have supported the trend
toward lower cost of money to savings and loan associations by reduc
tions in the interest rate charged on Bank advances. In 1932, after
the organization of the Federal Home Loan Bank System, interest
rates on advances ranged from 4 to 5 percent; on July 1, 1940, they
varied between 1% and 3 percent, reflecting a series of reductions
which continued through the fiscal year 1940. 21
21For details, see page 73.
II
Federal Home Loan Bank System
1. SUMMARY
AN
ABUNDANCE of money was the most noteworthy develop
ment in the operations of both the twelve Federal Home Loan
Banks and their member institutions during the fiscal year 1940.
The flow of private capital into member savings and loan associa
tions was large enough to enable them to make new mortgage loans in
the. amount of $894,212,000-an increase of 30 percent over the pre
ceding fiscal year-to retire investments of the U. S. Treasury and
the Home Owners' Loan Corporation in the amount of $24,827,600,
to reduce their net borrowings from the Federal Home Loan Banks
by $11,564,516, and still to increase cash reserves substantially.
This situation was reflected in the reduction of Federal Home Loan
Bank advances outstanding to $157,397,047 at the end of the fiscal
year, and in the increase of member deposits in the twelve Banks to
$33,114,867. On June 30, 1940, the Federal Home Loan Banks held
$36,249,169 in cash available for advances, and the excess of security
holdings over legal requirements was $41,334,671. The lower volume
of advances outstanding was the principal cause for a decline in net
income from $4,534,241 in the fiscal year 1939 to $3,236,727 in the
reporting period.
The primary purpose of the Federal Home Loan Banks is to provide
home-financing institutions with credit when the local demand for
funds exceeds the local supply. The usefulness of such a secondary
credit system Imust, of course, be measured by its potential credit
capacity rather than by the actual volume of credit it extends in any
given period. The public service and advantages accruing to members
are also a better gauge of usefulness. It is to be expected that at a time
when there is an abundance of local money flowing into member insti
tutions, the credit facilities of the Federal Home Loan Banks will not
be used to the fullest extent. The main benefits of a secondary credit
system may be derived from the stabilizing effect of its mere existence
and from its capacity to extend credit in periods of financial stress.
With respect to public service, the Federal Home Loan Banks,
through advice and assistance given to members during an unusually
difficult period, have been responsible in no small measure for the
51
52
REPORT OF FEDERAL HOME LOAN BANK BOARD,
1940
rehabilitation and recovery of home-financing institutions during the
last few years; for the modernization of plans of operation; and for
higher standards in management, thereby assuring better services to
investors and borrowers. This activity, while progressing satis
factorily, will continue for some time to come. Designed to benefit
the entire home-financing structure, the Federal Home Loan Bank
System is steadily building its membership into a more closely knit
and sounder component group within the industry. The strength of a
credit system depends chiefly on the strength of its member institu
tions. Hence, any improvement in the position of its members will
reflect favorably on the Federal Home Loan Bank System as a whole.
Earnings of a credit institution naturally fluctuate with the volume
of its lending activity. They will be low in "good times" when
advances outstanding are also low, and will be higher in "bad times"
when there is a great demand for reserve credit. During the eight
years of their existence, the Federal Home Loan Banks have earned
a net income of $24,536,800, of which $10,264,036 was allocated to
reserves and undivided profits, thus strengthening the capital structure
of the twelve Banks. The remainder, $14,272,763, was distributed
in dividends to stockholders, of which $11,183,336 was paid to the
U. S. Treasury and $3,089,427 to member institutions. Thus, eight
years of experience have settled the doubts expressed during the
legislative discussion of the Federal Home Loan Bank Act that a
reserve system in the home-mortgage field could be operated on a
self-supporting basis.
2. MEMBERSHIP
Changes in Membership
At the close of the fiscal year 1940, member institutions of the Federal
Home Loan Bank System numbered 3,914 as compared with 3,946 a
year previous. The aggregate assets of members were 7.1 percent
above those on June 30, 1939, totaling approximately $4,930,000,000
as against $4,600,000,000 at the end of the preceding year.
In the past three fiscal years, from July 1, 1937, to June 30, 1940,
the membership of the Federal Home Loan Bank System has remained
about constant in number, varying, within narrows limit, around 3,900
institutions. In the same three-year period, however, the combined
assets of members have grown by more than $1,000,000,000 and they
now approach the five billion dollar mark. This in itself is an indica
tion of the fact that, in spite of little change in the number of mem
bers, the importance of the Federal Home Loan Bank System in our
home-financing structure has increased rather than diminished. Dur
ing the period from 1932 to 1937, in which the Bank System was built
FEDERAL HOME LOAN BANK SYSTEM
53
up, its membership expanded rapidly in numbers as well as in assets.
In the present stage of the System, growth is almost entirely in the
resources of members; whatever contraction in numbers occurs is due
primarily to the progressing consolidation in the savings and loan
industry which constitutes the bulk of membership in the Federal
Home Loan Bank System.
CHART XXII
NUMBER AND COMBINED ASSETS OF MEMBER INSTITUTIONS OF THE
FEDERAL HOME LOAN BANK SYSTEM
AS OF JUNE 30 EACH YEAR
NUMBER OF
NUMBER
5, 0 0
BILLIONS
OFDOLLARS
5
MEMBER INSTITUTIONS
4,000
ESTIMATEDASSETS
4
2,000
2
-
,000
-
-
-
-
1933 1934 1935 1936 1937 1938 1939 1940
1933 1934 1935 1936 1937 1938 1939 1940
DIVISIONOF RESEARCHAND STATISTICS
FEDERALHOMELOANBANKBOARD
This situation is clearly reflected in the record of admissions to, and
withdrawals from, membership. During the reporting period, 90
thrift and home-financing institutions were admitted to membership
in the Federal Home Loan Bank System as compared with 122 in the
fiscal year 1939; and applications for membership pending on June 30,
1940, totaled 96 as against 105 at the close of the preceding fiscal
year. The reduced volume of admissions and applications is indica
tive of the continuous decline in the number of savings and loan asso
ciations outside the Bank System that can meet the standards for
admission to membership.
On the other hand, of the 122 terminations of membership during
the reporting period, 56 were occasioned by merger or consolidation
of member institutions and did not involve withdrawal of all their
54
REPORT OF FEDERAL HOME LOAN BANK BOARD,
1940
assets from the System. In addition, 50 member institutions went
into liquidation, 2 were removed from membership by the Board, and
14 member institutions, including 2 insurance companies, voluntarily
withdrew.
The following table summarizes, by types of institutions, the
changes in membership during the fiscal year 1940:
Number and assets of member institutions"of the'FederaflHome Loan Bank System,
June 30, 1940, compared with June 30, 1939
[Dollar amounts in millions]
Number
Savings and loan associations 1 ------Insured associations:
Federally-chartered------------State chartered
----Uninsured associations ----Other membersSavings banks
----------Insurance companies ---------------..
Total -
---
-------
Net change in fiscal
year
June 30, 1940
June 30, 1939
Assets
Number
Assets
Number
Assets
3,897
$3, 936
3, 865
$4, 233
-32
+$297
1, 380
786
1,731
1,440
896
1, 600
1,421
812
1, 632
1,726
979
1, 528
+41
+26
-99
+286
+83
-72
49
664
49
694
-
+30
9
40
202
462
11
38
213
481
+2
-2
+11
+19
3,946
4, 600
3,914
4, 927
-32
+327
1 Includes savings and loan associations, building and loan associations, homestead associations, and
cooperative banks.
Among savings and loan members, associations insured by the
Federal Savings and Loan Insurance Corporation now represent 57.8
percent of the number and 63.9 percent of the total assets of all savings
and loan members of the Federal Home Loan Bank System. Ex
hibit 12 shows the number and estimated assets of member institu
tions, by Federal Home Loan Bank Districts and by States, as of
June 30, 1939, and June 30, 1940.
The savings and loan membership of the Federal Home Loan Bank
System today comprises a larger proportion of the entire savings and
loan industry than ever before. Although including less than one
half the number of all savings and loan associations, member associa
tions, at the end of 1939, accounted for more than two-thirds of total
assets and for approximately three-fourths of the first mortgage loans
held by all savings and loan associations in the country; and in the
past fiscal year they were responsible for more than four-fifths of all
loans made by savings and loan associations. (Chart on opposite page.)
At the close of the fiscal year 1940, member institutions of the
Federal Home Loan Bank System were operating in 2,000 cities and
towns, comprising about 85 percent of the urban population of the
United States. They served an estimated 7,000,000 individuals,
FEDERAL
55
HOME LOAN BANK SYSTEM
either savers or borrowers or both. The majority of investors and
borrowers of savings and loan associations are, of course, heads of
families; hence, it is roughly estimated that 6, million out of some 23
million nonfarm families in the United States benefit from the facili
ties offered by member institutions of the Federal Home Loan Bank
System.
CHART XXIII'
MEMBER SAVINGS AND LOAN ASSOCIATIONS COMPARED WITH
ALL OPERATING SAVINGS AND LOAN ASSOCIATIONS
(BY CALENDAR YEARS)
L
NONMEMBERASSOCIATIONS M
NUMBER
ASSETS
MEMBERASSOCIATIONS
MORTGAGES HELD
BILLIONS
OF DOLLARS
61
LOIANS MADE
BILLIONS
OFDOLLARS
I
BILLIONS
OF DOLLARS
1
I
8
,
64/
r\L
68%
73%
J
-1
I I
1937 1938 1939
1937 1938
1939
1937 1938
1939
DIVISIONOF RESEARCHAND STATISTICS
FEDERALHOMELOANBANKBOARD
Members of the Bank System, while distributed over cities of all
sizes, are relatively more numerous in small communities which in so
many other respects have been stepchildren of the American financial
system. Approximately 50 percent of all member institutions are
located in cities of 25,000 or less, which explains in part the relatively
small average size of home-financing institutions. It is in the smaller
communities that home ownership is most common among all classes
of the population; in the larger cities, home ownership is less wide
spread and savings and loan associations are fewer in number, though
larger in size.
1Fofactual
figures, see Exhibit 13.
5
270198-40-
56
REPORT OF FEDERAL ]ROME LOAN
BANK BOARD,
1940
D istribution of savings and loan members of the Federal Home Loan Bank System,
by size of community, June 30, 1940
Size of community
Number
of
members
Less than 10,000 -----------------------------------------10,000 to 25,000
- - - - - - - - - - - ------ -- - - -- -668
- - - - - - - - - -25,000 to 50,000 - - ------------------------------------50,000 to 100,000 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 100,000 to 250,000 ----------------------------------------------------------250,000 to 500,000 ----------------------------------------------------------500,000 and over-- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Total -- - -
-----------------------------------------
1,422
323
285
2125.
378
677
3,865
Percent of
total
members
36.8
14. 7
8.3
7. 4
9.8
17.5
100 0
The Consolidation in the Savings and Loan Industry
As already mentioned, the savings and loan industry is at present in a
process of consolidation which, although reducing the number of
member associations, on the other hand exerts a wholesome effect on
our home-financing system. -The Bank Board and the twelve Federal
Home Loan Banks have snpported this process by assisting in mergers
and reorganizations with snbseqnent insurance of accounts by the
Federal Savings and Loan Insurance Corporation, and by encouraging
the sale of assets of those member associations which are too small or
weak to survive as independent units. They were guided in these
efforts by a policy of developing a membership of sound and strong
institutions capable of meeting the vastly increased needs for
economical and efficient home financing.
Essentially, the present trend toward larger and stronger home
financing institutions, within the bounds of local conditions, is a
parallel to developments in other sectors of our national economy and,
more specifically, in the banking field. However, the consolidation
in commercial banking, extending practically over the last two decades
and culminating in the suspension of thousands of institutions after
the bank holiday in 1933, preceded the comparable process in the
savings and loan industry. In the banking field, failures, liquidations,
and mergers led to a reduction in the number of active banks through
out the Twenties, despite the general business expansion in that
period. Difficulties of the early Thirties accentuated, of course, the
trend toward contraction. As a result, the number of active banks
in 1939 was only half that in 1921-15,035 as against 30,560.
In contrast, the number of savings and loan associations increased
through the greater part of the Twenties, reaching a peak in 1927,
and decreased slowly in subsequent years. Only recently has their
number been reduced in substantial measure as a belated consequence
57
FEDERAL HOME LOAN BANK SYSTEM
of the depression period from 1929 to 1933. The slow effect of un
favorable economic conditions on urban mortgage loans and real
estate, the long-term character of investments in savings and loan
associations, and the possibility of restricting repurchases operated
to delay consolidation in the savings and loan field and to carry it
over to a period of recovery. In fact, this process is not yet completed.
More than 2,000 of the 7,737 associations existing at the end of 1939,
although not in process of formal dissolution, are, in effect, in a state
of gradual liquidation. They make no new loans and receive no
new share investments, and restrict their operations to the collection
of interest and principal on mortgage loans and to the disposition of
real estate owned.
Number of commercial banks and savings and loan associations in the United States
OperatYear
banksI
1921
1922
---------1923 ---1924
-----1925
-----1926 ...
-----1927
----1928
------1929.-----1930 -..--...-------
-.
30, 560
30,158
29,505
28, 806
28,257
27,367
26,416
25, 576
24, 630
22,769
Operating
savings
and loan associations 2
9, 255
10, 009
10,744
11,844
12,403
12,626
12,804
12, 666
12, 342
11,777
Year
1931 -1932
-1933 -15,011
1934
1935
1936-------------1937 -1938
1939
-15,
Operat
Operating
ng
banks
savings
and loan as
sociations 2
19,966
18,390
16, 039
15, 837
15,628
15,393
15,206
035
11, 442
10,990
10,561
10,838
10, 478
9,779
8,840
8,300
7, 737
1 Federal Reserve Board, Annual Report, 1937, page 106, and Federal Reserve Bulletin, June 1940.
2 Savings and loan associations, building and loan associations, homestead associations, and cooperative
banks. For the period 1921 to 1931: Building and Loan Annals; for later years: Division of Research and
Statistics, Federal Home Loan Bank Board.
The table demonstrates that the contraction in number of operating
savings and loan associations has continued steadily during the past
several years. The declining number of savings and loan associations
does not imply that there have been too many institutions of that type
in all parts of the country. When the Home Owners' Loan Act of
1933 authorized the organization of Federal savings and loan associa
tions, it was discovered that approximately one-half of the counties in
the United States had no local home-financing institutions whatsoever.
This situation has subsequently been improved. It is true that in
certain areas, however, too many savings and loan associations had
been chartered and developed. It is this condition which has largely
contributed to the contraction which is now under way. In many
communities located in these areas, there have been an excessive num
ber of associations struggling for existence, for the most part too small
in size, unable to support competent management and satisfactory
office quarters, offering neither a safe investment channel for savers
58
REPORT OF FEDERAL HOME LOAN BANK BOARD,
1940
nor a modern home-financing service for mortgage borrowers. The
elimination or absorption of these institutions, together with the con
comitant development of associations in areas that previously had too
little home-financing facilities, will eventually bring about a more
balanced distribution of thrift and home-financing institutions over
the country. The savings and loan industry as a whole will emerge
from this transition as a stronger and more potent constituent of our
financial system.
Within the membership of the Federal Home Loan Bank System,
the trend toward fewer associations has resulted in the merger or con
solidation of 276 members from the beginning of operation in 1932
through June 30, 1940; in the same period, 135 savings and loan mem
bers went into liquidation. The bulk of liquidations in the savings
and loan industry have taken place outside the Bank System among
those associations that had been unable to meet the eligibility require
ments for membership in the System.
The process of consolidation naturally results in larger associations,
although size in itself is not a guarantee of strength. The trend
toward larger associations has certain advantages as measured in terms
of the community and area served by each association. Institutions
of reasonably large size are better able to support expert, full-time
management which is important to the successful operation of financial
institutions. Likewise, the maintenance of a full-time office located
in the business center of the community and separated from a con
fusing and often injurious association with other enterprises is difficult
for many small institutions. In addition, the sharp competition in the
home mortgage market requires modem business methods and stream
lined services that can be more adequately provided by larger institu
tions.
From these points of view, it is significant that on December 31,
1939, the average size of savings and loan members of the Federal
Home Loan Bank System was $1,047,000 as compared with $400,000
for nonmembers. Exhibit 14, which shows the distribution of member
savings and loan associations by asset size groups, evidences in greater
detail the trend toward larger institutions. On June 30, 1939, member
associations with assets of $500,000 or less represented 55.6 percent of
all members. On June 30, 1940, this proportion was reduced to 52.4
percent. The percentage of associations with assets of $1,000,000 or
more, on the other hand, rose from 24.6 to 27.3.
While the small- and medium-sized associations still predominate in
number, the larger associations hold an overwhelming proportion of the
total assets of savings and loan members. On June 30, 1940, associa
tions with assets of $1,000,000 or more accounted for only 27.3 percent
FEDERAL HOME LOAN BANK SYSTEM
59
of total members, but their assets were 75.4 percent of the aggregate
assets of all members.
It should not be assumed that the tendency toward larger savings
and loan associations means that small associations are not equally
capable of meeting the thrift and home-financing needs of their com
munities. The optimum size of savings and loan associations, in
fact of all financial institutions, must be gauged primarily by the size
of the community in which they are located and the volume of busi
ness which normal requirements demand. Local institutions which
outgrow their communities are subject to operating difficulties which
may well be quite as serious as those confronting very small institu
tions in larger cities.
3. OPERATIONS OF MEMBER INSTITUTIONS
Most characteristic features of member operations during the fiscal
year 1940 were increased lending activity and substantial retirements
of Treasury and HOLC investments-both accelerated by the large
amounts of private capital placed in member savings and loan
associations.
New High of Lending Activity
The estimated amount of new mortgage loans made by member sav
ings and loan associations totaled $894,212,000 during the fiscal year
1940 as compared with $686,697,000 in the preceding fiscal-year
period, a growth of $207,515,000, or 30 percent. Estimated lending
activity of nonmember associations rose at the rate of 8 percent, with
$196,576,000 in new mortgage loans made during the fiscal year 1940
as against $182,189,000 the year before. The combined lending
volume of all savings and loan associations passed the billion dollar
mark, reaching a new post-depression high of $1,090,788,000, which
was one-quarter above the level of the fiscal year 1939.
The distribution of total lending activity over the various types of
savings and loan associations has greatly changed during the last
three years. In the fiscal year 1937, member savings and loan asso
ciations accounted for 75 percent and nonmember associations for 25
percent of all loans made by savings and loan associations. For the
fiscal year 1940, these ratios were 82 percent and 18 percent, respec
tively. Within the membership of the Federal Home Loan Bank
System, Federal associations were responsible for only 34 percent of
all savings and loan mortgages written in 1937, whereas in the fiscal
year 1940, their share in the total had increased to 42 percent, and the
proportion of their lending volume to that of all member associations
had risen to not less than 51 percent. These shifts reflect in part, of
60
REPORT OF FEDERAL HOME LOAN BANK BOARD, 1940
course, the growth in membership of the Federal Home Loan Bank
System over the five-year period and the increasing number of Federal
associations due mainly to conversions from State to Federal charter.
At the same time, they are indicative of the concentration of the more
active savings and loan associations in the Federal Home Loan
Bank System as demonstrated by the fact that during the reporting
CHART XXIV
VOLUME OF NEW MORTGAGE
LOANS MADE BY SAVINGS AND LOAN ASSOCIATIONS
BY TYPE OF ASSOCIATION
1940
1939
1938
ANDSTATISTICS
DIVISIONOF RESEARCH
FEDERAL
HOMELOANBANKBOARD
period member associations loaned $221 for each $1,000 in assets and
nonmembers only $117.
Percentage distribution of new mortgage loans made by savings and loan associations
over the various types of associations,fiscal year figures
Type of association
All savings and loan associations -----------------------------Member savings and loan associations -------------Federal associations
-------------------State-chartered associations ------------------------Nonmember associations--------------------------
1937
1938
1939
100.00
75. 08
100.00
76.71
100.00
79.03
100.00
81.98
33. 62
41.46
24.92
34. 34
42. 37
23.29
38. 44
10. 59
20.97
41.97
40.01
18 02
1940
Exhibit 15 shows the monthly volume of new mortgage loans made
by savings and loan associations, separated by types of associations,
from January 1936 to June 1940, and Exhibit 16 presents the dollar
61
FEDERAL HOME LOAN BANK SYSTEM
amniount and percentage distribution of such loans, by Federal Home
Loan Bank Districts, for the fiscal years 1939 and 1940.
All Federal Home Loan Bank Districts, without exception, par
ticipated in the higher lending volume during the fiscal year 1940,
and it is notable that those Districts which had shown less activity or
little increased activity from the fiscal year 1938 to the fiscal year
1939 evidenced a substantial recovery in 1940. This is true, for
example, in the case of the Boston, Cincinnati, and Chicago Districts.
The largest percent increase in the fiscal year 1940 was in the Indian
apolis District, and the Winston-Salem District was a close second.
CHART XXV
INDICES OF MORTGAGE LENDING ACTIVITY BY SAVINGS AND LOAN
ASSOCIATIONS, BY F, H. L. B. DISTRICTS
FISCAL YEAR 1937=/00
3-PITTSBURGH
2-NEW YORK
I-BOSTON
INDEX
160
140
120
60
.. ...
.
....
4-WINSTON
SALEM
5-CINCINNATI
6-INDIANAPOLIS
8-DES MOINES
9-LITTLE ROCK
160
140
120/
100
80
-
60
--
---
--
7-CHICAGO
160
140
120
100
won=
--
----
--
10-TOPEKA
-------
--
80
160
----
11-PORTLAND
12-LOS ANGELES
140
120
100
80
937
60-1937
1938
1939
1940
1938 1939 1940
1957
1938
1939
1940
1937
1938
1939
1940
DIVISIONOF RESEARCHAND STATISTICS
FEDERAL HOME LOANBANKBOARD
The distribution of mortgage loans made by member savings and
loan associations according to purpose of loan followed closely the
pattern for all savings and loan associations (p. 33). The share
62
REPORT OF FEDERAL HOME LOAN BANK BOARD, 1940
of construction loans increased from 32.0 percent in the fiscal
year 1939 to 33.4 percent in the fiscal year 1940, home purchase ab
sorbed 31.6 percent of the total loan volume last year as against 33.2
percent during the reporting period, and the share of refinancing loans
declined from 19.9 to 18.6 percent. Reconditioning loans and loans
"for other purposes" showed only minor changes. A detailed account
of the distribution of new mortgage loans made by member savings and
loan associations, classified by purpose of loan, is given in Exhibit 17.
Retirement of Government Investments
During the fiscal year 1940, outstanding investments of the United
States Treasury and the Home Owners' Loan Corporation in savings
and loan associations declined appreciably. The ample flow of private
capital into member savings and loan associations enabled them to
repurchase such investments in substantial amounts. Consequently,
the balance of Treasury and HOLC investments outstanding was
reduced from $260,450,510 on June 30, 1939, to $237,161,310 on June
30, 1940. At this time, a review of the program of Government
investments in thrift- and home-financing institutions may be of
interest.
When Congress in 1933 passed the Home Owners' Loan Act to
provide immediate relief to home owners, it realized that a more
lasting solution of the problems in home finance lay in the rehabilita
tion of the country's home-financing institutions. At that time, the
flow of private money into savings and loan associations as well as
other private financial institutions had practically ceased. Mortgage
lenders were unable to make new home-mortgage loans and were
forced into liquidating existing loans to meet withdrawals of money
by needy or panicky investors. In order to check the painful process
of liquidation, to restore the confidence of savers, and to supply im
mediate funds for home-mortgage lending, Congress provided for
temporary assistance by the Government through placing public
funds in home-financing institutions. The U. S. Treasury was au
thorized to invest up to $100,000,000 in shares of Federal savings and
loan associations, of which amount $50,000,000 was appropriated;
subsequently, the Home Owners' Loan Corporation was authorized
to make similar investments to the maximum extent of $300,000,000
in the shares of savings and loan associations which were members of
63
FEDERAL HOME LOAN BANK SYSTEM6li
the Federal Home Loan Bank System or which were insured by the
Federal Savings and Loan Insurance Corporation. The program
provided for the gradual repurchase of Treasury and HOLC invest
ments by the associations. Repurchases do not begin until five years
after investments are made, and are limited annually thereafter to 10
percent of the total amount invested in any savings and loan associa
tion by the Treasury or thmeHome Owners' Loan Corporation. The
Federal Home Loan Bank Board was charged with the responsibility
for carrying out this program.
The following table shows the volume of such investments made by
the Treasury and the Home Owners' Loan Corporation for each of
the fiscal years from 1934 through 1940:
Gross investments made by the U. S. Treasury and the Home Owners' Loan Cor
poration in member savings and loan associations
Fiscal year
Investments by the U. S.
Treasury
.
Amount
invested
1934
.
$1,086,300
1935
29, 520, 400
1936
18,693,300
1937--------------------1938------------------------1939 --------------1940-------------
Cumulative
Investments by the HOLC
------Amount
invested
$1,086,300 -----------30, 606, 700 -----------------49,300,000
$63,142,700
49, 300,000
119,890, 300
49, 300, 000
28,964, 610
49, 300, 000
7,152, 200
49, 300, 000
1, 538, 400
Total investments
------Cumulative
.._
$63,142,700
183, 033,000
211,997, 610
219, 149,810
220,688, 210
m
n
invested
$1,086,300
29, 520, 400
81,836,000
119,890, 300
28,964, 610
7,152, 200
1, 538, 400
Cumulative
$1,086,300
30, 606, 700
112, 442, 700
232, 333,000
261, 297, 610
268,449,810
269,988,210
Of the $50,000,000 appropriated for Treasury investments, Congress
made available to the Federal Home Loan Bank Board an amount of
$700,000 to be used in the promotion and development of thrift and
home-financing institutions. The remaining $49,300,000 was in
vested in income shares of 661 Federal savings and loan associations.
This program was completed in November 1935. Of the $300,000,000
available for investments by the Home Owners' Loan Corporation, a
gross amount of $220,688,210 was invested in 1,344 Federal and
State-chartered institutions by June 30, 1940. The increase in
private capital received by member institutions has brought about a
decrease in the need for HOLC investments during the last two fiscal
years. Since 1938, the Board has restricted new HOLC investments to
special cases usually in conjunction with the rehabilitation of the
local savings and loan industry.
64
REPORT OF FEDERAL HOME LOAN BANK BOARD,
1940
The expectation that investments by the Government would
encourage the placement of private savings in savings and loan asso
ciations thereby eventually permitting the gradual retirement of
public funds has been fully justified. An increasing number of savings
and loan associations have voluntarily repurchased Treasury and
HOLO investments prior to the expiration of the five-year period
provided in the Home Owners' Loan Act and in a far greater amount
than stipulated by the law. Through June 30, 1940, repurchases of
Treasury and HOLO investments totaled $32,826,900, of which
$24,827,600 was retired in the fiscal year 1940. Of the total, only
$671,800 represented retirements provided by law. The Board, after
examining the financial condition of each savings and loan association
in which Treasury investments had been outstanding for five years,
determined that all were in a position to make repurchases. Hence,
the Board called for all amounts due to be turned back to the Treasury.
The balance of repayments in the amount of $24,155,800 consisted
of voluntary repurchases approved by the Federal Home Loan Bank
Board. In the belief that Government investments in private financial
institutions should be reduced as speedily as possible, the Board
sanctioned voluntary repurchases whenever this action appeared to
be compatible with the financial condition of associations applying for
such repurchases.
Repurchases of Treasury and HOLW investments by member savings and loan
associations
Treasury investments
Fiscal year
Amount repurchased
$77,000
1936--------------1,039, 300
1937--------------1938--------------381,000
1939--------------3,811,000
1940-------------- 1 9,854, 600
1Of
cumulative
HOLO investments
Amount repurchased
Cumulative
$77,000 - -------------1, 116,300
$12, 000 - -$12,000
1,497, 300
259,000
271,000
5,308, 300
2,420,000
2,691,000
14,973,000
17, 664, 000
1 15, 162,900
Total investments
Amount repurchased
$77, 000
1,051,300
640,000
6,231,000
24,827, 600
Cmltv
Cmltv
$77, 000
1, 128,300
1, 768,0300
7,999,300
32,826,900
this amount, $671,800 was retired in accordance with Section 5 (Q)
of the Home Owners' Loan Act.
Under the regulations of the Federal Home Loan Bank Board,
voluntary repurchases of investments by the U. S. Treasury or the
Home Owners' Loan Corporation are made in the same order as
applications for repurchase of such investments may be made under
the terms of the Home Owners' Loan Act. Voluntary repurchases
are deducted from requests for repayment which the U. S. Treasury
or the Home Owners' Loan Corporation may make.
65
FEDERAL HOME LOAN BANK SYSTEM
The following table indicates the net amount of investments out
standing both of the U. S. Treasury and the Home Owners' Loan
Corporation, by fiscal-year periods:
Net amounts of Treasury and HOLC nvestments outstanding
Treasury investments
Fiscal year
Number of
associations
1934----------------------------1935
---1936
----------1937
---------------1938--------------------1939 -------.. -------------1940 ------..
--------
HOLC investments
--
--
60
576
661
661
623
585
501
Amount
Number of
-
Total in
-----
Amount
$1,086,300 ...------------------..30,606, 700 ...---------49, 223, 000
776
$63,142, 700
48,183, 700
1, 141
183,021,000
47, 802,700
1,264
211, 726, 610
43,991,700
1, 304
216, 458,810
34, 137,100
1, 231
203,024, 210
Amount
$1,086,300
30,606, 700
112, 365, 700
231,204,700
259, 529,310
260, 450, 510
237,161,310
1A number of Federal associations have received both Treasury and HOLC investments.
Repurchases during the fiscal year 1940 resulted in a decline in the
number of associations holding both Treasury and HOLC investments.
While a number of associations made partial repurchases, other asso
ciations were in a position to repurchase such investments in full. A
complete tabulation of Treasury and HOLC investments made and
repurchased, and net investments outstanding, by types of member
institutions, is attached as Exhibit 18.
The reduction of Government participation in the capital structure
of member associations was reported to the Senate as required by
Senate Resolution No. 150, Seventy-Sixth Congress. In his Budget
Message for the Fiscal Year 1941, the President estimated that it
would be feasible to reduce the capital funds invested by the Govern
ment in various corporations and agencies by an aggregate amount of
$700,000,000 without impeding operations. During recent years,
member institutions of the Federal Home Loan Bank System have
already contributed substantially to the return of Government funds
previously invested. Barring unforeseen events, they may be expected
to continue to do so in the future.
Both the U. S. Treasury and the Home Owners' Loan Corporation
have received dividends on their share investments in member associa
tions on an equal footing with private shareholders. Cumulatively
through June 30, 1940, the U. S. Treasury has received $8,459,797,
and the Home Owners' Loan Corporation, $26,626,497, or a total
amount of $35,086,294. This is equivalent to a net yield of 3.46
percent on the average amount of Treasury and HOLC investments
outstanding from 1934 through 1940.
66
REPORT OF FEDERAL HOME LOAN BANK BOARD, 1940
Condition of Member Associations
An over-all analysis of the condition of member savings and loan asso
ciations confirms the favorable picture revealed in the foregoing pages.
The consolidated balance sheet for member savings and loan asso
ciations as of December 31, 1939, compared with that of the preceding
year, shows the following major changes (Exhibits 19 and 20):
1. Growth in assets by $295,000,000 to well over $4,000,000,000.
2. Increase in private investments by approximately $300,000,000
to over $3,000,000,000.
3. Improved liquidity, with cash holdings increased by almost
$49,000,000 to $206,000,000, or 5.1 percent of total assets.
4. Expansion of first-mortgage loans by $315,000,000, or from 74.4
to 76.8 percent of total assets.
5. Reduction of real estate owned by $73,500,000, or from 12 to 9.3
percent of total assets.
6. Decline in total borrowings by close to $17,000,000.
7. Increase in general reserves and undivided profits by almost
$17,000,000 to $285,000,000.
Assets.-The increase in assets among the various types of institu
tions during 1939 was confined to Federal savings and loan associations
which grew by $265,000,000, and to State-chartered insured associa
tions, which added $116,000,000 to their resources. The assets of
noninsured members declined $86,500,000; this drop, of course, was
due principally to shifts of associations from the uninsured to the
insured category and from State to Federal charter. The following
table summarizes the changes in assets of member savings and loan
associations during the calendar year 1939:
Changes in assets of member savings and loan associations,from December 31, 1938,
to December 31, 1939
[In thousands of dollars]
Total assets
Change during year
Type of association
Dec. 31, 1938 Dec. 31, 1939
All member associations_.------.-------------
-
Federal savings and loan associations-..---------. .
Insured State-chartered associations_ ------------.
Noninsured State-chartered associations.---.--....
Amount
Percent
$3,753,112
$4,048,185
+$295, 073
+7.86
1, 311, 006
812,310
1,629, 796
1,576,155
928, 733
1, 543,297
+265, 149
+116,423
-86,499
+20. 22
+14.33
-5.31
Except in the New York District, the growth in assets was general
for the entire country. The decrease of 2.6 percent in the New
York District is accounted for entirely by the number of New Jersey
associations which have segregated their assets in order to obtain
67
FEDERAL HOME LOAN BANK SYSTEM
insurance of accounts. Member institutions in the Winston-Salem
District show the most substantial increase in assets-18.9 percent.
Associations in the Portland District ranked second with a gain of
14.1 percent, followed closely by Des Moines and Los Angeles where
increases of 13.7 and 12.8 percent were registered.
CHART XXVI
PERCENT CHANGE IN ASSETS OF MEMBER SAVINGS AND LOAN ASSOCIATIONS
DURING THE CALENDAR YEAR 1939, BY F. H.L.B. DISTRICTS
PERCENT
3-PITTSBURGH
-
5-CINCINNATI
+ 6.5
6-INDIANAPOLIS
+ 7.9
+ 13.7
9- LITTLE ROCK
+ 9.4
12- LOS ANGELES
15%
20%
4.3
8-DES MOINES
I I- PORTLAND
10%
3 9
1-18 9
10-TOPEKA
5%
2.6
4-WINSTON SALEM
7- CHICAGO
0
I1 5
I - BOSTON
2-NEW YORK
INCREASE
DECREASE
5%
+ 5.2
14.1
+12.8
DIVISIONOF RESEARCHAND STATISTICS
FEDERALHOME LOANBANKBOARD
Private investments.-The growth of private investments in member
associations, including shares, deposits, and investment certificates
has raised the ratio of such funds to total resources from 72.4 percent
at the end of 1938 to 74.6 percent at the end of 1939. Investments
of the United States Treasury and the Home Owners' Loan Corpora
tion, on the other hand, were reduced from 6.9 to 6.2 percent of total
resources and will show an even more substantial reduction in 1940
when repurchases of such investments gathered momentum.
The following table shows the growth of private investments in
member savings and loan associations for the calendar years 1938
and 1939:
68
REPORT OF FEDERAL HOME LOAN BANK BOARD, 1940
Privateinvestments in member savings and loan associations
[Dollar amounts in thousands]
Type of association
Member associations -------
------
Insured members
Federally chartered ..--------------------------State chartered ...----------------..
Uninsured State chartered------------------------------
Dec. 31, 1938 Dec. 31, 1939
Pernt
change
$2, 717, 347
$3,020,469
+11.2
864,819
595, 288
1, 257,240
1, 116,430
701, 852
1,202,187
+29.1
+17.9
-4.4
For all member associations as well as for Federal and State-char
tered insured associations, the increase in private funds during 1939
was at a higher rate than the year before. Federal savings and loan
associations recorded the largest gain-29.1 percent. State-chartered
insured associations registered a growth in private investments of
17.9 percent. State-chartered noninsured members showed a de
cline of 4.4 percent. It should be noted, however, that this decline
was accentuated by the transfer of uninsured associations to the in
sured or Federal categories. Member associations as a whole en
joyed a net increase in private investments of 11.2 percent.
Mortgage pledged shares declined by $13,740,000 to $180,040,000
and represented only 4.1 percent of total resources at the end of 1939.
This exemplifies the continuing elimination of share-account sinking
fund loans, which involve the pledge of shares, and the widening
use of the direct-reduction plan.
Borrowings.-The decline in borrowings affected Federal Home
Loan Bank advances and other borrowed money. All together, at
the end of 1939, borrowed money was slightly below $200,000,000,
or only 4.9 percent of aggregate resources as against 5.8 percent the
year before. Of this total, more than nine-tenths represented Federal
Home Loan Bank advances, and less than one-tenth came from other
credit sources. These figures emphasize the fact that the Federal
Home Loan Banks are by far the most important source of credit for
member institutions.
Reserves.-Despite the fact that member savings and loan associa
tions have been employing reserves to take care of losses incurred in
the liquidation of real estate, the ratio of reserves to total assets
declined only slightly from 7.1 to 7.0 percent during 1939. It is
noteworthy that reduction of real-estate holdings has not prevented
the increase in reserves and undivided profits from keeping in line
with the growth of resources.
Mortgage loans.-The ratio of first mortgage loans held to total
assets has grown steadily from 69.9 percent in 1936 to 76.8 percent
in 1939, a reflection of the increased activity in new lending and of
69
FEDERAL HOME LOAN BANK SYSTEM
the transfer of real estate owned to purchase-money mortgages
which shifted property holdings back into the mortgage loan category.
The $3,107,000,000 in first mortgage loans held by member savings
and loan associations represents an 11 percent increase over the bal
ance at the end of 1938, and constitutes approximately three-fourths
of the estimated mortgage loan portfolio of all active savings and
loan associations (member and nonmember) in the United States.
Junior mortgages have always
CHART XXVII
been a small item on the balance
sheet of savings and loan associa MORTGAGE LOANS AND REAL ESTATE OWNED BY
MEMBER SAVINGS AND LOAN ASSOCIATIONS
tions and have shown a declining
1936 THROUGH1939
PERCENT
trend for a number of years.
100
,
-..
. ....
,.
I I I I
From 1938 to 1939, they were
REAL ESTATEOWNED
90
to
from $5,545,000
reduced
$4,645,000, or from 0.15 to 0.12
80
percent of total assets.
70
Chart XXVII illustrates an
essential feature of the recovery of
60
member savings and loan associa
TGAGELOANS
50
tions: the relative decline of real
estate owned as against the rela
40
tive increase in mortgage loans
outstanding.
30
Real estate.-For three consecu
20
tive years, real-estate holdings of
member associations have de
10
creased in dollar volume as well as
in proportion to total assets, and
1936
1937
1938
1939
by the end of 1939, the liquidation
DIVISIONOF RESEARCHAND STATISTICS
of the large volume of properties
FEDERALHOMELOANBANKBOARD
acquired through foreclosure or
voluntary deed had made substantial progress. Better economic
conditions, accompanied by a rapidly declining rate of real-estate
foreclosures, and a more active sales policy on the part of member
institutions have contributed materially to this improvement.
Real-estate holdings of member savings and loan associations of the Federal Home
Loan Bank System 1
Number of
members
Date
Dec. 31, 1936 -_
Dec. 31, 1937- .
--
Dec. 31, 1938-.....
-----.--_Dec. 31, 1939.-. .------.-------.
1 Excluding office buildings
-
Amount of
relestat
eld
Decrease
S
3,746
$512, 116, 000
3,----.---..3,890
488, 517, 000
3,894
3,866
450,139, 000
376, 673,000
Dollar
amount
--------$23, 599,000
38, 378,000
73,466,000
Percent
Proportion
to total
assets
(percent)
4.61
16.49
13.77
7. 86
16 32
11.99
9 30
-
70
REPORT OF FEDERAL HOME LOAIN BANK BOARD,
1940
Members in all of the twelve Federal Home Loan Bank Districts
showed a decline in real estate owned from 1938 to 1939, and it is par
ticularly significant that the largest reductions were effected in those
Districts where the "overhang" has been most substantial: the New
York, Chicago, Pittsburgh, Topeka, and Cincinnati Districts.' At
the end of 1939, member savings and loan associations in 26 States
reported real-estate holdings of less than 5 percent of total assets, and
in 12 States such holdings represented from 5 to 10 percent of their
aggregate assets.
Real estate owned by member savzngs and loan associations, by Federal Home Loan
Bank Districts
Dollar amounts (in
(i n
thousands)
Proportion to total assets
Federal Home Loan Bank District
Dec. 31, 1938 Dec. 31, 1939 Dec. 31, 1938
United States
....-------------
No. 1-Boston......-----------.---------No. 2-New York .-- .--------------No. 3-Pittsburgh-- ----------------No. 4-Winston-Salem_----No. 5-Cincinnati
-------------No. 6-Indianapolis----------No. 7-Chicago
-------No. 8-Des Moines __----No. 9-Little Rock .......------------No. 10-Topeka .
.------
No. 11-Portland -------------------..
No. 12-LosAneles-------------
-----...---
..---
Dec. 31, 1939
-
$450,139
$376, 673
Percent
11.99
Percent
9. 30
-
46, 745
102, 504
35, 892
9, 964
84, 272
27, 824
74,794
15, 824
14,150
45, 264
72,128
31, 610
8,960
76,983
21,792
62, 697
13. 889
10,639
10.98
22.20
15 70
2.87
10.93
11.58
19.12
8.84
7.30
9. 53
16 04
13. 30
2.17
9.38
8.40
15. 37
6.82
5.02
21,859
17,454
13.96
10 60
5 01
4. 09
4, 346
4, 251
11, 965
11,006
3 67
3.15
The bulk of acquired properties have been sold against purchase
money mortgages. However, substantial sales on installment con
tracts are reflected in an increase of real estate "sold on contract"
from $141,900,000 at the end of 1938 to $155,200,000, or 3.84 percent
of total assets, at the end of 1939.
Cash.-The growth in cash from $157,716,000 to $206,232,000, or
30.7 percent, is all the more remarkable since member associations
during the calendar year 1939 repurchased investments of the Treas
ury and the Home Owners' Loan Corporation in the amount of
$8,500,000, and reduced their borrowings by twice that amount.
This exemplifies the excess of available funds which developed in spite
of the fact that 1939 was the best lending year in nearly a decade.
During the past four years, member savings and loan associations
have built up their cash reserves from 3.74 percent of total assets
(1936) to 5.09 percent of assets (1939).
1
In some cases, the reduction in real estate owned was due to segregation of assets by which property
holdings were placed into special liquidating corporations.
FEDERAL HOME LOAN BANK SYSTEM
71
Statement of Operations
For the second year, the Division of Research and Statistics of the
Federal Home Loan Bank Board has compiled combined statements of
operation for savings and loan members of the Bank System. Since
these statements include only those members which submit reports
for the calendar year, and in view of the changing composition of mem
bership, operating ratios are more significant than dollar amounts.
However, it may be noted in passing that the gross operating income
of 3,110 reporting members in 1939 was $182,954,000 as against
$163,827,000 reported by 3,094 member associations in 1938, and that
the net income after deduction of all charges aggregated $121,575,000
as compared with $105,357,000 the year before.
As to operating ratios, while the changes from 1938 to 1939 were
comparatively slight, they were all in a favorable direction (Exhibit
21). Most important is an increase in the ratio of net income to gross
operating income from 64.31 to 66.45 percent. Also the distribution
of net income varied significantly, inasmuch as a larger proportion of
net income was allocated to reserves and undivided profits and a smaller
proportion to dividends. In 1938, reporting associations distributed
78.82 percent of total net income to shareholders in the form of divi
dends and bonuses; in 1939, this was reduced to 75.65 percent. Con
versely, allocations to reserves and undivided profits absorbed 24.35
percent of net income in 1939, as against 21.18 percent the year
before.
Of the gross operating income in 1939, 85.23 percent was derived
from mortgage loans as against 84.25 percent in 1938, while net
earnings from real estate contributed only 3.00 percent to gross
operating income as compared with 3.44 percent the year before.
This is in line with the expansion of the mortgage loan portfolio and
the contraction of real-estate holdings during the year. Operating
expenses changed only fractionally and remained about 26 percent of
gross operating income. Compensation in 1939 absorbed 12.61 per
cent of gross operating income or approximately one-half of total
operating expenses. Advertising expenses were equivalent to 2.12
percent and audit and examination costs to 0.72 percent of gross
operating income. Total interest charges on borrowed money were
reduced substantially from 9.19 to 7.75 percent of gross operating
income, reflecting the smaller volume of borrowings and the lowering
of interest rates on such advances.
20198--40-
6
72
REPORT
OF FEDERAL HOME LOAN
BANK BOARD,
1940
4. OPERATIONS OF THE FEDERAL HOME LOAN BANKS
Decline of Advances Outstanding
Lending operations of the twelve Federal Home Loan Banks were
profoundly affected by the liquidity of member institutions discussed
earlier in this report. Each month throughout the fiscal year 1940,
the balance of advances outstanding was lower than in the corre
sponding period of the preceding year. However, this was the result
of an unusual volume of repayments rather than of a reduced demand
for new advances. Gross advances of the Banks in the fiscal year
1940 were higher than the year before, totaling $108,009,901 as
against $76,659,075. At the same time, however, repayments
CHART XXVIII
MILLIONSFEDERAL
OFDOLLARS
30
HOME LOAN BANK SYSTEM,ADVANCES AND REPAYMENTS
JANUARY 1936 THROUGHJUNE 1940
28
t
26
+
24
t_
22
22
20
II
l
REPAYMENTS
AI
ADVANCES
I
i
,
16
to
DEC
JUN
1936
DEC
JUN
1937
DEC
JUN
1938
DEC
JUN
1939
DEC
JUN
1940
DIVISION
OF RESEARCH
AND STATISTICS
FEDERAL
HOMELOANBANKBOARD
increased to an all-time high of $119,574,417, as compared with
$103,922,449 in the preceding fiscal-year period. The excess of re
payments over advances during the reporting period is reflected in
the reduction of advances outstanding from $168,961,563 on June 30,
1939, to $157,397,047 on June 30, 1940.
Gross advances of the Federal Home Loan Banks from the beginning
of operations through the fiscal year 1940 aggregated $631,033,292
and gross repayments on such advances totaled $473,636,245. A
summary of advances, repayments, and balances outstanding from
73
FEDERAL HOME LOAN BANK SYSTEM
the inception of the Federal Home Loan Bank System through June
30, 1940, is presented in Exhibit 22.
The decline in advances during the fiscal year 1940 was fairly
general throughout the country, with only three of the twelve Federal
Home Loan Bank Districts showing a larger balance than the year
before. These three were the New York, Winston-Salem, and
Portland Banks. The sharpest percent decreases were in the Cin
cinnati District (25.8 percent) and in the Little Rock District (27.1
percent). Exhibit 23 gives detailed information on the volume of
advances outstanding, by Bank Districts.
S In line with the declining balance of advances, the number of
borrowing members was reduced from 2,385 at the end of the fiscal
year 1939, representing 60.4 percent of the membership, to 2,090 on
June 30, 1940, representing 53.4 percent of the total number of
members. A great number of member institutions were able to repay
their advances in full-a process which was facilitated by the general
practice of Federal Home Loan Banks to accept repayments, at the
convenience of borrowing members, before maturity.
Proportonof borrowing members to total number of members, as of June 30 each year
Federal Home Loan Bank District
1935
1936
1937
1938
1939
1940
Percent Percent Percent Percent Percent Percent
No. 1-Boston --------------No 2- New York_---------No. 3-Pittsburgh-----------__- --- _ .---No. 4-Winston-Salem_-__--No. 5-Cincinnati----- ----------------No. 6-Indianapolis
------------No. 7-Chicago
----. -------
No. 8-Des Moines ---No.
No.
No.
No.
--------
9-Little Rock
---------10- Topeka -----------11-Portland
-----------12-Los Angeles --------------
Total
_
----------
--
- -
28.9
54.8
71.0
55. 8
52. 2
43. 5
73.1
40 4
60.3
76.1
61. 7
55.6
54.1
80. 5
44.0
61.7
80. 4
65. 7
54. 8
70. 5
82. 4
39.9
63.2
80.8
71.7
56.0
66. 8
81.1
32.4
60. 5
78. 1
56. 6
46.8
59.3
75.3
29 9
58.6
72 1
53.8
37 8
53. 5
64.1
33 1
42.5
55. 8
46. 9
59 5
63.2
60. 6
61. 3
62. 7
67.5
67. 2
68. 2
60.1
66.8
69. 3
73. 4
51. 7
58.5
53. 0
71.1
41.2
51.7
48.1
60 5
54.6
63 6
67.3
67.8
60 4
53.4
51.7
-
60. 7
68. 7
68. 7
65.0
55. 0
On July 1, 1940, interest rates charged on Federal Home Loan Bank
advances ranged from 1% to 3 percent on short-term advances and
from 2% to 3 percent on long-term advances, reflecting various reduc
tions made during the fiscal year 1940. On October 12, 1939, the
Federal Home Loan Bank Board established a maximum rate of
interest of 3 percent per annum on advances to member institutions,
effective October 15, including new advances as well as advances out
standing at that date; with the further provision that notes evidencing
such advances shall not be written at an interest rate in excess of the
rate to be collected. 2 The Federal Home Loan Banks of Boston and
2 On advances to nonmember mortgagees approved under Title II of the National Housing Act, the rates
of interest are not less than 3 of 1 percent nor more than 1 percent higher than the rates of interest charged
to member institutions on advances of like character. No such loans were outstanding on June 30, 1940.
74
REPORT OF FEDERAL HOME LOAN BANK BOARD,
1940
New York reduced their interest rates on long-term advances to 2Y
percent, and their rates on short-term advances amortized within one
year to 1% percent. The Federal Home Loan Bank of Cincinnati
adopted a uniform rate of 2% percent for all advances. Exhibit 24
shows the interest rates in effect on July 1, 1940.
Shifts in Advances
During the fiscal year 1940, there was a decided shift from long-term
to short-term advances, reversing the trend that had prevailed over a
number of years. On June 30, 1940, advances for periods up to one
year constituted 27.1 percent of all advances outstanding as compared
with 20.7 percent on June 30, 1939. This shift has been widespread
throughout the country, with 8 Bank Districts showing an increase in
both the dollar volume of short-term advances and percent to total
advances outstanding. In two additional Districts, Cincinnati and
Little Rock, the volume of short-term advances declined, but increased
as a percentage of all advances. In only two Districts, Des Moines
and Topeka, did short-term advances decline both in volume and ratio
to total portfolio.
Distribution of Federal Home Loan Bank advances outstanding, by long-term and
short-term advances, as of June 30
Dollar amounts
Percent distribution
Year
Long-term
--------1933
--- -----------------------1934
1935-----------------------1936---------------------------1937-------------------------------1938
-----------------------------1939 ------------------------------------1940 --------------------------
$17, 460, 425
57, 885, 363
51,020,430
74, 653, 428
118, 257, 717
149, 227, 685
133,919,650
114,732,949
Short-term
$30, 203,405
27, 262,991
28,212,084
43,933,410
48,799,169
46,997, 252
35,041,913
42, 664,098
Lng-
term
36. 6
68.0
64. 4
63. 0
70. 8
76.0
79.3
72.9
Short
term
63.4
32.0
35.6
37.0
29.2
24. 0
20.7
27.1
The distribution of long-term and short-term advances outstanding
in each of the Federal Home Loan Bank Districts is shown in Exhibit
25.
The relative growth in the volume of short-term advances resulted
largely from "unsecured" advances which are collateralized only by
the investment of the borrower in Federal Home Loan Bank stock.
On June 30, 1940, such advances totaled $31,054,548, or 19.7 percent
of all advances outstanding, as compared with 13.9 percent the year
before. Advances of this type are made on a conservative basis. If
unsecured advances are made for a term of more than thirty days, the
borrowing association cannot have outstanding liabilities to other
75
FEDERAL HOME LOAN BANK SYSTEM
creditors in an amount greater than 5 percent of its net assets. Thus,
there is recourse on such advances to a substantial portion of the
assets of the debtor institution. Also, any excess collateral which
may have been pledged to the Bank as security for long-term advances
to the same borrowing member may be utilized, if necessary, to assist
in the retirement of an unsecured advance outstanding to such bor
rower. In no event can unsecured advances be written for a term in
excess of one year.
Trend of secured and unsecured advances outstanding, by fiscal-year periods
June 30, 1933- ..
June 30, 1934 June
June
June
June
June
June
30,
30,
30,
30,
30,
30,
__
Collateralized advances
Uncollateralized advances
Amount outstanding
Percent
of total
Amount outstanding
$47, 663, 830
85,148, 354
$46, 521, 239
82, 740, 248
97.6
97. 2
$1,142, 591
2,408, 106
2.4
2.8
79, 232, 514
118, 586, 838
167,056, 887
196, 224,937
168, 961, 563
157, 397, 047
68,045,199
89,964,281
130, 944, 112
163, 386, 013
145, 442, 668
126, 342, 499
85 9
75.9
78. 4
83. 3
86.1
80. 3
11, 187, 315
28,622, 557
36,112, 775
32,838,924
23, 518,895
31, 054, 548
14.1
24.1
21. 6
16.7
13.9
19. 7
Total
advances
outstanding
Date
-
--
__--- 1935 -1936-------------------1937--...----. ---------------- 1938--..
1939----....------ -- -1940-...--.----------
-
Percent
of total
The $126,342,499 in secured advances outstanding at the end of
the fiscal year 1940 was collateralized by 133,054 home mortgages
with unpaid balances of $304,724,687, and obligations of the U. S.
Government (direct or fully guaranteed) aggregating $1,209,625.
In addition, the Banks held as collateral to both secured and unse
cured advances a statutory lien on the amounts paid in by borrowers
on Federal Home Loan Bank stock, in the total amount of $21,706,900.
A detailed description of the types of advances made by the Fed
eral Home Loan Banks appears in Exhibit 26.
Throughout eight years' operation, none of the twelve Federal
Home Loan Banks has sustained any loss on advances. At the end
of the reporting period, 2 borrowing member institutions were in
voluntary, and 9 members in involuntary liquidation; their indebted
ness to the Banks totaled $1,130,495 and was secured by home mort
gages valued at $1,441,362 and stock in the Banks aggregating
$136,100. Excluding borrowers in liquidation, there were only 3
borrowing members delinquent over thirty days, in the total amount
of $118,374. No losses are anticipated on any of the advances out
standing on June 30, 1940.
By Board Resolution of March 4, 1940, the borrowing capacity of
member institutions was redefined as the amount for which the
member can legally obligate itself or, in the absence of such legal limit,
as the equivalent of 50 percent of the member institution's net assets.
76
REPORT OF FEDERAL HOME LOAN BANK BOARD,
1940
On June 30, 1940, the borrowing capacity of all members was approxi
mately $1,877,000,000. Within the borrowing capacity, a line of
credit may be established by the Banks for each member. Lines of
credit must be reviewed at least annually, and revised whenever
necessary.
Statement of Condition
A statement of condition for the twelve Federal Home Loan Banks
as a whole and for each of the Banks separately, as of June 30, 1940,
is presented in Exhibit 27.
As already indicated, a high degree of liquidity continued to be the
outstanding factor in Federal Home Loan Bank operations during the
CHART XXIX
COMPOSITION
OF CONSOLIDATED
ASSETS OF THE TWELVE FEDERAL HOME LOAN BANKS
AS OF JUNE 30,1939 and JUNE 30,1940
0
10
20
P E R C ENT
40
50
30
JUNE 30
S64
1939
60
70
80
5700
90
100
0
02J
JUNE 3C
21 1605
1940
03J)
CASH
B
INVESTMENTS
ADVANCES OUTSTANDING
II
OTHER ASSETS
DIVISION
OFRESEARCH
ANDSTATISTICS
FEDERAL
HOME
LOANBANKBOARD
fiscal year 1940. Although consolidated Federal Home Loan Bank
debentures in the amount of $41,500,000 were retired on July 1, 1939,
the volume of liquid funds remained in excess of requirements.
Cash holdings of the twelve Federal Home Loan Banks on June 30,
1940, totaled $47,109,587 as against $78,205,795 the year before.
The latter figure, however, includes $41,500,000 which had been
earmarked for the above-mentioned retirement of debentures.
Investments, consisting exclusively of United States Government
obligations (direct or fully guaranteed), increased from $48,702,247
to $54,856,104 during the year.
At the end of the reporting period, combined cash and investments
totaled $101,965,691 and were equal to 39.2 percent of the consoli
dated assets of the Banks, as compared with 42.8 percent at the close
FEDERAL HOME
LOAN
77
BANK SYSTEM
of the preceding fiscal year. Cash available for advances3 and
securities in excess of legal requirements 4 was $77,583,839.
The securities held by the Federal Home Loan Banks are listed in
Exhibit 28. Their book value of $54,856,104 as of June 30, 1940,
compares with a par value of $53,688,800 and a market value of
$56,569,799. Maturity dates and security yields are indicated in the
following table:
Distribution of securities held by the twelve Federal Home Loan Banks, as of June
30, 1939, and June 30, 1940
June 30, 1939
Maturity
Average
Amount otal
Under 1 year ------.
-----1 to 5 years_
5 to 10 years
--- _
10 to 15 years- ------15 to 20 years --------20 years and over -------Total _
.---.-----
June 30, 1940
Average
weighted
yield 1
ntAverage
Amount
tPercent
of totalweighted
yield 1
- $1,653,000
15,311,000
9,954,000
10,327,000
6,114, 000
4,305,000
3. 5
32.1
20.9
21.7
12.8
9.0
Percent
1.05
1.26
1.72
2.44
2. 71
2.60
$270,000
21,803,000
13,160,000
12, 343,000
2,638,000
3,475,000
0. 5
40.6
24. 5
23.0
4. 9
6. 5
Percent
1.10
1.17
1 97
2 55
2 45
2 58
47, 664,000
100 0
1.91
53, 689, 000
100 0
1 84
1 Based on cost to maturity/callable dates
The high degree of liquidity of member institutions caused them not
only to reduce their borrowings from the Federal Home Loan Banks,
but at the same time to increase their deposits with the Banks. At
the close of the fiscal year 1940, member deposits totaled $33,114,867
as compared with $32,191,666 the year before and $19,873,357 on June
30, 1938. The Federal Home Loan Bank Act does not require that
members maintain deposits with the Federal Home Loan Banks, nor
does it permit the Banks to transact any banking business not specifi
cally authorized in the Act. Nevertheless, member institutions have
found the Banks a convenient depositary for excess funds.
Of the total member deposits, $5,012,835 represented demand de
posits on which no interest is paid, and $28,102,032 was in interest
bearing time deposits. In view of the declining volume of advances
and reductions in interest rates charged on advances, several Banks
lowered the rate of interest paid on time deposits, so that the maxi
mum rate at the close of the fiscal year 1940 was 1 percent. The rates
paid by each of the twelve Federal Home Loan Banks as of June 30,
1940, are listed in Exhibit 29.
Represents total cash less reserve requirements of 75 percent of members' demand deposits, 25 percent
of members' time deposits, total applicants' deposits, and interbank deposits.
4 Represents the par value of investments owned above the necessary legal reserve of 20 percent of net
earnings each six months.
78
REPORT
OF FEDERAL HOME LOAN BANK BOARD,
1940
In addition to member deposits, which serve as a means of inter
local equalization of funds within a Bank District, an interregional
exchange of funds is provided by interbank deposits from Bank to
Bank. From the beginning of operations through June 30, 1940, such
interbank deposits (which are unsecured) totaled $79,550,000 and the
amount outstanding at the latter date was $2,700,000. Effective
December 15, 1939, the interest rate to be paid on interbank deposits
was fixed by the Federal Home Loan Bank Board at % of 1 percent
per year.
CHART XXX
COMPOSITION OF CONSOLIDATED LIABILITIES AND CAPITAL
OF THE TWELVE FEDERAL HOME LOAN BANKS
AS OF JUNE 30,1939 and JUNE 30,1940
10
0
20
9
JUNE 30
1939
PERCENT
40
30
50
70
60
80
100
90
4
42 1,
39
':090
04
JUNE 30
;
; 48
33 9
03-4
SCAPITAL
MEMBERSI
MEMBER
STOCK SUBSCRIPTIONS
-U S GO ERNMENT
/
M
DEPOSITS
DEBENTURES OUTSTANDING
OTHER LIABILITIES
SURPLUS and UNDIVIDED PROFITS
DIVISIONOF RESEARCH
AND STATISTICS
FEDERALHOME LOANBANK BOARD
Other important changes in the consolidated balance sheet of the
twelve Federal Home Loan Banks were a decline in debentures out
standing and an increase in capital stock as well as in surplus and un
divided profits. Series E of consolidated Federal Home Loan Bank
debentures, in the amount of $41,500,000, was retired at maturity
on July 1, 1939, which left only two debenture issues outstanding in
the total amount of $48,500,000. They represent the joint and several
obligations of all Federal Home Loan Banks. The Banks' participa
tion in these issues is shown in Exhibit 30.
Summary of all consolidated debentures issued by the Federal Home Loan Banks
Number of series
Date of issue
Maturity
Term
Amount
Year
A 1---.--
--.
- -------.---
B -..-------_--------------------------0.------D .--_.------.-----.----.--..
_--.__
E -----....-.....--
1Retired
at maturity dates.
Inrst
Percent
Apr.
1, 1937
1
July
Dec.
Apr.
July
1,1937
1,1937
1,1938
1, 1938
Apr.
1,1938
$24, 700,000
1
3
5
1
July
Dec.
Apr.
July
1,1938
1,1940
1,1943
1,1939
28,000,000
25,000,000
23, 500,000
41, 500,000
11
1X
2
2
1
79
FEDERAL HOME LOAN BANK SYSTEM
Despite the decline in the number of member institutions, capital
stock subscriptions of members continued to increase, aggregating
$42,632,475 on June 30, 1940, as compared with $39,586,175 the year
before. Including the $124,741,000 paid in by the U. S. Treasury
under the terms of the Federal Home Loan Bank Act, 5 the total paid-in
capital stock of the Federal Home Loan Banks aggregated $167,373,475
as of June 30, 1940. Because of increasing member subscriptions, the
ratio of paid-in capital stock held by members to the total capital
stock has steadily increased.
On a percentage basis, 74.5 percent of the capital stock of the
Federal Home Loan Banks was held by the Treasury and 25.5 percent
by the member institutions at the
CHART XXXI
close of the fiscal year. The Federal Home Loan Bank Act proDISTRIBUTION OF PAID-IN CAPITAL STOCK OF
THE FEDERAL HOME LOAN BANKS
vides for the gradual retirement
FISCAL YEARS 1936 THROUGH 1940
of Government stock when the 'oo
amount subscribed by member
MEMBERS
I
institutions exceeds that held by
the Treasury. It is necessary, so
however, to maintain the com
bined capital stock, public and
private, in substantial amount in 6o
order to provide a sufficiently
large base for debentures now out
GOVERNMENT
.
standing and those which may be 4
issued in the future. Successful
:
operation of the Federal Home 2"'
Loan Bank System as a reserve
institution depends on its ability
PEes
RCENT
to meet demands of member insti-
0
1
9
38
9
'
1940
1939
19
1937
1936
tutions for advances during
A
E
periods
emergency.
of
sound
,FEDERAHO LOANo NKB ARoAR
periods of emergency. A sound
capital structure must be main
tained at all times if the Bank System is not to be handicapped in
fulfilling this responsibility.
Under the provisions of the Federal Home Loan Bank Act, each
member must hold stock in its Regional Bank in an amount not less
than 1 percent of the unpaid principal of its home-mortgage portfolio,
DIVISION OF RESEARCH AND STATISTICS
8
Under the terms of the Federal Home Loan Bank Act, the Secretary of the Treasury was required to
subscribe on behalf of the United States for such part of the minimum capital stock of each Federal Home
Loan Bank as was not subscribed for by members within a period of 30 days from the date stock-subscription
books were opened by the Board. On this basis, the Secretary of the Treasury was committed to subscribe
for $124,741,000 of stock in the twelve Federal Home Loan Banks, all of which had been paid in prior to
November 19, 1937,
80
REPORT OF FEDERAL HOME LOAN BANK BOARD,
1940
but not less than $500. Each borrowing member must own stock of
the Regional Bank in an amount equal to at least one-twelfth of its
outstanding indebtedness to the Bank. Although outstanding ad
vances to members declined, the amount of Federal Home Loan Bank
stock held by the average member institution rose from $10,038 to
$10,896 during the reporting period.
By an act of Congress, Public No. 664, 76th Congress, approved
June 25,1940, the Reconstruction Finance Corporation was authorized
to purchase from the Treasury its subscription to the capital stock of
the Federal Home Loan Banks. This authorization is in accord with
the plan, outlined in the President's Budget Message for the Fiscal
Year 1941, of recapturing approximately $700,000,000 from the capital
funds of various Government agencies. The legislation does not con
template any change in the capital structure of the Federal Home Loan
Banks except for the transfer of stock to the Reconstruction Finance
Corporation.
The combined capital structure of the twelve Federal Home Loan
Banks is summarized in the following table:
Changes in capital structure of the twelve Federal Home Loan Banks
June 30, 1939
Total stock subscriptions:
Members .-----.--------------United States Government __----------------Payments received on stock subscriptions
Members .- -
.-..----------
United States Government------------Balance due on above stock subscriptions:
_---_-------Members.__ ----United States Government--------
$39,609,100
124,741,000
39, 586, 175
---------
-----------------
-
June 30, 1940
$42,647,900
124,741,000
42, 632,475
124, 741,000
124, 741,000
22,925
15,425
-------
From July 1, 1939, to June 30, 1940, the twelve Federal Home Loan
Banks increased their surplus and undivided profits by $1,462,595,
bringing the total amount of surplus and undivided profits at the end
of the reporting period to $10,264,036. Thus, within eight years of
operation, close to $11,000,000 has been set aside from earnings to
strengthen the Banks' capital structure. On June 30, 1940, surplus
and undivided profits were equal to 6.1 percent of the paid-in capital
stock.
Due to the retirement of debentures, total resources of the Federal
Home Loan Banks were reduced during the past fiscal year from
$296,629,853 to $260,067,459. On June 30, 1940, current assets were
270 percent of current liabilities.
81
FEDERAL HOME LOAN BANK SYSTEM
Income and Expenses
The Federal Home Loan Banks experienced a rather substantial
decline in income during the reporting period. The consolidated gross
income dropped from $7,274,390 in the fiscal year 1939 to $5,715,959.
This was occasioned by a reduction of interest earnings on advances,
attendant upon the lower volume of advances outstanding and lower
interest rates charged, and by a decline in nonoperating income.
Charges to income were somewhat reduced from $2,740,149 to
$2,479,232, chiefly through lower interest expense on outstanding
debentures. Since operating expenses of the Banks are more or less
independent of fluctuations in the volume of advances, they could not
be lowered in the same measure that gross income declined. As a
result, net income declined from $4,534,241 in the preceding fiscal
year to $3,236,727 in the reporting period.
In an evaluation of the expenses of the Banks, cognizance must be
taken of the extent of services performed by the Banks, described in
the following sections of this report. These services enhance the
usefulness of the Bank System to home finance and thrift and are part
of the public responsibility vested in the System.
Condensed consolidated statement of profit and loss of the twelve Federal Home Loan
Banks
Fiscal year 1939 Fiscal year 1940
Income:
Interest earned on advances ---------------------------------------
Interest earned on investments--------------------------------Interest earned on deposits in commercial banks --------------------
$5, 669,103
891, 301
$4, 561, 889
956, 533
570
713, 986
196, 967
7,274, 390
5, 715,959
Compensation, travel, and other administrative expenses ----------
922, 523
927,106
Interest on debentures-----------------Assessments for expenses of Federal Home Loan Bank Board--__--
1, 120, 292
300, 000
938, 750
300,000
Nonoperating income ----------Gross income _
---------
------------
Less-Charges:
Interest on deposits...
----------------
Other expenses-- ....--------------------------------------------
Nonoperating charges ------.----Total deductions ------------Net income---
-------------
----------------------------_
250, 276
83,168
247, 393
49, 358
63, 890
16, 625
2,740,149
2,479, 232
4, 534, 241
3,236,727
Exhibit 31 gives a detailed statement of profit and loss in the fiscal
year 1940, for each of the twelve Banks.
Four of the twelve Federal Home Loan Banks reduced their divi
dend rates during the fiscal year 1940. Consequently, the annual
dividend rate on the average capital stock of the twelve Federal Home
Loan Banks for the fiscal year 1940 was 1.07 percent as compared
with 1.36 percent in the preceding year, and total dividend payments
were $1,774,132 as against $2,201,926 the year before. Exhibit 32
82
REPORT OF FEDERAL HOME LOAN BANK BOARD, 1940
shows the dividend rates declared by each Bank for the fiscal year
1940 and cumulative amounts paid from the beginning of operations
to June 30, 1940.
The conservative financial policies of the Banks are indicated by
the fact that despite reduced net earnings, allocations to reserves and
undivided profits were $815,250 in excess of the reserve requirements
of the Federal Home Loan Bank Act.
Distributionof net income of the FederalHome Loan Banks, fiscal years 1939 and 1940
Fiscal year
1939
Allocation to reserves'
To legal reserves- .. ._
..-------------------- $906,848
473, 656
To reserve for contingencies --------------------_---- Total to reserves-----_
---------.----.--1, 380, 504
Dividends paid:
United States Government--------- ---------------------1 664, 559
Members-...------------------------------------------------537, 367
2, 201, 926
Total dividends paid --------------------------Balance to undivided profits ...-----......
-
-
------------------
Total net income (consolidated) .......------------------------
Fiscal year
1940
$647,345
419,093
1,066, 438
1,334,190
439, 942
1, 774, 132
951,811
396, 157
4,534,241
3, 236, 727
An analysis of the surplus and undivided profits of the Federal Home
Loan Banks, individually and collectively, as of June 30, 1940, is
given in Exhibit 33.
In addition to administering the Federal Home Loan Bank System,
the Federal Home Loan Bank Board serves as Board of Directors of
the Home Owners' Loan Corporation and as Board of Trustees of
the Federal Savings and Loan Insurance Corporation. Accordingly,
the Board derives its operating funds from assessments upon the twelve
Federal Home Loan Banks, from charges made against the Home
Owners' Loan Corporation and the Federal Savings and Loan Insur
ance Corporation for services rendered by the Board, and from fees
received for the examination of home-financing institutions. Expenses
of the Examining Division of the Board, which represent the
greater portion of the Board's operating budget, are reimbursed by
the institutions examined.
In the fiscal year 1940, receipts of the Federal HomeLoan Bank
Board totaled $1,396,788 and disbursements aggregated $1,282,542
as compared with $1,070,599 and $1,124,650, respectively, the year
before. Including a cash balance of $238,425 carried over from the
preceding year, the balance as of June 30, 1940, amounted to $352,671.
Exhibit 34 presents a tabulation showing in detail the administrative
receipts and disbursements of the Board for the last two fiscal years.
The personnel of the Federal Home Loan Bank Board totaled 396
at the close of the fiscal year 1940. Of this total, 241 employees
FEDERAL HOME LOAN BANK SYSTEM
represented the staff of the Examining Division.
83
Exhibit 35 gives a
summary of personnel by departments, as of June 30, 1939, and June
30, 1940.
Administration of the Bank System
In the administration of the Federal Home Loan Bank System, em
phasis is placed on the maintenance of an equilibrium between central
ization and decentralization. Under the direction of the Federal
Home Loan Bank Board, the Governor of the Federal Home Loan
Bank System is responsible for the administration and supervision of
the twelve Banks.
In the determination of its policies, the Federal Home Loan Bank
Board is assisted by an advisory body in which each of the twelve
Bank Districts is represented to assure a close contact between the
operations in the field and the central administration in Washington.
This organization was created by the Federal Home Loan Bank Act
and is known as the Federal Savings and Loan Advisory Council.
The Council, which consists of one member elected by each of the
twelve boards of directors of the Federal Home Loan Banks and six
members appointed by the Federal Home Loan Bank Board, held two
meetings during the reporting period. At these meetings, the Advi
sory Council centered its attention on a number of subjects of primary
importance to the successful operation of the Bank System, among
which were the following: organization of supervisory activities by
the Board and the officers of the Banks, earnings of the Banks in the
face of declining advances, interest rates on advances, retirement of
Treasury and HOLC investments in shares of member institutions,
deposits of member institutions in the Banks, questions arising from
the proposed recapture of capital funds from Government corpora
tions, and the Federal Home Building Service Plan. The Council
also endorsed proposed legislative amendments to the Federal Home
Loan Bank Act. Its recommendations were of value in the evolution
of rules and regulations governing the operations of the Banks and
their member institutions. A list of the members of the Council as of
June 30, 1940, is attached as Exhibit 36.
The Bank Presidents' Conference, which is composed of the execu
tive heads of the twelve Banks, met twice during the year. The Con
ference, established by Board Resolution, meets regularly in Wash
ington to advise and confer with the Governor of the Federal Home
Loan Bank System on various administrative and supervisory
problems. Among the subjects discussed at the meetings this year
were costs of supervision, supervisory duties of Bank officers, annual
reports of Federal savings and loan associations, advertising policies
and public relations of member institutions, interest rates on Bank
84
REPORT OF FEDERAL HOME LOAN BANK BOARD,
1940
advances, mortgage interest and dividend rates, retirement of Treas
ury and HOLC investments in member associations, issuance of new
debentures, and national and State legislation.
A balance between centralization and decentralization is also accom
plished by an arrangement under which the officers of the twelve
Federal Home Loan Banks act as agents of the Federal Home Loan
Bank Board in various matters under the jurisdiction of the Board.
This arrangement makes it possible to give recognition to local condi
tions while preserving reasonable uniformity of standards, and helps
to simplify and make more efficient the work of the Board. The
officers of the Banks receive, consider, and submit recommendations
on applications for charters for Federal savings and loan associations,
for insurance of accounts by the Federal Savings and Loan Insurance
Corporation, for investments by the Home Owners' Loan Corporation
in member associations, and on other applications requiring specific
approval by the Board. As agents of the Board, the officers of the
Banks also have the responsibility of supervising the institutions in
their Districts which are insured by the Federal Savings and Loan
Insurance Corporation. These institutions submit to them for their
consideration all such matters as budgets, applications for approval of
amendments to charters or bylaws, petitions for permission to establish
branch offices, applications for approval of the purchase of assets or of
consolidations, mergers, or dissolutions, and similar matters which
must be approved by the Federal Home Loan Bank Board under the
statutes and rules and regulations of the Board. The officers of each
Bank supervise the bonding of directors, officers, and employees of
institutions insured by the Federal Savings and Loan Insurance
Corporation as required by the statutes, bylaws, and rules and regula
tions governing such institutions. Upon receiving a report on the
supervisory examination of an insured institution, the President of
each Bank makes a careful study of such report and transmits a copy
thereof to the institution examined accompanied, if necessary, by a
supervisory letter based on the facts disclosed in the examination
report.
Each of the Federal Home Loan Banks is administered by a board
of twelve directors, four of whom are appointed by the Federal Home
Loan Bank Board to represent the public interest, while eight directors
are elected by the member institutions in each Bank District in ac
cordance with the terms of the Federal Home Loan Bank Act and
the rules and regulations prescribed by the Federal Home Loan Bank
Board. Effective June 23, 1939, the Board issued new rules and regu
lations for the election of directors. The election procedure was
modeled along the lines of the preferential ballot system used suc-
FEDERAL HOME LOAN BANK SYSTEiM
85
cessfully by the Federal Reserve Banks for the past twenty-five
years. The advantages of this procedure were well demonstrated in
the 1939 election in that the secrecy of each ballot prevailed, material
reductions were made in election costs, and the period formerly re
quired to conduct the election was reduced by more than one month.
Examination and Supervision
Each Federal Home Loan Bank is examined semiannually by the
Federal Home Loan Bank Board. Member institutions are required
to file an annual report with the Federal Home Loan Bank of which
they are members. The report, together with an analysis prepared
by the Board's Examining Division, serves the requirements of the
Banks as well as those of the Governor of the Federal Home Loan
Bank System.
The Federal Home Loan Bank Board examines and supervises all
Federal savings and loan associations, and, in cooperation with State
authorities, State-chartered associations which are insured by the
Federal Savings and Loan Insurance Corporation. It also examines
such noninsured member institutions of the Bank System as are not
subject to State examination. On June 30, 1940, there were 2,235
insured thrift- and home-financing institutions under the direct
supervision of the Board.
In the early period of operation, examinations were conducted by
the twelve Federal Home Loan Banks. Late in 1934, however, an
Examining Division was established under the Board, with the Chief
Examiner in Washington and a District Examiner in each of the Fed
eral Home Loan Bank Districts. This arrangement has served to
assure uniformity of examination standards as far as practicable and
to give sufficient emphasis to local conditions.
When the Federal Home Loan Bank Board commenced operations,
Federal examination of thrift- and home-financing institutions was
an innovation. State supervisory authorities had developed a great
variety of examining procedures and practices; examination-report
forms and the standards of examination differed from State to State.
In the formulation of its examining procedures, the Federal Home
Loan Bank Board has attempted to combine and improve the best
practices developed by State authorities. A standard examination
report form was prepared and later revised through the collaboration
of representatives of the National Association of Building and Loan
Supervisors, the Accounting Division of the U. S. Savings and Loan
League, and the Federal Home Loan Bank Board. This standard
form is now used by the Bank Board and by nearly half the States.
86
REPORT OF FEDERAL HOMt LOAIN BANK BOARD,
1940
As a result of cost reductions made effective in the fiscal year 1939
and of simplifications in the examination report form, there has been a
material decline in average examination charges. Comparing the
calendar year 1939 with 1938, the average decline approximated 15
percent.
Soon after the beginning of operations, the Federal Home Loan
Bank Board determined that the functions of examination and super
vision should be entirely separated. Accordingly, the responsibility
for supervision has been vested in the Governor of the Federal Home
Loan Bank System and the officers of the Federal Home Loan
Banks who act as the Board's agents for this purpose. Separation
of examining and supervisory functions assures to examiners a greater
measure of independence as fact-finders, and to supervising officials
a more detached consideration of information and circumstances
revealed by the examinations. Supervisory action is taken only
after independent study of the facts as related to the statutes, to the
rules and regulations established by the Board, and to general stand
ards and practices in the industry. By delegating immediate super
visory functions to the officers of the Federal Home Loan Banks,
supervision has been made responsive to varying conditions in the
different sections of the country.
In the discharge of its supervisory authority, the Board is guided by
the principle that every institution should be so operated that due
regard is given to the public interest. Supervision of financial institu
tions of all types is now commonly accepted, because of the heavy
responsibilities assumed in managing the funds of millions of private
individuals. The protection of the interests of private individuals
who entrust their savings to financial institutions has logically
devolved upon the State and Federal governments.
This responsibility of the Board does not imply participation in
the management of local home-financing institutions. The day-to
day operation of savings and loan associations is properly the concern
of local directors and managing officers. The function of the Federal
Home Loan Bank Board is rather to establish basic standards of
operation to which all insured associations must conform.
The rules, regulations, and standards which have been adopted by
the Board are the product of careful study and investigation. They
are intended to be specific objective standards which will protect the
interests of the public without imposing undue restrictions on legiti
mate activities of local management.
Although the supervisory activities of the Board are primarily
directed toward the compliance by all institutions with the statutes and
regulations, the Board has an additional positive interest in developing
and maintaining the soundest and most economical practices among
FEDERAL HOME LOAN BANK SYSTEM
87
individual institutions. The informal influence of the Board, in
encouraging the type of operation which in its considered judgment
will assure successful .administration of the institutions as well as a
maximum service to investors and borrowers, is an important aspect
of the Board's supervisory activities. In this same connection, the
Board recognizes that no institution will prove more successful than
the capability of its management. The establishment of full-time
qualified executive management is therefore encouraged in all institu
tions where warranted by size, budget, and community needs. Wher
ever possible to do so, the Board attempts to take preventive super
visory measures before proceeding to corrective action. If difficulties
can be forestalled in this manner, all interested parties, the associ
ation, its borrowers and investors, and the Board, profit thereby.
The limits to the results which can be expected from the supervisory
activities of the Board should be noted. Supervisory standards, no
matter how well drawn, cannot insure permanent successful operation
of individual institutions. Such standards cannot, for example, remove
home-financing institutions from the effects of real estate and economic
trends. In the last analysis, the success or failure of supervision must
be measured in terms of the degree of competence with which the
savings and loan industry meets the thrift and home-financing needs
of the country.
The following table contains a summary of the examinations and
analyses conducted by the Examining Division of the Federal Home
Loan Bank Board during the fiscal year 1940:
Number
Supervisory examinations-------------------------------408
Supervisory examinations and audits -------------------1, 572
Miscellaneous examinations --- __
---------------_
-101
Examinations and analyses of applications for membership, insurance,
conversion, and HOLC investments------------------_-------_
683
Other services 1-------------------------------------459
Total-----------------------------------------------
3,223
1 Examinations on occasion of mergers; purchase, sale, transfer, or segregation of assets; services to Federal
Home Loan Banks and Federal Savings and Loan Insurance Corporation; and other services.
Federal Home Building Service Plan
The Federal Home Building Service Plan, inaugurated by the Federal
Home Loan Bank Board in 1936, has been further developed during
the reporting period.
While it is contemplated ultimately to extend
the Plan to all sections of the country, field activities were confined
to six trial areas for intensive development during the fiscal year 1940.
Within the six areas, certain cities have been selected as primary and
secondary points for promotion of the Plan in the 1940 building
270198-40-7
88
season.
REPORT OF FEDERAL HOME LOAN BANK BOARD,
1940
Local operation of the Plan in communities outside of these
areas has been, and will continue to be, served by the Bank Board's
Home Building Service Section in Washington.
The Federal Home Building Service Plan offers the member insti
tutions of the Bank System and other mortgage lenders a "quality"
program operating to insure better planning, design, and construction
for new homes financed by such institutions. While designed to
safeguard home seekers of modest income, in a field where protective
architectural and technical service had been lacking in the past, the
Plan is calculated to strengthen the value of collateral behind the
mortgage loan, and to provide financial institutions with a proper
merchandising technique for loans on new construction. Essentially,
its services are a means of reducing the risks-both to borrower and
lender-involved in loans on new houses.
The Federal Home Building Service Plan provides mortgage lenders
with a program through which they may offer prospective home
owners good small-house plans, as well as technical services at mini
mum cost. The facilities included in the Plan range from advice and
guidance in the selection of proper and suitable design, plan, and
building site, to the qualification and selection of contractors, the
awarding of contracts, and the supervision of construction. The
homes erected under the Plan obtain a "Certificate of Registration"
attesting that they have been built according to proper standards,
thus supplying the product with a much-needed identification of
"quality."
The Plan is sponsored jointly by the Federal Home Loan Bank
Board, the American Institute of Architects, and the Producers'
Council representing the largest materials manufacturers. A number
of associations in the building trades such as the National Lumber
Manufacturers Association, the National Adequate Wiring Bureau,
and the Portland Cement Association have endorsed the Plan and
assist in its promotion. However, the Plan is operated in each com
munity by local organizations comprising the various elements of the
building industry-mortgage-lending institutions, architects, builders
and contractors, and material dealers. Institutions which desire to
operate the Plan may use the material and assistance provided under
the Plan to develop their own home building service and adapt it to
their individual requirements and to local conditions.
As of June 30, 1940, there were 312 home-financing institutions
which had been approved to offer the services of the Federal Home
Building Service Plan, and 489 architects had been qualified. At the
same time, the number of home designs approved under the Plan
reached 925.
III
Federal Savings and Loan Associations'
PLACE OF FEDERAL ASSOCIATIONS IN THE HOME-FINANCING
INDUSTRY
THE progress
of Federal savings and loan associations during the
fiscal year 1940 continued at a rapid pace. Private investments
in the 1,429 2 associations operating under Federal charter on June 30,
1940, totaled $1,268,000,000 as against approximately $991,000,000
for the 1,386 associations operating the year before. During the
reporting period, these private local institutions, chartered and super
vised by the Federal Home Loan Bank Board, made new mortgage
loans in the amount of $457,816,000, an increase of 37 percent over
the preceding fiscal-year period. At the same time, they repurchased
investments of the U. S. Treasury and the Home Owners' Loan
Corporation to the extent of $21,523,600. Despite such repayments
and vastly increased lending operations, they were able to strengthen
their cash position as well as their reserves.
After seven years of operation of Federal savings and loan associa
tions, it appears appropriate to survey the place that this national
system of home-financing institutions occupies within the savings and
loan industry as a whole. At the end of the calendar year 1939, the
combined assets of Federal associations represented 26 percent of all
savings and loan assets in the United States. However, these institu
tions accounted for not less than 42 percent of the volume of new mort
gage loans made by all savings and loan associations during the fiscal
year 1940, and their mortgage holdings were equivalent to 32 percent
of the total mortgage portfolio of all savings and loan associations.
1 Federal savings and loan associations are chartered by the Federal Home Loan Bank Board pursuant to
the provisions of Section 5 of the Home Owners' Loan Act of 1933. They are locally owned and managed,
and can be said to serve the home mortgage credit field in much the same way that national banks serve
the commercial credit structure of the country.
2 One association is omitted from all statistical figures throughout this section because it had not fully
completed organization prior to June 30, 1940. The difference between the 1,429 Federal savings and loan
associations reported as chartered and the 1,421 Federal savings and loan associations listed as members of
the Federal Home Loan Bank System is due to the lapse of time between the issuance or withdrawal of
Federal charters and the issuance or withdrawal of membership certificates. The difference results from
such time lapses mainly in the cases of conversions from State to Federal charter and terminations.
89
90
REPORT OF FEDERAL HOME LOAN BANK BOARD,
1940
Federal savings and loan associations, operating on a uniform basis
and offering simple, progressive lending and savings plans, benefit all
sections of the country. Nearly 2,900 counties, or 94 percent of all
counties in the United States, fall either wholly or in part within the
fifty-mile lending radius or service area of these institutions. Meas
ured in terms of assets, the West, the South, and the Middle West
(with the exception of the Chicago area) show a much higher propor
tion of Federal associations to all savings and loan associations
than the Northeast. This is due in part to the organization of new
Federal associations in the sections of the country which had inade
quate home-financing facilities before 1933-one of the objectives of
the Act authorizing the establishment of Federal savings and loan
associations.
The following table shows the combined assets of Federal savings
and loan associations, by Federal Home Loan Bank Districts, as com
pared with the estimated assets of all operating savings and loan
associations, for December 31, 1939, the latest date for which complete
information is available:
Assets of Federal savings and loan associations compared with total assets of all
operating savings and loan associations, by Federal Home Loan Bank Districts,
as of December 31, 1939
Proportion to
Assets of
Federal
Federal Home Loan Bank District
associations
United States---..----- -..
_----- ------------------..
total operating
savings and
loan
associations
--
$1, 576, 155,000
28.5
No.
No.
No.
No.
1-Boston
------------------------------------2-New York .------- ----------------------------3-Pittsburgh --------------------------------4-Winston-Salem...---------------------------
124,761,000
167,598,000
73, 428, 000
176, 420, 000
20.0
17.3
14. 1
35.3
No.
No.
No.
No.
No.
6-Indianapolis..--.
------------------------7-Chicago-----------------------------8-Des Moines ------..----------------9-Little Rock ----------------------------10-Topeka..
-----------------------------.-
129, 567,000
128,693,000
104,811,000
79,731,000
101,159,000
46.9
24.8
40.1
36.4
43.0
No. 5-Cincinnati
No. 11-Portland.--..---
------------
-----------------------
-----------.-------------.-
No. 12-Los Angeles.-----------------------------
291, 293, 000
30.1
78, 258, 000
51.2
120,436,000
41.8
In relation to total assets of the savings and loan industry, Federal
associations lead in the Portland Federal Home Loan Bank District
where they hold over one-half of all savings and loan assets. The
Indianapolis Federal Home Loan Bank District shows the second high
est proportion of Federal savings and loan associations to all associa
tions, and the Topeka Federal Home Loan Bank District ranks third
in this respect. In each of these three Districts and in the Los
Angeles and the Des Moines Districts, the combined assets of Federal
associations account for more than 40 percent of the total assets of all
FEDERAL SAVINGS AND LOAN ASSOCIATIONS
91
operating savings and loan associations. In the Boston, New York,
and Pittsburgh Federal Home Loan Bank Districts they represent 20
percent or less of the total savings and loan assets. In dollar volume
of assets, however, Federal associations are highest in the Cincinnati,
Winston-Salem, and New York Districts.
GROWTH IN NUMBER AND ASSETS
During the reporting period, a net increase of 43 associations chartered
by the Federal Home Loan Bank Board brought the total number of
Federal savings and loan associations to 1,429 as of June 30, 1940.
At the latter date, the combined assets of Federal associations totaled
$1,728,865,000 as compared with $1,442,069,000 on June 30, 1939.
The growth in assets during 1940 was 19.9 percent as against 18.8
percent the year before.
CHART XXXII
NUMBER AND ASSETS OF FEDERAL SAVINGS AND LOAN ASSOCIATIONS
NUMBER
1,800
ASSETS
1.400
1,600
1,200
1,400
1,000
1,200
800 net addition of 43 associations during the fiscal year 1940 was
600
00
600
S400
200
0
200
1934 1935 1936 1937 1938 1939 1940
0
1934 1935 1936 1937ellt 1939 1940
and LoanAssociations
Savings
Converted
Federal
a
Nhartered
at Fe
Savings
t deral and Loan Assoclations
DIVISION
OF RESEARCHAND STATISTICS
FEDERAL HOME LOANBANKBOARD
The net addition of 43 associations during the fiscal year 1940 was
the result of 64 new charters issued and of 21 cancellations of existing
charters. Of the new charters, 62 were for conversion of State
chartered associations to Federal charter, and only 2 for newly
organized institutions.
As was pointed out in previous reports, the program for the estab
lishment of Federal savings and loan associations, begun in 1933,
92
REPORT OF FEDERAL HOME LOAN BANK BOARD,
1940
served two purposes: (1) to organize new Federal savings and loan
associations in communities where sound thrift and home mortgage
lending facilities were unavailable or inadequate; and (2) to develop
under Federal charter a system of home-financing institutions that
would combine the best standards and practices evolved in the long
history of savings and loan associations. Except for isolated cases,
the first part of this program has more or less come to a close; it has
resulted in the organization of 633 new associations operating as of
June 30, 1940, with combined assets of $506,588,000.
Changes in number of Federal savings and loan associations,fiscal year 1940
Number of
associations
June 30, 1939
Type of association
New associations -------Converted associations ---- . -
-----------------
Total---------.------------------
New
Charters Number of
charters cancelled associations
issued
June 30, 1940
636
750
2
62
5
16
633
796
1,386
64
21
1, 429
Of the 21 cancellations during the reporting period, 18 were oc
casioned by merger with other Federal associations, two were due to
voluntary dissolution, and one charter was withdrawn because the
association failed to complete organization. Thus, the majority of
cancellations were caused by mergers within the Federal system of
savings and loan associations and involved no reduction in assets.
From the beginning of operations, the Federal Home Loan Bank
Board has received 770 applications to charter newly organized
Federal savings and loan associations, of which 137 were rejected,
withdrawn, and cancelled, leaving 633 charters outstanding on June
30, 1940. Of the 1,279 applications for conversion from State to Fed
eral charter registered from the beginning of operations, 386 were
rejected, withdrawn, and cancelled, and 97 were on file awaiting
final disposition, leaving 796 charters outstanding.
The conversion of existing associations from State to Federal
charter is still progressing.
During the last fiscal year, conversions
were concentrated in the States of Pennsylvania (30), Wisconsin (9),
and New Jersey (5). Federal charters were issued in New Jersey for
the first time this year. Federal associations are now operating in
each of the 48 States, the District of Columbia, Alaska, and Hawaii.
The largest gains in assets of Federal savings and loan associations
during the fiscal year 1940 were in the Pittsburgh, Winston-Salem,
and Chicago Districts. All Districts show an excellent trend, however,
and even Cincinnati, the District with the smallest increase, registered
a gain of 10.9 percent.
93
FEDEBAL SAVINGS' AND LOAN ASSOCIATIONS
Exhibit 37 lists the number and assets of Federal savings and loan
associations, classified by new and converted associations, for each of
the fiscal-year periods from 1934 to 1940, and Exhibit 38 shows the
number, assets, and mortgage loans outstanding of Federal associa
tions, by Federal Home Loan Bank Districts and by States.
CHART XXXIII
PERCENT GROWTH IN ASSETS OF FEDERAL SAVINGS AND LOAN ASSOCIATIONS
BY FEDERAL HOME LOAN BANK DISTRICTS
FISCAL
YEAR
0
UNITED STATES
IF-BOSTON
1940
INCREASE
PERCENT
10%
20%
30%
40%
50%
198
14.5
2- NEW YORK
15.4
3-PITTSBURGH
45.
4-WINSTON SALEM
36. I
5- CINCINNATI
10.9
6- INDIANAPOLIS
13.8
7- CHICAGO
29.9
8- DES MOINES
21 7
9- LITTLE ROCK
15.4
10- TOPEKA
15 I
II - PORTLAND
18 1
12 -LOS ANGELES
210
DIVISIONOF RESEARCHAND STATISTICS
FEDERALHOMELOANBANK BOARD
The growth of Federal savings and loan associations is reflected in
the increasing number of institutions in the higher asset brackets.
At the end of the fiscal year 1938, slightly over 23 percent of all
Federal associations were in the asset group of $1,000,000 and more.
On June 30, 1940, approximately 32 percent of the associations were
in that asset bracket. At the other end of the scale, the proportion of
institutions with assets of less than $250,000 has decreased from 40
to 25 percent. Medium-sized associations, with assets from $250,000
to $1,000,000, constituted 42 percent of all Federal associations in 1940
as against 36 percent in 1938.
94
REPORT OF FEDERAL HOME LOAN BANK BOARD,
1940
Distribution of Federal savings and loan associations, by size groups
June 30, 1938
June 30, 1939
June 30, 1940
Asset size group--Number
Percent
Number
1,346
219
320
241
250
218
98
100
16
24
18
19
16
7
1,386
146
308
284
264
260
124
All associations
------------Less than $100,000
$100,000 to $250,000_----$250,000 to $500,000_----$500,000 to $1,000,000
----$1,000,000 to $2,500,000.---. --------$2,500,000 and over ----------.-------
Percent
Number
100
10
22
21
19
19
9
Percent
1,429
89
275
309
296
300
160
100
6
19
22
21
21
11
The following table shows the distribution of Federal savings and
loan associations by size of community:
Distributionof Federalsavings and loan associations,by size of community,
June 30, 1940
Institutions
Assets
Population group
Less than 2,500-------------------2,500 to 5,000.----------------------------5,000 to 10,000-----------------10,000 to 25,000----------------25,000 to 50,000_----- 50,000 to 100,000
--------100,000 to 250,000 --------250,000 to 500,000..
-500,000 to 1,000,000 ----Over 1,000,000
_----------------.._
United States total-
------
Amount
Percent
of total
Average
size
Number
Percent
of total
143
218
229
238
129
104
93
91
80
104
10.0
15. 2
16.0
16.7
9.0
7. 3
6. 5
6. 4
5.6
7. 3
$74, 761,000
71,189,000
126, 950, 000
201, 081, 000
164,000, 000
189, 642,000
261, 631,000
264, 977, 000
125, 594,000
249, 040, 000
4. 3
4.1
7. 4
11.6
9. 5
11.0
15.1
15. 3
7. 3
14.4
$523,000
327,000
554, 000
845,000
1, 271,000
1, 823, 000
2,813,000
2, 912, 000
1, 570, 000
2, 395, 000
1,429
100.0
1, 728,865,000
100.0
1, 210,000
For the United States as a whole, there is some preponderance in the
number of associations in the smaller communities. Approximately
58 percent of all Federal savings and loan associations are located in
cities of 25,000 or less. However, because of the lower average size
of institutions in these localities, 72.6 percent of total assets of all
Federal savings and loan associations are found in communities of
25,000 and over. From the standpoint of both number and average
size, Federal associations are well distributed among the various size
communities.
PRIVATE CAPITAL DISPLACES GOVERNMENT INVESTMENTS
The principal measure of the success of Federal savings and loan asso
ciations is the continuous rapid growth of private investments in
these institutions. During the fiscal year 1940, the number of
individual private investors increased to 1,562,079 from 1,299,915,
FEDERAL
SAVINGS AND
95
LOAN ASSOCIATIONS
or by 20 percent, and investments by private shareholders at the end
of the fiscal year totaled $1,268,048,000 as against $990,872,000
the year before-a growth by 28
percent. At the same time, investCHART XXXIV
ments by the U. S. Treasury and
PERCENT DISTRIBUTION OF PRIVATE
the Home Owners' Loan Corpora-
AND GOVERMENT INVESTMENTS IN
FEDERAL SAVINGS AND LOAN ASSOCIATIONS
BY FISCAL YEAR PERIODS
tion were reduced to $197,267,900
from $217,025,500. As a result of
these divergent trends, Govern-_
ment investments constituted only o13 percent of total investments in
Federal associations as compared
60
o
with 18 percent the year before.
The following index figures,
based on a comparable group of 40
Federal savings and loan associations operating from 1935, through
1940, indicate that during this 20five-year period, private invest
ments have more than doubled.
1935
In the fiscal year 1940, the
i th
p
dig
yDIVISION
increase over the preceding year
was 24 percent.
PERCENT
pRIVATE
1936
1937
1938
1939
1940
OF RESEARCHANDSTATISTICS
BOARD
LOAN
BANK
FEDERAL
HOME
Index of private repurchasable capital in comparable Federal savings and loan
associations1
[Average month 1936=100]
Date
June
June
June
June
June
June
30,
30,
30,
30,
30,
30,
-----........-------------------1935----------1936 -------------------------------------------1937 -----------.-----------------------------------------------------1938
------------ -------1939 --------------------------- ---1940--------------------------------------------
Private repur- Percent increase
chasable captal over preceding
year
91
100
114
133
165
205
10
14
17
24
24
1
This index eliminates the effect of conversion of State-chartered into Federally-chartered associations, and
the addition of newly established Federal associations during the period. Any growth of associations due
to consohdation, merger, or purchase of assets from other institutions is not reflected in the index.
Exhibit 39 gives a summary of the number of private investors and
the volume of private investments in Federal savings and loan asso
ciations, by Federal Home Loan Bank Districts and by States, for the
past two fiscal years.
The reduction in Treasury and HOLC investments was brought
about primarily by voluntary repurchases of such investments by the
associations. Retirement of Treasury investments during the fiscal
96
REPORT OF FEDERAL HOME LOAN BANK BOARD,
1940
year 1940 totaled $9,854,600, and repurchases of HOLC investments,
$11,669,000, for an aggregate amount of $21,523,600. Of this
amount, only $671,800, representing investments of the U. S. Treasury,
was called by the Federal Home Loan Bank Board in accordance
with Section 5 (j) of the Home Owners' Loan Act, while $20,851,800
reflected voluntary repurchases approved by the Federal Home Loan
Bank Board.
Repurchases of Government investments by Federal savings and loan associations
(cumulative), June 30
Investing agency
U. S. Treasury.
1936
------
$77, 000
Home Owners' Loan Corporation-----Total..
-----
1937
1938
1939
$1, 116, 300
$1, 497, 300
$5, 308, 300
1 $15,162,900
12,000
231,000
1,490,000
13, 159,000
1, 128, 300
1,728,300
6, 798,300
28, 321, 900
-77, 000
1940
1Of this amount, $671,800 was retired in accordance with Section 5 (j) of the Home Owners' Loan Act.
Cumulatively from the fiscal year 1936, when the first repurchases
were registered, Federal savings and loan associations have retired
Treasury investments in the amount of $15,162,900 and HOLC in
vestments to the extent of $13,159,000, for a total of $28,321,900.
As the above table indicates, the bulk of repurchases were in the fiscal
year 1940, when they were more than three times the aggregate
volume of all retirements in the four preceding years.
Treasury and HOLC investments in Federal savings and loan associations
Investments
outstanding
June 30, 1939
Investing agency
U. S. Treasury
-------Home Owners' Loan Corporation- ___
Total
-------------
-
intmntsl
iscal year
1940
Repurchases
fiscal year
1940
Investments
outstanding
June 30, 1940
$43, 991, 700
173, 033, 800
2 $1, 766, 000
1 $9, 854, 600
11, 669, 000
$34,137,100
163,130,800
217,025, 500
1, 766, 000
21, 523, 600
197, 267,900
1
Of this amount, $671,800 was retired in accordance with Section 5 (j) of the Home Owners' Loan Act.
2 Only $295,000 was actually invested in Federal savings and loan associations by the Home Owners'
Loan Corporation. The remaining $1,471,000 represents an increase in investments outstanding at the
end of the year as a result of the conversion to Federal charter of State associations which had already
received HOLC investments.
A summary of investments by the U. S. Treasury and the Home
Owners' Loan Corporation in Federal savings and loan associations,
by Federal Home Loan Bank Districts and by States, as of June 30,
1939, and June 30, 1940, is attached as Exhibit 40. Further infor
mation on Government investments and repurchases is given on
pages 62-66.
FEDERAL SAVINGS' AND
LOAN ASSOCIATIONS
97
Dividends distributed by Federal savings and loan associations for
the calendar year 1939 totaled $40,759,506, of which $33,432,287
went to private shareholders, $1,438,561 to the U. S. Treasury, and
$5,888,658 to the Home Owners' Loan Corporation.
INCREASED LENDING ACTIVITY
The large increase in private capital permitted Federal savings and
loan associations again to expand their lending activity by consider
able amounts. The estimated volume of new mortgage loans made
by all Federal savings and loan associations in the fiscal year 1940
was $457,816,000 as against $333,959,000 in the preceding year.
Of the total amount loaned by
HART XXXV
Federal savings and loan associations during the reporting
ESTIMATED VOLUME OF NEW MORTGAGE
LOANSBMADE BY F S F L ASSNS,
period, $179,141,000 was for
BY PURPOSE OF LOAN
new
construction.
Over
the
MILLIONS
FISCAL YEARS 1937-1940
last five years, the proportion OF DOLLARS
of construction loans to the total
loan volume has steadily in
creased from 29 to 39 percent, 400
while the proportion of refi
nancing loans declined from 34
to 19 percent. These trends 300oo
toward growing importance of
construction loans and decliningREFINANCING
importance of refinancing loans 200
were common to all classes of
PU
home-financing institutions, asME
pointed out in an earlier section
00
of this report (pages 32-35). '
However, they appear magni
fied in the data for Federal
savings and loan associations.
o 1937
1938
1939
1940
OFRESEARCHANDSTISTCS
DIVISION
In reality, the volume of
FEDERALHOMELOAN BANK BOARD
refinancing in prior years was
even greater than the foregoing figures indicate. Federal savings and
loan associations make loans on the direct-reduction plan, and many
borrowers converted their share-account sinking-fund loans to this
basis when it became available. None of this recasting, if no change
in mortgagee was involved, is reflected in the above figures.
98
REPORT
OF FEDERAL
HOME LOAN BANK BOARD,
1940
Distributionof loans originated by Federalsavings and loan associations, by purpose
of loan, fiscal-year periods
Amounts in millions of dollars
Percent distribution
Purpose of loan
1936
1937
1938
1939
1940
Construction- ------$48, 167 $100, 698 $95, 046 $123,870 $179, 141
Home purchase..----. - 36, 610
84,446 84, 519
95, 161 138,548
Refinancing --_.--- ---56, 837
68, 730 61,083
67,444
85, 320
Reconditioning ----------
Other
7,314
...--------------.16,434
Total..---...------
16 5,362
16,795
17,588
18,542
23,615
28,942
291,986 281,851
333,959
21, 317
20,669
1936
1937
1938
1939
29. 1 34. 5
22.1 28. 9
34. 4 23. 5
33. 7
30.0
21.7
37.0
28. 5
20. 2
39.1
30. 3
18. 6
4. 5
1940
4.4
5.8
10.0
6.2
5.6
7.3
8.4
8.7
7.5
457,816 100.0 100.0 100.0 100.0
100.0
34,138
A summary of loans made by reporting Federal savings and loan
associations during the year ended June 30, 1940, classified by pur
pose of loan, by Federal Home
1
CHART XXXVI
Loan Bank Districts and by
is given in Exhibit 41
GROWTH OF THE MORTGAGE PORTFOLIO OF States
a e
FEDERAL SAVINGS AND LOAN ASSOCIATIONS
FISCAL YEAR PERIODS 1935 THROUGH 1940
(MILLIONS OF DOLLARS)
1,405.0--------- -----
principal repayments on exist
ing loans have an increasing
tendency to offset the dollar
volume of new loans made. For
this reason, the balance of loans
outstanding, although growing
rapidly in recent years, does not
fully reflect the increase in lend
ing activity.
,136 3
--------
9438--
_
742 4 _-
Because of the substantial
mortgage holdings of Federal
savings and loan associations,
STATEMENT OF CONDITION
AND OPERATIONS
A combined statement of con
dition for all operating Federal
savings and loan associations
as of December 31, 1939, is
presented in Exhibits 19 and 20.
474 6---- --
1935
1936
937
1938 199 1940
DIVISION OF RESEARCH AND STATISTICS
FEDERAL HOME LOAN
BANK
BOARD
The principal changes outlined
in the preceding pages are re
fleeted in an increase in private
repurchasable capital from 65.9
percent of total resources at the end of 1938 to 70.8 percent at the close
of 1939, in a decline in Treasury and HOLC investments from 16.6 to
13.2 percent, and in a growth of first-mortgage holdings from 79.8 to
i For actual figures, see Exhibit 42.
FEDERAL SAVINGS AND LOAN ASSOCIATIONS
99
81.5 percent of total assets. The ratio of real estate owned to total
assets fell from 7.5 to 5.7 percent, while the cash ratio increased from
4.9 to 5.6 percent.
To eliminate the effect of associations which were newly chartered
or which merged during the year, selected balance-sheet items for a
group of 1,344 identical Federal savings and loan associations, sepa
rated by new and converted associations, are summarized in Exhibit
43. As would be expected, the status of the newly organized, com
paratively young associations varies significantly from that of the
converted older associations. The newly organized associations
experienced a greater proportional growth than the converted asso
ciations as to assets, private investments, and mortgage holdings.
Property holdings of both types of associations were reduced, con
verted institutions showing the largest percentage decline. However,
the ratio of real estate to total assets in new Federal associations is
much lower than in the case of converted institutions. Reserves
and undivided profits were accumulated by the new associations at
a greater rate than by the converted institutions. On the other hand,
the aggregate volume of reserves and undivided profits was pro
portionately less in new associations owing to the shorter period of
operation.
The consolidated statement of operations for the calendar year
1939, attached as Exhibit 44, reflects the effect of increased lending
activity on income. Gross operating income of the 1,384 Federal
savings and loan associations operating during the calendar year 1939
was $78,255,000 as compared with $66,666,000 for 1,355 reporting
associations the year before. Operating expenses were $22,242,000,
or 28.4 percent of total gross operating income, which was a slight
reduction from the ratio of 28.6 percent for the preceding year. Net
income (after interest and nonoperating items) totaled $53,319,000
as compared with $44,351,000 reported the year before. Of this net
income, 23.8 percent was allocated to reserves and undivided profits
and 76.2 percent was distributed in dividends to shareholders. In
1938, these ratios had been 22.1 and 77.9 percent, respectively.
Thus, an increasing proportion of net income was used by Federal
savings and loan associations to strengthen their reserve position.
The aggregate expenditure for compensation during the year 1939
was $10,405,000, or 13.3 percent of gross operating income. Ad
vertising, the second largest item of expense, amounted to $2,358,000,
or 3 percent of gross operating income. The average expenditure for
advertising per association was $1,704 as compared with $1,540 for
100
REPORT OF FEDERAL HOME LOAN BANK BOARD, 1940
the preceding year.' While all of the important expense items were
higher in dollar amounts than the year before, their ratios to gross
operating income show little change.
Since operating ratios vary considerably according to the size of
association, an analysis of such ratios grouped as to size of association
is presented in Exhibit 45. These data may prove useful to local
managers in evaluating and comparing operations with those of a
number of associations of comparable size.
Dividend rates paid by Federal savings and loan associations
continued the downward trend observed over a number of years.
For the calendar year 1939, the average annual dividend rate (weighted
by the amount of invested capital) was 3.39 percent as compared with
3.49 percent for the calendar year 1938 and 3.69 percent in 1935.
From 1938 to 1939, all of the twelve Federal Home Loan Bank Dis
tricts showed reductions in average dividend rates. Of the 46 States
in which Federal associations operated throughout the two-year
period, 36 indicated lower rates and 9 unchanged rates, and only one
State reported slightly increased dividends. The lowering of dividend
rates was thus fairly general throughout the country. The wide range
of dividend rates is indicated by the average of 2.58 percent for the
State of New York, on the one hand, and the average of 4.08 percent
for North Carolina, on the other. Exhibit 46 shows the average
annual dividend rates paid by Federal savings and loan associations,
by Federal Home Loan Bank Districts and by States, for the calendar
years 1938 and 1939.
LEGISLATION
At the beginning of the fiscal year, 42 States and one Territory had
laws specifically permitting conversion of locally chartered member
associations of the Federal Home Loan Bank System into Federal
savings and loan associations. During the year, the State of Missouri
has been added to this list.
By virtue of a. provision of the Social Security Act Amendments of
1939, approved August 10, 1939, Federal savings and loan associations
are now subject to the Federal Social Security taxes.
3
For details concerning the business promotion expenditures of savings and loan associations, see Federal
Home Loan Bank Review, April, May and June 1940.
__
__
IV
I _I
_ _
Federal Savings and Loan
Insurance Corporation
SUMMARY
T
HE Federal Savings and Loan Insurance Corporation's sixth
year of operaton was marked by continuing progress. The
number of individual investors in insured savings and loan associations
increased from 2,236,000 to 2,591,600, and the amount of private
capital invested in such associations rose from $1,657,859,000 to
$2,019,808,000. Insured institutions made new mortgage loans of
$662,689,000 during the fiscal year 1940-an increase of 41 percent
over the preceding year.
This growth in the volume of savings entrusted to insured associ
ations and in the volume of money loaned by them to finance home
ownership testifies to the value of Federal insurance of accounts.
Title IV of the National Housing Act, by which the Federal Savings
and Loan Insurance Corporation was created, had two basic objectives;
to safeguard small savings in order to restore and maintain public
confidence in thrift and home-financing institutions, and to facilitate
recovery of home mortgage lending by reviving the flow of private
money into savings and loan associations. The degree to which these
objectives have been attained is apparent from the few data given
above and will be more evident from the following pages.
From the beginning of operations through June 30, 1940, only 16
associations have encountered serious difficulties necessitating cor
rective action by the Corporation. Compared with a total of 2,235
insured associations on June 30, 1940, this-is not a substantial figure.
In 12 of these cases, the Corporation made cash contributions to
restore the impaired capital of insured associations, in the aggregate
amount of $917,198.94 (after deduction of recoveries to June 30,
1940). With the assistance and cooperation of the Corporation, one
association was enabled to continue normal operations without the
payment of a contribution by the Corporation. Three insured insti
tutions were placed in default with the Corporation acting as receiver
for two and the Superintendent of Building and Loan Associations of
the State of Ohio in charge of the third. Insured shareholders in
two of these institutions were issued new share accounts amounting
101
102
REPORT OF
FEDERAL HOME LOAN
BANK BOARD,
1940
to $192,260.73 in other insured associations prior to the close of the
fiscal year. The ultimate net loss to the Corporation in these cases
cannot be determined until final liquidation of the associations'
assets has been completed, inasmuch as the Corporation will share
in any recovery.
During the fiscal year 1940, resources of the Corporation increased
from $119,400,262 to $124,917,101. The balance sheet as of the end
of the reporting period showed $23,620,811 in surplus and reserves in
addition to the Corporation's capital stock of $100,000,000. There
was an increase of $5,337,467 in the surplus and reserve accounts
during the fiscal year.
Further progress was made in the execution of community rehabili
tation programs developed jointly by the Insurance Corporation and
State supervisory authorities. Such programs, which include as the
final step the insurance of eligible associations by the Corporation,
promise an effective aid in solving the problems confronting the home
financing industry in many areas where the savings and loan structure
has been weakened by adverse local conditions.
EXTENSION OF INSURANCE PROTECTION
During the fiscal year 1940, the number of insured savings and loan
associations increased from 2,170 to 2,235. Of the latter number,
1,421 1 are Federal savings and loan associations, which are required
by law to qualify for insurance of accounts, and 814 are State-chartered
savings and loan associations, which are eligible for insurance upon
application and approval by the Corporation.
During the fiscal year, 84 associations received insurance certificates.
At the same time, insurance certificates were cancelled for 14 associa
tions which merged with other insured institutions, and for 5 associa
tions which went into liquidation. On June 30, 1940, there were 205
applications for insurance pending.
Changes in number of insured associations,fiscal year 1940
Type of association
Federal savings and loan associations -----State-chartered savings and loan associa
tions-..----...---__.
--------.
- ..----Total.----------------------------1
AssociaNew
tions ininsurance
sutred June certificates
30, 1939
issued
certificates
canceled
Insurance
Conversions to
Federal
charter
Associa
tions m
sured June
30, 1940
1,383
20
10
+28
787
64
9
-28
814
2,170
84
19 -----------
2, 235
1,421
The difference between the 1,421 Federal savings and loan associations reported as insured and the
1,429 Federal savings and loan associations reported as chartered is due to the lapse of time between the
issuance or withdrawal of Federal charters and the issuance or withdrawal of insurance certificates.
FEDERAL SAVINGS AND LOAN INSURANCE CORPORATION
103
Whereas the number of insured associations increased by only 3
percent, the combined assets of all insured institutions grew from
$2,339,411,000 to $2,708,529,000, or 16 percent. Likewise, private
capital invested in insured associations rose from $1,657,859,000 to
$2,019,808,000, or 22 percent. This rapid growth indicates the
continuous progress of those institutions insured in previous years
which are benefiting from the cumulative effects of insurance. Only
to a lesser extent does it reflect the net addition of 65 insured institu
tions during the year.
CHART XXXVII
INSURED ASSOCIATIONS
NUMBEROF ASSOCIATIONS
JUNE 30, 1935 TO JUNE 30,1940
NUMBEROF INVESTORS
(THOUSANDS)
2,235 __
2,592-------
--
-
-
ASSETS
(MILLIONSOF DOLLARS)
-----2,709--------
2,170----
2,015 .
.
.-
1,756
1,336_
818-,
DIVISIONOF RESEARCHAND STATISTICS
FEDERAL HOME LOANBANKBOARD
On June 30, 1940, individual investors in insured associations
numbered 2,591,600 as against 2,236,000 the year before. This
demonstrates the increasingly widespread appreciation of insurance by
small savers. On June 30, 1940, the average account per private
investor in insured savings and loan associations was $779, and 98
percent of all accounts were $5,000 or less-that is, within the maxi
mum amount protected by the Insurance Corporation for each indi
vidual investor.
Exhibit 47 shows the number and assets of insured associations and
the number of private investors holding repurchasable shares in these
270198--40-8
104
REPORT OF FEDERAL HOME LOAN
BANK BOARD,
1940
associations as of June 30, 1940, by Federal Home Loan Bank Districts
and by States.
The insurance protection afforded by the Federal Savings and Loan
Insurance Corporation now covers a larger portion of the savings and
loan industry than at any previous time. On June 30, 1940, approxi
mately 58 percent of the total number of member savings and loan
associations of the Federal Home Loan Bank System were insured,
and they held 64 percent of the aggregate assets of all members (as
against approximately 59 percent the year before). The extension
of insurance to an ever-growing sector of the savings and loan industry
is illustrated in the chart on the opposite page.
Exhibit 48 presents a comparison of savings and loan associations
insured by the Corporation with the member associations of the
Federal Home Loan Bank System, by Federal Home Loan Bank
Districts and by States, as of June 30, 1940. On that date, 23 States,
Alaska, and Hawaii showed more than 75 percent of all savings and
loan members insured by the Corporation, and the assets of insured
institutions represented more than three-fourths of total member
assets in 28 States. In 15 States, insured institutions held from 90
to 100 percent of the assets of member institutions. Only 4 insured
associations were not members of the Federal Home Loan Bank
System on June 30, 1940.
OPERATIONS OF INSURED ASSOCIATIONS
Insured savings and loan associations continued to attract substantial
amounts of private capital. At the same time, they were actively
making home-mortgage loans. During the fiscal year 1940, insured
institutions, including Federal savings and loan associations as well as
State-chartered associations, wrote new mortgage loans in the esti
mated amount of $662,689,000. This was equivalent to 74 percent
of all loans made by member savings and loan associations of the
Federal Home Loan Bank System and to 61 percent of the total lending
volume of all savings and loan associations in the country.
The progress of insured associations is illustrated in the chart on page
106, showing the trend of "entering assets" and "present assets" of
institutions insured by the Federal Savings and Loan Insurance Cor
poration, from the beginning of operations to June 30, 1940. The
dotted line on the chart represents the assets of associations on the
date insurance was granted; the addition of these entering assets yields
a cumulative total at the end of each month. The solid line represents
the total assets of all insured associations at the end of each month.
The spread between the two lines indicates the gain in assets of insured
institutions after insurance of accounts was obtained.
FEDERAL SAVINGS AND LOAN INSURANCE CORPORATION
CHART XXXVIII
PERCENT DISTRIBUTION OF ASSETS OF INSURED
AND NONINSURED MEMBER ASSOCIATIONS OF
THE FEDERAL HOME LOAN BANK SYSTEM
1935 THROUGH 1940, AS OF JUNE 30
INSURED
EM
NONINSURED
1935
1936
1937
1938
1939
1940
DIVISION OF RESEARCH AND STATISTICS
FEDERAL HOME LOAN BANK BOARD
105
106
REPORT
OF FEDERAL HOME LOAN
BANK BOARD,
1940
CHART XXXIX
PROGRESS
OF
OF
INSURED
OCTOBER 1934
OLLARS
THROUGH
ASSOCIATIONS
JUNE 1940
PRESENT ASSETS
20
.oe ****"*
o:'::l'
ENTERING
ASSETS
Z
,0
0
C
'34
MAR JUN SEP DEC MAR JUN SEP DEC MAR JUN SEP DEC MAR JUN SEP DEC MARJUN
1935
1936
1937
1938
1939
SEP DEC MAR JUN
1940
SEstimates based upon current reports from approximately 95% of all insured associations
DIVISION
OFRESEARCH
AND STATISTICS
FEDERAL
HOMELOAN
BANKBOARD
To trace the development of insured associations more accurately,
the pertinent balance-sheet items of an identical group of 2,061
institutions have been compiled as of June 30, 1940, compared with
June 30, 1939. The combined assets of this group of associations
represented approximately 93 percent of the total assets of all insured
savings and loan associations at the end of the reporting period.
In the fiscal year 1940, these associations, all of which had been
insured prior to June 30, 1939, added $299,364,000 to their private
capital-a net increase of 19 percent. During the same period, the
number of investors increased by 219,900. At the same time, they
were able to reduce investments previously made by the U. S. Treasury
and the Home Owners' Loan Corporation by $22,185,000, or 9 percent. 2
Their holdings of first mortgages increased by $295,968,000, or 18
percent, during the year, while real estate owned declined $33,806,000,
or 19 percent. Cash and Government obligations expanded by
$22,487,000, or 16 percent. Thus, the assets of these institutions
have shown a substantial improvement in quality, since real estate
one of the slowest types of assets-is being replaced by liquid funds
SFor further information on the retirement of such investments, see pp. 62-66.
FEDERAL SAVINGS AND
LOAN INSURANCE
CORPORATION
107
or new loans secured by home mortgages. In addition, $12,018,000
was added to reserves and undivided profits, bringing the total of these
items to $141,135,000. Reserves and undivided profits are now
equivalent to 6 percent of the aggregate assets and to 95 percent of
the total real estate owned by the associations.
Progress of an identical group of 2,061 insured associations,fiscal year 1940
[Amounts in thousands of dollars]
June 30, 1939
Item
Total assets-- _------------------.---$2, 221, 741
First mortgages held.--...-------------- .
1,687, 450
182, 375
Real estate owned-...---------------------Cash and Government obligations ...--.-144, 688
Private repurchasable capital -----------1,578, 953
Government investment --------_------245,198
Reserves and undivided profits -.........
129,117
Private investors_.------------ ------2,136, 094
June 30, 1940
$2, 512, 969
1,983, 418
148, 569
167,175
1, 878, 317
223,013
141,135
2,428, 017
Cdollar
v
e
+$291, 228
+295,968
-33, 806
+22, 487
+299, 364
-22,185
+12,018
+291,923
rchange
+13.1
+17. 5
-18. 5
+15. 5
+19.0
-9.0
+9. 3
+13. 7
One of the beneficial effects of insurance of accounts in home
financing institutions has been an increasing flow of investments from
trust funds, fiduciaries, and endowments into these institutions. As
funds from these sources are mostly of a long-term character, their
investment in home-financing institutions is particularly suitable,
and insurance is viewed as an added safeguard for the security of such
investment. The administrators of smaller funds of this type nor
mally are not equipped to make direct loans on the security of home
mortgages and in many cases prefer indirect lending through protected
investments in insured savings and loan associations. An increasing
number of States are adding insured share accounts to the list of legal
investments for trust funds.3
COMMUNITY PROGRAMS
During the fiscal year 1940, the Corporation continued to participate
in the development of community-wide programs designed to bring
about comprehensive rehabilitation of the savings and loan industry
in certain localities where general weaknesses in the savings and loan
structure have been apparent. Conditions pointing to the need for
such a community-wide approach most frequently are the outgrowth
either of a long-continued downward trend in economic conditions, the
overdevelopment of local home-financing institutions in the prede
pression era, the prevalence in the past of unsound lending and
operating policies, or a combination of these and other factors. What
ever the causes, the most common symptom of general weakness is the
presence of an excessive volume of owned real estate and other slow
s For further information, see p. 120.
108
REPORT OF FEDERAL HOME LOAN BANK BOARD,
1940
assets, coupled with inability to meet the normal withdrawal demands
of shareholders.
Preceded by a broad survey of local economic conditions, community
programs have two principal advantages as against insurance of
individual institutions without a general plan of rehabilitation for all
associations in problem areas. First, these programs provide a much
more favorable opportunity to develop a well-balanced pattern of
associations suited to the needs of the community from the standpoint
of number, location, and size. Second, the prospects for successful
operation and development of each individual insured association are
far better if insurance is predicated upon a comprehensive plan
envisaging an adequate number of strong, conveniently located, and
well-managed institutions, and the elimination of subnormally operat
ing institutions. For these reasons, and as a matter of general policy,
the Corporation rarely approves individual applications for insurance
in localities where there is a need for community-wide rehabilitation
of the home-financing industry. In such localities, the degree of
insurance risk assumed by the Corporation is measured not only by
the financial condition of individual associations, but by the prospects
for successful operation in the light of general economic and com
munity conditions. Therefore, the Corporation, in cooperation with
State authorities, seeks to develop a program involving merger,
reorganization, or liquidation of all subnormally operating associa
tions, with the ultimate objective of providing the community with a
sufficient number of sound, normally operating institutions com
mensurate with local thrift and home-financing needs. Insurance
applications are then considered in relation to the program as a whole.
These community programs, it should be emphasized, are primarily
under the direction and control of State supervisory authorities.
While it participates actively in the formulation and execution of the
plan of reconstruction, the function of the Federal Savings and Loan
Insurance Corporation basically is that of lending the full weight of its
assistance to local supervisory authorities in their efforts to cornect
unsound community situations. In problem areas particularly,
Federal insurance of accounts has become a major element in any
attempt to place savings and loan associations in sound condition.
Insurance of accounts tends to inspire the public confidence necessary
to successful rehabilitation.
One of the largest single programs thus far undertaken is that for
the city of Chicago. At the inception of the program, in 1937, there
were in this area some 256 savings and loan associations, with aggre
gate resources of apprbximately $105,000,000. A substantial propor
tion of these were small border-line institutions. By June 30, 1940,
FEDERAL SAVINGS AND LOAN INSURANCE CORPORATION
109
a total of 94 associations had been insured by the Corporation.
Their assets on June 30, 1940, aggregated $108,418,000. A substan
tial portion of these assets represented growth subsequent to insurance
of accounts. It is expected that at the conclusion of the program,
associations that were too small or too weak to continue in operation
will have been eliminated by merger or liquidation.
During the fiscal year, the Banking Department of the State of
Wisconsin, in cooperation with the Federal Savings and Loan Insur
ance Corporation, further developed a far-reaching program of re
habilitation for all savings and loan associations in the metropolitan
area of Milwaukee. At the beginning of the program, institutionally
owned residential real estate in this city amounted to over $55,000,000,
of which approximately 85 percent was held by local savings and loan
associations. The 96 savings and loan associations in operation far
exceeded any reasonable estimate of the need for such institutions.
With the exception of 17 associations previously insured by the Cor
poration, only a few of these institutions were operating normally
with respect to the payment of withdrawals and many were in serious
financial condition due to excessive holdings of real estate and other
slow assets. On June 30, 1940, the Insurance Corporation had insured
a total of 49 institutions, with assets of $56,646,000. It is contem
plated that at the conclusion of the program there will remain in
Milwaukee about 60 associations, all operating normally and, with
few exceptions, insured by the Federal Savings and Loan Insurance
Corporation. The other associations in operation at the beginning
of the program either will have been merged with other institutions
or will have been placed in liquidation.
In the State of New Jersey, through June 30, 1940, some 15 separate
community programs have been developed by the State authorities in
collaboration with the Federal Home Loan Bank of New York and
formally approved by the Federal Savings and Loan Insurance Cor
poration. One of these programs has already been carried through to
completion. In addition, preliminary surveys, which it is anticipated
will lead to the eventual adoption of formal programs, have been con
ducted in many other communities throughout the State. Coinci
dentally, with the reorganization program in New Jersey, the State
Department of Banking and Insurance has taken possession of a sub
stantial number of subnormal associations. At the end of June 1940,
a total of 73 associations, with assets of $66,283,000, had been insured
under the State-wide rehabilitation program in New Jersey. Capital
reorganization was required in 23 of these cases.
Another community-wide rehabilitation program was inaugurated
for Altoona, Pennsylvania, after extended negotiations between the
110
REPORT OF FEDERAL HOME LOAN BANK BOARD, 1940
State supervisory authorities, officers of the Federal Home Loan Bank
of Pittsburgh, officials of the Federal Savings and Loan Insurance Cor
poration, and representatives of local savings and loan associations.
Here again an excessive number of savings and loan associations were
struggling for existence. Most of these institutions were in serious
financial condition and in no position to meet satisfactorily the thrift
and home-financing requirements of their community. It is antici
pated that of the 38 savings and loan associations included in the
program, now well under way, there will emerge 5 sound and normally
operating institutions.
In any discussion of these community programs, two significant
developments are worthy of special mention. These are the Mil
waukee Properties Bureau and the New Orleans Central Appraisal
Bureau. One represents a new and highly successful method of mar
keting institutionally owned real estate, the other an equally successful
plan for providing uniformly sound real-estate appraisals as a basis for
mortgage lending. The success of their respective operations points
to the desirability of establishing similar facilities in other localities.
It may well be that in the future appraisal and sales Ifunctions can be
combined effectively in a single organization. A brief description of
the operation of these bureaus is given in Exhibit 49.
RESULTS OF REORGANIZATION CASES
The assistance rendered by the Corporation in cases where it becomes
necessary for a savings and loan association to undergo a reorganiza
tion of capital structure was described at some length in the Board's
Seventh Annual Report. Insurance of accounts has proved to be a
factor of primary importance in restoring public confidence and sup
port wherever reorganizations have been undertaken. Occasionally
an association will proceed to reorganize and then apply for insurance
on the basis of its improved condition. Much more frequently, asso
ciations which recognize their condition to be unsound will file appli
cations for insurance in the expectation that the Corporation will
suggest means of capital adjustment designed to make them eligible
for insurance.
By far the most common form of reorganization is the process of
segregation in which all good assets are transferred to a newly organ
ized association. This method is usually applicable in cases where an
association has an excessive proportion of real estate owned, delinquent
mortgages, and other unsatisfactory assets. In such a reorganization,
the shareholder usually receives a substantial percentage of his original
investment in the form of insured shares issued by the new associa
tion. The balance of his investment is represented by certificates of
FEDERAL SAVINGS AND LOAN INSURANCE CORPORATION
111
interest in the liquidation of the unacceptable assets. In addition,
the Corporation has also been instrumental in bringing about successful
reorganizations by nmeans of either a straight write-down of shares in
order to remove an indicated impairment of capital, or by a pledge
and escrow of a portion of an association's shares in order to provide a
secondary recoverable reserve until such time as the association's per
manent reserves have been built up to a sound level.
Through June 30, 1940, insurance certificates had been issued to 318
associations following reorganization. Excluding 32 institutions
which subsequently merged into other associations, the resources of
reorganized institutions on June 30, 1940, totaled $362,891,000 as
against $230,457,000 immediately following reorganization and insur
ance, a growth of approximately 57.5 percent. Almost without
exception, these institutions have become valuable assets to their
communities, providing a sound protected investment channel for
savers and a substantial source of funds for borrowers on home mort
gages. The following table gives a survey of all reorganization cases
through June 30, 1940:
Reorganizations with subsequent insurance of accounts
Method of reorganization
Number of
associations 2
----Segregation of assets-..Write-down of capital_ -----Pledge and escrow of shares--------------------
Total ------
------------------
Assets when
insured
insured
Assets June
30,
1940
30, 1940
Percent
increase3
increase
176
51
69
$132, 393, 000
53, 593, 000
68, 682.000
$197, 536, 000
88, 384, 000
95, 987, 000
49. 2
64 9
39. 7
296
254, 668, 000
381, 907, 000
49 9
1 For details, see Seventh Annual Report of the Federal Home Loan Bank Board, pages 117-121.
23 Excludes 13 associations which subsequently merged with other institutions.
Growth, although primarily the result of normal expansion, has been influenced by bulk purchases
of assets, HOLC share investments, and Federal Home Loan Bank advances.
EXAMINATION AND SUPERVISION
Through the use of annual examinations and audits of each insured
association, the Federal Savings and Loan Insurance Corporation ex
ercises close supervision over insured institutions in order to protect
its own interests as well as those of the insured investors. Supervision
includes constant study of the progress of each insured institution by
an analysis of monthly reports and by personal contacts through the
Office of the Governor of the Federal Home Loan Bank System and
the officers of the twelve Federal Home Loan Banks who act as agents
of the Insurance Corporation in their respective Districts. Super
vision also extends to controlling the fulfilment of agreements with
associations to which the Corporation has made contributions in order
to remove an impairment of capital and to prevent default.
112
REPORT
OF FEDERAL
HOME LOAN BANK BOARD,
1940
Examinations of Federal savings and loan associations are conducted
for the supervisory officials and the Insurance Corporation by the
Examining Division of the Federal Home Loan Bank Board. For
State-chartered insured associations, duplication of examining work
has been minimized by conducting joint examinations with the State
authorities supervising such associations. The State examiners
accept that part of the examination made by the Board's examiners
and the Board's examiners accept that part conducted by the State
examiners. This arrangement reduces the cost of duplicate exami
nation and is desirable from the standpoint of convenience to the State
chartered associations. The saving to the institutions is largest in
those States in which examination charges are based upon per diem or
actual cost rather than on flat fees; this is the case in about half the
States.
Joint examinations are now made in 30 States and in the Territory of
Hawaii. This covers approximately the whole area where joint
examinations are necessary and feasible. In eleven States there are no
State-chartered insured associations. In four States there are fewer
than five such associations, and it is questionable whether joint
examinations of the generally small institutions in these States could
be made efficiently and economically. In one State there is no State
examining department. In the District of Columbia, examinations by
the Comptroller of the Currency are accepted by the Insurance Cor
poration although several associations in the District have requested
examinations conducted jointly by the Bank Board and the Comp
troller of the Currency. Hence, joint examination procedure has been
set up in all but two of the 32 States and Territories where it is
practicable to conduct examinations on this basis.
SETTLEMENTS
In the fiscal year 1940, the Federal Savings and Loan Insurance
Corporation assisted five insured institutions by cash contributions.
In one case referred to the Corporation during the year, study of all
facts revealed that financial assistance by the Corporation was un
necessary. This brought the total number of closed settlements
requiring financial help from the Corporation to 12 since the beginning
of operations. In all these cases, the Corporation has acted under
the authority given by Section 406 (f) of the National Housing Act as
amended. 4 In addition, the Corporation fulfilled its guarantee to
4 In order to prevent a default in an insured institution or in order to restore an insured institution in de
fault to normal operation as an insured institution, the Corporation is authorized, in its discretion, to make
loans to, purchase the assets of, or make a contribution to, an insured institution or an insured institution in
default; but no contribution shall be made to any such institution in an amount in excess of that which the
Corporation finds to be reasonably necessary to save the expense of liquidating such institution.
FEDERAL SAVINGS AND LOAN INSURANCE
CORPORATION
113
investors in two insured associations, under the terms of Section 405 (b)
of the National Housing Act as amended. 6 Final settlement of two
other pending cases had not been completed as of June 30, 1940.
After receipt of cash aid from the Corporation, three associations
liquidated voluntarily, paying all insured investors immediately. Six
associations continued operation under new management, and three
associations, after restoration of their capital by the Corporation,
were merged with other insured institutions in the community.
Cash assistance to insured associations during the fiscal year 1940
totaled $544,471.73, while recoveries during the year aggregated
$13,354.87. Cash assistance in all completed settlements from the
beginning of operations to June 30, 1940, totaled $935,306.55. During
the same period, recoveries were received in the amount of $18,107.61.
There follows a brief description of the five cases requiring financial
help during the fiscal year 1940:
Due to the unwarranted confidence of directors of a Federal savings and loan
association in a north central State, the manager of this association was allowed
to pursue unsound practices in the disbursement of funds to borrowers for con
struction loans, which, together with a generally inefficient organization, resulted
in a capital impairment of the association. In accordance with the Corporation's
requirements, a new president and secretary-treasurer were elected and the board
of directors was augmented by the election of new directors. The Corporation,
in cooperation with the new management, proceeded to remove the causes of the
association's impaired condition. The Corporation made a contribution of
$26,418.29 and entered into an agreement with the association whereby that
portion of the contribution ultimately not required to absorb losses on specific
assets is subject to return to the Corporation; provided, however, that the cost of
liquidating these assets by the association will be borne by the Corporation up to
an additional amount not exceeding $6,385.
A similar settlement was made in the case of a large converted Federal savings
and loan association in a middle western State. The difficulties of the association
were due to inefficient operation, particularly in the property-management field,
on the part of the former manager, who deferred the liquidation of a too large
amount of owned real estate. It was found that withdrawals had not been dealt
with properly and had caused ill will and a decline in private capital. Generally
poor economic conditions in this area and a rapid decline in real-estate values also
contributed to the association's condition. Examination of the association revealed
a substantial impairment. The Corporation made an immediate contribution of
$395,266.93 to remove the capital impairment, and entered into an agreement
5In the event of a default by any insured institution the Corporation shall promptly determine the insured
members thereof and the amount of their insured accounts, and shall make available to each of them, after
notice by mail at his last-known address as shown by the books of the insured institution, and upon surrender
and transfer to the Corporation of his insured account, either (1) a new insured account in an insured insti
tution not in default, in an amount equal to the insured account so transferred, or (2)at the option of the
insured member, the amount of his account which is insured under this section, as follows: Not to exceed
10 per centum in cash, and 50 per centum of the remainder within one year and the balance within three
years from the date of such default, in negotiable non-interest-bearing debentures of the Corporation. The
Corporation shall furnish to all insured institutions a certificate stating that the insurance of accounts in
such institution is to be paid in the manner described in this subsection.
114
REPORT OF FEDERAL HOME LOAN BANK BOARD,
1940
with the association providing that the Corporation would be reimbursed that
portion of the contribution found to be in excess of requirements in the liquidation
of certain specified and evaluated items, and also providing that the cost of
liquidating these assets by the association will be borne by the Corporation up to
an additional amount not exceeding $204,148.10. Subsequently, a payment of
$10,000 on the authorized additional contribution was made.
Appraisals of real estate owned by a State-chartered association in a north
central State reflected an impairment of capital. Examination of the association's
condition revealed that its difficulties were caused by the inefficiency of the former
management, a substantial decline in private capital, and the-failure of the board
of directors to approve the liquidation of a rapidly increasing volume of owned
real estate. In cooperation with the State supervisory authorities, a plan of merger
with a nearby Federal savings and loan association was developed. Upon deter
mination by the Corporation that a cash contribution was more desirable and less
expensive than liquidation, a contribution of $25,000 was made, the association
converted to Federal charter, and the proposed merger was effected.
Inefficient and dishonest operation of a large converted Federal savings and
loan association in a northeastern State resulted in overvaluation of real estate
and misappropriation of a substantial sum of money with losses exceeding fidelity
bond coverage, causing the association's capital to become impaired. Following
an examination and audit of the association, the association's directors obtained
the resignation of the two former officials and secured the services of a capable
managing officer. The Corporation thereupon made a contribution of $44,533.20
in order that the association might continue in a sound and solvent condition.
It was arranged that the portion of the contribution ultimately not required to
absorb losses is to be returned to the Corporation. The cost of liquidating these
assets of the association will be borne by the Corporation up to an additional
amount not exceeding $18,594.
A converted Federal savings and loan association in a central State was found
to have made a large amount of multiple loans in speculative developments;
the association's appraisals were found to be unreliable, and money had been
Excessive additional
disbursed without regard to the progress of construction.
disbursements to complete construction made the final principal amount of the
loans exceed the value of the security. Complications arising from this state of
As it was
affairs placed the association in a serious financial condition.
desirable for many reasons that this association continue operation and in
order to save the greater expense of liquidation, the Corporation made a contribu
tion of $43,253.31 to remove the capital impairment.
OPERATION OF INSURED INSTITUTIONS IN DEFAULT
The Federal Savings and Loan Insurance Corporation is directed by
Section 406 (e) of the National Housing Act as amended 6 to make
an annual report to Congress on its operation of defaulted insured
institutions.
6The Corporation shall make an annual report to the Congress of the operation by it of insured institu
tions in default, and shall keep a complete record of the administration by it of the assets of such insured
institutions which shall be subject to inspection by any officer of any such insured institution or by any
other interested party, and, if any such insured institution is operated under the laws of any State, Terri
tory, or possession of the United States, or of the District of Columbia, such annual report shall also be
filed with the public authority which has jurisdiction over the insured institution.
FEDERAL SAVINGS AND LOAN INSURANCE CORPORATION
115
During the fiscal year 1940, the Corporation undertook the first
two settlements occasioned by the default of insured associations
which were closed for liquidation by supervisory authorities. In both
cases, the Corporation made available to investors in the associations
the optional methods of settlement, which consist of either (1) a new
account in another insured association equal to his insured investment
(up to $5,000) in the institution in default, or (2) the full insured
amount of his account-10 percent in cash, 45 percent in debentures
payable within one year, and 45 percent in debentures payable with
in three years from the date of default. In both cases, the insured
shareholders thus far contacted chose settlement in the form of new
accounts in other insured savings and loan associations. As of June
30, 1940, over 99 percent of the shareholders had been given new ac
counts in the amount of $192,260.73. The extent of any loss to
the Corporation will, of course, depend on ,the amount realized' in
the liquidation of assets.
A report on these two cases follows:
The Security Federal Savings and Loan Association of Guymon, Guymon,
Oklahoma, an institution with assets of $227,000, located in the heart of the
"dust bowl," experienced a downward trend for several years, during which pe
riod economic conditions in the community had grown steadily worse due to con
tinued crop failures and the subsequent moving of many inhabitants from the
areas in which the association operated. On February 12, 1940, the Federal
Home Loan Bank Board appointed the Federal Savings and Loan Insurance
Corporation receiver for the institution and on March 29, 1940, directed the Cor
poration to proceed with liquidation.
The Corporation immediately took possession of the assets of the institution,
stationing its agent in the community to supervise their disposal. Liquidation
is proceeding as rapidly as possible under the unfavorable economic conditions,
and every effort is being made by the agent and the Corporation to minimize
the final loss.
Comparative statements of condition and of operations as of
February 12 and June 30, 1940, are shown in Exhibits 50 and 51.
After determining the insured investors and the amount of their insured ac
counts, the Corporation requested the investors to appear at the office of the
institution during the week of April 15, 1940, to accept, at their option, either
an insured account in another insured association, or 10 percent of their insured
investment in cash immediately and the remainder in negotiable noninterest
bearing debentures of the Corporation due within one and three years from the
date of default.
All investors to date have chosen new insured accounts, and have been issued
such accounts by another insured association in the State of Oklahoma, whose
officers cooperated fully with the Insurance Corporation to facilitate a prompt
settlement satisfactory to all investors. At the end of each day of the "pay
off," the Insurance Corporation issued its check to the Federal savings and loan
association in the total amount of accounts issued to investors during the day.
In accordance with the policy of the issuing institution, the accounts were per
mitted to be withdrawn on demand. Individuals who elect to leave their in
vestments with the issuing institution will be entitled to the same rights and
privileges accorded other members.
116
REPORT OF FEDERAL HOME LOAN BANK BOARD,
1940
Of the 233 insured accounts, 207 had been settled as of June 30, 1940. New
insured accounts had been opened in the amount of $164,003.89, or 99.8 percent
of the total amount insured in the Guymon association. Because of difficulties
in locating the claimants, 26 insured claims totaling $331.94 had not been paid at
the close of the fiscal year. When these investors are located, the optional
methods of settlement will be made available to them.
On March 1, 1940, the Board authorized the General Manager of the Insurance
Corporation to take all necessary steps to determine the necessity and advisability
of assistance, if any, by the Corporation to the Community Federal Savings and
Loan Association of Independence, Independence, Missouri.
There was evidence that the association, which had assets of approximately
$1,300,000, had miscellaneous contingent liabilities which jeopardized the in
terests of insured members; that the association was not being operated within
the provisions of its charter, Federal statutes, and the Rules and Regulations for
the Federal Savings and Loan System; and that it was not in condition to meet
repurchase demands of share account holders.
These facts were disclosed by a thorough investigation and examination of the
association. Evidence uncovered by examiners and a representative of the Cor
poration stationed at the office of the association disclosed a situation far more
complicated and dangerous than had first been anticipated, and that continued
operation of the association was not feasible.
With this evidence before it, the Federal Home Loan Bank Board on June 10,
1940, appointed a temporary conservator directly responsible to the Board, to
take charge of and preserve the assets of the institution and to protect the interests
of creditors and members.
Arrangements were made for the notification of all officers, directors, members,
and creditors of the association regarding a hearing at which they would be given
opportunity to show cause why a receiver or conservator should not be appointed.
The hearing was conducted on June 19, 1940, by a trial examiner designated by
the Board and produced no evidence as to why a receiver or conservator should
not be appointed. Consequently, on June 26, 1940, the Federal Home Loan
Bank Board appointed the Federal Savings and Loan Insurance Corporation
receiver for the purpose of liquidation, and an agent of the receiver was assigned
to the institution.
At the close of the fiscal year, arrangements were being made for a hearing in
accordance with the Rules and Regulations of the Federal Savings and Loan Sys
tem at which members, creditors, and other interested parties could present
alternative proposals for the liquidation of the institution.
A statement of condition of the Community Federal Savings and Loan Associa
tion of Independence, as of June 26, 1940, the date on which the Federal Savings
and Loan Insurance Corporation was appointed receiver, is included as Exhibit 52.
In addition to the above-described cases of associations for which
it has been appointed receiver, the Corporation has a major interest
in the Trenton Building and Loan Association, Trenton, Ohio. A
summary of the Corporation's participation in this case follows:
On April 15, 1940, the Superintendent of Building and Loan Associations of the
State of Ohio closed the Trenton Building and Loan Association, Trenton, Ohio,
and took possession of its assets for liquidation. An examination indicated that
FEDERAL SAVINGS AND LOAN INSURANCE CORPORATION
117
the association, with assets of $34,782, had sustained a substantial loss in the
amount of approximately $8,500, and no alternative was deemed acceptable by
the Superintendent. Liquidation of the assets is proceeding under the super
vision of the State, and it is expected that the ultimate loss will not be substantial.
Beginning May 15, the Corporation made available to the investors in the
association the optional methods of settlement. All investors to date have chosen
new accounts in a neighboring insured State-chartered institution whose directors
and officers cooperated effectively with the Insurance Corporation. Accounts so
issued were withdrawable immediately if desired. Of the total of 48 investors,
47 have accepted settlement in the amount of $28,256.84, or 99.5 percent of the
total amount of share investment.
FINANCIAL CONDITION AND PERSONNEL
The potential liability of the Corporation, representing the aggregate
amount of all insured share accounts up to $5,000 for each investor
and the total creditor obligations of all insured associations, rose from
$1,725,000,000 to $2,056,000,000 during the fiscal year. Against the
potential liability, capital, reserves, and surplus of the Corporation
on June 30, 1940, aggregated $123,620,811, or $1 for each $16.63
of potential liability. In an evaluation of this ratio, it must be
CHART XL
RESOURCES OF THE FEDERAL SAVINGS AND LOAN INSURANCE CORPORATION
AS OF JUNE 30, 1935 AND JUNE 30, 1940
O
20
40
MILLIONS OF DOLLARS
60
80
100
120
140
June 30, 1935 - $101,874,480
June 30,1940 - $124,917,I/01
DIVISION
OFRESEARCH
AND STATISTICS
FEDERAL
HOME
LOANBANK
BOARD
remembered, of course, that the potential liability does not constitute
the actual insurance risk of the Corporation under realistic assump
tions. Against the insured liability must be set the assets of the
insured associations which, on June 30, 1940, exceeded the potential
liability of the Corporation by $652,400,000.
During the fiscal year 1940, aggregate resources of the Corporation
increased from $119,400,262 to $124,917,101. Of these amounts,
$100,000,000 represented the capital stock. ][n addition, the balance
sheet as of June 30, 1940, shows a surplus of $2,868,584, a reserve
fund as provided by law in the amount of $5,752,227, and a special
reserve for contingencies of $15,000,000. In only six years time,
118
REPORT OF FEDERAL HOME LOAN BANK BOARD, 1940
the Corporation has set aside reserves, surplus, and unallocated
income to the extent of $23,620,811. At the same time, however,
the potential liability of the Corporation has grown at a faster rate,
making the continued accumulation of reserves advisable.
The capital stock of the Corporation was exchanged in 1934 for
Government-guaranteed bonds of the Home Owners' Loan Corpora
tion. Reserves of the Corporation are invested in Government obli
gations and securities wholly guaranteed by the U. S. Government.
Exhibit 53 shows the Corporation's statement of condition as of June
30, 1940.
The income of the Corporation consists of premiums paid by the
insured institutions, admission fees from newly insured associations,
and interest earned on investments. All income above expenses is
placed in reserves, and contributions for the settlement of insurance
cases are deducted from reserves.
Each insured institution is required to pay an annual insurance
premium of %of 1 percent of the total of its insurable accounts plus
all creditor obligations, which premium approximates 11 cents for
each $100 of assets of the institution. During the fiscal year 1940,
premium income was $2,631,241 as against $2,291,893 the year
before. Admission fees during the reporting period totaled $19,022
as compared with $45,353 in the fiscal year 1939. The admission
fee remained unchanged at 4 cents for each $100 of the aggregate
amount of all accounts of an insurable type plus creditor obligations.
Income from investments, including $86,549 profits from the sale of
securities, amounted to $3,474,266. Including miscellaneous items,
the aggregate income of the Corporation during the reporting period
was $6,124,660-an increase of $461,686 over the preceding year.
Expenses, administrative and nonadministrative, amounted to
$255,809 during the fiscal year 1940, as against $222,996 in 1939.
Gross premium income for the year, less total expenses, left a net
figure of $2,375,432. Total net income was $5,868,584.
Aggregate payments to insured institutions during the fiscal year
1940 were $544,472 as compared with $285,989 the year before. In
addition, there were contingent liabilities due to commitments made
to prevent default in insured institutions in the amount of $323,756
at the end of the fiscal year 1940, as against $140,506 the year before.
Exhibits 54 and 55 present detailed statements of income and ex
penses for the fiscal year 1940.
FEDERAL SAVINGS AND LOAN INSURANCE CORPORATION
119
Condensed income and expense statement for the period July 1, 1939, to June 30, 1940
Income:
Insurance premiums earned_ --------------Admission fees earned
Interest earned on investments ---Miscellaneous -----------------
$2, 631, 241. 15
19, 022. 11
3, 387, 717. 14
130. 30
$6, 038, 110. 70
Administrative expenses------------------------Nonadministrative expenses
240, 383. 39
15, 425. 65
255, 809. 04
Net income from operations--Other income: Profit on sale of securities --
----
-- -
Net income for peiiod-------Less: Adjustment of net income for prior years__ --
-
5, 782, 301. 66
86,548.97
5, 868,850.63
266. 90
_-___
Net income------------------------------------
5,868,583. 73
Distributionof net income
-
$3, 000, 000. 00
2, 868, 583. 73
--------Total_----------------------Contr-ibutions to insured associations deducted from legal reserve
-----------------------------fund-------------
5, 868, 583. 73
To special reserve for contingencies --------To surplus-----------------------------
537, 471. 73
On June 30, 1940, the personnel on the payroll of the Corporation
totaled 47, including one part-time employee. In addition to this
small staff, the Corporation has available the facilities of the general
service divisions under the Bank Board. The administrative cost to
the Corporation for services rendered by the Board during the fiscal
year 1940 was $116,582. This arrangement has been a factor in
keeping administrative expenses of the Insurance Corporation at a
minimum.
During the fiscal year 1940 a further simplification in administra
tion was effected by the appointment of the Comptroller of the
Federal Home Loan Bank Board and the Auditor of the Home Owners'
Loan Corporation as Comptroller and Auditor, respectively, of the
Insurance Corporation to serve without additional compensation.
270198-40---9
120
REPORT OF FEDERAL HOME LOAN BANK BOARD,
1940
STATE LEGISLATION
During the fiscal year, the State of Alabama adopted in substance,
though with certain changes, the Uniform Savings and Loan Act.
By this action, the Alabama Legislature effected a wholesale revision
of the savings and loan statutes in that State. The Uniform Act has
been designed as a model State law, and incorporates many features
of the law and regulations governing Federal savings and loan asso
ciations.
One provision of the new Alabama law deserves special mention.
It requires all associations in the State to qualify for and obtain
insurance of accounts within a stated period of time. Associations
unable to qualify for insurance will be placed in liquidation. Alabama
therefore, becomes the first State to require all operating savings and
loan associations under its supervision to insure the accounts of their
investors with the Federal Savings and Loan Insurance Corporation.
During the fiscal year 1940, laws were enacted in four jurisdictions
authorizing investments by fiduciaries, conservators, and receivers,
insurance companies, savings banks, and other specified types of
corporations in shares or accounts of State-chartered institutions
insured by the Corporation.
At the beginning of the fiscal year 1940, ten jurisdictions had passed
laws providing for the appointment of the Insurance Corporation as
receiver or liquidator in the case of default of an insured State
chartered institution. During the year, four additional States amended
their laws to provide for appointment of the Insurance Corporation,
under certain conditions, as liquidator or receiver, or coliquidator or co
receiver of insured State-chartered institutions. The Federal Savings
and Loan Insurance Corporation has a direct financial interest in the
liquidation of defaulted associations and must of necessity aid in
keeping losses and costs of liquidation at a minimum. It is, therefore,
to the interest of the Corporation as well as of insured associations
and their shareholders that adequate statutes be passed providing for
the appointment of the Corporation as receiver or liquidator, or
coreceiver or coliquidator with the State supervisory authorities.
__
_ _
V
Home Owners' Loan Corporation
1. SUMMARY
D URING the fiscal year 1940, assistance given by the Home
Owners' Loan Corporation to home owners was further ex
tended and intensified by various legislative and administrative
measures. These aids, designed to help borrowers in meeting their
mortgage obligations, were accompanied by a continuation of the
normal program of liquidation in which the Corporation is now
primarily engaged.
New measures to aid the borrowers of the Home Owners' Loan
Corporation may be summarized as follows:
1. By an amendment to the Home Owners' Loan Act, the Cor
poration was authorized to extend amortization periods to a maxi
mum of 25 years, if, in the judgment of the Corporation, the cir
cumstances of the home owner and the condition of the security
justify such extension or revision.
2. By resolution of its Board of Directors, the Corporation made
provision to accept, until further notice, interest at the rate of 4%
percent per annum on all payments due on and after October 16,
1939, on the indebtedness of home owners to the Corporation arising
from any loan, advance, or sale of property.
3. To reduce the hazards resulting from default on taxes and
insurance, a procedure was established enabling borrowers to remit
taxes and insurance premiums to the Corporation in periodic pay
ments with the loan installment.
In addition to these new measures, the Home Owners' Loan Cor
poration has continued to extend every reasonable assistance to
borrowers to enable them to keep their homes. For example, cases
of default are studied carefully on an individual basis and every
effort is made to postpone foreclosure as long as possible. Informal
adjustments of loan terms are made to help borrowers over periods of
financial stringency. Substantial advances have been made to
borrowers to keep them current on taxes and insurance and to help
them maintain their properties in good repair.
The progress toward liquidation of the Corporation's affairs was
marked by a decrease in the total balance of loan and property
121
122
REPORT OF FEDERAL HOME LOAN BANK BOARD,
1940
accounts from $2,629,952,937 to $2,436,945,646 during the fiscal
year 1940. The Corporation made particularly rapid progress in
marketing its acquired properties. Because sales greatly exceeded
new acquisitions, the number of properties owned and in process of
acquisition declined from 99,354 to 70,780. On the liability side,
the bonded indebtedness of the Corporation was reduced from
$2,949,305,025 to $2,634,808,900. The combined resources of the
Corporation showed a drop from $3,114,821,877 to $2,790,002,453
during the year.
The vast majority of the original borrowers of the Corporation
have made great strides in reducing the indebtedness on their homes.
On June 30, 1940, the average loan balance outstanding per original
borrower was $2,268 as compared with an average original loan to
these borrowers of $2,930 at the time of HOLC refinancing-a reduc
tion of 22.6 percent.
After provision of $187,246,962 for past and future losses, the
deficit of the Corporation as of June 30, 1940, stood at $76,453,005.
Although the various new measures adopted during the fiscal year
involved a heavy increase in work load, administrative expenses
were reduced by 7.2 percent and personnel by 10.6 percent.
2. NEW AID TO HOME OWNERS
Reduction of Interest Charges
The acceptance of interest at the rate of 4%2 percent on all loans and
the extension of amortization periods in a large number of cases repre
sented a broad revision of borrowers' payments to the Home Owners'
Loan Corporation. In the original Home Owners' Loan Act, interest
charged on HOLC loans had been stipulated at a maximum rate of
5 percent, with the exception of cash loans made at the rate of 6 per
cent. Only 2,314 loans of this type were made. The amortization
period generally had been 15 years.
The resolution of the Board of Directors of the Home Owners' Loan
Corporation providing for the acceptance of interest at the rate of
4% percent was adopted on September 7, 1939:
In case of payments becoming due on and after October 16, 1939, and until
further notice, interest will be accepted at the rate of 4Y percent per annum on
the indebtedness of a home owner to the Home Owners' Loan Corporation arising
from a loan, advance, or sale of property which carries an interest rate of 5 or 6
percent per annum.
Under the terms of this resolution, the benefits of reduced interest
charges were extended to all debtors of the Home Owners' Loan
Corporation, whether origina borrowers or purchasers of properties
HOME OWNERS' LOAN CORPORATION
123
sold by the Corporation on the deferred-payment plan. The loan
contracts remained unchanged, thereby saving both borrowers and
the Corporation expense and delay in redrawing loan papers. In the
case of vendee instruments entered into since October 1, 1939, how
ever, an interest rate of 4% percent has been written into the contract.
The savings accruing to HOLC debtors during the next fiscal year
as a result of this revision of interest rates is estimated to be in the
neighborhood of $9,000,000, or $10.50 per debtor to the Corporation.
Loan Extensions and Revisions
The Act "to allow the Home Owners' Loan Corporation to extend the
period of amortization of home loans from fifteen to twenty-five years,"
approved August 11, 1939, reads as follows:
Be it enacted by the Senate and House of Representatives of the United States
of America in Congress assembled, That (a) the fourth sentence of section 4 (d)
of the Home Owners' Loan Act of 1933, as amended, is amended by striking out
before the semicolon the words "fifteen years" and substituting therefor the words
"twenty-five years." (The amended sentence now reads, "Each home mortgage
or other obligation or lien so acquired shall be carried as a first lien or refinanced
as a home mortgage by the Corporation on the basis of the price paid therefor by
the Corporation, and shall be amortized by means of monthly payments sufficient
to retire the interest and principal within a period of not to exceed twenty-five
years; but the amortization payments of any home owner may be made quarterly,
semiannually, or annually, if in the judgment of the Corporation the situation of
the home owner requires it.")
(b) That the sixth sentence of section 4 (d) of the Home Owners' Loan Act of
1933, as amended, is further amended to read as follows: "The Corporation may
at any time grant an extension of time to any home owner for the payment of any
installment of principal or interest owed by him to the Corporation or may at any
time during the existence of the mortgage grant an extension and revision of its
terms to provide for the amortization by means of monthly payment sufficient to
retire the interest and principal within a period not to exceed twenty-five years
from the date of its execution if in the judgment of the Corporation the circum
stances of the home owner and the condition of the security justify such extension
or revision." (Public No. 381, Seventy-sixth Congress.)
Under the authority of this amendment, the benefits of loan exten
sions and revisions were made available not only in those cases where a
favorable outcome seemed to be a matter of reasonable probability,
but in many other cases, even though the eventual result may be in
serious doubt, provided the borrower had any possible chance of meet
ing his obligations under the extended or revised loan.
Where extensions of the amortization period were not practicable,
loan contracts frequently were revised to provide for the gradual
liquidation of arrearages, in keeping with a procedure established by
the Corporation in 1937, under which formal adjustments of loan
124
REPORT OF FEDERIAL HOME LOAN BANK BOARD,
1940
payments had been granted to 88,048 borrowers prior to October 1,
1939.
The extension program was initiated October 1, 1939, and was
virtually completed at the end of the fiscal year 1940. At that time,
the bulk of applications for extensions and revisions had been proc
essed, but there will continue to be a small number of extensions
each month in the future as circumstances arise which adversely affect
the paying ability of individual borrowers. It was possible in many
States to provide for the necessary adjustment of mortgage loan
contracts without title searches, and without recording the extension
agreements. Thus, the benefits of loan extensions were made available
at a minimum cost to the borrowers.
In order to make available the benefits of the extension program to
a maximum number of home owners and to avoid unnecessary fore
closures, action was held up on all foreclosure cases in which extension
or revision of loan terms held out any hope of affording a solution to
the borrower's difficulties. While the procedure for carrying out the
program was being worked out, the regional offices were instructed to
refrain from foreclosure in all cases except those where circumstances
precluded any possibility of adjustment. The opportunities offered
by the program were made known to all delinquent borrowers.
During the period of processing extension applications, foreclosure
was authorized only in cases of abandonment of the property, death,
wilful default, hopeless inability to pay, and similar instances where
extension would offer no solution.
Execution of the Extension Program
As of June 30, 1940, the Corporation had received 229,945 applications
for extensions and revisions. The processing of these applications
is shown in the following table:
Loan extensions and revisions, Oct. 1, 1939, through June 30, 1940
Applications
Applications
Applications
Applications
received----rejected--------pending decisionapproved-....--
Number
Percent
oftotal
applications
229,945
16, 583
5,783
207, 579
100.00
7.21
2.08
90.71
Number
207,579
Applications approved..__---9, 581
Applications withdrawn 1-..Applications in process of
- -------- 5,331
closing.---Extended and recast accounts
set up 2 on the books for
192, 667
closing ._...
. .
Percent
ofappli
cations
approved
100.00
4. 61
2. 57
92. 82
1 In these cases, applications had been approved by the Corporation but remained unclosed due to death
of the borrower, refusal of the borrower to sign the agreement, and various other reasons.
2 Of this number, 164,112 had been fully consummated. The remaining 28,555 applications were still
awaiting final closing.
From October 1, 1939, to June 30, 1940, extended and recast ac
counts were set up for 192,667 borrowers and vendees, or about
125
HOME OWNERS' LOAN CORPORATION
22.3 percent of the total number of Corporation borrowers and
vendees at the latter date. Of these accounts, 172,491 involved an
extension of amortization periods, and 20,176 provided for a revision
of the borrower's payments without extended amortization (loans
recast). Exhibit 56 shows the number of extensions and revisions
set up on the books after October 1, 1939, by HOLC Regions and
by States.
These extensions and revisions provide for the inclusion in the
amount of the loan, as extended or recast, of delinquent interest and
principal and of any advances made by the Corporation for delinquent
taxes, assessments, and insurance. In this manner, a home owner
to whom an extension is granted is brought to a current status with
respect to all obligations under his mortgage, and is given a new start
with revised installment payments.
The total debtor balance of the 172,491 accounts set up for ex
tension from October 1, 1939, through June 30, 1940, was $567,922,504.
Of this, $86,976,495 represented principal arrearage, $3,311,355,
interest arrearage, and $477,634,654, unmatured debtor balance.
The average account extended in that period had a total debtor
balance of $3,292.48, representing principal arrearages of $504.24,
interest arrearages of $19.20, and an unmatured debtor balance of
$2,769.04 at the time of extension.
In order to provide the best possible safeguard against future de
linquencies on taxes and insurance, the Corporation has required that
home owners to whom an extension or revision is granted enter into
a tax and insurance agreement with the Corporation. Under this
arrangement the home owner agrees to deposit monthly with the
Corporation one-twelfth of the amount of his annual taxes and one
thirty-sixth of the amount of a three-year fire insurance premium.
The program of extensions and revisions naturally placed emphasis
on the accounts on which arrearages had been most heavy. Of the
total loans extended and recast from October 1, 1939, through June
30, 1940, there were 54.1 percent in arrears more than twelve monthly
installments, and 35.4 percent in arrears more than eighteen months.
Accounts extended and recast from Oct. 1, 1939, through June 80, 1940, classzfied
by arrearageage groups at time of extension
Installments in arrears:
Percent
oftotal
Less than 3 months ----------------------------3 to 11 months --------------------------------12 to 17 months ------------------------------18 months and over-------------------------
6.
39.
18.
35.
Total -----------------------------------_
100.0
7
2
7
4
126
REPORT OF FEDERAL HOME LOAN BANK BOARD,
1940
Under the authority of the new amendment to the Home Owners'
Loan Act, loan extensions up to 25 years were granted to original
borrowers only; amortization periods on vendee accounts were limited
to a maximum of 20 years.
The following table shows the distribution of accounts extended
and recast in the period from October 1, 1939, through June 30, 1940,
by the revised amortization periods:
Distributionof accounts extended and recast from Oct. 1, 1939, through June 30, 1940,
by amortization periods
Number of accounts
Amortization periods from original date of loan
Within 15 years---------------------------------More than 15 but less than 16 years---------------------------_
More than 16 but less than 17 years.-- ----------------------More than 17 but less than 18 years_---------------- -----------More than 18 but less than 19 years----------------------More than 19 but less than 20 years ----------------------------More than 20 but less than 21 years.-----------------------------More than 21 but less than 22 years----------------------------More than 22 but less than 23 years. --------------- --------More than 23 but less than 24 years.---. ------------------More than 24 but less than 25 years------------------------Exactly 25 years..
----------------.-----------------.Total---------------------------------------..-----
Original
loans
Vendee
accounts
19,725
451
3,142
42
4, 363
35
5, 666
56
6, 332
117
7, 621
346
8, 100
1, 206
8, 284 -----....-..
10,413 --------_
16, 749
-----41,387 ---- ------58,632 ...--------.
190,414
2,253
Tot
Total
20,176
3,184
4,398
5, 722
6, 449
7,967
9, 306
8, 284
10,413
16,749
41,387
58,632
192,667
Of the 192,667 accounts extended or recast after October 1, over
three-fourths were revised by extending amortization periods from
20 to 25 years. Almost one-third of the accounts were given the
maximum extension of 25 years. About 90 percent of the accounts
extended or recast were for terms beyond the 15 years for which the
loans were originally written.
The performance record of borrowers granted the benefits of loan
extensions and revisions has been too short to warrant any definite
conclusion as to the effectiveness of the program. It is hoped that
through the program a substantial number of borrowers who have
been unsuccessful in meeting their payments will now be able to pay
the lower monthly installment and thus finally free their homes from
debt.
On the other hand, it cannot be ignored that in many cases
extensions have been granted only as a last resort to afford the home
owner every available means of assistance, and when serious de
linquencies on extended accounts occur, foreclosure becomes in
evitable. At the end of the reporting period, 6,175 loans extended
under the program were in default, that is, more than three months
in arrears; and as of the same date, foreclosure had been authorized on
368 of such loans as it became evident that the borrower was unable
or unwilling to keep up payments despite the revision of the loan.
HOME OWNERS' LOAN
CORPORATIOT
127
Tax and Insurance Deposits
The program for the establishment of tax and insurance deposits by
borrowers resulted from the experience gained by the Corporation
over a number of years. In dealing with approximately one million
home owners, the Corporation found that one of the most serious
obstacles to home ownership is the burden of taxes, insurance, and
other carrying charges which must be paid in addition to the loan
installment. While loan payments generally are made in monthly
installments, those other carrying charges usually are to be remitted
in lump sums. Real estate taxes are the most important item of this
character and in some areas they have been the principal cause of
default to the Corporation. In order to overcome this obstacle, the
Corporation has established facilities for the advance accumulation
by home owners on a monthly basis of funds for taxes and insurance.
The plan permits the home owner to pay monthly in one amount the
loan installment and accruing taxes and insurance premiums on his
property. When taxes and insurance premiums come due they are
paid automatically from the funds accumulated by the home owner
in this manner.
In providing a systematic method for the accumula
tion of necessary tax and insurance funds, the Corporation is in a
position to prevent many defaults which would inevitably occur.
The home owner finds it easier to meet his tax and insurance pay
ments by building up the amount needed in small payments each
month.
Both the Home Owners' Loan Corporation and its borrowers are
likewise interested in saving penalties and interest charges on tax
delinquencies. Before the introduction of the plan, penalties and
interest included in tax payments that the Corporation made for
borrowers were averaging more than $500,000 per month. Since
September 1939, such expenditure has been declining each month
and, with the completion of the program, penalties and interest on
taxes will be virtually eliminated. For the home owner, the new
procedure reduces the threat of tax default and ultimate foreclosure.
Prior to the time it arranged for the establishment of tax and
insurance accounts, the Corporation paid approximately $300,000
annually for the searching of public tax records to determine whether
Corporation borrowers had paid their taxes and, if not, to ascertain
the years and amount of delinquency. This information was necessary
to permit the Corporation to protect the priority of its lien on the
mortgaged property. With a large percentage of its borrowers on
the tax and insurance accumulation plan, the Corporation will be
spared much of the expenditure for searching public tax records.
128
REPORT OF FEDERAL HOME LOAN BANK BOARD,
1940
Finally, the Corporation, to protect its interests, had been obliged
to advance considerable amounts to home owners for the payment of
taxes. In the fiscal year 1940, such advances totaled $66,283,241.
It is hoped that, through the medium of tax deposits, delinquency will
be avoided in many cases where it might otherwise have occurred, and
that the Corporation will be relieved of much of the necessity for
advancing funds for taxes.
Municipalities and other public bodies benefit from the new plan
by prompt receipt of real-estate taxes. In short, the tax deposit
service, to the extent that it is successful in enabling the borrower to
meet his obligation promptly, is profitable to all parties interested in
the mortgaged property-the home owner, the Corporation, and
local tax authorities.
As of June 30, 1940, tax and insurance agreements had been closed
with 289,849 original borrowers and 38,225 vendees, or 38.3 percent
of the total number of borrowers and vendees on the books of the
Corporation at that date. The Corporation is requiring the estab
lishment of tax and insurance accounts for each new vendee. Pur
chasers of acquired properties are thus given the advantages of a
modern attractive loan contract, and the HOLC will not find it neces
sary to incur heavy expenses for taxes and insurance in servicing its
vendee accounts. As was pointed out on page 125, the establishment
of tax and insurance deposits has also been made mandatory for home
owners to whom loan extensions were granted.
The results of the new program and of the inclusion of delinquent
taxes in extended accounts can be seen in the sharp decline in the
number of accounts with tax delinquencies during the fiscal year 1940.
Number of accounts in arrearson taxes, by status of accounts, fiscal year 1940 1
Month
1939
July-----------------------------------August.----------------------------------------------September ,...----October ------------------------------------November ,------------ -----------------December .-----------------------------
Accounts Accounts not
also in dein default
fault on loan on loan paypayments
ments
Total
accounts in
arrears on
taxes
Percent of
total
active
accounts
102,457
77,259
54, 750
42, 239
33, 312
27,517
102,588
94,064
86,124
85, 256
69, 816
56,967
205,045
171,323
140, 874
127, 495
103,128
84,484
24.2
20.3
16.7
15.1
12.1
9.9
22,778
18,466
54,188
51,021
76, 966
69, 487
9.1
8. 2
1940
January --February
------ .
--------------------------.
-----------
------...-- ----------------March
April ------------------------------------May -------------------------------------June..---..--------------------------------- --
13, 586
10,268
9, 972
7,731
50,132
40,972
41, 032
36,334
63, 718
51,240
51,004
44,065
7.5
5.7
6.0
5.1
1 Accounts in default refer to those accounts which are delinquent more than three monthly payments in
principal and interest as well as taxes. Accounts not in default consist of those which are current as to
principal and interest, but delinquent in taxes. Active accounts include all original borrower accounts
and all vendee accounts on which the Corporation is still making collections. In other words, they represent
all accounts less those which have been paid in full and those foreclosed or authorized for foreclosure.
HOME OWNERS'
129
LOAN CORPOIRATION
3. GENERAL OPERATIONS DURING THE FISCAL YEAR
Shifts in Status of Accounts
During the reporting period, the accounts of the Corporation showed
some significant changes. The number of original loan accounts was
further reduced by repayments of original loans in full and by fore
closure. Property accounts declined sharply mainly because of
increased property sales which, in turn, resulted in an increase of
vendee accounts. A substantial number of accounts were wholly
terminated not only through complete retirement of the borrowers'
indebtedness, but also through cash sales of properties, and for various
other reasons.
The number of original borrowers receiving HOLC loans was
1,017,824. However, up to June 30, 1940, the Corporation had set
up a total of 1,019,138 accounts, the increase resulting principally from
divisions of the properties on which original loans had been made.
The status of these accounts at the end of the last two fiscal-year
periods is shown in the following table:
Status of accounts, June 80, 1989, and June 30, 1940
June 30, 1939
Number
Number
Total number of original accounts
_----------------Active original accounts on the books --Active vendee accounts on the books----------------Foreclosures pending (original loans and vendee accounts)_
Properties owned and in process of acquisition ------------.
--------- -------Accounts wholly terminated
1,018,687
793, 643
51,873
15, 769
99, 360
58,042
Percent
P
of total
100 0
77.9
5.1
1.5
9. 8
5. 7
June 30, 1940
NumberPercent
Number
ofe total
1,019,138
759,137
97, 025
6, 177
70, 780
86,019
100.0
74.5
9.5
6
7.0
8.4
Of the total number of accounts, 8.4 percent had been wholly ter
minated as of June 30, 1940, leaving the task of final liquidation of
91.6 percent of all accounts. Three-fourths of all accounts were still
in active status on the records as of June 30, 1940, while 0.6 percent
were in various stages of foreclosure procedure; 7 percent were on the
books as properties acquired through foreclosure or deed in lieu of
foreclosure and still owned by the Corporation; and 9.5 percent of all
original accounts were represented by properties previously acquired
and sold to third parties on a deferred payment plan (vendee accounts).
The extension program had a profound effect on the status of
original borrower accounts on the books of the Corportaion. As
past delinquencies were included in the loan amount as extended,
arrearages were wiped out in one single operation. Hence, many
130
REPORT OF FEDERAL HOME LOAN BANK BOARD,
1940
borrowers who had been in default moved into the category of satis
factory performance, but since the extension program has been
in
effect only a few months, there is no yardstick available for measuring
the permanency of these shifts.
Of the active original loan accounts at the end of the reporting
period, there were 700,760, or 92.3 percent, in satisfactory status.
These borrowers were either paying on schedule or were less than
CHART XLI
STATUS OF ACCOUNTS
AS OF JUNE 30,1940
FORECLOSURES
0.6%
PENDING
ACCOUNTS WHOLLY ~*
TERMINATED.... 8.4%
jg
PROPERTIES OWNED AND IN PROCESS
OF ACQUISITION ............ 7.0%
- VENDEE ACCOUNTS
ON THE BOOKS...9.5%
DIVISION OF RESEARCH AND STATISTICS
FEDERAL HOME LOAN BANK BOARD
three months in arrears, or if they were more than three monthly
installments in arrears, they were reducing their delinquency by
regular payments. Only 58,303, or 7.7 percent of the active original
borrowers as of June 30, 1940, were in default and not liquidating.
HOME OWNERS'
LOAN
131
CORPORATION
Status of active borrower accounts, original loans only, June 30, 1940
Unextended loans
Extended
loansor1recast
Total
Number
Perct
of total
Number
ue
ent
of total
509, 313
100.00
249, 750
100.00
759,063
100.00
87.90
Classification
Total borrowers in "active status" _-----
um
N
ber Percent
of total
Paying on schedule or less than 3 months
in arrears_--
-------
More than 3 months in arrears but liquidating ----- ___-
---------
-
-
Total in satisfactory status- ------.
In default and not liquidating-----------
436,455
85.69
230,779
92.40
667,234
27, 767
5. 45
5, 759
2.31
33,526
4.42
464, 222
91.14
236, 538
94.71
700, 760
92. 32
45,091
8 86
13, 212
5.29
58, 303
7. 68
5.
1Includes all accounts extended or recast prior to and since Oct. 1, 1939.
Irrespective of whether all the shifts brought about by the extension
program prove to be permanent, the fact remains that the great majority
of original borrowers have experienced no serious difficulty in fulfilling the
terms of their obligations. This performance record is a good indica
tion of the measure of success with which the Home Owners' Loan
Corporation thus far has accomplished its purpose. The low-cost
amortized loans made by the HOLC are enabling most of its borrowers
not only to meet their interest payments, but through regular repay
ment of principal to acquire substantial equities in their homes. Put
simply, the HOLC is serving as the medium through which a large
number of people in imminent danger of losing their homes a few years
ago are now well on the way to debt-free home ownership.
Collections
In the fiscal year 1940, the Home Owners' Loan Corporation collected
$80,709,552 in interest and $175,796,316 in principal from original
borrowers, or a total of $256,505,868 as compared with $270,084,559
the year before. This decrease in collections was due to the reduction
of the rate of interest charged from 5 to 4% percent, the reduction in
monthly loan installments on extended accounts, and to a decline in
the number of original accounts as a result of unavoidable foreclosures.
The increase in the number of vendee accounts was reflected in larger
collections on such accounts. During the fiscal year 1940, the Cor
poration collected a total of $50,048,308 from vendees as compared
with $27,762,525 the year before. Interest receipts amounted to
to $9,531,005 during the reporting period as against $4,644,189 for the
fiscal year 1939.
132
REPORT OF FEDERAL HOME LOAN BANK BOARD,
1940
Cumulatively through June 30, 1940, the Corporation had collected
on original loans and vendee accounts $664,285,674 in interest and
$863,809,859 in principal, aggregating $1,528,095,533. Proceeds from
cash sales and initial payments on property sales are included in these
figures. Of the total, $220,190,184 represents amounts received on
accounts which have been paid in full.
Normally, the collection record of the Corporation from month to
month is a good indication not only of the performance of borrowers,
but of the general business situation which is the most important factor
determining the borrowers' performance. In the fiscal year 1940,
however, the execution of the extension program somewhat blurred
the picture, both because it reduced amounts falling due and because a
number of borrowers withheld payment in anticipation of adjustments
while the program was worked out.
Arrearages at the end of the fiscal year 1940 totaled $35,118,808,
of which $34,197,227 was due on original loan accounts and $921,581 on
vendee accounts. Of this total, $32,282,380 represented amounts due
and unpaid on principal, and $2,836,428 amounts due and unpaid on
interest. Again, the extension program through which delinquent
principal, interest, taxes, and other items were included in the loan
amount as extended resulted in a decline of arrearages over the pre
ceding year.
Loan Service
In addition to its routine duties of billing home-owner borrowers each
month and contacting delinquent borrowers by mail or personal calls
to work out a solution of their problem, the Corporation had to carry a
heavy work load resulting from the revision of loan terms undertaken
during the fiscal year 1940. Regular billings had to be changed for all
borrowers to conform with the charging of interest payments at the
lowered rate of 4% percent. After the passage of the 1939 amendment
to the Home Owners' Loan Act, 224,162 applications for extensions
and revisions were received and examined through June 30, 1940, and
virtually all of these home owners were contacted by representatives to
determine a detailed program of extension or revision of the loan.
Finally, the establishment of tax and insurance deposits for borrowers
involved additional work.
The following table at the top of the opposite page shows the num
ber of borrowers and vendees being serviced at the end of the fiscal
year 1940.
133
HOME OWNERS' LOAN CORPORATION
Number of accounts serviced
Original
borrowers
......
_---.-_ - ..--------.--- ---------Total active accounts 1
Unadjusted accounts.--------..
..------------.-Loans extended beyond 15 years
__--------------Loans recast within 15 years 2---------------------------------------------Tax and insurance accounts_ .
759, 063
509, 314
165, 254
84,495
289, 849
Vendees
96, 618
94,427
1, 707
484
38, 225
Total
855, 681
603, 741
166, 961
84,979
328, 074
1 For definition, see footnote on p. 128.
2Includes accounts recast prior to Oct. 1, 1939.
The 251,940 accounts on which extensions had been granted or
which had been recast, required special attention in order that default
under the revised terms and a recurrence of the difficulties which
necessitated the revisions be avoided. In addition, there were 76,337
unextended accounts more than three months in arrears requiring
special servicing attention.
In its loan service operations, the Home Owners' Loan Corporation
has continued to treat each individual case on its merits, in an effort
to assist borrowers in their rehabilitation and to avoid foreclosure.
Every consideration is given to borrowers who are behind in their
payments, and in addition to the formal revisions described in earlier
sections of this report, numerous informal adjustments are made to
prevent more serious default and final foreclosure. Even after fore
closure has been authorized, a revised payment schedule may be
agreed upon and the foreclosure withdrawn. The Corporation's
servicing activities are guided by the principle that foreclosure shall
not be resorted to until every means of possible rehabilitation has
been exhausted. To sum up, the Corporation's servicing operation
is one representing a fuller development than any heretofore attained
in the history of home mortgage finance.
One of the measures provided for the mutual protection of the
Corporation and its borrowers is the advance of supplemental amounts
for the payment of taxes, insurance, repairs, and similar costs. Nor
mally, home owners are expected to make such payments from their
own funds. However, many of the distressed mortgagors with whom
the Corporation is dealing have difficulty in meeting these carrying
charges on their homes in addition to regular interest and principal
payments due the Corporation. In order to help its borrowers meet
these costs during periods of difficulty, and to protect the security
behind its mortgage loans, the Corporation has advanced substantial
amounts to original borrowers after refinancing their loans.
134
REPORT OF FEDERAL HOME LOAN BANK BOARD,
1940
The following table indicates that advances for the payment of
taxes and insurance represent over 97 percent of all advances made
through June 30, 1940. The Corporation has established a system
of tax and insurance accounts through which borrowers accumulate
in monthly installments funds for payment of their taxes and insur
ance (see page 127). As these accounts are set up, the Corporation
frequently finds it necessary to advance sufficient funds to wipe out
past tax and insurance delinquencies, and give the borrower a fresh
start on the monthly accrual plan. This explains the fact that ad
vances for taxes increased substantially during the last fiscal year.
Supplemental advances by the Corporation for these carrying charges
should decline sharply in the future.
Advances to original borrowers, by purpose
Fiscal year
Taxes
1934 ....-----------------------------$1,619
1935....----------------------__
--85,035
1936 .
.-------------------.
1, 563, 728
1937.......
--------------.
11,349,050
--1938 .
--------------------..
18,607,296
1939.....---------------------------36,991,707
1940 ..---------------------------66,283,241
Cumulative, June 30, 1940 ------------134,881,676
Insurance
Reontioning
Misellaneous
$17,017 ...... .. ......
391,349
$3,696
$676
2,144,683
311, 362
21,904
1,215,925
528,159
66,477
1,269,992
386,026
133,013
1,068,715
415,172
145, 979
778,422
886,627
881,794
6,886.103
2,531,042
1, 249,843
Total
$18,636
480,756
4,041, 677
13,159, 611
20,396,327
38,621,573
68,830,084
145, 548, 664
Foreclosure Operations
Foreclosures authorized on original loans, after deduction of with
drawals, numbered 11,078 in the fiscal year 1940, or only one-third
of the 1939 volume. Net foreclosures on vendee accounts were 795,
as against 394 the year before. The Corporation acquired 4,334
properties during the year by deed in lieu of foreclosure, as compared
with 6,127 in the fiscal year 1939.
The largest factor responsible for the reduction in foreclosures was
the policy pursued by the Corporation in carrying out the program
of loan extensions and revisions. As 'was pointed out in a previous
section of this report, foreclosure action was held up during the exe
cution of the program in order that the largest possible number of
borrowers who were in difficulties might take advantage of the pro
gram. In many cases, foreclosure authorizations were withdrawn
with the result that at times withdrawals outnumbered authorizations
for foreclosure.
The table at the top of the following page shows the trend in fore
closure authorizations and withdrawals during the fiscal year 1940,
by months.
HOME O'WNERS'
135
LOAN CORPORATION
Foreclosure operations during the fiscal year 1940, by months
I
Vendees
NetAuthorizations
author-
Withdrawals
Original borrowers
Authorizations
Withdrawals
1939
.....------------------ .2,967
July.... .
_--------------------2,996
August----------------_
2,268
September..
-1,366
--------------------October __---871
November ------------------------_--639
December---------------
501
587
556
545
455
1, 387
Net
author
56
60
53
38
30
26
2,466
2,409
1, 712
821
416
-748
67
66
63
52
46
36
11
6
10
14
16
10
929
529
423
387
386
334
-27
466
556
864
928
1,215
52
55
83
115
172
141
9
5
9
16
22
25
43
50
74
99
150
116
7,019
11,078
153
795
.
1940
January....---------------------------902
995
February__-----------------.
March ...
..-----------------------979
April. ---------------------1,251
------------------1,314
May----------------------1,549
June_--_
Total ....-----------------------
18,097
948
As the extension program approached completion, foreclosures
showed some increase from the low level reached in the last few
months of 1939 and at the beginning of 1940, and a further resur
gence of foreclosures must be expected after the bulk of justifiable
extensions has been granted. For one reason, foreclosures postponed
during consideration of extensions must be instituted in those cases
where careful investigation shows that even the most generous
revision of loan terms would fail to bring the borrower's obligations
within his ability to repay.
Also, it is inevitable that some borrowers
with whom extension agreements have been concluded will lapse again
into serious default, making foreclosure unavoidable.
Cumulatively from the beginning of operations through June 30,
1940, the Corporation had authorized 208,005 foreclosures on original
loans, of which 25,891 were withdrawn, for a net total of 182,114.
Foreclosures authorized on vendee accounts numbered 1,544, of which
255 were withdrawn, leaving a net total of 1,289. Of the total
authorizations, the Corporation has acquired a total of 29,025 prop
erties by deed in lieu of foreclosure. Exhibit 57 presents, cumu
latively to June 30, 1940, net foreclosure authorizations on original
loans and vendee accounts, by HOLC Regions and by States, and the
ratio of net foreclosures on original loans to the total number of such
loans.
In many cases, foreclosure results not from genuine inability to
repay, but from wilful refusal to pay, abandonment of the property,
death of the borrower, legal complications outside the control of the
Corporation, and failure to cooperate in efforts made to protect the
270198-40---10
136
REPORT OF FEDERAL HOME LOAN BANK BOARD,
1940
borrower's investment in his home. Included in this latter category
are proposals that the borrower supplement his income by renting
the property, or that the property be sold in order to salvage at least
part of his equity. In the liquidation of approximately 1,000,000
CHART XLII
FORECLOSURE
ORIGINAL
.,.....
ACCOUNTS
OPERATIONS
AND VENDEE
ACCOUNTS
DIVISIONOF RESEARCHAND STATISTICS
FEDERALHOMELOANBANKBOARD
loans that had been in serious distress only a few years ago, fore
closures resulting from causes other than inability to pay were found
to be substantial in number-representing over half of all cases.
That the Home Owners' Loan Corporation forecloses only after every
consideration has been given to the borrower is indicated by the
following table:
Percent distribution of foreclosures brought through June 30, 1940, by accumulated
arrearagesprior to foreclosure
Percent
Arrearages before foreclosure:
Less than 12 months_ ----------------------------------------12 months to 17 months----18 months to 23 months -- ----------------------24 months and over----------------------------Total-----------
-------------------------
of total
29. 2
20. 7
17. 4
32. 7
100. 0
HOME OWNERS'
137
LOAN CORPORATION
In slightly more than 70 percent of all cases, the Corporation has
withheld foreclosure action, in the endeavor to work out with the
borrower some satisfactory solution, until the arrearage has amounted
to 12 monthly installments or more.
Generally, the Corporation has found its larger loans to be those
most likely to become foreclosure cases. A principal reason for this
fact is that "overhousing" of HOLC borrowers is most frequent in the
case of larger loans, that is, homes owned by such borrowers are far
out of line with their present ability to pay under any terms, and even
the greatest forbearance by the Corporation cannot begin to solve
the borrower's problems.
The following table presents a comparison of the average original
amount of all refinancing loans made by the Corporation with the
average original amount of such loans on which the Corporation had
to foreclose during the period from June 1, 1939, 'to May 31, 1940.
Supplementing these data, the average balance of foreclosed loans at
the time of foreclosure is shown.
Average original loan amount and loan balance outstanding of loans foreclosed,
June 1, 1939, to May 31, 1940
Average
original
Average
loan
amount of
all loans amount of
closed
foreclosed
accounts
HOLC Regions
OL Regions
Average
loan
balance
at time
of fore
closure
United States-------------------------------------
$3,039
$3,996
$4,235
Region 1-New York----------------------------------------Region 2A-Baltimore ..---- ------------------------
4, 756
2,957
5,146
3,428
5, 514
3,535
3,054
2,732
Region 2B-Cincinnati_-- _
------
--------
Region 3A-Atlanta
------------Region 3B-Memphis .-----------------------------------------.
Region 4A-Chicago ----------..---------------Region 4B-Detroit ___
---------Region 5A-Omaha ..--------------------------Region 5B-Dallas...-------------------------------Region 6--San Francisco .--------..
--.--.----------------------
2, 325
2,550
3,830
2, 710
2,017
2,299
2,322
2,919
3,041
4,372
3, 566
2,117
2, 529
2,906
3,428
2,823
3,032
4,252
3,908
2,163
2,506
2,868
For the United States as a whole, the average original loan amount
of accounts foreclosed has been approximately one-third in excess of
the average original loan amount of all refinancing loans made by
the Corporation, demonstrating that foreclosures are concentrated in
the group of the larger loans which generally means in the group of
the more expensive homes. This observation holds true for all
HOLC Regions, with the exception of the Cincinnati Region.
The leniency shown by the Corporation before instituting foreclo
sure becomes evident from a comparison of the average original loan
amount of foreclosed accounts with the average balance of such loans
at the time of foreclosure. The accounts included in the table, it
138
REPORT OF FEDERAL HOME LOAN BANK BOARD,
1940
should be noted, were foreclosed upon in 1939-40. Hence, they had
been on the books of the Corporation for three to six years, and in
this period, some repayments on principal should normally have been
made by the borrowers. Instead, the figures for the United States
show that the average loan balance at the time of foreclosure was
actually higher than the average original amount of the foreclosed
loans. Thus, not only did the average foreclosed borrower fail to
reduce his principal indebtedness by regular amortization, but the
Corporation made substantial advances for taxes, insurance, and
maintenance over and above the original loan amount before it re
sorted to foreclosure. This is most conspicuous in the New York
Region, which comprises New York, New Jersey, and the New Eng
land States; in the Baltimore Region, including Delaware, Maryland,
Pennsylvania, Virginia, and the District of Columbia; the Cincinnati
Region, consisting of Ohio and West Virginia; and the Detroit Region,
comprising Indiana and Michigan. In the remaining Regions, the
average loan balance at the time of foreclosure was about the same
as the average original loan, or slightly less.
Decline of Real-Estate Holdings
During the fiscal year 1940, the real-estate holdings of the Home
Owners' Loan Corporation showed a substantial decline. Some im
provement had already been noted in the preceding fiscal year when
the number of properties owned and in process of acquiring title 1 had
decreased from 103,132 to 99,354. During the reporting period, this
latter number was further reduced to 70,780, a decline of 28.8 percent.
The combined capital value 2 of property owned or in process of
acquiring title was $424,185,212, at the close of the current fiscal
year, as against $549,441,184 on June 30, 1939.
The peak of the Corporation's property holdings was reached in
July 1938 when properties owned and in process of acquisition num
bered 103,349. Since then, the number of properties on hand and in
process of acquisition has been reduced by 31.5 percent.
The property holdings of the Corporation show an increasing
tendency toward concentration in certain areas where the general
real-estate situation is still abnormal and where foreclosures are most
numerous and property sales most difficult. 3 On June 30, 1940, over
I
Properties in process of acquiring title are those where the foreclosure action has been advanced to the
point of judgment or sale but where because of the existence of a redemption period or for other reasons,
some additional time must yet elapse before the Corporation can acquire full title.
2 The capital value of property is represented by unpaid balances of loans and advances, unpaid interest
to date of foreclosure, sale, or judgment, foreclosure costs, net charges prior to date of acquisition, and per
manent additions, initial repairs, and reconditioning subsequent to acquisition.
' See Survey of Housing and Mortgage Finance, pp. 13-16.
HOME OWNERS'
139
LOAN COIRPORATION
one-fourth of the properties owned and in the process of acquiring
title were in the State of New York; at the end of the preceding fiscal
year, this proportion had been only one-fifth. Further points of
concentration are New Jersey, Massachusetts, Pennsylvania, Ohio,
Missouri, and Wisconsin. All together, 62.9 percent of the properties
owned and in process of acquiring title are located in the seven States
mentioned above. Slightly less than 35 percent of the Corporation's
loans were made in these same States.
CHART XLIII
PROPERTIES OWNED AND IN PROCESS OF ACQUIRING TITLE
AT THE END OF EACH MONTH
PROCESS
PROPERTIES
NG
O F A CQ U I IIN
R
TITLE
80
PROPERTIES OWNED
Sy
o 60
-^--
I 00 _ --
JUN
-
SEP
y / / // /
DEC
MAR
FISCAL 1937
-__
--
JUN
SEP
DEC
--__
MAR
FISCAL 1938
-_
--__
JUN
-_
SEP
--__
DEC
MAR
FISCAL 1939
-_
--__
JUN
__
-- L _J
_-
SEP
DEC
MAR
JUN
FISCAL 1940
PROPERTYMANAGEMENT
DIVISION
HOMEOWNERS'LOANCORPORATION
The improvement of the real-estate account of the Corporation
during the fiscal year 1940 was due both to increased sales of proper
ties and reduced acquisitions through foreclosure or deed in lieu of
foreclosure. The latter factor was in part the result of the drop in
foreclosures attendant upon the execution of the extension program.
Only 23,826 properties were acquired in the fiscal year 1940 as against
41,743 the year before and 55,190 in the fiscal year 1938. Of greater
importance, however, was the Corporation's expanding sales activity
exemplified by 49,716 sales in the fiscal year 1940 as compared with
37,771 in the fiscal year 1939 and 15,159 in the fiscal year 1938.
140
REPORT OF FEDERAL HOME LOAN BANK BOARD,
1940
Property acquisitions and sales, by fiscal-year periods
Acquisitions
__
Period
Sales
Number of Aggregate Number of Aggregate
properties capital value ' properties capital value
1936..._
----1937---------- -----1938-...----------1939------ -------1940--....-..-------.....
Total---------
Aggregate
sales price
Ratio of
number of
sales to
number of
acuisi
5,275
39, 534
55,190
41, 743
23, 826
$23,930,096
181,196,458
303,226.436
228, 932,138
127,055, 797
142
2,231
15,159
37, 771
49, 716
$497,117
8,248,929
62,001,901
166,888, 675
241, 270,671
$523,055
8,293,100
54,182,578
130,177,111
170,505,356
2.6
5.4
26.7
89.1
207.1
165, 568
864, 340,925
105,019
478,907, 293
363, 681, 200
62. 8
1 Includes all adjustments to June 30, 1940.
2 For the purpose of computing the percentage of properties sold to those cumulatively acquired, proper
ties sold prior to acquisition, and properties remaining "in process of acquiring title" in Alabama have been
added to the number of properties acquired.
All together, through June 30, 1940, the Corporation has acquired
165,568 properties, equivalent to 16 percent of the original loan
accounts, and has sold 105,019 properties, or 63 percent of the prop
erties acquired. These figures include a small number of reacquisi
tions and resales.
CHART XLIV
PROPERTIES ACQUIRED AND SOLD
BY MONTHS
0
=4,,'
-T1
iI
If
I
. L
DEC MAR JUN
JUN
SEP
FISCAL1937
PROPERTYMANAGEMENT
DIVISION
HOMEOWNERS'
LOANCORPORATION
As will be seen from Chart XLIV, the volume of property sales
began to exceed the volume of monthly acquisitions in April 1939
and has consistently remained above the level of acquisitions from
HOME IOWNERS'
141
LOAN CORPORATION
that date. The fact that this favorable trend developed prior to the
execution of the extension program appears to confirm that the trend
wag not brought about, but only accentuated by the drop of fore
closures in connection with the extension program.
A relatively small number of HOLC properties have been disposed
of for cash. The majority have been sold for a down payment
averaging in excess of 10 percent, with the balance due amortized
over a period up to 15 years. Since October 1939, new sales instru
ments have been written at an interest rate of 4% percent. Interest
on the unpaid balances of vendee accounts originated prior to that
time is also charged at the rate of 4% percent per year.
Property sales through June 30, 1940, by terms
Number of
properties
Cash sales-..------------------------------------------------------------------------------Sales on security instruments-----------------Sales contracts or other instruments in lieu thereof-------------------------Total----------------------------------
-
----------
6,038
59,017
39, 964
105,019
Percent of
total
5.7
56. 2
38.1
100.0
Property sales through the end of the fiscal year 1940 resulted in
a cumulative capital loss of $115,226,093, or an average of approxi
mately $1,097 per property, representing the spread between the
sales price and the capital value on the books of the Corporation.
The cumulative capital loss through June 30, 1940, was 24.1 percent
of the capital value of all properties sold. A detailed statement of
profit and loss on property sales, by calendar years, is given in
Exhibit 58.
The losses sustained in the disposition of properties do not warrant
the conclusion that the sales experience of the Home Owners' Loan
Corporation has been unfavorable. Losses resulting from the sale
of real estate are computed on the basis of capital value which in
cludes all costs incident to the forbearance shown by the Corpora
tion toward its borrowers before foreclosure. For this reason losses
are, in large part, the result of this forbearance. In its efforts to
avoid foreclosure and protect the borrower's interest, the Corporation
permits substantial arrearages to accumulate before proceeding to
acquisition. Finally, when foreclosure is brought, foreclosure and
acquisition costs must be added to the debt already increased by
the borrower's loan and tax delinquency, and often extensive recon
ditioning is necessary to place the property in condition for sale.
Hence, capital values in most cases exceed current market prices.
The various elements entering into the capital value of properties
142
REPORT OF FEDERAL HOME LOAN BANK BOARD,
1940
owned and in process of acquiring title on June 30, 1940, are shown
in Exhibit 59.
The Corporation attempts to sell the properties which it has been
forced to acquire as speedily as is consistent with the Government's
interests and with the condition of the real-estate market. Pending
sale, the vast majority of properties owned are being rented and are
thus converted into an income-producing asset of the Corporation.
On June 30, 1940, there were 83,923 dwelling units in properties
owned by the Corporation. Of these units, 64,484, or 76.8 percent,
were available for rental. The remainder comprised dwelling units
held vacant for repairs, properties held vacant for immediate sale,
those adversely occupied, and a few cases on which reports were being
obtained. Of the units available for rental, 58,769, or 91.1 percent,
were rented. 4 Operations of units available for rental are shown in
Exhibit 60 which presents information on vacancies, rent collections,
and average rent per dwelling unit.
During the fiscal year 1940, the gross operating income derived
from properties owned was $26,267,858, and the gross operating
expenses on properties owned, exclusive of overhead costs, totaled
$22,008,719, leaving a net operating income of $4,259,139. Cumula
tively from the beginning of operations to June 30, 1940, gross oper
ating income totaled $72,939,968, while property expense aggregated
$62,619,049. Hence, the net operating income from property before
payment of overhead costs was $10,320,919. The properties rented
are earning, in addition to their own operating expense, more than
enough to provide for the operating expense of all properties owned,
whether available for rent or not.
Increase of Vendee Accounts
Due to increased sales of those properties which the Corporation has
been forced to acquire, the number of vendees, that is, of individuals
purchasing acquired properties from the Corporation, has been ex
panding over a number of years. At the end of the reporting period
there were 97,404 vendee accounts on the books of the Corporation
as compared with 764,935 original loan accounts. In other words,
of the total debtor accounts, 12.7 percent represented accounts
resulting from property sales by the Corporation, as contrasted with
original refinancing loans.
Although many of the vendee accounts have been established too
recently to permit definite conclusions, the performance of vendees
thus far has been satisfactory. Of the vendees in active status at
the end of the reporting period, 96.3 percent were paying on schedule
<In 378 cases, dwelling units could
not be rented because the tenants were in the process of eviction.
HIOME
OWNERS'
LOAN
CORPORATION
143
or were less than three months in arrears; 1.4 percent were more
than three months in arrears but liquidating their delinquencies
by regular payments; and only 2.3 percent were in default and not
liquidating.
Cumulatively through June 30, 1940, foreclosures against vendees
numbered 1,544, of which 255 were withdrawn, leaving 1,289 net
foreclosures, or 1.3 percent of the total number of properties sold on
an amortized payment plan. Through the end of June 1940, there
were 848 properties reacquired from vendees, and 58 properties were
in the process of acquiring title. 5
Through June 30, 1940, property sales on a deferred payment basis
have brought a total sales price of $343,480,644, which resulted in
the setting up of vendee accounts to the extent of $299,915,015.
The remainder constituted principally down payments received from
property sales. Principal repayments and transfers have reduced
the dollar amount outstanding on vendee accounts, as of June 30,
1940, to $277,239,129, which figure includes $1,163,323 in advances
made to vendees as well as unpaid balances of instruments received
from partial sales.
Reconditioning
Reconditioning operations showed a sharp decline during the fiscal
year 1940, due mainly to the reduction in the number of properties
acquired, which necessitated less repair work for sales purposes.
During the year, the number of reconditioning contracts completed
was 66,085, in the amount of $17,722,229, as compared with 117,698
in the amount of $26,590,243 the year before. Of these contracts,
60,235 were for reconditioning of properties acquired by the Cor
poration or for properties in process of acquisition.
The Corporation not only reconditions a large number of properties
which it has been forced to acquire, but also advances funds to borrow
ers for repair and maintenance if the borrowers are unable to keep
their property in a satisfactory condition. The Corporation has, of
course, a vital interest in the protection of the security underlying its
loans. At the same time, advances for reconditioning purposes
represent one of the services which the Corporation provides for its
borrowers in accordance with the intent of the Home Owners' Loan
Act.
From the beginning of operations to the close of June 1940, the
Corporation has completed 795,894 cases of reconditioning, with a
total expenditure of $157,071,700. In addition to these cases, certain
other expenditures are made by contract management brokers who
IThese properties are included in the acquisition
figures given on page 140.
144
REPORT OF FEDERAL HOME LOAN BANK BOARD,
1940
CHART XLV
COMPLETED
CASES
RECONDITIONING
JULY 1956 THROUGH JUNE 1940
THOUSANDS
14
r--
DIVISIONOF RESEARCH
AND STATISTICS
FEDERALHOMELOANBANKBOARD
have authority to provide for small maintenance repairs on properties
under their management.
Number of reconditioning contractscompleted from the beginning of operationsthrough
June 30, 1940
Type of case
1. Included in original loans to place homes of borrowers in a condi
tion of reasonable structural soundness -------2. Advanced to borrowers since closing of loans for keeping homes in
sound condition __
-------3. Reconditioning to make acquired properties attractive for rent or
sale_--------------4. Insurance cases supervised by the Corporation ----------------Total
------
---
--------------------
Number of Total dollar
contracts
amount
completed
amount
Averge
dollar
amount
417,393
$78, 255, 416
$187
14,779
2,204,652
149
332,701
31,021
70,098,984
6,512,648
211
210
795,894
157,071,700
197
The reconditioning activities of the Corporation have been an im
portant factor in halting blight in older residential districts. In a
number of communities, its efforts have stimulated reconditioning and
modernization by home owners and by private mortgage-lending in
stitutions which hold real estate for sale. At the same time, the Cor
poration has been impressed by the vast extent of blight in American
cities and by the need for a well-planned program of conservation for
HOME
OWNERS'
LOAN
CORPORATION
145
urban neighborhoods. Consequently, the technical staff of the
Corporation has participated in the preparation of neighborhood
conservation surveys and in the development of cooperative neighbor
hood improvement plans in areas where it has a heavy concentration
of loans and properties. The Corporation has a very real stake in
preventing blight in these areas. Realization of its investments and
protection of borrowers' equities depend to a considerable degree on
successfully resisting the growth of slums. During the fiscal year
1940, a report on conservation problems in the Waverly area in
Baltimore was published to provide a pattern for the physical restora
tion of urban neighborhoods. 6
Appraisal Activity
The total number of appraisals completed in the fiscal year 1940 was
90,872 as against 101,118 in the preceding fiscal year. Of the total,
21,141 were initial appraisals as a result of foreclosure, and 65,064
represented reappraisals or supplemental reviews made to keep ap
praisal data up to date and abreast of changes in local economic con
ditions, real-estate values, and the physical condition of properties.
The remaining 4,667 appraisals include reports for miscellaneous
purposes.
Although the refinancing operations of the Home Owners' Loan
Corporation were closed in June 1936, appraisals are still an important
tool in the management of the Corporation. The majority of ap
praisals are used as a guide in determining sales prices of acquired
properties. Appraisals are also necessary in the conduct of normal
property management activities such as improving or recondition
ing owned properties. In addition, the Corporation uses appraisals
in certain legal proceedings.
The Appraisal Section of the Corporation renders additional services
to the other agencies under the Federal Home Loan Bank Board for
which the Corporation is reimbursed. Also, under a cooperative
arrangement with the Federal Works Agency and the Procurement
Division of the U. S. Treasury, the Section assists in the appraisal
of various types of properties throughout the country, particularly
old post office and customhouse structures which are no longer needed
for Government use. During the fiscal year 1940, four large appraisals
were completed for the War Department, involving several thousand
acres of land, both improved and unimproved.
During the reporting period, the Home Owners' Loan Corporation
sponsored Technical Appraisal Conferences held in several States and
4See Survey of Housing and Mortgage Finance, page 22.
146
REPORT OF FEDERAL HOME LOAN BANK BOARD,
1940
open to any person interested in appraisal work. A general improve
ment of appraisal techniques is of vital interest to the Corporation, the
other agencies under the Board, and especially to the local home
financing institutions with which these agencies are concerned.
Insurance
Significant changes were made during the latter part of the reporting
period in the Corporation's program with respect to insurance of its
borrowers' properties as well as its own properties against fire, wind
storm, and other hazards. In May, an agreement was concluded with
the Stock Company Association providing for an open policy in each
State and Territory under which the properties of those borrowers
who maintain accounts with the Corporation for taxes and insurance
(see p. 127) and also the properties of those borrowers who neglect to
obtain insurance coverage may be insured as required by the Corpora
tion. In June, a plan was adopted for accumulating reserves to cover
fire and other hazard losses on properties owned by the Corporation.
It should be emphasized that the majority of the Corporation's
borrowers continue to furnish their own insurance policies from com
panies of their own selection and through their own agents just as
they have in the past. The HOLC provides only that the insurance
carrier be licensed by the State in which the borrower's property is
located and that the policy meet the requirements of the Corporation
under the terms of its mortgage.
For the properties owned by the Corporation and for the properties
of such borrowers as failed to provide adequate insurance protection,
contracts had been maintained since 1935 with the Stock Company
Association, which was formed to represent the stock fire insurance
companies, and the Mutual Company Association, which was formed
to represent the mutual fire insurance companies. When the Cor
poration, in the summer of 1939, began to offer its borrowers the
opportunity of arranging for the monthly payment of taxes and in
surance on their properties, renewals of their insurance policies were
ordered from the Stock Company Association or the Mutual Company
Association, depending upon the type of policy which the borrower
had previously provided.
In the late summer of 1939, the Corporation began a thorough
study of its entire insurance program in order to reduce the costs of
this protection. Because of the unusually large number of mortgage
loans and properties held by the Corporation, the reviewing and
checking of numerous separate policies as they were written and
renewed involved considerable detail work. Also, several years of
HOME OWNERS' LOAN CORPORATION
147
experience evidenced that the fire losses on the Corporation's owned
properties and on those of its borrowers have been very low compared
with the premiums charged for the insurance of these properties. In
February 1940, all insurance companies licensed to do business in
the United States were invited to submit bids for the insurance of the
Corporation's properties and also those of its borrowers. A total of
twenty-nine bids was submitted. After a careful study of each of
these, the bid of the Stock Company Association was accepted, a new
contract was executed, and the existing contracts cancelled.
Under this new contract, properties of the Corporation's borrowers
are covered by insurance similar to that provided in the previous con
tracts with the Stock and Mutual Company Associations. It is also
provided that the Corporation conduct a fire prevention program.
Under the open policy now in effect in each State and Territory,
certificates are issued to insured parties by the various insurance
companies which are members of the Stock Company Association.
Under the new contract between the Home Owners' Loan Cor
poration and the Stock Company Association, even though insurance
arrangements are entered into by the mortgagors with the Corpora
tion, the mortgagors may, at the time of expiration of policies held by
the Corporation, furnish their own insurance policies through com
panies and agents of their choice, provided such policies meet the
Corporation's requirements. If the Corporation is obliged to order
insurance on a mortgagor's property through the Stock Company
Association, the mortgagor is still permitted to designate a local agent
to receive the commission.
In the past, when the Home Owners' Loan Corporation ordered
insurance for its mortgagors, the coverage was usually in the amount
and kind previously carried by them. Under the new arrangement,
it is the general policy of the Corporation to order insurance only to
the extent of the loan balance outstanding; the mortgagor may
purchase additional coverage through his local agent.
In June 1940, the Corporation cancelled, with a few exceptions, all
outstanding insurance policies on its owned properties and adopted a
plan for the monthly accrual of a reserve for fire and other hazard
losses. All losses on these properties which were formerly covered
by separate insurance policies are now charged to this special reserve.
This plan was feasible because of the wide spread of small risks repre
sented by the Corporation's properties. Moreover, the Federal Gov
ernment generally does not carry insurance on its properties. When
properties are sold by the Corporation on an installment basis, in
surance must be paid for by the vendee.
148
REPORT OF FEDERAL HOME LOAN BANK BOARD,
1940
4. SURVEY OF HOLC FINANCES
FinancialCondition
The financial condition of the Home Owners' Loan Corporation re
flects substantial progress in the liquidation of its assets and also
several significant shifts in the composition of assets. During the
fiscal year 1940, aggregate assets decreased from $3,114,821,877 to
$2,790,002,453, or by 10.4 percent. This was the largest drop in
assets thus far recorded in any fiscal year. (See Chart XLVI at top
of facing page.)
Comparison of the balance sheet as of June 30, 1940, presented in
Exhibit 61, with the balance sheet as of June 30, 1939, reveals the
following changes in asset items as well as in capital and liability
accounts during the fiscal year:
Changes in important balance-sheet items from June 30, 1939, to June 30, 1940
ASSETS
Original mortgage loans and advances thereon_------_------
Vendee accounts and advances thereon ----------------Property owned and in process of acquiring title ------ _
Bond Retirement Fund_------------------------------Investments------------------------------------------LIABILITIES AND
- $193, 229, 155
+ 125,
-125,
- 114,
-13,
343,
255,
150,
434,
792
973
563
600
-314,
9,
-42,
-16,
496,
256,
159,
890,
125
584
616
976
CAPITAL
Bonded indebtedness-------------------------------------Accounts payable ----------------------------------------Reserve for losses--------------------------------------Net worth 1
-----------------------------1Capital stock minus deficit.
Original mortgage loans.-The balance of original mortgage loans
outstanding and advances thereon decreased from $1,928,212,237 to
$1,734,883,082, reflecting principal repayments on the part of original
borrowers and, to a smaller extent, transfers of loan accounts to
property accounts through foreclosure or deed in lieu of foreclosure.
Vendee instruments.-Expandedproperty sales by the Corporation
resulted in an increase of vendee instruments outstanding and advances
thereon from $151,896,337 to $277,239,129.
Property owned.-The capital value of property owned and in
process of acquiring title dropped from $549,441,184 to $424,185,211
resulting from increased sales and decreasing acquisitions, analyzed
in detail on pages 138-142.
Bond Retirement Fund.-This item was reduced from $149,217,560
to $35,066,998 principally as the result of certain bond retirements
toward the close of the fiscal year.
149
HOME OWNIERS' LOAN CORPORATION
CHART XLVI
TOTAL ASSETS OF THE HOME OWNERS' LOAN CORPORATION
BY QUARTERS,
1935
1936
DECEMBER
31, 1934 THROUGH JUNE 30,1940
1937
1938
1939
1940
DIVISIONOF RESEARCH
AND STATISTICS
FEDERALHOMELOANBANKBOARD
Investments.-The investments of the Corporation, consisting of
$100,000,000 capital stock of the Federal Savings and Loan Insurance
Corporation and of shares in savings and loan associations, declined
from $316,458,810 to $303,024,210 due to substantial repurchases of
share investments by savings and loan associations. These repur
chases, discussed on pages 62 to 66 of this report, had the effect of
accelerating the liquidation of the Corporation. Exhibit 62 gives a
detailed statement of HOLC investments in savings and loan
associations.
Bonded indebtedness.-The bonded indebtedness of the Corporation
was reduced from $2,949,305,025 to $2,634,808,900. The latter
amount included $31,449,200 of bonds matured but not presented
for payment and for which a like amount of cash is on deposit with
the Treasurer of the United States. Hence, the liability of the
Corporation for its outstanding unmatured bonds, all of which are
guaranteed by the U. S. Government as to principal and interest,
totaled $2,603,359,700; and allowing for the assets held by or due to
the Bond Retirement Fund, the net liability of the Home Owners'
Loan Corporation was $2,582,979,789.
150
REPORT OF FEDERAL HOME LOAN BANK BOA D, 1940
On August 1, 1939, $904,761,250 Series B, 2% percent bonds became eligible for
retirement by call. Such a call was made on May 18, 1939. During the latter
month, an offer was made to the holders of Series B bonds to exchange them for a
new Series M, 1% percent bonds of 1945-47. Over 75 percent accepted this offer,
leaving approximately $217,000,000 Series B bonds to be paid on August 1, 1939.
This payment was effected partially from funds in the Bond Retirement Fund
and the balance from the proceeds of the sale of $76,350,000 1% percent Series M
bonds, out of which total, $45,900,000 was sold during 1939 and $30,450,000 dur
ing the fiscal year 1940.
The only other bonds sold during the current fiscal year consisted of a total of
$86,000,000,
percent Series J bonds, due October 1939, and Y percent Series N
bonds, due October 1940, which were sold at intervals to the U. S. Treasury for
general corporate purposes. All of these were repaid, in addition to $20,000,000
Series J bonds which were outstanding at the beginning of the fiscal year. Cash
in the amount of $127,867,400 from the Bond Retirement Fund was deposited
with the U. S. Treasury for the payment of a like amount of Series K, % percent
bonds which matured on May 15, 1940. A detailed statement of bonds issued,
refunded, and retired to June 30, 1940, and bonds outstanding on that date, is
presented in Exhibit 63.
Reserves for losses.-The Corporation entered the fiscal year 1940
with a reserve for losses on loans, interest, and property in the amount
of $89,488,388. During the year, there was added to this reserve an
amount of $3,333,333 per month, for a total of $40,000,000. Losses
sustained during the year on mortgage loans and property totaled
$82,390,320. As a result, the balance in the reserve for losses was
reduced to $47,098,068.
Net worth.-On June 30, 1940, the accumulated deficit after pro
vision for losses amounted to $76,453,005. Hence, the net worth of
the Corporation at the close of the current fiscal year stood at
$123,546,995, a decline of $16,890,976 during the year.
Exhibit 64 sets forth for the fiscal years 1939 and 1940 the cash
receipts and expenditures of the Corporation. Their effect on cash
working funds, Bond Retirement Fund, and bond liability, taking
into consideration assets of the Bond Retirement Fund follows:
Fiscal year
1939
Source of funds:
-------
$26,575,820
Discount on bonds purchased --------------------------
----------------
Cash working funds, beginning of year---- -----
Assets in Bond Retirement Fund, beginning of year----------------Net receipts from operations----------------------------------------------Proceeds from bond sales---Net funds available ---------..
...-
-------------
91,366,431
113,235,883
138,957, 879
370,136,013
Use of funds:
79,329,628
Cash working funds, end of year--.-------------------- ------ 149,217, 560
Assets in Bond Retirement Fund, end of year_--------------Bonds retired--
Total---------
---------------------------------------------------------------------------
Fiscal year
1940
$79, 329,628
149,217,560
159,884,275
117,171,577
112,631
505, 715,671
39,702, 549
35,066,998
141,588,825
430, 946,124
370,136,013
505,715,671
HOME OWNE~R'
151
LOAN CO'RPORATION
Income and Expense
During the fiscal year 1940, the income as well as the expenses of-the
Corporation showed a substantial decline. Total income, operating
and other, was $128,527,812, as compared with $142,256,098 the year
before, and total expenses amounted to $105,496,796 as compared
with $125,852,591 in the fiscal year 1939.
The greatest decline in income was in the interest earned on original
mortgage loans and advances. Not only was the number of original
loans on the books of the Corporation reduced, but the principal
amount of the borrower's indebtedness on which interest is charged
is lowering each year through amortization. Another important
factor during the reporting period was the reduction of interest
payments by borrowers from 5 to 4% percent, effective October 16,
1939. Interest on vendee accounts increased because of the growth
in number of such accounts, although the reduction of interest charges
applied to vendees as well as to original borrowers. Gross income
from property changed only slightly. Dividends received on share
investments from savings and loan associations declined as a conse
quence of the lower amount of such investments outstanding and a
reduction in the rate paid by many associations.
Condensed income and expense statement for the fiscal years 1939 and 1940
July 1, 1938, to July 1, 1939, to
June 30, 1939
June 30, 1940
Items
Operating and other income:
Interest on original mortgage loans and advances -------------
$103, 263, 288
$84, 735, 261
20, 698
26, 353, 510
7, 457,939
201, 771
41, 407
26, 267,858
7,253, 960
260,062
Total income_------------------------------------
142, 256, 098
128, 527, 812
Operating and other expenses:
Net interest on bonded indebtedness -------------------Amortization of discount on refunded bonds--------------Administrative expense..---------------------General expenses
----------Property expense-------------------------
72, 199, 571
2, 638, 265
25, 024,998
2, 828,486
23,161, 271
56, 393, 368
1, 466, 777
23, 331, 735
2, 296, 198
22, 008, 718
125, 852, 591
105,496, 796
16, 403, 507
23, 031, 016
34, 921, 055
40,067, 690
18, 517, 548
17, 036, 674
Interest on vendee accounts and advances
-------------------------
Interest on special investments ----------------------------------Property income _ _---- ---Dividends on investments in savings and loan associations --------Miscellaneous ----------------.----------- ----------- --
Total expense...--------..----.----------------Net income before provision for losses _-_----Provision for losses.------_.. ----..
Deficit for period...--..
__......
---....-----------
-. ----------------------------------------
4,958, 892
9,969, 264
The largest drop in expenses-$15,806,203-was in interest on
bonded indebtedness, due to the reduction of such indebtedness and
to savings resulting from the large refunding operations effected
during the latter part of the fiscal year 1939 and the early part of
270198-40-
11
152
REPORT OF FEDERAL HOME LOAN BANK BOARD,
1940
1940. As of the close of the reporting period, however, the average
interest rate on all unmatured bonds outstanding was 2.138 percent
as compared with 2.098 percent on June 30, 1939. This slight
increase was the result of the maturity of a large volume of low cost
bonds in May 1940. Property expense was lower, and administrative
expense declined by $1,693,263, or 6.8 percent.
After provision for losses in the amount of $40,067,690 during the
year, the deficit for the operations of the fiscal year 1940, was
$17,036,674 as against a deficit of $18,517,548 in the preceding fiscal
year. Exhibit 65 shows a detailed statement of income and expense
for the fiscal year 1940.
Cumulative from the beginning of operations to June 30, 1940, the
total operating and other income of the Corporation was $828,310,786,
and total operating and other expenses, $717,472,934, leaving a net
income-before deduction of losses in the liquidation of assets and
provision for losses which may be sustained in the process of liquida
tion-of $110,837,852. After deduction of $187,290,857 for such
losses and loss reserve provisions, the net deficit as of June 30, 1940,
stood at $76,453,005.
A statement of income and expense from the beginning of operations
to June 30, 1940, and an analysis of changes in deficit for the reporting
period are presented in Exhibits 66 and 67.
By resolution of the Board of Directors of the Corporation, specified
amounts are set aside from income each year to maintain a reserve, the
accumulation of which is intended to approximate eventually the
total losses which may be sustained in the liquidation of mortgage
loans, delinquent interest, and property. Although these reserve
provisions were raised from $34,900,000 in the fiscal year 1939 to
$40,000,000 in the fiscal year 1940, the balance of reserves was reduced
during the reporting period since losses charged off during the year
exceeded the reserve provisions for such losses.
Analysis of loss reserves for mortgage loans, interest, and property
Item
Cumulative
to June 30,
1939
Fiscal year
1940
Cumulative
to June 30,
1940
$146,137,153
$40, 000, 000
$186,137,153
Losses:
On mortgage loans and vendee instruments ---------On capital value of property sold ------------------Sales brokers' commissions and selling expenses ---------.
On properties charged off...---------------------------
93,841
44,460, 779
11,912, 362
181, 783
74,869
70,765, 315
11, 520, 579
29, 557
168, 710
2115, 226,094
23, 432,941
211, 340
--------------------
56, 648, 765
82, 390, 320
139,039, 085
89,488, 388
-42, 390, 320
47,098,068
Allocated to reserves ---.---------------------
Total losses----------
-----
Balance in reserves -----.-------------------.
1 Includes reserve provisions for accumulated interest.
2 Includes accrued interest capitalized of $27,415,423.50.
HOME OWNERS'
LOAN CORPORATION
153
The final liquidation of the Corporation is as yet too far removed
to permit any conclusion as to the ultimate financial result of its
operations. There are good reasons to believe that the unavoidable
elimination of hopeless cases was concentrated in the first few years
of operations. The losses involved in this process naturally had to
be set against the income of only a few years, with the result of an
accumulating deficit. Inasmuch as the remaining original borrowers
have a better chance of successfully retiring their indebtedness, the
experience to date can hardly serve as an appropriate yardstick for
prognostication.
5. THE PROCESS OF LIQUIDATION
Risks Assumed by the HOLC
Any evaluation or analysis of the liquidation experience of the Home
Owners' Loan Corporation must be predicated upon a clear under
standing of the risk elements involved in the refinancing loans made
by the Corporation. The most salient feature of the loans made by
the Home Owners' Loan Corporation was, of course, that they were
granted only to individuals who, during the depression emergency,
were confronted with imminent foreclosure. A comparison of the
lending policy of the HOLC with that of private lenders shows that
the Corporation's loans were made (1) at a higher ratio to appraised
value and on the basis of a more liberal appraisal formula than was
customary, (2) in neighborhoods where other lenders were reluctant
to make additional loans, (3) at lower interest rates, (4) for a longer
term, (5) with no charge for delinquent payments, and (6) with greater
leniency to borrowers before final resort to foreclosure.
The HOLC was established to aid distressed home mortgage bor
rowers. In his message of April 13, 1933, to the Congress, requesting
the Home Owners' Loan Act, President Roosevelt stated, "I ask the
Congress for legislation to protect small home owners from foreclosure
and to relieve them of a portion of the burden of excessive interest
and principal payments. . . . To protect home owners from inequi
table and forced liquidation in a time of general distress is a proper
concern of the Government." The original purpose of the Act as
passed by the Congress on June 13, 1933, was again emphasized when
the legislation was entitled "An Act to provide emergency relief with
respect to home mortgage indebtedness, to refinance home mortgages,
to extend relief to the owners of homes occupied by them and who
are unable to amortize their debt elsewhere . . "
From the first, the Corporation required applicants for refinancing
loans to prove that their mortgagees were no longer willing or able
154
REPORT OF
FEDERAL HOME LOAN
BANK BOARD,
1940
to carry the loans, and that reasonable efforts had been made to
refinance the loans with other private lending institutions. Written
evidence to this effect was required. The first Manual of Rules and
Regulations issued by the Corporation contained (p. 4) the following
provision: "It is the primary duty of every agent of the Corporation
to ascertain what effort, if any, has been made by an applicant to
adjust his financing difficulties with his present mortgagees or to
refinance through other sources of mortgage money and to advise
what steps along these lines might reasonably be taken."
Throughout the three-year lending period of the HOLC, attention
was frequently called to the fact that loans would be refinanced only
for distressed borrowers who were in actual danger of losing their
homes through foreclosure and who were unable to refinance their
loans elsewhere. The Corporation received applications totaling
$6,173,000,000, or almost half of the debt then outstanding on owner
occupied one- to four-family homes. Out of this volume of applica
tions, loans were actually closed in the amount of $3,093,000,000.
Thousands of applications were withdrawn because private lenders
finally agreed to refinance the obligations.
It should be noted that the Corporation disbursed $389,527,917, or
one-eighth of its loan volume, through so-called wholesale operations,
established to assist in speeding up the liquidation of closed financial
institutions. In these cases, the borrower was not required to prove
that he was unable to continue his payments. Practically all of these
borrowers were in distress, however, or would have found themselves in
serious difficulty had their loans been called by the liquidating insti
tutions. At that time, private mortgage money was, for all practical
purposes, not available.
The HOLC not only gave its borrowers the advantage of the most
liberal loan terms, but also benefited them in many cases by negotiating
reductions in their previous mortgage debt. It is estimated that, in
the process of refinancing, savings to the borrowers through principal
reductions of $200,000,000, or 7 percent of the original debt, were
effected.
Not only were debts reduced, but borrowers need pay no interest on
that part of the debt which was wiped out. This saving, plus the
reduction in annual interest charges, has meant an estimated saving to
borrowers of $100,000,000 a year. In contrast with the present
4} percent rate, borrowers previously paid up to 7 percent or higher on
their first mortgage loans, and an even more exorbitant figure on their
second and third mortgage loans.
The liquidation experience of the Home Owners' Loan Corporation
must be considered in the light of these foregoing factors. The
HOME OWNE'RS'
155
LOAN COR PORATION
refinancing loans of the Corporation did not constitute outright grants
and the majority of those loans will be repaid with interest. On the
other hand, it cannot be overlooked that the Corporation is exposed to
losses over and above those sustained in the usual mortgage lending
operation because of the care it exercises to grant its borrowers every
forbearance possible before finally resorting to foreclosure.
Debt Liquidation by OriginalBorrowers
Naturally, the liquidation of the Home Owners' Loan Corporation
itself is predicated upon the liquidation of the borrowers' indebtedness
to the Corporation. The following table demonstrates the progress
of the large majority of original borrowers in retiring their mortgage
indebtedness.
Debt liquidation of the average outstanding original loan
Number of original accounts outstanding, June 30, 1940 --Original amount of these loans -----------------------------------------------------Average original amount
Loan balance, June 30, 1940------------------------------Average loan balance, June 30, 1940-----------------------Percent reduction ---------------------------------------
764, 935
$2, 241, 186, 940
$2, 930
$1, 734, 883, 082
$2, 268
22. 6
The above figures show that the present original borrower has been
able over a period of from four to seven years 7 to reduce his indebted
ness to the Corporation by 22.6 percent. Thus, he has made sub
stantial headway on the road toward debt-free ownership. This
achievement is all the more remarkable as the borrowers, when
refinanced by the Corporation, were on the average delinquent two
years on both principal and interest and between two and three years
on taxes.
As would be expected in such a vast relief operation as undertaken
by the Home Owners' Loan Corporation, not every borrower came
through. Some 175,832 loans had to be foreclosed when the borrowers,
though given every opportunity, still failed to meet their loan obliga
tions. On the other hand, 77,141 borrowers who repaid their loans in
full prior to the expiration of the loan contract, did even better than
amortize their indebtedness in regular installments.
Exhibit 68 shows the average outstanding original loan per borrower
and the average loan balance outstanding on June 30, 1940, by
HOLC Regions and by States.
In the future, as a result of the loan extensions granted under the
terms of the 1939 amendment to the Home Owners' Loan Act, debt
liquidation by the Corporation's borrowers will be slower than under
7 The refinancing loans of the Corporation were made in the period June 13, 1933, through June 12, 1936.
156
REPORT OF FEDERAL HOME LOAN BANK BOARD, 1940
the original terms of HOLC loans. The distribution of loan and
vendee accounts with amortization periods of more than 15 years is
given in the table on page 126. In addition, there were 594,246 original
loan accounts and 95,602 vendee accounts on June 30, 1940, written
for terms of 15 years or less.
In its original refinancing operations, the Corporation closed loans
in the total amount of $3,093,451,321. Subsequent advances to
original borrowers for various purposes, and interest converted to
principal, increased this amount to $3,246,633,610 as of June 30, 1940.
At the end of the reporting period, there had been repaid on this
principal $776,798,956, or 23.9 percent of the gross amount of original
loans and advances; and $734,951,572, or 22.6 percent of the gross
amount of original loans and advances, had been transferred to
property and similar accounts, representing, for the most part,
properties acquired or in process of acquisition. This left a net
balance of original loans outstanding, plus advances, of $1,734,883,082
on June 30, 1940.
Reduction of indebtedness of original borrowers
Through June
30, 1939
Original amount of loans closed .-- ------------------ $3,093, 450,641
Advances to borrowers and interest merged with principal in extension
---- -----------------------80,279,664
agreements_---------Cumulative gross indebtedness of borrowers------------------Less principal repayments_--__
----
_-----
-------
Less balances transferred to property and similar accounts-------------Balance of original loans and advances outstanding -------------
3,173, 730,305
601, 002,640
Through June
30, 1940
1$3,093, 451, 321
153,182,289
3, 246, 633, 610
776,798, 956
644,515,428
734,951, 572
1,928,212,237
1, 734, 883, 082
1 Revision.
As was pointed out before, a substantial number of borrowers have
wiped out their indebtedness to the Corporation by voluntary pay
ment in full. During the fiscal year 1940, the loans of 23,454 original
borrowers were canceled in this manner as against 18,769 the year
before, and the amount of repayments in full totaled $57,754,943
as compared with $46,478,954 in the fiscal year 1939. All together,
through June 30, 1940, repayments in full aggregated $183,389,074.
Generally, the loans repaid in full were smaller than the average
loan made by the Corporation. The average original amount of
mortgage loans repaid in full through June 30, 1940, was $2,356 as
compared with an average original amount of $3,039 for all refinancing
loans made by the Corporation. Naturally, the repayment in lump
sums or the refinancing of smaller loans is easier than that of larger
loans; however, the records of the Corporation show a generally
157
HOME OWNERS' LOAN CORPORATION
better performance of the smaller loan accounts in respect not only to
principal repayments, but as to defaults and losses on properties ac
quired.
This experience is corroborated by the fact that foreclosures
were most heavy in the group of larger loans as shown on page 137.
Thus, the conclusion appears to be justified that the smaller loans
generally have fared better than the larger ones. Orderly liquidation
has been most rapid in the former group; trouble has been most fre
quent in the latter category.
Average original amount of mortgage loans paid in full through June 30, 1940,
compared with the average original amount of all loans made
Average
original
amount of
all loans
HOLO Regions
United States - - -------Region
Region
Region
Region
Region
Region
Region
Region
Region
Region
-------
-----------------------
--------- -----------------1-New York..-----------2A-Baltimore ---------------------------------------------------2B-Cincinnati
3A-Atlanta------------------------------3B-Memphis -------------------------------------..4A-Chicago.----------------------------------4B-Detroit-....
------5A-Omaha.---------------------...
-----5B-Dallas __.... -----------------------------6-San Francisco----------------
Average
original
amount of
loans re
paid in
full
$3,039
$2,356
4, 756
2, 957
3, 054
2,325
2,551
3,830
2, 710
2,017
2, 299
2, 322
3, 340
2,621
2,646
2,088
2, 265
3,121
2, 163
1,869
1, 938
1,980
In addition to repayments of original loans in full, a number of
accounts have been terminated by cash sales of acquired properties,
charge-off, and various other methods.
summary of all terminated accounts:
The following table shows a
Cumulative number and amount of accounts terminated
Original loans paid in full or redeemed - -------------------------Cash sales at foreclosure-----Cash sales of acquired properties ----- --------Vendee instruments paid in full or redeemed----------Properties and accounts charged off or consolidated---Total accounts terminated. -.-----
------
Through June 30, 1939
Through June 30, 1940
Number
Number
Amount
Amount
53,676
684
3,000
585
91
$125,638,128
1,918, 077
10, 492,806
1, 585, 301
81, 341
77,141
908
6,038
1, 797
180
$183, 389,074
2, 514, 555
20, 164,481
5, 330, 754
155, 299
58, 036
139, 715,653
86,064
211, 554,163
Recoveries and Losses of the Corporation
The liquidation of the Home Owners' Loan Corporation progressed
rapidly during the fiscal year 1940. The Corporation's task of
liquidation includes the collection of the amount invested in out
standing mortgage loans, plus the unpaid balance on properties
158
REPORT OF FEDERAL HOME LOAN BANK BOARD,
1940
acquired, subsequent additions in the form of advances to borrowers
and vendees, interest capitalized, and necessary expenditures on
properties acquired.
During the reporting period, the net balance of loans outstanding
and the capital value of properties on hand was reduced from
$2,629,952,937 to $2,436,945,645, a reduction of $193,007,292, or 7.3
percent, as compared with a decrease of 5.4 percent during the pre
ceding year. The following table shows the various processes by
which this reduction was brought about:
Reduction of total debtor and property accounts' in the fiscal year 1940
Balance of loans outstanding and properties on hand, June
1939-----------------Plus: Additions during the year:
Advances to original borrowers ------------ $69, 296,
Advances to vendees ---------------------1, 042,
Unposted advances increase ---------------235,
Interest converted to principal (extensions) - 3, 649,
Interest capitalized in property -- _------3, 622,
Capital charges to property-----------_-- 22, 185,
Sales brokers' commissions and selling ex
pense-------------------------------11,520,
30,
$2, 629, 952, 937
326
541
044
054
720
972
579
Total additions--------------------------------
111, 552, 236
2, 741, 505, 173
Minus: Receipts during the year:
Principal repayments by original borrowers175, 796, 316
Principal repayments by vendees and proceeds
45, 404, 119
from property sales ------------------968, 772
Miscellaneous capital cash credits ----------Total receipts_--------------_-Loss on principal sustained during the year ------
Balance of loans outstanding and properties on hand, June 30,
1940
---------------------------------------------
222, 169, 207
2 82, 390, 320
2, 436, 945, 646
1Debtor accounts include original loans and advances to borrowers, subsequent additions to the original
loans, and interest converted to principal by extension; they also include vendee accounts originating from
property sales of the Corporation and advances to vendees. Property accounts represent the capital value
both of property owned and property in process on which a foreclosure judgment has been obtained or
foreclosure sale has been held subject to redemption period; they include unpaid interest on the loan ac
counts transferred to property accounts, the cost of initial repairs and improvements, and acquisition costs,
taxes, etc., applicable to the period prior to the acquisition of absolute title.
2Includes sales commissions and selling expenses of $11,520,579.
On June 30, 1940, there remained to be recovered $2,436,945,646,
distributed as follows: $1,734,883,082 on original mortgage loans,
$277,239,129 on vendee accounts, $424,185,212 on properties, and
$638,223 on unposted advances.
159
HOME OWNERS' LOAN CORPORATION
From the beginning of operations through June 30, 1940, the Cor
poration had made gross investments in loans and properties in the
amount of $3,448,189,599. At the end of the reporting period, this
total had been reduced by $1,011,243,953, or 29.3 percent. Actual
recoveries by virtue of principal repayments on debtor accounts, cash
proceeds from property sales, and miscellaneous cash credits ac
counted for $872,204,868, or 25.3 percent of the gross cumulative
investment; and losses sustained in the liquidation were responsible
for $139,039,085, or 4.03 percent of the gross cumulative investment.
Reduction of total debtor and property accounts through June 30, 1940
Amount
Percent
------
$3, 448,189, 599
100. 00
Deduct:
Repayments on original loans-----------------------------------------Receipts-property sales and vendee accounts --Net miscellaneous cash credits-------- -----------------------------
776, 798,956
87, 010, 903
8, 395, 009
22 54
2.52
.24
Total ----.... ----------------------------------------------------------------------Total losses-..------......---------
872,204,868
139, 039, 085
25.30
4. 03
2,436,945,646
70.67
Gross investment in loans and properties, June 30, 1940 _
.
Balance of loans outstanding and properties on hand, June 30, 1940----------
1Includes sales brokers' commissions and selling expenses.
The liquidation experience of the Corporation thus far has been
very unequal in the different parts of the country. The New York
Region, which comprises New York, New Jersey, and the New Eng
land States, has shown by far the poorest record with respect to re
coveries and losses. In this Region, the ratio of recoveries on loans
outstanding and properties to total gross investments has been only
15 percent, while in the other Regions, the ratio ranged from 26.5
percent in Chicago to 34.5 percent in San Francisco. On the other
hand, the ratio of losses sustained to gross investments has been 5.6
percent in the New York Region as compared with a range of 2.1 to
4.9 percent in the other Regions (Chart on page 160).
The principal reason for this situation lies in the fact that the Cor
poration has encountered in the New York Region the most difficult
home-mortgage conditions of the country. In the States comprising
this Region, recovery has lagged far behind the recovery in other
sections. This is an area, too, that is characterized by real-estate
taxation heavier by far than that carried elsewhere. In New York
City and vicinity, in particular, there is the added element that real
estate and the mortgage structure are still suffering from the effects of
the inflated values and standards which prevailed during the years
preceding the 1929 crash. The difficulties of the mortgage situation
in the New York Region are reflected in a delinquency and foreclosure
160
REPORT OF FEDEURAL HOME LOAN BANK BOARD, 1940
experience unparalleled by that in any other section of the country
and in market conditions confronting lenders with unusual problems
in their efforts to dispose of repossessed properties. In brief, this is
an area of continued home-mortgage distress and of continued insta
bility in the mortgage and real estate markets.
The San Francisco Region, including the Pacific and Mountain
States, and the Dallas Region, including the States of New Mexico,
Oklahoma, and Texas, have thus far shown the best records of
liquidation.
CHART XLVII
REDUCTION OF THE GROSS INVESTMENT IN LOANS AND PROPERTIES
THROUGH JUNE 30,1940, BY H.O.L.C. REGIONS
'
RECOVERIES
LOSSESSUSTAINED
PERCENT
0
UNITED
I-
5
10
15
20
25
30
35
40
STATES
NEW YORK
2A-BALTIMORE
28- CINCINNATI
3A-ATLANTA
3B-MEMPHIS
4A-CHICAGO
4B DETROIT
5A-OMAHA
5 B-DALLAS
6-SAN FRANCISCO
DIVISIONOF RESEARCHAND STATISTICS
FEDERALHOMELOAN BANKBOARD
The reduction of the Corporation's debtor and property accounts
was accompanied by a decrease in the bonded indebtedness of the
Corporation. Total bonds outstanding on June 30, 1940, amounted to
$2,634,808,900, which compares with a peak in bonded indebtedness
of $3,047,046,575 on May 31, 1936, shortly before the refinancing
operations of the Home Owners' Loan Corporation came to an end.
In accordance with the provisions of the Home Owners' Loan Act,
all principal repayments by borrowers have been deposited regularly
HOME OWNERS' LOAN COIRPORATTON
161
in the Bond Retirement Fund and used only for the retirement of
bonds. By Board Resolution, certain other receipts, such as cash
proceeds from property sales and repurchases of investments in savings
and loan associations have likewise been applied to the retirement
of bonds. Through June 30, 1940, repayments of debtors and receipts
from property sales amounted to $863,809,859 and other items appli
cable to the retirement of bonds aggregated $22,550,957, for a total of
$886,360,816. Of this amount, $869,598,703 had been deposited in
the Bond Retirement Fund through June 30, 1940, and $16,762,113
was deposited during July.
The following table shows the disposition of the funds allocated to
the Bond Retirement Fund through June 30, 1940:
$834, 531, 705
Applied to retirement of bonds----------------------------Deposited with U. S. Treasury for retirement of matured bonds
31, 449, 200
on which interest has ceased ------- ------------------Available for future bond retirement_------------------------
3, 617, 798
869, 598, 703
Amount due Bond Retirement Fund for June 1940 deposited in
July 1940--------------------------------------------
16, 762, 113
886, 360, 816
6. ADMINISTRATION AND PERSONNEL
Despite the heavy work load resulting from the extension program,
which brought additional duties to the legal, accounting, and loan
service staff of the Corporation, administrative costs and personnel
showed continued reductions during the period from July 1, 1939, to
June 30, 1940.
Both as a result of increased efficiency and better organization and
because of the declining work load attendant upon the normal process
of liquidation, the Corporation has been able to effect a continuing
reduction in its payroll costs.
On July 1, 1940, the personnel 8 of the Corporation numbered
9,843, of whom 1,274 were employed in the Washington office and
8,569 in the field. This compares with a total of 11,007 the year
before-a decline of 10.6 percent during the reporting period, with
an attendant reduction of $1,639,965 in annual salary cost. At the
height of HOLC activity during the period of refinancing operations,
the Corporation had employed a personnel of more than 20,000. In
other words, the present staff of the Corporation numbers less than
one-half the peak.
8 All personnel figures include employees on a per diem basis.
162
REPORT OF FEDERAL HOME LOAN BANK BOARD,
1940
The Corporation has inaugurated a carefully developed program
for training employees. This program not only improves the quality
of performance, but facilitates promotion from within, by enabling
employees to qualify for more responsible work as openings occur.
Detailed information on the number of employees on July 1,
1940, by departments, divisions, and sections is given in Exhibit 69.
As a liquidating organization,
CHART XLVIII
the Home Owners' Loan Corpora
ADMINISTRATIVE EXPENSES
tion is faced with the problem of
OF THE HOME OWNERS' LOAN CORPORATION
FISCAL YEARS 1936 THROUGH 1940
releasing
gradually substantial
numbers of employees who have
MILLIONS
40
given loyal service to the Corpora
tion and have demonstrated a
5 high degree of competence in their
positions. The Corporation feels
3o -_'
Sa definite responsibility toward
25
these employees and assists them
^F1 !
in securing other employment as
20
-expeditiously as possible.
:
Positions are classified in ac
,
-cordance with the requirements of
_ _^:;i: l
Executive Order No. 6746, of June
:
21, 1934, which stipulated the
, ,:
5, rates of compensation for employ
Sees in emergency agencies. The
01
classification of positions and the
1
1936
1937
1938
1939
1940
OF RESEARCHANDSTATISTICS
DIVISION
FEDERAL HOME LOAN
BOARD
assignment of salary scales are in
accordance with the principle of
"equal pay for equal work." Classifications are continuously re
viewed and positions analyzed in order to take cognizance of changes
in duties and procedures.
Closely identified with classification is the salary administration
program designed to provide equitable rates of pay on the basis of
the work performed and the efficiency with which it is carried out.
Positions are periodically reviewed for the purpose of making adjust
ments. A service rating program is conducted twice a year which
forms the basis for adjustments and promotions and which provides
employees with an appraisal of their work.
During the fiscal year 1940, 22 State, divisional, district, and other
branch offices were closed, reducing the total number of such offices
to 42 at the end of the period. The number of field stations for serv
icing purposes declined from 110 to 54. This compares with a total
BANK
HOME OWNERS'
163
LOAN CORPORATION
of 458 offices operating in the field in November 1934, when the peak
in the number of offices and in personnel was reached. The contrac
tion in organization was reflected not only in salary savings but, for
example, in a reduction of rental space by some 134,000 square feet
during the year, with an attendant decline in annual rent of approxi
mately $86,000.
To coordinate the office space used by the agencies under the
Federal Loan Administrator, the field offices of the Corporation were
CHART XLIX
THOUSANDS
VCCC
Or EMPM
LUTtS
fH C
TOTAL
-
-BY
-
NUMBER
AIAIS"
-
, -,
J
OF
EMPLOYEES
9ll5-
-
-
Ul
1q40
-
-
--
-
-i
____
i
IC
------------
-
)
JU
JUN
-----
-
--
i
!
AJOj~-L
E
EC MR
U
I
SEP DEC. MAR JUN SEP DEC MAR JUN SEP DEC. MAR JUN SEP DEC MAR JUN SEP DEC. MAR JUN
1937
1938
1939
1940
1935
1936
*lncwidesWA.E. Employees
DIVISONOF RESEARCH
AND STATISTICS
FEDERALHOMELOANBANKBOARD
joined in a number of localities with similar offices maintained by
the Reconstruction Finance Corporation and the Federal Housing
Administration. Furthermore, an arrangement was made with the
Reconstruction Finance Corporation through which various HOLC
offices in localities where no RFC offices exist accept applications for
RFC loans and hold interviews in connection with such applications.
_
__
_~
_____
List of Charts
SURVEY OF HOUSING AND MORTGAGE FINANCE
Page
I. Indices of residential construction and industrial
production------------------------------II. Construction other than residential -------III. Distribution of residential construction, private
and USHA------------------------------_
IV. Total families and total available dwelling units in
nonfarm areas-------------_-------V. Number of new nonfarm dwelling units built, by
type of dwelling, 1921 to 1939---------------_
VI. Nonfarm real-estate foreclosures in the United
States ------------------------------------VII. Rate of foreclosures for the United States and
selected States ----------------------------VIII. Cost indices for construction of a standard six
room frame house-----------------------IX. Index of residential rentals----------------X. Home-mortgage lending activity -------------XI. Estimated volume of mortgage loans made on non
farm one- to four-family dwellings, by type of
lender__---------------------------_
XII. Estimated volume of mortgage recordings on non
farm property----------------------------XIII. Percent increase in the number of mortgages re
corded, by types of lenders ---------------XIV. Dollar distribution of mortgages recorded, by type
of mortgagee -------------------------XV. Mortgage recordings from January to June 1940,
by FHLB Districts -----------------------XVI. Home building compared with construction loans
of savings and loan associations------ -----XVII. Annual changes in estimated private mortgage
debt on nonfarm one- to four-family dwellings__
165
3
3
4
6
7
12
13
17
19
23
24
26
28
29
31
32
41
166
REPORT OF FEDERAL HOME LOAN BANK BOARD, 1940
Page
XVIII. Estimated balance of outstanding mortgage loans
on nonfarm one- to four-family dwellings, by
type of lender ----------------------------XIX. Amounts of selected types of long-term savings
held by individuals ------------------------XX. Annual net changes in selected types of long-term
savings_-----------_--------------------XXI. Bond yields, July 1932 through June 1940 -------
42
44
45
47
FEDERAL HOME LOAN BANK SYSTEM
XXII. Number and combined assets of member institu
tions of the Federal Home Loan Bank System__
XXIII. Member savings and loan associations compared
with all operating savings and loan associations_
XXIV. Volume of new mortgage loans made by savings
and loan associations, by type of association___
XXV. Indices of mortgage lending activity by savings and
loan associations, by FHLB Districts ----XXVI. Percent change in assets of member savings and
loan associations during the calendar year 1939,
by FHLB Districts -----------------------XXVII. Mortgage loans and real estate owned by member
savings and loan associations _ --------------XXVIII. Federal Home Loan Bank System, advances and
repayments, January 1936 through June 1940__
XXIX. Composition of consolidated assets of the twelve
Federal Home Loan Banks----------------XXX. Composition of consolidated liabilities and capital
of the twelve Federal Home Loan Banks- ---. XXXI. Distribution of paid-in capital stock of the Federal
Home Loan Banks ------------------------
53
55
60
61
67
69
72
76
78
79
FEDERAL SAVINGS AND LOAN ASSOCIATIONS
XXXII. Number and assets of Federal savings and loan
associations- ----------------------------91
XXXIII. Percent growth in assets of Federal savings and
loan associations, by Federal Home Loan Bank
Districts -------------------------------93
XXXIV. Percent distribution of private and Government
investments in Federal savings and loan associ
ations------------------------------------95
LIST OF CHARTS
167
Page
XXXV. Estimated volume of new mortgage loans made by
Federal savings and loan associations, by pur
pose of loan-- -------------------------__
XXXVI. Growth of the mortgage portfolio of Federal savings
and loan associations ---------_ ___-_ __-- ___
97
98
FEDERAL SAVINGS AND LOAN INSURANCE CORPORATION
XXXVII. Insured associations, June 30, 1935, to June 30,
1940-------_---------------------------XXXVIII. Percent distribution of assets of insured and non
insured member associations of the Federal
Home Loan Bank System ------------------XXXIX. Progress of insured associations, October 1934
through June 1940 --------------------XL. Resources of the Federal Savings and Loan In
surance Corporation ----------------------
103
105
106
117
HOME OWNERS' LOAN CORPORATION
XLI.
XLII.
XLIII.
XLIV.
XLV.
XLVI.
Status of accounts as of June 30, 1940---------Foreclosure operations----------------------Properties owned and in process of acquiring title_
Properties acquired and sold -----_-----__
--Reconditioning cases completed -------- _---_--_
Total assets of the Home Owners' Loan Corpo
ration --------------------_----_----- XLVII. Reduction of the gross investment in loans and
properties through June 30, 1940, by HOLC
Regions ---------------------_
--------_
XLVIII. Administrative expenses of the Home Owners'
Loan Corporation -----------------------XLIX. Total number of employees --------------__--_
270198--40----12
130
136
139
140
144
148
160
162
163
List of Exhibits
SURVEY OF HOUSING AND MORTGAGE FINANCE
Page
1. New nonfarm residential building in the United States,
1921 to June 1940--------------------------------2. Ten metropolitan areas with highest and with lowest
home-building volume per 10,000 population-year
1939-------------------------------------------3. Nonfarm real-estate foreclosures in the United States,
1926 to 1940-----------------------------------4. Estimated number of nonfarm real-estate foreclosures, by
Federal Home Loan Bank Districts and by States,
fiscal years 1939 and 1940------------------------5. Selected figures on residential real estate owned by finan
cial institutions, December 31, 1939 ---------------6. Indices of total building cost, and of cost of materials and
labor used in construction of standard six-room frame
house, January 1936 to June 1940------------------7. Estimated volume of mortgage loans originated on non
farm one- to four-family dwellings, by type of lender,
1929 to 1939 -------------------------------------8. Summary of estimated nonfarm mortgage recordings, fiscal
year 1940-------------------------------------9. Mortgage recordings from January to June 1940, by Fed
eral Home Loan Bank Districts --------------------10. Estimated balance of outstanding mortgage loans on non
farm one- to four-family dwellings, 1929 to 1939 -----11. Changes in selected types of individual long-term savings,
December 31, 1938, and December 31, 1939----------
173
173
174
174
175
176
177
178
180
181
182
FEDERAL HOME LOAN BANK SYSTEM
12. Number and estimated assets of member institutions, June
30, 1939, and June 30, 1940------------------------13. Member savings and loan associations compared with all
operating savings and loan associations--------------168
182
184
LIST OF EXHIBITS
169
Page
14. Number and asset distribution of member savings and
loan associations of the Federal Home Loan Bank
System, by asset size groups, June 30, 1940 -------15. Estimated volume of new mortgage loans made by sav
ings and loan associations, by type of association, Jan
uary 1936 through June 1940---------------------16. Estimated volume of new mortgage loans made by all sav
ings and loan associations during the fiscal years 1939
and 1940, by Federal Home Loan Bank Districts- - - 17. Distribution of new mortgage loans made by all savings
and loan members of the Federal Home Loan Bank
System, according to purpose, fiscal years 1938, 1939,
and 1940
-----------------------------------18. Investments by the U. S. Treasury and the Home Owners'
Loan Corporation in member savings and loan associa
tions, by fiscal-year periods, 1934 to 1940------------19. Combined balance-sheet items for all savings and loan
member institutions of the Federal Home Loan Bank
System, as of December 31, 1939, compared with De
cember 31, 1938
-------------------------------20. Percentage distribution of balance-sheet items for all sav
ings and loan member institutions of the Federal Home
Loan Bank System---------------------------21. Operating ratios for reporting savings and loan member
institutions of the Federal Home Loan Bank System for
the calendar years 1938 and 1939-------------------22. Advances and repayments for the periods indicated, and
the balance of advances outstanding at the close of such
periods, fiscal years 1933 through 1940 ------------23. Advances outstanding, by Bank Districts, at the close of
each fiscal year, 1934 to 1940-----------------24. Interest rates charged member institutions on advances, as
of July 1, 1940
--------------------------------25. Distribution of advances outstanding, by long-term and
short-term advances, as of June 30, 1939, and June 30,
1940
---------------------------------------26. Types of advances made by the Federal Home Loan Banks_
27. Statement of condition of the Federal Home Loan Banks as
of June 30, 1940 ------------------------------28. Investment holdings of the Federal Home Loan Banks at
the close of the fiscal year 1940 --------------------
184
185
186
186
187
188
189
190
191
192
193
194
195
196
202
170
REPORT OF FEDERAL HOME LOAN BANK BOARD,
1940
Page
29. Interest rates paid members on time deposits as of July 1,
1940 -------------------------------------------30. Statement of consolidated debentures outstanding June 30,
1940 -------------------------------------------31. Statement of profit and loss of the Federal Home Loan
Banks for the fiscal year ended June 30, 1940--------32. Total dividends declared by the Federal Home Loan
Banks through June 30, 1940, and the annual rates paid
semiannually for the fiscal years 1939 and 1940-------33. Analysis of surplus and undivided profits for the fiscal year
ended June 30, 1940 -----------------------------34. Statement of receipts and disbursements of the Federal
Home Loan Bank Board for the fiscal years 1939 and
1940 -----------------------------------------35. Comparative statement reflecting, by offices, the number
of Federal Home Loan Bank Board employees as of the
close of the fiscal years 1939 and 1940--------------36. Members of the Federal Savings and Loan Advisory Coun
cil, as of June 30, 1940 ----------------------------
203
203
204
208
209
211
211
212
FEDERAL SAVINGS AND LOAN ASSOCIATIONS
37. Number and assets as of the end of each fiscal year, 1934 to
1940------------------------------------------38. Number of associations chartered, mortgage loans out
standing, and assets, by Federal Home Loan Bank Dis
tricts and by States, June 30, 1939, and June 30, 1940-_
39. Private investors in repurchasable shares and private repur
chasable capital, by Federal Home Loan Bank Districts
and by States, June 30, 1939, and June 30, 1940 ------40. Investments of the U. S. Treasury and the Home Owners'
Loan Corporation, by Federal Home Loan Bank Dis
tricts and by States, June 30, 1939, and June 30, 1940_
41. Summary of new mortgage loans made by reporting associa
tions during the year ended June 30, 1940 -----------42. First mortgage loans outstanding (net), June 1935 through
June 1940--------------------------------------43. Selected balance-sheet items for 1,344 identical new and
converted associations, as of June 30, 1939, and June 30,
1940-------------------------------------------44. Consolidated statement of operations for 1,384 reporting
Federal savings and loan associations, for the year
ended December 1939_ __------------------------_
212
213
216
217
219
220
220
221
171
LIST OF EXHIBITS
Page
45. Operating ratios of 1,398 Federal savings and loan associa
tions, grouped as to size of association, December 31,
1939------------------------------------------46. Average annual dividend rates declared for the calendar
years 1938 and 1939--------------- ---------------
222
223
FEDERAL SAVINGS AND LOAN INSURANCE CORPORATION
47. Number and assets of all insured associations and number
of private repurchasable shareholders, by Federal Home
Loan Bank Districts and by States, June 30, 1940----48. Comparison of all savings and loan members of the Federal
Home Loan Bank System with all insured savings and
loan associations, by Federal Home Loan Bank Districts
and by States, June 30, 1940-----------------------49. Milwaukee Properties Bureau, Inc. and New Orleans Cen
tral Appraisal Bureau ----------------------------50. Condensed comparative statement of condition of the
Security Federal Savings and Loan Association of Guy
mon, Guymon, Oklahoma, February 12, 1940, and June
30, 1940----------------------------------------51. Condensed statement of operations of the Security Federal
Savings and Loan Association of Guymon, Guymon,
Oklahoma, for the period February 12, 1940, through
June 30, 1940 ------------------------------------52. Condensed statement of condition of Comunity Federal
Savings and Loan Association of Independence, Inde
pendence, Missouri, June 26, 1940 -----------------53. Statement of condition of the Federal Savings and Loan
Insurance Corporation as of June 30, 1940-----------54. Income and expense statement of the Federal Savings and
Loan Insurance Corporation for the period July 1, 1939,
to June 30, 1940---------------------------------55. Expenses of the Federal Savings and Loan Insurance Cor
poration for the period July 1, 1939, to June 30, 1940_ -
224
226
227
231
231
232
232
233
234
HOME OWNERS' LOAN CORPORATION
56. Number and percent of accounts extended or revised after
October 1, 1939, by HOLC Regions and by States, as of
_
June 30, 1940 -----------------------------------
235
172
REPORT OF FEDERAL HOME LOAN BANK BOARD, 1940
Page
57. Net foreclosure authorizations on original loans and vendee
accounts, cumulatively to June 30, 1940, by Regions and
by States ---------------------------------------58. Profit and loss on sales of real estate, by calendar years,
January 1935 to June 1940-----------------------59. Analysis of the various elements entering into the capital
value of properties owned and in process of acquiring
title, June 30, 1940_
___
____--------------------60. Percentage of vacant units to units available for rent, per
centage of rents collected to rent accruals, and average
rent per unit, by months, July 1936 to June 1940-----61. Balance sheet of the Home Owners' Loan Corporation as of
June 30, 1940 ------------------------------------62. Investments in savings and loan associations, by States, as
of June 30, 1940 --------------------------------63. Bonds issued, refunded, and retired to June 30, 1940, and
outstanding as of June 30, 1940 ---------------------64. Cash receipts and expenditures, fiscal years 1939 and 1940_
65. Statement of income and expense for the fiscal year 1940_66. Statement of income and expense from the beginning of
operations-June 13, 1933, to June 30, 1940---------67. Analysis of changes in deficit for the fiscal year ended June
30, 1940----------------------------------------68. Average outstanding original loan per borrower and aver
age loan balance outstanding, June 30, 1940, by HOLC
Regions and by States--_------ _-----------_----69. Number of employees by departments, divisions, and sec
__ ----tions, as of July 1, 1940 -------- ,-------__
236
236
237
237
238
241
242
243
244
245
246
246
248
EXHIBIT 1
New nonfarm residential building in the United States
(Thousands of dwelling units]
One-family Two-family Apartment
Year
1921 _......--------------------1922 ...----------------------1923 ------------------------..
1924---------------------------1925 ------------1926
-----------1927------------------------------1928 ---------------------------1929---------.--------------------1930 -------------------
316
437
513
534
572
491
454
436
316
185
147
61
39
42
110
207
219
260
354
167
190
_-------
1931 --------------------------1932 --...---------------------1933 ---.....--------------------1934----------...........------..
1935
--------------------1936
..-----..-------- ---- - -- -.------1937-..---...-..--.
1938 ..................--------1939 -------..-..-------------------January to June 1939-..--January to June 1940.-----------------
70
146
175
173
157
117
99
78
51
28
21
6
4
3
6
10
15
17
22
11
14
Total
449
716
871
893
937
849
810
753
509
286
212
74
54
55
144
282
286
347
465
224
241
63
133
183
186
208
241
257
239
142
73
44
7
11
10
28
65
52
70
89
46
37
Source: For 1921 to 1936: National Bureau of Economic Research. For 1937 through 1940: Department
of Labor, on the basis of building permit reports for cities of 2,500 population or over.
EXHIBIT 2
Ten metropolitan areas with highest home-building volume per 10,000 population
year 1939
Including USHA
Excluding USHA
Percent
Metropolitan district
popula-ts
tion
coyerage
Miami_ ---------------------------Washington._-- ----------------Los Angeles --------------------Houston--- ---------------------------Sacramento--------San Diego_
------------Dallas
_ _------------------------Charleston, W. Va_
------Jacksonville -----San Jose ..-----------------------------
-
Total
units
Unts per
per
10,000 population
Number
units
Units
per
Unitsper
10,000 pop
ulation
92.9
96. 4
81.8
89.1
73. 8
5,049
12, 283
30,595
4 480
1, 208
411.1
205. 3
161.3
148. 2
128 9
3,974
11, 957
29,985
4,120
1,208
323.5
199. 8
158.1
136.3
128. 9
86.1
88 7
66 9
87. 1
61.8
1,959
2,877
1, 200
1, 291
609
125. 6
104.7
165 8
99. 7
95 2
1, 959
2,877
726
1, 291
609
125. 6
104.7
100. 3
99.7
95. 2
Ten metropolitan areas with lowest home-building volume per 10,000 population
year 1939
Including USHA
Excluding USHA
Percent
Metropolitan district
populaeraetion
co
erage
..--------- .----------.--------.
Utica ..
Trenton... --- .
...----------..--------Altoona ------......--- ---------------Syracuse --------------------------- Scranton-Wilkes Barre------- --------Johnstown ---.
- ----------------Reading -------------------------Kansas City --------------------Albany-Schenectady-Troy.----- -----.--.-----Allentown-Bethlehem-Easton_-----------------
55.8
68. 5
71.8
88. 2
42. 4
49.9
80.3
85.8
77. 7
60. 5
Source: Insured Mortgage Portfolio,Volume 4, March 1940.
tal
units
Total
226
524
20
752
138
46
490
399
331
518
Unitsper
per
10,000population
21.2
40. 2
2.4
34.8
5.0
6.2
35. 8
7. 6
10.0
26. 6
Number Unitsper
Number Units per
units
10,000 pop
ulation
13
30
20
74
138
46
90
399
331
196
1.2
2.3
2.4
3. 4
5. 0
6.2
6. 6
7. 6
10.0
10.1
173
174
REPORT OF FEDERAL HOME LOAN BANK BOARD,
1940
EXHIBIT 3
Nonfarm real-estate foreclosures in the United States, 1926 to 1940
Year
Rate per 1,000
nonfarm
dwellings
Number
1926----------------1927 ----------------1928 --------------1929 -------------1930 ----------1931 ---------------1932-------------1933
--------
68,100
91,000
116,000
134,900
150,100
193,800
248,700
252, 400
3. 60
4.80
6.10
7.10
7 90
10. 20
13 10
13 34
Year
Rate per 1,000
nonfarm
dwellings
Number
1934
- -----1935_-- -------1936 ----1937----------1938
----1939------------1940 1----------
230,988
229,550
186,993
153, 025
119, 290
104, 857
38,712
12. 21
12.13
9.88
8.09
6. 31
5. 54
4.09
1 January to June; rate on annual basis.
Source: Division of Research and Statistics, Federal Home Loan Bank Board
EXHIBIT 4
Estimated number of nonfarm real-estate foreclosures, by Federal Home Loan Bank
Districts and by States
State and Bank District
Year
Year
ending
June
30,
ending
June
30,
1939
State and Bank District
1940
Year
Year
ending
June
30,
ending
June
30,
1939
1940
112, 241
86,954
No. 7-Chicago -------
7,989
5, 207
No. 1-Boston ------
12, 614
11, 561
Connecticut -------Maine---------Massachusetts ----------
Illinois---_ ------Wisconsin_---
3, 029
2,178
2, 686
977
7, 786
330
661
174
2, 306
745
7, 450
310
698
52
4, 769
3, 220
No. 8-Des Moines ------
6, 744
5, 352
25,915
19,181
1,093
1,030
3,894
223
504
632
840
3, 250
219
411
5, 501
20,414
4,442
14,739
4, 727
3, 526
387
906
503
227
2, 704
351
643
391
107
2, 034
4,817
3, 303
383
1, 271
1,392
1, 771
327
1,041
898
1, 037
1, 868
1, 429
94
124
515
191
749
195
96
122
379
120
618
94
No. 12-Los Angeles ----
5,490
3, 560
Arizona_-----------_California_. -Nevada....---
181
5, 292
173
3, 373
14
United States .---_
New Hampshire ------
Rhode Island ----------
Vermont---------------No. 2-New York -
------
New Jersey------New York -----
13, 685
11,711
Delaware ------Pennsylvania ----------West Virginia -------
249
12, 875
561
204
10, 837
670
No. 4-Winston-Salem --__-
11,013
8,706
No. 3-Pittsburgh --
---
Alabama------District of Columbia--Florida ----Georgia
Maryland --------------North Carolina -------South Carolina -------.
Virginia_ _-----
1, 704
384
1, 612
1, 494
1, 860
2,230
399
1, 330
1,049
326
1, 307
825
1,802
1, 690
359
1, 348
Iowa ....--
--------
Minnesota
--Missouri -North Dakota ---South Dakota
-----No. 9-Little Rock ----Arkansas -------Louisiana_ - --
--
Mississippi ------New Mexico - -----Texas_------No. 10-Topeka ---- __
Colorado -------Kansas--------Nebraska .-------.
___.__
Oklahoma ---___-_____
No. 11-Portland ----Idaho ----------Montana -------------- __
Oregon.----------
No. 5-Cincinnati ----
10,783
8,916
1, 357
7, 274
2,152
1, 389
5, 519
2, 008
6, 596
4, 502
2, 453
1,496
3,006
Utah_---
-
Washington -----------
Kentucky _ _____
Ohio _---Tennessee-------No. 6-Indianapolis--.....
Indiana.-----------Michigan------......
.----
4,143
Wyoming ------
Source: Division of Research and Statistics, Federal Home Loan Bank Board.
17
175
EXHIBITS
EXHIBIT 5
Selected figures on residentialreal estate owned by financial institutions, Dec. 31, 1939
1-to 4-family Residential
All real
nonfarm
real estate
estate owned homes
owned owned by
by savings
ccm
insured
by
life
and loan
insurance
merciall
associations
banks
companies
FHLB District
United States------------------------
Properties
owned by
the Home
Owners' Loan
Corporation 2
$684, 547, 000
$247, 819,000
$182, 688,000
$462, 229,879
57, 623,000
13,053,000
12, 735,000
53, 987, 544
776,000
2,139,000
53,388,000
463,000
731,000
126,000
4,430,000
2,000
8,277,000
74,000
198,000
72,000
3,316,000
955,000
5, 794,000
140,000
1,777,000
753,000
9,884,062
877, 774
37, 904, 871
748, 628
4,044,230
527, 979
No. 1-Boston.------------.--.---Connecticut
------------------Maine
_------------------------------Massachusetts -----------------New Hampshire
-----------Rhode Island --------Vermont _---------------------------
238,389,000
81,441,000
57,870,000
227,036,139
201, 281,000
37,108,000
18,215,000
63, 226,000
23,490,000
34, 380,000
66, 707,872
160,328, 267
89, 859, 000
17, 617, 000
67, 499,000
23, 386,289
288,000
86, 525, 000
3,046, 000
617,000
15, 662,000
1, 338,000
793,000
64,269,000
2, 437, 000
177,059
22, 217, 637
991,593
13,370,000
25, 501,000
9,113,000
19, 663,872
Virginia-----------------
2, 633,000
609,000
131,000
237,000
4, 925,000
2,369,000
535,000
1, 931,000
8,252,000
471,000
3,098,000
6, 518,000
273,000
5, 353,000
570,000
966,000
1,041,000
1,012,000
656, 000
2,262,000
1, 519,000
844, 000
168,000
1,611,000
2,695, 209
123,043
1,118,512
1, 587,358
8, 202, 557
1, 471, 720
420,005
4,045,468
No. 5-Cincinnati---------------
97, 085, 000
25,085,000
12,191,000
29, 377, 597
15,292,000
80,911,000
882,000
942,000
17, 749,000
6,394,000
1,506,000
9, 770,000
915,000
2,945,971
23,661,693
2,769,933
23,513,000
21,500,000
3,888,000
15,677,718
11, 691, 000
11, 822, 000
1,883,000
19, 617, 000
2, 736,000
1,152,000
7,137,851
8, 539, 867
90, 285,000
24,734,000
4, 748,000
30,173,868
41,483,000
48,802,000
24,238,000
496,000
3,594, 000
1, 154,000
14, 157,096
16,016,772
16,124,000
11,152,000
1,392,000
22,450,315
2,057,000
1,075,000
11,940,000
761,000
291,000
1,041,000
3,445,000
6,518,000
74,000
74,000
145,000
264,000
855,000
88,000
40,000
2,103, 584
3, 704,039
13,480,946
1,157, 282
2,004, 464
11, 202,000
5, 754,000
2, 243, 000
12, 795,922
273,000
7, 627,000
296,000
105,000
2, 901, 000
570,000
25,000
1, 214,000
5,000
3,940,000
160,000
429,000
532,000
14, 000
1,108,000
1,802,797
3,992,976
1,659,855
87,716
5, 252, 578
21,931,000
4, 709, 000
360, 000
18,124,037
2,030,000
11, 514,000
3,617,000
4, 770,000
620,000
917,000
520,000
2,652,000
131,000
147,000
49,000
33,000
1,168,674
6,535,528
3,849,258
6,570,577
No. 2-New York -----------------------.-New Jersey. -----.
New York
---------
---------------
No. 3-Pittsburgh --------------------
Delaware------------------------------Pennsylvania-----------------------------West Virginia ------
No. 4-Winston-Salem ---------------Alabama ----------------------District of Columbia-Florida -- -----------Georgia----
-
-----------
--------
-
------------
Maryland-----------------------North Carolina------------------South Carolina--------------
Kentucky------------------------------Ohio --- __ ----- --------Tennessee -----No. 6-Indianapolis-----------Indiana--------------------------------Michigan --------------------------------No. 7-Chicago ----------------------------Illinois ----------------------Wisconsin ---------------------No. 8-Des Moines ----------------------Iowa----------------------------------------Minnesota ------------------Missouri
-----------------North Dakota--------------South Dakota---------------No. 9-Little Rock --
--
--------
--
---
Arkansas---------------------. -- ------------Louislana ..-----Mississippi--------------------New Mexico-----------------------------Texas-...----------No. 10-Topeka .---------------------Colorado-------------------Kansas .
.--------Nebraska ------------------------------.
Oklahoma--...--------------------
See footnotes at end of table.
r---~zr-------r--------~.=~L~
-------------
176
REPORT OF FEDERAL HOME LOAN BANK BOARD, 1940
EXHIBIT 5-Continued
Selected figures on residential real estate owned by financial institutions, Dec. 31
1939-Continued
All real
1- to 4-family
estate owned h nonfarm
FHLB District
by savings
and loan
associations
No. 11-Portland---
-
---------------
$9,660,000
Idaho -----------------78,000
.
-------105,000
Montana-----------Oregon.-----------------------------Utah
---------------------Washington
-------_-------_------Wyoming
No. 12-Los Angeles----------------Arizona-- .
------------------California.--------------Nevada-----.--------------------------Hawaii---.-------------1
Excluding possessions.
December
30, 1939.
2
Capital value.
Source: FDIC
Residential
Propertie
real estate
owned
owned by
by
homes owned owned by
the Home
by life
insured com-Owners'Loan
insurance
Corporationmere
companies
banks
Corporation
$7, 530,000
$307,000
$4, 755, 320
1,391,000
5,655,000
2,123,000
308,000
25,000
424,000
3, 346,000
25,000
3, 668,000
42,000
2,000
13,000
182,000
37,000
60,000
13,000
284, 598
192, 628
654,258
1,085, 303
2, 469, 888
68,645
15, 506,000
9, 743,000
10,342,000
4,801,258
35,000
15,422,000
16,000
33, 000-----
124,000
9,615,000
4,000
139,000
10, 201,000
2,000
-------
988,892
3, 781, 670
30,696
Report, Assets and Liabilities of Operating Insured Banks,
EXHIBIT 6
Indices of total building cost, and of cost of materials and labor used in construction
of standard six-room frame house
[Average month 1936=100]
Mate
rials
I
1936
January ------- February_--------March ----April-------------------May -------June------------July_---------August ------------September --------- --------October-November-------------December ------
Labor
I
--
Materials
Total
f
II
98.7
99.0
99.1
99.2
99.4
99. 5
99. 9
100.3
100.4
100. 7
101.4
102. 5
98.1
98.1
98.2
98.8
99. 4
99.9
100.3
100. 5
101.0
101.5
102.0
102.2
98. 5
98. 7
98.8
99.1
99.4
99. 7
100.1
100.4
100.6
101.0
101.6
102.4
January--------_
---February_---March_-----April-----------May -------------June------------------July -------August -----------September ------October ------------November------------..-------December
104. 0
105. 6
107. 7
109.1
110. 0
110.2
110.5
110.6
110.3
109.8
109.2
108.1
102. 7
103. 4
104. 7
106. 7
107. 7
109.5
110.6
110.9
111.0
111.2
111.2
111.0
103. 6
104. 9
106. 7
108.3
109.2
110.0
110.5
110. 7
110. 5
110.2
109. 9
109.1
1938
January-----------February----------March----------------
107. 2
106.5
105.7
110.9
111.0
111.4
108.4
108.0
107. 6
1987
--
-
Labor
I
Total
I
1938-Continued
April -----_
105. 2
May .---------104.8
104. 6
June -_
---104. 2
July_-August ------103.4
September_-----103.4
October .
.----------103.3
November ---- _-_103. 2
December---------103 1
111.4
111.3
111. 5
112.0
112.3
112.4
112.1
112.1
112.1
107. 2
106.9
106. 9
106. 8
106. 4
106.4
106.2
106.1
106.1
1939
January--------------February-__---.. - _
March------.....
April-..
--May
------June _------July...--------August -------September_ October _.... ..---November ---------.
December....----------
103.0
103.0
103.0
102. 9
102. 7
102. 5
102. 4
102. 3
102.9
103.6
104.4
104. 5
111.9
112.2
112.4
111.9
111.5
111.3
111.3
111.2
111.2
111.1
110.8
110.6
106.0
106.0
106.1
105. 9
105. 6
105. 4
105. 3
105. 2
105. 7
106.1
106. 5
106. 6
1940
January.--__. _______
February -------March---......-----------April
_-----May_-----------------June--------------------
104. 4
104. 5
104. 5
104.3
104.4
104.4
110.2
110.3
110.3
110.0
109.9
109. 7
106.
106.
106.
106.
106.
106.
Source: Division of Research and Statistics, Federal Home Loan Bank Board.
I
4
5
4
2
2
2
177
EXHIBITS
EXHIBIT 7
Estimated volume of mortgage loans originated on nonfarm one- to four-family
dwellings, by type of lender
[Millions of dollars]
Type of lender
1929
1930
Savings and loan associations__ $1, 791 $1, 262
400
Insurance companies .-------. 525
612
484
Mutual savings banks----Commercial banks and their
670
trust departments .---.
1,040
Home Owners' Loan Corpora
tion_--_- -__-----------1,120
720
Individuals and others 1--Total -
-----------
1
5,088
1939
1931
1932
1933
1934
1935
1936
1937
1938
$892
169
350
$543
54
150
$414
10
99
$451
16
80
$564
77
80
$755
140
100
$897
232
120
$798
242
105
$986
274
112
364
170
110
110
264
430
500
560
610
175
103 2, 116
100
150
722
443
154
605
27
723
89
669
149
740
836 2,923 2,150 2,184 2,499 2,463
2,871
400
-
3, 536 2,175 1,092
Includes fiduciaries, mortgage, title, and real-estate companies, construction companies, philanthropic
and educational institutions, fraternal organizations, State and local governments, etc.
Source: Division of Research and Statistics, Federal Home Loan Bank Board.
178
1940
REPORT OF FEDERAL HOME LOAN BANK BOARD,
II&
0
00
00CD000=0000
00 00000000
L
00
00
00if00
000000000000000-qld4
0o0
I- 000004000000
00000
0 00000C
m0
H
t0t-
~
M
to o 1CC1 -4 00
4.
M
q00
o00m
______
M
m000
0)
-
000
(M
0000'
m
0o00004X
l
m X000
0
X0
w00
00000r4
0o0
ce
--Voo000
t 0000
cie
'-q
114, i
otoX6' 4i
000
t0(00to
00
m0
00
00
K..Z
___
0.
00t-C)00
q0
00
0
00)
00
tCqC
00 "
000
o
oM-o-M-
00
M00a0m
0)
0m00Ntor0400
001 0000
00 CM04 M 1.
t-0000000o0)0D0Idq
0..
N
00
,::i0
00
-00to
t
q
I00
e
0
________
--
m0
-000D0C0
0)00=000-c
m0
C 0
00tmm
-t
00qto -
___
-4
0
0-0000
m00-000
cc to0(=0I-00
c~caa
i;
0
0
00000-000000-0N
0000000000000000
r- qN oqM-&
1t-
o
oz
Q)
-q0
0-00-000
.00000i
1114
00i
000-)
-04
"4
m0
1O4Op
0
0)
1114 00000t
"1:4 0N=0-0000
00000000000
w
00
N0
0
0q
0
N)
0001001
mzm00
t-
L -000C00000to
00
0000
00
~~
-
-
- - - -_
0 w000010
Iq
4-')
000
C0
0CD 000-
V0
Q0~)
00
-
4-:
0)
0
)
v0-040
00
00
0
0I
0
00
0-0
(=0
0
000000 -CM-i0 00
I-0)
0)0)
o
t0o
ca
01
_
0
-4M t
00
r-0
_
_ _
000
_
_
000
0-00000000)
0-
U'
00
to
m C cq (
00- 0000cq
0
0000000-t-4
0
00
0
u MMU
qI
0
00v-I
C=C. =C
C
0
000
0000
M
000000000-0-
00 l000Go000
000
00
-
C00
000000t-000
00
0000000
0
400000 00000-0
000000
000Cc
0000000000-
00000t4
NI
m00
00000
0000000000
-
-
0000
000X0 060-
00
00C60000-aa10400
C1
0000
00
00
00t00000000O
u
4.400.0
_
04 00000
t000
00-4 000o00
0
C4
000
10
0
00D o
0
0004- 00
M0-000000
0000-00000
~-4.Q
N
00C0w0
- 0)00000N
"
N00 to0000-00t-0=
!:H 00000000000
00
-..
000000000LO
00
Ca 0
bO0
t-000
00000000
1
oo l)
c 0-000
_4 m
=
00000
M
r.40 N000
-0
X000
00
0
0
t-t-
00
0000
00
C00
06
b00U000
t-
t
cl-C
14)
00
w 0c0000000-0-14
IT00-0000000
?-1 m $0i
0))
00
1-
'0000
___I
0)
*~~~
0
r0-0.0
0I0
-qCD0-
0000 TlU
*q
0<=0
U000000
w
m
00
0-00
w00 00000
00 t,- OC1
,-0o
r4-4
m
0
000C0
V
=t-Mr:
WM _
-_W___
00000
0000000-:Cla
-00
M=
0000or
0 000
--0000
00" 00
to-00 000000000C
r00000 0
100000
00r- 0000000000000-?")m
00
00)
N
- wNNc"4
I
o0$m C14'li
00cc00i
~f0
-q4__
-0
'0
C00
0
00
N0
MLoN_
0000
0
qMr-qx-m
________NX
0000000)0
0-0000000
_
00
0
___cq
c
000
000
,04-'
00G
40
00o
-
000
0q
0
0
0DC
00
~ ~
0e00CO
w z
0)
ce
~ ~ w
t40;Z>
z
z
0'0~,4-2.
.
00
~
.4
0
0
~
ca00)0'-P-4
0
C
W
179
uEXHIBIT'S
CC CO
cI- f
CC
14:v
00
P-4
cq
COCOC-0COl
C 0CC CCCC
0 COI-CC
C- C0
to m C
0
CC
06a
r-4 00
C14
oo CO
C-C CCO
coOCi
CO COkCC OCO
CCCI
c*5
00
C-i
.
0
C0
CC
l)-
CCCCCOC
C o c yc m
'COCC
00CC m
00 COCCCJCC~l
=
0-4
40CCEDCO
CC
~
CO CC CC
CC
C
oC-
C
CC
c c
C
c
C
CC
COC
kC
Ci
w
IN IN
10
L4C.
CO 4
CC C-C'
o
C
-.COCC:
4N
"CCO Cq
c
CC
LCO COxCt C
C
CO
C
IN
0C6Ce
CCD
oNC
II
OC--
-" CC
4CO=-
CC
t-
C
OCO4CD
0 C4
o
m44CO
a44
0
i4c6
,-Cc
c-m
COM
CO~
CCO
CO
CO~
CD "
CO
0
6
cct
"Ico C-CCCC
COC:V-V
CC CC
r-I
CO
i 1 tC
O
4ci
vZ
C
m=
c
h
Co
COCO
ocr
P4
cc00C1O-CC
=O
D Cr-CW.) c
~0
C COCCCOl
'D00 C-C oCOCO
CCCOCCCCCOCcCC
cc0-CO
CceOINCCCOCO11
00C= 4
4CO C"-CC<=C
V t2 "- r4=
l
r
i T
40 4
OV
"400'cc
m
IN
oo
ccO?-
ci
C)
CC~
CCCCOCO
=CCO q
(M
r
c- 0CO
oCCCr
-CCCCCO
CC CCCOCO
CCC-COCCCCc6OciOCOCOCO1-CC-C-COCOCC
-tcc m
't-CC
4
4
X
CCCCCC
s~~~
0c c
tzm
t-
:
C
CO CC
CC
C- 0CoCC
- CO
CC-CC
-
CCCCDOwCC
CLOCcCmCC
WOCC
CO
C C0
=
.
?--CO
COM
CCU)
CCtCCUoC"
C
r
CCCCC
CI-CCCCC=Ccc
0 00
C- t cCCCCCC CO COCCCCO
CmOCCLCOCC
coCCCli-1OC14O C 11CCCOO
-CC.4'
CCC'CCCCTCCie-T
C
L
OI ?"
L
OO
CO
CO
DC
cC
C
COMO ,
L6CCCC COC6
CO
~~
C
CD
LOC
'"di C
r-LO
C
CO
Ct COCO
C-COCCCCC
9
(Oc~l~-r
300
C- CCCC CNoCoOm
CziX
OC
tv
C-OCm LD
.d4
CO04CC,
C-cs
C "4
?.-1
r-4
O CO CO
CC
rCC
r0
CCC0
C
CC
C
0
cC
C-
ci
0
oCo0=c-
C-CO CC
COCO
0
ci -
CC IeCCCCO C
CCO
COCCC
O
-4CCCCmCC
C
CC
-C
CO -qt4
COCCCOCCCC CC wC
COOCCOM- C0
m CN
C
CtCO
Cm
CO
CO
r-'-C
CO
0
I0 4COCC
c
:c6c
4
CO)
cC-
-L
mCO
-4
CC
0O CO
'-.4t
4 CC 0
a4
4-It
4
- 4
Cc 4C0CCO0
4
444
CO
4
444
4O
'0
CO CCCO
C
C CC
CCC- CC
m
CO
4coC
oCO
t-oC=--tl
C =CC
CC CO
CC 0tOO
CII 64 oIN
M
IM
co cc
~~ ~
~ ~
CCCOCC -4CC
0
COCC
CCr-o
=CC
COOCCC
e 4ao6,,4'
IrZ
-4 r -I ?-I
OCOCOC-O
CO
X C
"14
c
COOOO
c~c~c6,-Zco-
0
Oi
I-
4
COOO
CO
LCCCCOC
o'C C
CD
c0
Im
I
C-CC 00C
CCOI
tI loo
- c0I-IC,0-1144- COc ko
-o'm
COCIC
CCCCCCCCCCC
II
ES
0
C
cc
C3
CC C-O
CoCo
0
COO o=
CCCCC-C
C)
CC
O CCCOCCCco
1
Co
L-OCC1CO
OC-OCC
c c O
"COO 0C- OC-CCCCCC 0
CC C
"1
C
o
CC CCCCCCMO
CO-COCOCOCC-CO
CO
CO
CCiCC?- COC
mcq cc4I'l
coCO
C
o m
=
r C-4
I
"q
r-4
"
rr"
N
CCCCCO0-C-LC
CO
COC
CC
CC
CCCC
o
I
I-ccC0
0 0
":vNt X0 C*co
00 r-4
V
CC
CCC
OC
CC 0CCC
0
C o CCO
CO:
COO1
C
ca
0CCV- Cfo
0cooOCC
ICCCI-N
CO
C-q
CCOC
CCCC-OCO
CqCrCO-CC
- COC-
CC6OCOOCOOCOCCOvO0
O CCO-
co4
ra
CC=
O
1 M
flce 0
C
0
0
C>
0
CC0 CI-O
C
CO
C-
COCOC
I CC -C O
C
CO
IIo
pp
C C .4N
'l m
COC
C11t OC
t
CO
CO-c=
COCCCO)CO
mCCq
ciq
C-CCOCCo
C0
o
C
0C-C-CC
CCO
0O
CC-CCOCO
c
40
W "
-4--.,,..
c
oci
C
I
CdM,4
C~
r-
1.
CA
MrcCO-rrt
GV
nO
C-
CCOOCO
I
Ci
O
-oC 00C CO
CC
cc CC-CCC-to
00 C-Co
t
&
cW)
C
C
t0C O
MCC
o
IZ1*N
) CCmCOCCC
-CO
q
C
C
C
C
OOC
o
OC<DtCO
CO1
CO
"
c
C
CCt CCCCCO
COCCC
0
cm
m
C
COC
COCC-CCCCt
tX
cC
~~~O
C; co~l(~(
0
C43
C
C
CC
CO6 CCOC
CC ce
4CC, coMrce
N -4 P.-r
00In
COm
1
"00C- tj
0
ce (Le
CO
COt-C
mCC CC
= -r-iM
iCC0CCC
C
CC
CO
CCCCCO-CO
I
+D
C)~~~
C~~
1-4
o
0CC-CCo
"CCO
cO
l
CCO
=
t
Le
CC
.,-o ;;
0
4
Io
4
0
4
9 0 =(=
m
?.I::::.:
:W=::',m
0
:o "::CI:-4=
C-06
c'I-
4
C
I
I
C oC
4)L 4
4:::
44444
= 4,,c,4
m
C44
t
444.0C
t
C C
0
cc
toCr4
"-C)
z z
C)
0~
414*
0
-o.4
m c)*
CC(Z-'
'0:)
.C. I
~ ~COLO)
1
z
bp
100
z
z
z
z
Il~
I1
(z
180
REPORT OF FEDERAL HOME LOAN BANK BOARD,
1940
EXHIBIT 9
Mortgage recordingsfrom Januaryto June 1940, by FederalHome Loan Bank Districts
[Percent of total dollar volume, by type of lender]
Savings
Banks
and loan Insurance
scom- andtrust
associa
panies
conpanies
tions
--------
United States
Percent
25
37
5
12
22
13
11
100
16
34
45
40
37
39
6
4
5
4
3
4
20
18
8
11
15
11
24
21
21
25
19
26
18
15
12
12
13
12
16
8
9
8
13
8
100
100
100
100
100
100
21
5
20
16
19
19
100
23
19
6
4
28
15
3
24
21
19
19
19
100
100
-----------------
No. 3-Pittsburgh --------
-----------
Delaware-----------------------Pennsylvania.-------------------West Virginia-------------------No. 4-Winston-Salem ----
Total
Percent
8
Connecticut ----------------Maine-------------------------Massachusetts-------- ----------New Hampshire ----------Rhode Island
----------------Vermont---------------
New Jersey ..
New York --------.
Other
Indi- mort
vidualsmot
gagees
Percent
32
No. 1-Boston --------------------
No. 2-New York...
Mutual
savings
banks
Percent Percent Percent Percent
4
16
15
100
29
6
30
3
17
15
100
16
31
27
14
5
8
28
28
41
10
2
(1)
19
17
16
13
17
8
100
100
100
17
(1)
20
15
100
29
15
25
18
17
13
26
20
24
22
17
9
9
13
11
15
100
100
100
100
100
100
100
100
1
9
12
100
1
7
9
9
6
9
34
100
100
100
39
9
Alabama-----------------------District of Columbia ------------Florida------------------------...-------------------Georgia---Maryland--------------------------------North Carolina -------------South Carolina----------Virginia .-------------------------
15
45
32
31
52
52
32
35
15
7
15
15
3
8
9
6
--
47
8
50
52
17
13
7
11
24 ----22
29 ------
28
13
36
(1)
10
13
100
43
12
29
(1)
8
8
100
No. 5-Cincinnati
------------
-
-----
Kentucky----------------------Ohio--------------------------Tennessee ------------------No. 6-Indianapolis
Indiana----
----------
--------
17
--11
------11
----27--16
3
14 -- --22
----24
23
17
14
42
11
16
100
36
7
21
(1)
14
22
100
37
32
8
6
19
26
(1)
(1)
10
26
26
10
100
100
--------
29
10
21
()
21
19
100
Iowa -------------------------Minnesota--..
-------Missouri-----------------------North Dakota --------South Dakota --------
34
39
18
43
24
11
15
6
11
20
30
16
20
14
32
15
18
27
12
20
10
10
29
20
4
100
100
100
100
100
34
15
10
18
23
100
38
54
24
33
27
9
7
12
1
21
17
5
17
22
9
19
13
25
32
18
17
21
22
12
25
100
100
100
100
100
19
17
100
36
11
14
14
23
14
11
18
100
100
100
100
Michigan
.-------------
No. 7-Chicago..---------------------Illinois .
.-------------------------Wisconsin----------------------No. 8-Des Moines
No. 9-Little Rock----------------------------Arkansas
Louisiana----------------------Mississippi---------------------New Mexico--- -----------------Texas ....-------------------------No. 10-Topeka....---------Colorado-----------------------Kansas .------------------------Nebraska-----------------------Oklahoma......----------- -----
------2
-----
41
7
16-----
25
43
53
44
4
8
15
6
12
24---7
18-----
..----...-------....-----
--------
181
EXHIBITS
EXHIBIT 9-Continued
Mortgage recordings from January to June 1940, by Federal Home Lcan Bank
Districts- Continued
Savings Insurance
m
associaco panies
- tions
Percent
31
No. 11-Portland-------------------------------23
Idaho -----------39
Montana--------------31
Oregon .---------------------------------33
Utah-----------------Washington--------------------31
Wyoming----------------------36
No. 12-Los Angeles--------- -------- 18
Arizona--
---------
California----------------------Nevada----------1 Less than 0.5 percent.
Percent
7
3
7
9
7
6
(1)
6
Banks
Cn
panies
Mutual
savings
banks
d
Other
vidualsmortgagees
Total
Percent Percent Percent Percent Percent
26
3
15
18
100
100
32 ----- .
25
17
---28
6
100
20
1
22
25
100
12
10
5
100
45 ---------27
6
8
22
100
23
(1)
29
12
100
46 --21
9
100
14
3
33 .----
43
7
100
18
14
7
2
46 ---35 -----
20
42
9
7
100
100
EXHIBIT 10
Estimated balance of outstanding mortgage loans on nonfarm one- to four-family
dwellings 1
[Millions of dollars]
Type of mortgagee
1929
1930
1931
1932
Savings and loan associations- - $7, 008 $6, 984 $6, 485 $5, 756
Insurance companies------1, 626 1,732 1,775 1, 724
Mutual savings banks
----- 3, 225 3,300 3,375 3,375
Commercial banks 2----2, 500 2,425 2,145 1, 995
Home Owners' Loan Corpo
ration ------------ ------------Individual and others 3--- -7,200 7, 400 7, 500 7,000
1933
1934
$4, 906
1, 599
3, 200
1,810
$4, 012
1, 379
3,000
1,189
1935
1936
1937
$3,467 $3, 361 $3, 480
1,281 1, 245 1,246
2,850 2, 750 2, 700
1,189 1,230 1,400
1938
1939
$3, 630 $3, 957
1,320 1,490
2,670 2, 680
1,600 1,810
103 2, 209 2, 897 2,763 2,398 2,169 2, 038
6, 700 6, 200 6,000 6,000 6, 180 6,332 6,440
Total----------------- 21, 559 21,841 21, 280 19,850 18,318 17,989 17, 684 17,349 17,404 17, 721 18,415
1 The estimates of the outstanding balance of nonfarm home-mortgage loans by type of institution for
1939 and the revised statistics for the immediately preceding years have been developed from exhaustive
studies of the mortgage holdings of savings and loan associations, life insurance companies, mutual savings
banks, commercial banks, and the Home Owners' Loan Corporation. The figures for the Home Owners'
Loan Corporation reflect the actual balance of mortgage loans held and advances outstanding. The figures
for savings and loan associations are based on a compilation of the annual reports of Federal savings and loan
associations to the Federal Home Loan Bank Board, and of the annual reports of State-chartered savings
and loan associations to their supervisors and to the Federal Home Loan Bank Board. The estimates for
life insurance companies were developed from study and summary of detailed reports which were received
from a sample group of insurance companies holding more than 85 percent of life insurance company assets.
These schedules provide a detailed break-down of their mortgage-loan portfolios. The estimates for mutual
savings banks were developed by the use of data on the total mortgage holdings of these banks, as reported
by the Comptroller of the Currency, and the National Association of Mutual Savings Banks as well as
certain additional material collected by the Division of Research and Statistics of the Federal Home Loan
Bank Board. As a result of this investigation, it was possible to segregate mortgage holdings of mutual
savings banks into the farm and nonfarm element and further to separate the nonfarm element into mort
gages on homes and other-than-home property. The project covered mutual savings banks in the States
of New York and Massachusetts, and involved institutions containing more than 50 percent of all mutual
savings bank assets. For commercial banks, use was made of a study conducted at the end of 1934 by the
Federal Housing Administration in conjunction with the Comptroller of the Currency, the Federal Reserve
Board, and the Federal Deposit Insurance Corporation. This canvass segregated mortgages on homes
from other nonfarm real-estate holdings of the reporting banks. The relationships shown then have been
applied to total mortgage holdings of the banks for earlier years. In recent reports the Federal Deposit
Insurance Corporation has provided a segregation of mortgage holdings of insured commercial banks.
Adjustments have been made in the estimated data on the basis of the Federal Deposit Insurance Corpo
ration's reports as well as the F. H. A. reports indicating increased mortgage lending by commercial banks.
Finally, in the case of individuals and other types of mortgagees, estimates have been developed for recent
years on the basis of studies of mortgage recordings by type of mortgagee conducted by the Division of
Research and Statistics of the Federal Home Loan Bank Board. For earlier years the estimiates have been
prepared after reviewing many studies, bulletins, and researches of various Government and private agen
cies. Included in these sources are the Financial Survey of Urban Housing, the refinancing operations of
the Home Owners' Loan Corporation by type of mortgagee, local surveys conducted by the National Asso
ciation of Real Estate Boards, special surveys of the Federal Home Loan Banks, figures supplied by the
New York State Mortgage Commission, sundry reports of the Mortgage Bankers Association, and hearings
of the Sabath Committee investigating real estate bond holdings committees.
2 Does not include trust departments of commercial banks.
3 Includes trust departments of commercial banks, fiduciaries, real-estate bond companies, title and
mortgage companies, philanthropic and educational institutions, fraternal organizations, construction
companies, RFC Mortgage Company, Federal National Mortgage Association, etc.
Source: Division of Research and Statistics, Federal Home Loan Bank Board.
182
REPORT
OF FEDERAL HOME LOAN
BANK BOARD,
1940
EXHIBIT 11
Changes in selected types of individual long-term savings
Dec 31, 1939
Dec 31, 1938
Life insurance companies 1 - ----------$21, 857,993, 609
Mutual savings banks 2
---------10, 235, 431, 452
Insured commercial banks 3--------------------------- 12,195,956,000
Savings and loan associations----...
--- ...--4, 391,828,000
Postal savings 5-----------------------------------1, 286, 316, 255
2i percent Postal Savings bonds -----------------------91,971,840
U. S. Savings bonds 7--- ----------------------------1,441, 547, 895
Total..................------------------------------- -------
51, 501, 045,051
Percent
change
$23, 381,052, 834
10, 480, 684, 326
12, 622,325, 000
4, 417,895, 000
1, 314, 637, 649
89, 540,440
2, 208, 880, 724
7.0
2.4
3. 5
.6
2. 2
-2.6
53. 2
54, 515, 015. 973
5.9
I Estimated accumulated savings in United States life insurance companies. Represents reserves plus
unpaid dividends and surplus to policyholders, except that deduction is made of policy notes and loans and
net deferred and unpaid premiums. Source: Spectator Life Insurance Year Books.
2 Deposits. Source: The Month's Work, published by National Association of Mutual Savings Banks.
3 Deposits evidenced by savings passbooks. Assets and Liabilities of Insured Commercial Banks. Re
port No. 12 of F. D. I. C.
4 Estimated private investments in savings and loan associations, including deposits, investment securi
ties, and shares pledged against mortgage loans. Includes estimates for private investments in State
chartered savings and loan associations in Maryland, South Carolina. Colorado, Idaho, and Arizona.
Source: Compilation by F.H.L.B.B. Division of Research and Statistics of reports by F.H.L.B. System
on Federal savings and loan associations and by State banking commissioners on State-chartered savings
and
5 loan associations. Figures mostly as of December 31.
Due depositors: outstanding principal and accrued interest on certificates of deposits, outstanding savings
stamps, and unclaimed deposits. Source: Post Office Department.
6 Source: Treasury Daily Statement. Excludes such bonds held by the Postal Savings System.
7 Current redemption value. Source: Treasury Daily Statement.
EXHIBIT 12
Federal Home Loan Bank System-Number and estimated assets of member insti
tutions, June 30, 1939, and June 30, 1940
Numberof
Assets of members
Bank District and State
United States-----...........----------------No. 1-Boston-------.....----...-----------......
Connecticut----....-----------------------Maine------------...........----------------------------Massachusetts----------------------New Hampshire--------------------------------Rhode Island---------------------------------------------------Vermont
No. 2-New York....-----....
--------------
New Jersey----------------------------------New York..---.---------------------
1939
1940
1939
1940
3,946
3,914
$4, 600,318,000
$4,927,154,000
216
221
649,203,000
698,228,000
48
22
123
15
4
4
48
22
125
17
4
5
85,315,000
18,373,000
485,581,000
27,556,000
28,159,000
4,219,000
93,325,000
18,951,000
515,013,000
35,872,000
30,326,000
4,741,000
420
413
474, 561,000
457,506, 000
296
124
289
124
219,708,000
254,853,000
179,257,000
278,249,000
548
541
244,955,000
261,976, 000
Delaware--------------------------------------Pennsylvania--------------------------------------------------------------West Virginia
7
510
31
7
503
31
2,485,000
223,435,000
19,035,000
2, 647,000
237,891,000
21,438,000
No. 4-Winston-Salem-----------------------
417
413
535,129,000
626,891,000
22
23
29,221,000
20
20
125,949,000
53
51
53,803,000
57
56
30,342,000
75
69
53,771,000
117
182, 589,000
114
40
43
27,484,000
36.____.____40,2800
34
31,970,000
34,064,000
135,791,000
72,352,000
36,750,000
63,336,000
211,431,000
32,739,000
40,428,000
No. 3-Pittsburgh .
------------------------
Alabama------------------------------District of Columbia---------------------Florida ......-------------------------------Georgia----------------------Maryland-----------------------------North Carolina----------......---------------South Carolina-----------------Virginia...--------------------------------
183
EXHIBITS
EXHIBIT 12-Continued
Federal Home Loan Bank System-Number and estimated assets of member insti
tutions, June 30, 1939, and June 30, 1940-Continued
Number of
members
Assets of members
Bank District and State
1939
No. 5-Cincinnati--------------
579
-
Kentucky -----------------Ohio ---------------------Tennessee --------------No. 6-Indianapolis------------
1940
590
1
214
$841,697,000
i
-
96
452
42
93
444
42
215
-
Indiana -------------------Michigan ------------------
1939
1940
---------------------- I---- I-------I---------------I ----------------I
I
$891,073,000
93, 554,000
686, 295, 000
61, 848, 000
97, 712,000
721, 676,000
71,685,000
250,887,000
274,096,000
-------------151,833,000
99,054,000
159
55
158
57
477
462
405, 353,000
425, 528,000
349
128
345
117
258,193,000
147,160,000
292, 621,000
132,907,000
246
240
197,402,000
223, 536,000
66
39
114
14
13
69
39
107
13
12
39,204,000
44,689,000
93,794,000
9,787,000
9,928,000
47, 539,000
57,270,000
98,070,000
10, 515,000
10,142,000
---------
288
284
364, 532,000
357, 589,000
Arkansas
Louisiana-----------------Mississippi----------------New Mexico ------Texas--------------------..
41
69
27
15
136
41
67
26
14
136
16,380,000
129, 217, 000
22, 570,000
5,249,000
191,116,000
18, 576,000
94,806,000
22, 560,000
5,941,000
215,706,000
234
230
188,703,000
202,773,000
40
104
35
55
39
103
34
54
29,044,000
58,779,000
43,607,000
57,273,000
31,556,000
59,583,000
50,778,000
60,856, 000
No. 7-Chicago--------------IllihnoisWisconsin ---------------No. 8-Des Molnes----------Iowa ----------------------Minnesota----------------Missouri------------------North Dakota------------South Dakota
No. 9-Little Rock
No. 10-Topeka------------Colorado-----------------Kansas--------------------Nebraska -----------------Oklahoma
No. 11-Portland
---------
163,827,000
110,269,000
134
133
128,017,000
146,919,000
Idaho
Montana
Oregon-Utah
----------------Washington-------------Wyoming-----------------Alaska---------------------
8
12
30
10
63
10
1
8
13
30
10
61
10
1
6,985,000
9,700,000
29,167,000
14,252,000
63,235,000
4,518,000
160,000
7,801,000
10,646,000
32,658,000
15,520,000
74,719,000
5,303,000
272,000
No. 12-Los Angeles-----------
173
172
319,879,000
361,039,000
Arizona------------------...
California ....-------------Nevada------------------Hawaii----------------
3
163
3
4
3
162
3
4
3,078,000
312,997,000
794,000
3,010,000
4,230,000
352,324,000
794,000
3,691,000
-
270198-40--13
184
REPORT OF FEDERAL HOME LOAN BANK BOARD,
1940
EXHIBIT 13
Federal Home Loan Bank System-Member savings and loan associations compa? ed
with all operating savings and loan associations
Item
1937
Number of operating savings and loan associations
Number of member associations---------------------------Same, proportion to total (percent)------------------------------Assets of operating savings and loan associations (thousands of
dollars)---------------------------------------------------------Assets of member associations (thousands of dollars)
Same, proportion to total (percent)-------------------------------First mortgage loans held by operating savings and loan associations
(thousands of dollars)
Fust mortgage loans held by member associations (thousands of
dollars)---------------------------------------------------------Same, proportion to total (percent)-------------------------------Loans made during year by all savings and loan associations (thou
sands of dollars)------------------------------------------------Loans made during year by member associations (thousands of
dollars) ---------------------------------------------------------Same, proportion to total (percent) .--------------------------
1938
8,840
3,894
44. 05
1939
8, 300
3, 903
47. 02
7, 737
3, 870
50. 01
$5, 588, 866
$3, 565, 731
63 80
$5, 543, 765
$3,786,
636
68 30
$5, 527, 529
$4, 053, 692
73. 33
$3, 832, 280
$3,907,774
$4, 076,110
$2, 583, 287
67 41
$2,792,720
71 47
$3,107. 000
76. 22
$896, 579
$797, 996
$986, 383
$686, 564
76 58
$620, 369
77 74
$796, 378
80.74
EXHIBIT 14
Number distribution of member savngs and loan associations of the Federal Home
Loan Bank System, by asset size groups, as of June 30, 1940
All member sayings and loan
associations
Federal associations
Number
Percent
of total
Number
Percent
of total
Number
Percent
of total
7.0
22.6
22. 8
20.
17. 7
6 2
3 4
88
271
308
96
298
99
61
6.2
19 1
21.6
20 8
21.0
7. 0
4.3
31
160
189
157
188
61
26
3 8
19 7
23 3
19.3
23 2
7. 5
3.2
152
443
385
332
196
79
45
1,421
100.0
812
100 0
1,632
Insured Statechartered assocations
Nonsured State
chartered asso
ciations
Asset size groups,
$0 to $100,000 -- --..$100,000
to $250,000 --$250,000 to $500,000---$500,000 to $1,000,000
-----$1,000,000 to $2,500,000
$2,500,000 to $5,000,000 -- ---$5,000,000
and over --Total -----------
-
271
874
882
785
682
239
132
3,865
100 0
2
Number
Percent
of total
9 3
27 2
23. 6
20 3
12 0
4. 8
2. 8
100.0
Asset distribution of member savings and loan associations of the Federal Home Loan
Bank System, by asset size groups, as of June 30SO,
1940
[Assets in thousands of dollars)
All member sayings and loan
associations
Federal associations
ns
Insured Statechartered associations
Aggregate cer- Aggregate
Percetotal
assets
total
assets
Aggregate Percetotal
assets
Noninsured State
chartered asso
ciations
Asset size groups
total
----------$0 to $100,000
-----$100,000 to $250,000
$250,000 to $500,000
$500,000 to $1,000,000 ----$1,000,000 to $2,500,000 --$2,500,000 to $5,000,000 -$5,000,000 and over -------Total
-----------
total
total
Aggregate centotalof
Per
assets
total
$18,756
148, 245
318, 593
558, 915
1, 065, 020
815, 701
1,307, 451
0 4
3. 5
7. 5
13 2
25 2
19 3
30 9
$6,006
45, 384
110, 780
213, 611
464, 462
337, 825
547, 749
0 4
2 6
6 4
12 4
26 9
19 6
31.7
$2,121
27, 435
68,747
111, 554
287, 838
212, 497
268, 426
0 2
2 8
7. 0
11.4
29 4
21 7
27. 5
$10,629
75, 426
139, 066
233, 750
312. 720
265, 379
491, 276
0.7
4. 9
9.1
15 3
20 5
17 4
32 1
4, 232, 681
100. 0
1,725, 817
100 0
978, 618
100 0
1, 528, 246
100. 0
185
EXHIBITS
EXHIBIT 15
Estimated volume of new mortgage loans made by savings and loan associations, by
type of association, January 1936 through June 1940
January--------February ------------March-- ---......-April
Federal
Statebermem-
Nonmember
$11, 764, 000
12, 105,000
15, 310, 000
$18, 434,000
17,055,000
22, 180,000
$12, 593, 000
16, 156,000
20, 381, 000
$42, 791, 000
45,316,000
57, 871, 000
17, 740,000
28, 597, 000
Total
1936
-----------------
----------
-------------------
17,915, 000
64, 252,000
June
---------------------July----------------------August--------------------------------------September-- --------October ------------------November ------------------------------------December
-------------
21,
21,
21,
22,
23,
19,
22,
247, 000
491, 000
571, 000
500, 000
914, 000
771,000
517, 000
29, 197,000
27, 898, 000
26, 773, 000
26, 761, 000
30,864,000
26,344, 000
27, 252, 000
17, 858,000
18, 507, 000
18,864, 000
19, 652, 000
21, 743,000
17, 200,000
15, 766, 000
68, 302,000
67, 896,000
67,208, 000
68, 913,000
76, 521, 000
63, 315,000
65, 535,000
1937
January
------------February
March ..-----------------April-----------------May-----------------------June----..-----------------
July---------------------------------
17, 543,000
19, 360, 000
27, 829, 000
32,915, 000
30,998,000
31, 577, 000
28,693,000
20, 729,000
24, 594,000
32, 177, 000
37, 395,000
39, 288,000
39, 965,000
595,000
781, 000
208, 000
290, 000
046, 000
669,000
17,783,000
53, 867, 000
56, 735, 000
77, 214,000
89, 600,000
89, 332,000
92, 211,000
August-------------------------------------September
-------------October
-----------November------------December--------
35,758,000
15,
12,
17,
19,
19,
20,
26,768, 000
26, 189,000
24,539, 000
20,829,000
20,038,000
32,334, 000
33, 307,000
32, 104,000
27,113, 000
24, 522, 000
17, 915, 000
18,818, 000
18,813, 000
16, 561, 000
15, 536, 000
77,017,000
78, 314,000
75, 456, 000
64, 503,000
60, 096, 000
16, 781, 000
17, 520, 000
23, 356,000
20, 879, 000
22,073,000
27, 835, 000
11, 442, 000
10, 500, 000
14,027,000
49, 102,000
50,093,000
65, 218,000
May -
----------- -------- -
---
18,966,000
28, 166,000
19,945,000
67,077,000
82,234,000
1988
JanuaryFebruary. -March----
------
---------------------
-------------
April----.------ -----------------------
26,107,000
May.-------------------June---------------------July---------------August -. September
October-------------------------November-----------------December
--------------
30,238,000
24, 721, 000
26,310, 000
23,823, 000
26, 858, 000
25, 650, 000
26,534,000
24, 220,000
25, 019, 000
31, 196, 000
30, 350, 000
28, 973, 000
29, 506, 000
29, 255, 000
30, 546,000
26, 115, 000
26, 504, 000
16, 362,000
16, 407, 000
14,843, 000
18, 345, 000
16,742, 000
15,851,000
13, 735,000
12, 411, 000
72, 279, 000
73,067,000
67, 639,000
74, 709,000
71,647,000
72, 931, 000
64,070,000
63,934,000
20,894,000
22, 298, 000
29,811,000
23, 071,000
24,191,000
30,124,000
11, 602,000
11,820,000
13,443,000
55,567,000
58,309,000
73,378,000
33,400, 000
36, 358, 000
39, 094, 000
32, 562, 000
35,426, 000
36, 465,000
17, 463, 000
17, 339, 000
18, 595,000
83, 425,000
89, 123, 000
94, 154,000
----------
1939
January------------ ---------------February.-------------March-------------- -----April
---------------------May-----------------June--------------------------------
July ----------
------------
--
August---- ------September
-------------October------------------
-
November-----------------------------December ------
------------
1940
January--------- ---------------------February ------
----------
---
March---------------------------- --ApriL ---------------------------------May--- -----------------------------June-------------------------------
34,055,000
40,645,000
37,090,000
37, 854,000
34,785, 000
34, 146,000
37,340, 000
36,989,000
37,847,000
34,671,000
16,962,000
16,971,000
17,053,000
15,653,000
17,596,000
16, 620,000
73,307,000
85, 172,000
95,038,000
89,732,000
93, 297,000
86,076,000
34,053,000
33, 209,000
28, 008, 000
25,737,000
29,786,000
28,941,000
38,241,000
46,577,000
49,287,000
47, 435,000
12,795,000
36,484,000
43, 015,000
45,803,000
42, 214,000
71, 522,000
15,643,000
18,409,000
19,452,000
17, 335,000
90,368,000
108,001,000
114, 542,.000
106,984,000
15,850,000
13, 199,000
83, 112,000
66,944,000
186
REPORT
OF FEDERAL
HOME LOAN BANK BOARD,
1940
EXHIBIT 16
Estimated volume of new mortgage loans made by all savings and loan associations
during the fiscal years 1939 and 1940, by Federal Home Loan Bank Districts
1940
1939
Bank District
United States---------------------
--
--
No. 1-Boston ----------------------------------No. 2-New York...-----------------------------------No. 3-Pittsburgh-----------------------------------No. 4-Winston-Salem-------------------------No. 5-Cincinnati
------------------------------------No. 6-Indianapolis --------------------------------------No. 7-Chicago...
------------------------------------------No. 8-Des Moines
--------- -----No. 9-Little Rock ----------------------------No. 10-Topeka- -------------------No. 11-Portland ----------------------No. 12-Los Angeles -------------------------
Percent
$868,886,000
$1, 090, 788, 000
25. 5
77, 677, 000
85, 470, 000
70, 425, 000
119,865,000
135, 003, 000
40, 919, 000
85, 218, 000
53, 374, 000
53, 616, 000
43, 384, 000
30, 295, 000
73, 640, 000
101,181, 000
101,154, 000
84, 852, 000
160,306, 000
176, 305, 000
55, 763, 000
111, 260, 000
69, 228, 000
57, 860, 000
50,133, 000
38, 963, 000
83, 783, 000
30.3
18.4
20. 5
33.7
30 6
36 3
30. 6
29. 7
7.9
15. 6
28.6
13. 8
EXHIBIT 17
Distribution of new mortgage loans made by all savings and loan members of the
Federal Home Loan Bank System, according to purpose
Fiscal year 1938
Fiscal year 1939
Fiscal year 1940
Purpose of loan
Dollars
Construction-------------Home purchase ------Refinancing
-------Reconditioning ---Other----------....
----------Total ----------------
$177,
209,
134,
41,
66,
Percent
548, 000
272,000
558, 000
981, 000
201, 000
28 2
33. 2
21.4
6 7
10. 5
629, 560,000
100 0
Dollars
$219,
216,
136,
41,
71,
726,
789,
494,
842,
846,
Percent
Dollars
Percent
000
000
000
000
000
32 0
31. 6
19. 9
6.1
10. 4
$298, 628, 000
297, 243,000
166, 191, 000
46, 600, 000
85, 550, 000
33.4
33 2
18. 6
5. 2
9.6
686, 697, 000
100. 0
894, 212, 000
100. 0
187
,EXII3TS,
0c
CO
0
OD
"t
C)
CQ$.
4-4
0>
0c
0z
188
REPORT OF FEDERAL HOME LOAN BANK BOARD,
00
000
r22
000
00000000000000
0-000000.00
0000000
4
4oi~444444
00
000
~0
000
~
_
00o
00000
00
00
0
Z0l)
000004000"000000=0N0m
00000000000000
rq
t C000000000m00
00000000=
0000000X000000000-4 - 02
D0000
C01000A00t-00UTC0
4
4k
00000000000000-0m0
7-400000000-000
4
000000
000000000C
DO Ao
it14)
1940
(M0
o cc0to0C9
00000000000
44444
44
oo
4
-D
i4
00
14
00
00
oo000M00 AD0as0"SA-"s0N-00
of0S4444444owQ
cc
C4)
0
MH000
444C
r 0
0-0000000
4y:
y to0000
400000m000 00
0
to0000
0m
C14
4
cc000000
0
0
0
0
Cc44LO4
0
0
0
0
C
t-
MM
0
N
00000(M
?--
000
C)
o0M0X
(M00
00
t000000-000N0
0-000-0000000000000
LORdq0t-0000000004
00000w00c
44444444444
a
0000400
0O
00
4
00
00
0
a0020
S-43
0000
0- 0000000'IiQX0 q1X0000
000010
00
w0m
0000000
00o
00
0%r0
0-0000000
Cq0000
0
cs
0
00
t-000000000000000000
00
000000-0000
C)
4444444t (O D444
000'or-00000000
=
00
00
4,:
00
~0
000i
00
0
0
0
0000000000000000000000000000000000
0000
0
to
00
4
4
4o
0
0
0 00000 r-00000
k0-q=0000
) Om
00
CM 94t =
M-4t --
000=
c01:
2CDCDm -00
00C
I-0V-00000O0t,000-000=0CC)-00x0000
r4Oo)
10 00000
0' -i C r-(
0I00
00
Co
Q.)
C4)00
00
t-0D -
r
GO
0''
00~
~C)
,0
~00
00
Cc
E00
ce
Q
0fl
CIS
))0_o'
00
0
Z
n
0
ce
T)QQ~
00
a
189
IEXHIBITS
OCo
00
CD
COqo
CCC)
C) 0
-COC
CoCCt1114o o
o=o
Co
Com
coio
Co
Co
Co00C'C Co
o0"tCo
Co7
Co
CoCCro
Co
-It Oo
Co4
Coo
:)m
comC)
0CC
CC
)Co
C-Coo
CCo
0
-0
*
C)CC
C) Co
C).
o
X0CCr0)C
CCo~
oN
C-Co~~o;
-iCyi1-.
C
Co
ro-i
~Co
CCO
OCC
C)C)
~)bC
CC-.14
(=C- m
C o
CoO
CoCC
0CC
iC
ro-o
Co
C oo
00 00
Co
CoCeDo Yoic)
Co
N r-4
--q n4
C-
-e 00 cq
10
CoCo o0o
C-Co-4oCo
C)00
10 cq
C
G
Co *o
cC)~
:) Co
CoC1
o
Co =00Celo
Co co ?-ICo
ca
Co
o 0o
Cco
to
C
m
Co0Co
CoICo C)
C)
CCo
-1CO
CoCo
C-1
Cl
00
10 cfl C11
Co4 Co X0mCo
C14
cc 10
C6 -.14C'i
Co
Co4
Cor-C co
Co4~
Co
)
mo(Do
OC)o
mComo<=
xoX0
Co
o -t-CoC -oC )
Co
0
CoC-Ct-Co
C6~
zC
co
C
C.
oN
Coe o
o
CC
co
00
P-4~
Co
C
Co
00
M
co
co
coo
o
CoCo
CC
Co C coo
Co001C
C
o'Ii o
00
C
CC
M
$-4
Co c~~~
I
(a)
to
-
o
Ct-
C
CoCo4
Co
_-4I -
Co
CC
CoRl Co0o Oo
CCo
Coo Co
coot
o
r
Co1Co
1o
Co4co -o
Cot-Co
0
CC
CoRti-Co
Co 7 lcCo
CoDo0CoC
Oo
CoI CCdqoo=occoN
o ro
Co
Co
I'olColo
0
C- C
ooC
-4
CoC~C
N--HC0 o
0
CC
coC
r-
.P.
CowmoC-Co CC
CoL o
1-0
Co
I
C-
OCIo
- cc - C
o
Co iCj
Coo
CC
co
0:,
C-0Co
o
Co~
C -1 00
o
(Z 10 -1o
C-C-C
o-q o
C-o
Co
ooC
CD
Co
"CoC:)C
Coo C
C
r-q1o
o
0C
- CoDCoCoA
CoCoro4oo
CoCC
Co Co Croo
t-Co 0o
i-c *
4
.
o
Co
.- ,4 r4
CC
Co
Co
0
Co
Co)
CD
bi
C
CC
.0
CC
0
0
0
2)C
-4-)
0
0
Co
190
REPORT OF FEDERAL HOME LOAN BANK BOARD,
1940
EXHIBIT 21
Operating ratios for reporttng savings and loan member institutions of the Federal
Home Loan Bank System, for the calendar years 1938 and 1939
Percentage ratio to gross operating income
Savings and
loan members
Item
Number of institutions reporting _
Federal savings Insured State Uninsured State
chartered mem chartered mem
loan as
and
sociations
ber associations ber associations
-,-
---
-
-
1938
1939
1938
1939
3,094
3, 110
1, 355
1, 384
--
1938
588
I
-
1939
642
1938
1,151
1939
1, 084
GROSS OPERATING INCOME
Interest
On mortgage loans-ordinary Percent Percent Percent Percent Percent Percent Percent Percent
cash collections---------------.
84 24 85. 23
85.99
82 49
82 28
86.23
83.40
85.98
On other loans-----_----1.70
1 61
1.11
1.33
1 14
1 31
2 73
2 16
On real estate sold on contract
3 82
3.79
3.73
3.81
5 29
5 28
2 96
2.76
Net income or loss from real
estate owned----------------3.44
3.00
2.39
1.99
3 82
4 41
4 38
3.29
All other income....--------------6.80
6.37
6.78
6.64
7.27
6 71
6.53
5 81
r
100.00
100.00
100.00
100.00
100.00
100 00
100 00
100 00
12.71
1.54
12.61
1.51
13 27
1.84
13.29
1.77
13.92
1.42
13.84
1.52
11 27
1.26
10.97
1 18
1.03
2 06
.98
2.12
1.04
3 13
1 03
3 01
1.11
1.92
1.05
2.11
.96
.93
.88
1.00
All other operating expense ---------
.54
.71
7.35
1.30
.72
6.69
1.92
.76
6.61
1 98
.67
6.67
1.93
.99
8.27
1 96
.89
8.00
Total operating expense ------
25.94
25.93
28.57
28 42
29 56
74.06
74 07
71 43
71.58
Gross operating income .----LESS OPERATING EXPENSE
Compensation to directors, officers,
employees, etc ---------------Rent, light, heat, etc--------------
Repairs, taxes, and maintenance of
office building-------------------Advertisin-----------------------Federal insurance premium (if in
sured) -------------------.----Audit and examinations- --------
Net operating income before interest
and other charges---------
0
0
.47
5 70
.67
5.80
29 37
20. 59
20.50
70 44
70.63
79.41
79.50
LESS INTEREST CHARGES
On deposits, investment certificates,
etc--------------------------
On advances from Federal Home
Loan Banks------------------On borrowed money
5.70
5.07
.06
.04
13.39
12.11
7.06
6.61
3.18
.31
2 42
26
4 69
.15
3.42
.11
2 78
.37
2 31
.30
1 73
.46
1 24
.43
---------
9 19
7.75
4.90
3 57
16.54
14.72
9.25
8.28
Net operating income ..------------
64.87
66.32
66 53
68 01
53 90
55 91-
70 16
71.22
2.91
2 59
2.61
2 40
3.25
3.65
3 03
2 13
67.78
68.91
69.14
70 41
57.15
59 56
73.19
73.35
Total interest -
ADD NONOPERATING INCOME
Total nonoperating income --------Net income after interest and
before charges-------------LESS NONOPERATING CHARGES
Total nonoperating charges- ----Net income for the year -------
3.47
2.46
2.44
2.28
2.31
2 61
5 39
2.59
64 31
6645
66.70
68.13
54.84
56 95
67 80
70.76
191
EXHIBITS
EXHIBIT 21-Continued
Operatng ratios for reporting savings and loan member institutions of the Federal
Home Loan Bank System, for the calendar years 1938 and 1939-Continued
Percentage ratio to net income
Item
Savings and
Sang mand
loan
members
1938
1939
Federal savings Insured State- Uninsured State
and loan aschartered mem- chartered mem
sociations
ber associations ber associations
1938
1939
1938
1939
1938
1939
Percent Percent Percent Percent Percent Percent Percent Percent
Disposition of net income0. 01
0. 00
0. 26
0 23
0 05
0.07
0.12
0.11
For bonus on shares -----------5. 67
7 54
1.56
3.99
5. 56
3. 02
4. 53
18
-Legal reserves. 0
0
3. 45
5 50
5. 60
6. 29
5 04
3. 58
Federal insurance reserve -------4.03
3 27
3 73
6 15
4. 69
7.07
5 66
---5.96
For contingencies ----1. 56
1 14
1 03
1. 62
1 96
1.42
1 39
1.12
Real-estate reserve
1.33
1.61
1.19
2 70
.83
1.44
.29
.32
Other reserves---------72 67
81 67
76. 35
78. 70
75. 54
77.88
76.17
74.83
Dividends
------3 35
7.82
7. 70
9. 32
9. 21
9. 70
6 37
8 85
Balance to undivided profits--
Source Division of Research and Statistics, Federal Home Loan Bank Board
EXHIBIT 22
Federal Home Loan Banks-Advances and repayments for the periods indicated,
and the balance of advances outstanding at the close of such periods
Advances
Fiscal year:
---------------------1933 .-.
--------------------------1934
-------------------------1935
1936-----------------------------------------------------------1937---------------1938
1938-July---------------------------------August
September
October-----------------------------November
December
----1939-January -----------------------February ---------------March---------------April
------------------------May
June
Total, fiscal year 1939
Total, fiscal year 1940
Grand total through June 30, 1940
-
-
--
Balance out
standing
$48, 894, 602. 41
62, 871, 970. 22
36, 683, 308. 61
78,195, 224. 32
114, 287, 052. 41
105, 432,157 95
$1, 230,772. 82
25,387,445.72
42, 599,148. 52
38, 840, 900. 50
65,817, 003.85
76, 264,107.15
$47, 663, 829.59
85,148, 354.09
79, 232, 514.18
118, 586, 838.00
167, 056, 886.56
196, 224,937. 36
4,944,007 35
4, 293, 884 00
6, 561, 499. 04
4, 735, 722 66
5, 246,902 10
14, 995, 541 90
2, 922, 785. 00
2, 333, 900 00
3, 898, 200.00
3, 580, 641. 91
6, 307, 000.00
16, 838, 990. 66
9, 276, 755 82
6, 768,425.78
6, 428, 884 85
5,065,948 26
4, 779, 461 97
5, 840, 579 58
22,913,631 53
10, 571,147 80
12,898,951 04
8,018,005 31
5, 572, 017. 37
5, 788, 639 57
191,892,188. 89
189, 417, 647.11
189, 550, 261. 30
189, 220,035. 70
189, 687, 475. 83
198, 842, 438.15
178, 851, 591. 62
170, 614, 343. 82
161, 613, 592 78
157, 176, 229. 38
157, 911, 212. 01
168, 961, 563.10
76, 659,074.62
103, 922,448 88
6, 823, 240
7,767,958
10,152, 378.
9, 604, 571
5, 827, 035.
18,723,885
4, 386, 398
2, 010, 995
4,374,870
4,973, 207
9,884,072
23, 481, 287.
1939-July-------------------------------August --------------------September-- ------------October---------------------------November -- -----------December
1940-January--------------------------February
-------------March--- -April --------------------------------May June ----------------------------------
Repayments
00
00
44
96
52
15
89
54
00
50
50
73
14,197, 703 85
9, 885, 280. 86
5,934,956 06
4, 637, 720 74
5, 659, 170 45
6, 232, 809. 57
28, 911, 443. 55
14, 283, 556. 42
11, 247, 971 04
8, 804,899 62
6,186,099.84
3, 592, 802 17
108, 009,901.23
119, 574, 417.17
631, 033, 291.77
473, 636, 244 61
161,587,099 25
159, 469, 776 39
163, 687,198. 77
168, 654, 049. 99
168, 821, 915. 06
181, 312,990. 64
156, 787, 945.98
144, 515, 385.10
137, 642, 281.06
133, 810, 588. 94
137, 508, 561.60
157, 397.047. 16
--
192
REPORT OF FEDERAL HOME LOAN BANK BOARD,
C-oOU')
N
~--
C
O0
-
Cq
=mX
m0
o
COcq
1--tiC
-
lz
CO
OOItqcc
OC
= (1%4
C)coCCOC00OCq
= - C
t- C
I
C.)r-4 _
_
00
_
_
)
c
~
o
-- -400
10CO0
C~
CO
0 X0Cc o
T-.cq
0
It0 ) 0
CO
c
_tr
L
o
m
O
-CO
-4C- i C C
-HCC-C
C o
0 cc14
Cc
cOCN O mCO
-C
0C
00
C
0
C)
OCto=CO
C>
.- r4
CIA
o
c
C-CC
0
ld OCCOC
C>
00
m 0
CC CC11C
CI
CC
Coo0m(C)
0CO
)
- 0
ft mt
OCC00
m
to
.q
O
__1_
mO
-C)
N
C
C00
- 144m 114Olq 0
COCO
0
-OCOCIliq
C
__.4
c qCCC
O=
-C
0
m 0=t OCOO
COX
00)
o
O0
"m
CO
C6COCT
0 =
00oCOcOCX0CmCcOcCV
SC-)r-0CCCOC10'
C0
COCCOCOCC-Oq
mO
0C-C )cq
C
x
-ttqoC
o '41, CCCOIXOM
C
COrcC >oC
CO)O
C O C6CO tq
m CD
CO wC4O mCOr-4
O
JqNNc
N
q -wc - mO
w cq m -4 wC C>
00dq
C,
zzzzzzzzf)
t
zzzzI
tcX 1
CCCO Q,14 COc
C
1940
193
EXHIBITS
EXHIBIT 24
Federal Home Loan Banks-Interest rates charged member institutions on advances,1
as of July 1, 1940
Federal Home Loan Bank
Boston ---------------------------------------------New York--------------------------------------Pittsburgh ---------------------------.
---- -----Winston-Salem ---Cincinnati
Indianapolis ---------------------------------------Chicago-------------- ---------------------------Des Moines -------- ---.-.-.-------------------------------------Little Rock-----------Topeka -------------------------------------Portland-------------------------Los Angeles -----------------------------------------
Reffecin
Percent
1
Type of advances
All short-term advances amortized
within 1 year.
212 All long-term advances.
1/
All short-term advances
within 1 year.
22 All long-term advances.
3 All advances.
3
Do.
2
Do.
3
Do.
3
Do.
3
Do.
Do.
3
3
Do.
3
Do.
3
Do.
amortized
1 Banks are required to charge one-half of 1 percent to 1 percent additional on advances to nonmembers.
194
REPORT OF FEDERAL HOME LOAN BANK BOAIRD,
0)
=0M0
00.)(co
0
000=0t-00
I
m
-:4
N00r-4co
0
0
et e r-
4 ,4
ce
- -
o
C)
co o
0
0000
S
C o':
)
Q0a)
c
t m
0
) t-q
1400
00r
0
0
Co
mcq
m OQO
oco
C
-C
,
C
,C
o6
4-6o
0
C '-
0000m
mt
t-0 D 00
C00 0
C
COl"
0
LO0!0
o
--4
o
C
m
X0 -4000 00
00
C
t6 -o60u-)C"4
C:00)0tm"t
0 00"C*t-004
0 q tt
0
00-C
0
OoC
.dq
00X600
t-Ct- 100Co00Cq
00C00
C)
o
6c6oc
00llCDt-
00 0*00t- cOCO
44Z
000
0
0c
c
m x0to mX-q
00000C0t0'lq 000t0
0
C
o00Co
C=)x L L C0 0
c0000
Cl
M
qr 0)
't0=C
C4
C . C:)rotc -. i o
C60i
4
00
- 0co
OO t- N
t-) c ) t
t~n.tq0c000
Cc
X0t-
u =C =eoC
C
C>)
t- Oto
00
0
C-)I-C)C) C 0 CD
10)
cCT1o
0
A
O0
C) l
)
0>C
i-fl
C
0
0
t0oNr- -qt-cmtoC0
W
00~L 0
C)C4
PI)
-
X0OOCq
= ta
-c00
)
0 00
4D7-0
- - -- 0000
00 C td r
-i I. 0 lqCo)(Mm
ce.)
CD
CD
0o
0q
-
r4L)V-
C
q
cq, o Cm,q o
- - -
C-r-0I-) m
CC.)cq (=>00Iiq00
l
0c
-Co
) .i0000m
-4cc(m
0)
00
0
tqC14mli4k
0 0000
0t
o1
qc
M-q0czX
O CfDcc
C oC:
0000
4C) m N00,-q)
(=00 "fco U.o 000
Cl
r-Ncc0d
0C
m
C>0Go
mot-000C -00
t-
r000
C 0C*
00- r- =
Mo0
00
m C00 c'C000
X
0
I':)'C
(=0m00 mU'-co
m
0
0CDoNC000=00t-
0 oot
X6
CoC000C)
00
m
O
0 ce
'O0
w
0-CC
cczzzzzzMz-z10zz0z0
4-.)
L
0
0
001-4-
C
0
0000Co0000C-.
cc0 q0
C
00
o t-00
?-10Il
C
Co
c
0
1940
EXHIBITS
195
EXHIBIT 26
Types of advances made by the FederalHome Loan Banks
The twelve Federal Home Loan Banks may make the following types of ad
vances:
ADVANCES
TO MEMBERS
(a) Up to ten years on the security of home mortgages or obligations of or guar
anteed by the United States. Such advances up to one year need not be amortized,
though two Banks have a preferential rate for those advances amortized. Ad
vances made for more than one year, must be amortized on a monthly or quarterly
basis, and are subject to the following limitations as to amount:
1. If secured by a mortgage insured under the provisions of Title II of the
National Housing Act, the advance may be for an amount not in
excess of 90 percent of the unpaid principal of the mortgage loan.
2. If secured by a home mortgage given in respect of an amortized home
mortgage loan which was for an original term of six years or more, or
in cases where shares of stock, which are pledged as security for such
loan, mature in a period of six years or more, the advance may be
for an amount not in excess of 65 percent of the unpaid principal of
the home-mortgage loan; but in no case shall the amount of the ad
vance exceed 60 percent of the value of the real estate securing the
home-mortgage loan.
3. If secured by a home mortgage given in respect of any other home
mortgage loan, the advance shall not be for an amount in excess of
50 percent of the unpaid principal of the home-mortgage loan; but
in no case shall the amount of such advance exceed 40 percent of the
value of the real estate securing the home-mortgage loan.
4. If secured by obligations of the United States, or obligations fully
guaranteed by the United States, the advance shall not be for an
amount in excess of the face value of such obligations.
(b) Up to one year on securities other than obligations of or guaranteed by the
United States, providing such securities constitute an investment which the mem
ber is legally authorized to make, have a readily ascertainable market value, and
are not in default with respect to payments of interest or principal. Such ad
vances cannot be in excess of 80 percent of the market value or the principal
amount of such securities, whichever is less.
(c) Up to one year without security or on any kind of security to members
whose creditor liabilities (not including advances from the Federal Home Loan
Bank) do not exceed five percent of their net assets.
(d) Up to thirty days on an unsecured basis or on any kind of security. Such
advances must be repaid at maturity or refunded with eligible collateral. In
making such advances, there is no requirement that the creditor liabilities of the
member do not exceed five percent of its net assets.
ADVANCES
TO NONMEMBER MORTGAGEES
Up to ten years on mortgages insured under Title II of the National Housing
Act. Advances for more than one year must be repaid on a monthly or quarterly
amortization basis.
196
REPORT OF FEDERAL HOME LOAN BANK BOARD,
= Co00
qo t- Co
C)
oo
C6
m
00
YD
o0 m
X0
C14
10
5
00
M
CD
V
Coo
5R
0)
o
0
0 XCo
xf 1
Co
00
00C)
C
r0i
c
00o
10
00CC
~
Co~
C1
cliCl
00
ko
SCoZ
Coo
0
a)
'
ci
c0
CoO
L6oCo
cC 0
J-0
10
ci o6
co00
1940
co~
CoC
&
c$
tcq
c)!4!
40
O=N
MCD0
C6o6C
CIT
Co00
CoOm
0)4
0
0
Co
NO
0
Co
Co
0
0
0
00 Co
0 Co
N0)C
0 Co
Co 00
00
C00
Coa
"0Co Co
00Co
0T
0
00 Co
00C
Ccii
Co0z
,0
CoCo 000r
0
0
XCoCoC CT
Co oro4
0
Coto =00=
0
Ck0
I
II
Co
CoO
Co CO C)C
II
Coo
Coo
Coo
00
o Co00
Co.00CNN
0o6c
0Coc;
0
of
of
00
Coo
C)
0
to
I
Co C oCo C
C0
0c0
00
X0UC
Co C
CIT
X6
II
00
'C
0o6
Co N
Cf X6
0
Co
I
0
000m
XC C o
0oCo C
0 Co
-4
CoCo
0Co
0
CzoCoO-
1-00
00
00
0
~Co
00
Coo
00
Z
CoN00
00
Co
r-
00 CO
C4.
o
CotCCo
00 1N N
N CoCo
Co Cm
04
oC
00
0100
00
0
'''0'
4-4
;-4
cg m'
<0.0)W
'3o00
COD
GOO
H
C
197
EXHIBIT'S
0C)
i
Cl
q
0 cl0
C6cic) 0
X0ll -q
6
-10
00
0C~ 4C601C4Cele
l
>-'i>
11:11i- 0I0
CIC
r- =
C)C000tol
oC4
C)
C6
±q
0
lq
00
=
10o
l
&c,
6 c-I
0Cq m
6
1-r-q
O d
C
cc
00
cCCll
Ih
C)
000
l0C6,
I
0
Cl 0
l0
I
c00Cl
00
00l0C000
C
0
0
04
0cl
00
cc
c)
Cl0C1000-00CO
0
C
0
C)
Cl4' 4
C
0
0
C
CCTll
C-
o6Cl0
m6oo0
cc
COO Cl0Cl
Cll
0
l
0
lICl
0
ci
0 0
Cl
C
Clll l
0-
Cl
0cl
Cl4,
0C
rC
5
l
c
ItlC)0
rlCl
Clfl
o
-
0000
0 0
0 C)
CO
CO
0
r-44
0
C
0
600C)
00C)
10-X
Cl
l
C
C
0
Cl4l
-Cl
0
q
0
0
COColto
l
C-Cl
Cl
1t
1.1
Cl
C
0ClO
00lmClD
0l
r--4
t-
C0L6
00
0
0
l
00
6
0 0
0
0Cl
Cl
0
00goCo6
oCl5
6Cce~
l0
0
IM-
I-
C
Cl
C0
cClCq -l
l
C
o5q
l
0Cl Cl t-l
ClC1ll
o
C
6±6
0o6
C
CO
00l
-1
=llCCl0tq
-!!
-q
o-V
0
toltCl0l00
0 C-l
0
oM i Oi4
6
0c c o
o c 114
(D0
00
O
0
ce'C
,
~
~
-~
C 4C'06
C 0l
c 10 cq 0'O
05,
C6
r
-
QC)
-~
Cl1C 0
Cl
;-4l=l
(a)
FC$C
0
0
C3 C 5
lC
0l 0
0 0
e
C
06
0
Cli>
-
C
i
iml
cl
0 1 CN 0 10 o1
C)lx. 100
riO
0
6
C00
00
0
0
Igo
00
ct
Cq
'0--
2
Cto
0H
C
oi
0
C)00
Cl>-
c
0
00C)
0C
Cl
0
l
1Cl
t
0
CCll
.0
-0M
mlC114
Cl
l
o~o4
C9
Cl"l
,cdC3
0 0 q t- 0
CI
16
.t
*.
t-:
0
C4,C
Cl
CC
Cl
C) l00
'Ice66666661
I I
l
C
C)I
C)
±:
Cl
±
C
l
±0 16C 0
m m10
cl
C00)oo
0
0
0l
0ClI-0 l
C
000NC
0 0
0MO.!:ClfC
CiLClU
'±
0C0)
0
cc
o o
CllC
q
0 0Cl
cq
0
.0±rCl-4ICl
C
0-Cl
COO
C>--Cl
,e
Cl
C'0
6
0R
Cl-4
C)
IIciCl
tlo
00
00
C
i>
00
0
CO
Clq
l
106ce
0
0
000
CX0
CqI
0c0M
4'
X0Cl
i-
C0
l
1
0C
UCl0 IL
Cl
0 0
cC l
10
00
C)
L
0l66C66
6oQ
0C)
X0I
l
00
0t
6
c)Cl)>0
0
00
I 4o
x
0
0
C
NC
C6U l
00cq
00
0
00 0C)0
00
0 0
00
Cl
it-
-OjO
4
mocq0
Cl
" Cli>
4,4
0
4l
Cl
to
Cl00l
10 C t6
UCl6
N00
0
0
C6CCl0
lCl
C1ClOC
Cl~
Cl
0
C56o1c 6
l0r-
0
Cl0 0
Cl
Cl
Cl0
ttCl
=C00C
r C500
00C>
00C)
00
00
C
ClCCl
4'
Cl
C> 0
C0
) )
6o
616
0
0 C -
f<C>
4Clq O
-4 C6
m
0 0
0 0
C
0oli>.
.:q
eCli>
O
4cI q0
1
0
60C)0
C
C C C
0l:CICl
1CC
0(n
l
9
Q
M
c
C
0
198
REPORT OF FEDERAL HOME LOAN BANK BOARD, 1940
ci
r
66
--i' o6
Idq
0000
0
0VD
00 C)00
0.d
000o
00i 00
to I-
m0w00
400 202
C)
00000
00
00
4-D
-4
00
+0
00
00
0
6
00
000
4-D
00)
U)
C4 00
007
000
00 2XN
00
10000
00
00
00
+0
00
00
00
00
00
0
00
00
22-C
H
00
~-C1
o
X- "4 o
t00-=
Iloi-00
o
t
m0
0
00
m00o0 C)
000
c
100
00
0 0-0
12
00
00
00
02
04
m2
00
00
00
0000
P40
000
C.)o
000
00
H 00
00
-+Z
00
-l E
00
C
00
--
00
00
00
000
199
EXHIBITS
m0'0
00
000C
C4
.0
00 CO
01
C>1- CO)
0
0
0000
0001 C
N00
00
0000
00 c
1-4
001m
toiIlzm
.0
0
0
16o
16
00000
0
0
o
00
00
0;)
0t
00-41
0C>
0a0
cq
C6C)
1
1000
C)
ooQQ-4
r
to
0 C)
r.-
CO=
104
0
N
C14
I
soz0
q
00
q
I
000
ko0e00010
00
00Ct
!j
t
C
I
<
0
0
CO
000
0000
0t-
k1
00
001
U.)
I0
010
66C4ol XO
00
O00
to
00
O
c0c
0CO
00
000
00
0000"-f
CO11C1Otot
V00
1
CO0m
m
C
0
0
00
01
li
00
00d0
CO 0
10
M
CO
q
1D
0000
00
1
N00,T.CO
14
m
i 00 i
4=
0
000
)
-0C)
001
(00
mO00
0
0c
0
CD
01
0
1
C601-
C4
t1
- CO
66o
010
CO
16
CO 0UCO)m
INcOc001
I-t-
l
C>
0
00
0
00
O
If
CO4
00
616
00
b00
c6
4'
000160
00 C6o
COC
006
cc
00
C
000C11
-COC
0010C)C
1-C6 5 =;C
00
CO00
C
IICO
cyz
4ko
r-q
cq
6A-
D001
0
000M 10
CO4.
xj: 0000
qCO
0 0
4
,0eT1
0010
.0''=
,,64'
0'
4'Z
100
'.e
:
w1
w'Z4
'C~o ,0
L
11144
;N44
1)
0.0e
Go
CSC
4
.
(a)0
.0'0
n0
2~'440
o
cc
00
,=0r
14
270198-40-14
.0r
rd " 00
4-,-o ,0
q ,
.0
16
P.,0.0.0
Q0.
.0
p ro
00q
ca ce 5'00..'".
~.4
(a)0
p0000
.0
02
0o.0
0
ca
4
0
F-4
200
REPORT OF FEDERAL HOME LOAN BANK BOARD,
Vl
m
c4z
c m
1940
00 t-0C00M
000CD 00000r
X0C6
m
C56
00
coo
00
6
C0
C0
C6
C)00
C
C60~z
000
r=N000C
0c00
000)
00
C)00-0
00t.
-Z.6
0D00000
C)
0
C
0
0 C>
000oo
0
c)66
V00
00)
00D
de
00
CO
0!
I
C
CO
oe66
10
al,.
00 0
00m
C)
02
4.2
02
C
0
H
000m
14)
V.
t:
C-0
00
Q
c14
0
0
CO
00
6ciO0
Nfx
00C
00
00 c
0=0
00 m0
'Zo
r--4
0
0
C:-4
0C
C)
000000
L
C)0t
000
'000
002
0002
o~
ocvo
412
SC>
02
(am)
f-4
'Cz
CCd
-4")--a
0 ..
4-a
0
M
0)
4Z~
E-4
0200
4.2
0C0
201
EXHIBITS
66d
N00
00(=
00
66
00
c66
2~22S
00
C14r0
0000
000q
66
C6X6
-44~
00~
00
00
Cz
00
00
000C
cy
00C
F25
g2
It
C)C
000=
4.-
00
4.
66!
o
00
0
go
o0
00
0i 80
02d
(=00C)
00
t-00
C;
to=
r-4
002C>
000
00
Q
000
64
2002P
0222000
.02200w
22a2
C6
IrD
r-i
2Y-46
w0K
ce22
cq0
00
cy
00c
00
00
X000
cc0
00
00
00
00
00 q
-0
00
ta
00
ci0
0
co
5
r-A
00
00
tl:
CYD
00C
0 0
C)
00X
00
00C
00
0
00
00S
0
o6 cy
LO
(=02
C 00
t-io
022
"4 4
22
Q40
c 0l
22
(=0I
6d
10
Moo
.-I202 0
.22
10
02
0 ,
;
.t
"I'"d
a)
20
02
= cc
m C-1
:
20
&02
m0
,42
0
ce2
0
Hc
cc~
20
0-4
422
.5
0202
O'cl
E422
4-0
02
0
E-
5c
202
REPORT OF FEDERAL HOME LOAN BANK BOARD,
1940
EXHIBIT 28
Federal Home Loan Banks-Investment holdings at the close of the fiscal year 1940
Interest Face value
rate
U. S. Treasury bonds
Aug. 1, 1941 .--------.
June 15, 1947-43--Oct. 15,1945-43-------Apr. 15, 1946-44 ----Sept. 15, 1947-45------Dec. 15, 1945-------Mar. 15, 1956-46-----June 15, 1948-46------June 15, 1949-46 --Dec. 15, 1947
Mar. 15, 1951-48
Sept. 15, 1948---------Dec. 15, 1950-48 ----Dec. 15, 1952-49----Dec. 15, 1953-49-----Sept. 15, 1952-50---June 15, 1954-51----Sept. 15, 1955-51------Dec. 15, 1953-51----Mar. 15, 1960-55------Sept. 15, 1959-56------June 15, 1963-58
Dec. 15, 1965-60
TotaL
3Y4
3M
314
$150,000
300,000
850,000
1,450, 000
3%
2% 1, 550,000
335,000
2j
200,000
334
3
1,750,000
31/1 900,000
2
650,000
2%4 1,295,000
2
300,000
1,280,000
2
300,000
3
2/
4,600,000
22
3,150,000
23
3, 267,000
140,000
3
600,000
24
5,186,000
2/
24 1,338, 000
1,300,000
2
2% 3,475,000
------------
34,366,000
U. S. Treasury notes:
Mar. 15, 1941------Dec. 15, 1941------Mar. 15, 1942------Dec. 15, 1942--------June 15, 1943----Sept. 15, 1943 -----------Dec. 15, 1943
Mar. 15, 1944--------June 15, 1944 -------Mar. 15, 1945 ----------
1Y
1%4
1Y4
1
1
34
5,895,000
TotaL ------Total Treasury issues --
150,000
100,000
200,000
200,000
1,845,000
150,000
1, 450, 000
700,000
650, 000
450,000
-
-
40,261,000
Interest Face value
rate
Miscellaneous securities:
Home Owners' Loan Cor
poration bonds:
May 15, 1941 -------July 1, 1944-42. -_
May 1, 1952-44 - June 1, 1947-45 --
%
24
3
1
Tota-----
7,469,800
Federal Farm Mortgage
Corporation bonds:
Jan. 15, 1947-42 ----May 15, 1949-44-Total
$120,000
2,975,800
700,000
3, 674,000
-
300,000
600,000
3
3
900,000
---
Commodity Credit Cor
poration notes:
Aug. 1, 1941 --..--Nov. 15, 1941.------Total-------Reconstruction Finance
Corporation notes:
July 20, 1941 -----Jan. 15, 1942 --July 1, 1942----Total-----
510,000
200,000
%
1
710,000
480,000
3,040,000
188,000
3, 708,000
U. S. Housing Authority
notes:
Feb. 1, 1944..------
640,000
Total miscellaneous
issues ....---
13, 427, 800
Grand total --------
53, 688,800-
203
EXHIBITS
EXHIBIT 29
FederalHome Loan Banks-Interest rates paid members on time deposits, as of
July 1, 1940
Remaining
over 90
days
Federal Home Loan Bank
----------------Boston........--------------New York---------------------------------Pittsburgh ------------......
Winston-Salem -----------Cincinnati -----------------
Limitation (greater of 2)
Percent
Indianapolis
Chicago ------------------------------Des Moines
----------Little Rock
Topeka--------------------Portland ------------------Los Angeles -----------------
2
A $50,000 or 1 percent of assets.
None.
Do.
Y
Do.
1Y $100,000.
$100,000 or 5 times minimum
stock requirements
None.
Do.
Do.
No interest paid.
Do.
Do.
$50,000.
$50,000 to $100,000
Excess of $100,000
I One-half of 1 percent paid on deposits remaining 30 to 90 days.
2 Does not apply to deposits held on Feb 13. 1939.
3 1 percent after 1 year.
EXHIBIT 30
Federal Home Loan Banks-Statement of consolidated debentures outstanding,
June 30, 1940
Federal Home Loan Bank
Boston....-----------------------------------------------------New York
-----------------------------------------Pittsburgh ---------------------------Winston-Salem
------------------------Cincinnati ---------------------------Indianapolis--------------------------------Chicago-----------------------------------Des Moines -----------------------Little Rock -----------------.
----Topeka-------------------------------------Portland..
--------------------------------------------Los Angeles..--------..-----.-----------Total---..-----...
---------------------------
Total outstanding
standing
Series C, 2
percent due
Dec. 1, 1940
Series D. 2
percent due
Apr. 1, 1943
0
0
$5, 500,000
5, 500,000
5, 250,000
4, 500, 000
11,000,000
7, 500,000
2,000, 000
2, 750,000
0
4, 500,000
0
0
$1, 500, 000
3,000,000
2, 750,000
2,000,000
8,000,000
3,000,000
500,000
750,000
0
3, 500, 000
0
0
$4,000,000
2, 500,000
2, 500,000
2, 500,000
3,000,000
4, 500,000
1, 500,000
2,000,000
0
1,000, 000
48, 500, 000
25, 000,000
23, 500,000
204
REPORT OF FEDERAL HOME LOAN BANK BOARD,
t-wxt5-oS
000
0000 9
00
r0
0-00
0
0000
C000
00
00
oto-0
00
r- r-i
0
C)00-
16
)(M
0
cq10
00
000
0
X
4,-4
o
00000000
C
4
00
C)C
0000-
oC5g6-4
1-
C4
101.
0010,d4 00i
CZcq000to00-0C)
00
0000
0000Cc0r-4
00
X0-0-
m
w
00-10N0m0NCNm
t~o
C)
4zocoo
Co(M m
0C) 00 kD0
0000
00
0
~
00
0
t
00
la00
00
g6
g
0
0
C.0
om
00
00
o00 '100
'.
0000C40
0
0
q00i
CD00>
c
0o
00
00
00
0
00
D
C>
C
0
0
00000)
00
cc0
0000m00m00
0-1000
00
o6
C
0D
0C0
0
0m
000
r
-
044
m
CD
0
0m
0
r0
00
000
00
C65 gr5
ccC11co
-20
0
00
0
00
00
0000t00
00
00
0
00000M
o
to4x
to0
0000
0000=
t-
00C
ot
00
to
00w00
00
00
C00
m00!Iq000000000
lo'0000000000C
C0
C
4
0
0000000000000
00
00
0
o
H
fr-~
0
0
o
0
00o00 to
00
- 10
or-4
m
00
0-
00
00:
r t- 10t- mrx
cr5
0- 00000 c -r00
Cq M r-44tj0r-4
00
00
000
000
o11:14
000o
00
0
00
00000000000
-00
00000
"
00000-0
0000000
co
0
000000
00
0000
0-o000
0 1r5
00
000
00
000
C0, 0
00060
c00
00o0t0
00
00
00
0
00
0
jo
00
0
0
0
00000
ILIcsc
'
C,
0
0~
00
CD w
*0cnS0
0w,
+1 4-D
00
00
NO
00
0d0
$4
00
00
0
N
~oeq0
0
(=>
0
0
0
I0-
o-.1
0000
00C
00100000060
000
-4
00
o0
10000
00 00
000 00
00-6
00;.0
-4j0
0w
z
M
1
0
1940
205
EXHIBITS
00 0t0o000
000o00N
fo000
tM-000
C
6 5c
00000C>0<=0cc
N
o
q
'Ii *
0001>C) -
00000c
PA
".:v
C)o=>0
H
Z
0: 00?-00 10
6 cO ;
-
00-.
000
00
0
0000N
0-
1-r-- O4
000cr->.
00 0 N
0-0t-
H
Z 16,6 o6
0
-00000000
000000
0000m00
10000001;
00-
0
.~4 14
t-
40N00
I
m00
>0mC.
00 5
50
00000
00
cp
0
00LO
0000"
CP o
0
000
0004
001
0C
0
0
0
0xt- 10
O C 04
00000000N
0000000004
m0000 00 r000
000
000-0000
00
0
m
0000000
0 00
0 0
0 000 r0N00 011-
00001>-4
000 t 0t
0
0000100
0N00
00
0
C-7
00t
0
W5 c0
00
0
000 =
C:
000004
00
0008IL
10 q0 0-
0
-i0
r0
00
6t 4
00
c00
CO
0
0000Ot
0 = 1
CD Q
.oo- 0 cc00000
565 45c o6
t-
00.4100-
c1>-000
000t-0
00000
D
-0~
-0
000
00
0
k00w00000000tl 000000
e00
000000000000mr000
-0000 tq
00
O0000 004
000>LO
j
00
t-
00
14
m0-14
00 .40m000 0
0
0000
CD-o<= q0000
00040 -001
0000 0
0
0000000C
m
00G
0
4X60;0000
S O*t-
(c
00C0(=
40
r-00001>-
00 0(=m t00000CD000CO
C)
00-00
to0N00
0-0:000
00
t00001-
000000
0
00000
y
00
C
00 co
CD" -0
00
1.606
C; CS
0-
1-t
0000(M
m
01
-
C)=
C
00i
to
00&000t-X0
t-
004~~,d
0
00000C
10 C)0-000
to
00i
000t-000=
0000000
0
~0
xdc5c
v
o0
N0000
o0t-0000
0
000-00
000
m0
000
r
0
00000-ti
m
o0
c 001C 0 0
11
C4
0
-
cc00v00000; 6'd
000
e00
064
co$r
C1100000 10
0000
00
'
00000-
000
m
k 0o
0
00m 00
0000
000
0 00 00N
0-000000
~05'
t-"
C00
m00 00 000?--
000-0
0
CIO to
0
to0t--
-
00
0
0
0
0to
0)
0)
00
0
q
2
5
&040
04;-4004
cd
)
~
P
Mo
0004c,
206
REPORT OF FEDERAL HOME LOAN BANK BOARD,
C:(=>I z
"-40 CO
r-4 COO 04(
00000100III
000C40 Co0000rC
101-0t
00
0
t-000CC
0110
C>
C9
r-4
6000
00
00
---------- ---
0
0-1
I-,
k0000
-0rt
CO
r-4
C)
cli
o0 CV
00
C14
cz
6
Rio
0C
00110004000C=
o
6
00
0t0
06~
00
001oC
-00 t-C6C'
0100
0 "11
0)
L)
0
010
00
"-q0
000
C
01
0
0<=
0
0-
CO
x00
00
1=1-
00
CO
00
c0
0
Co
<7
OD
0y
I 0000
C)
00
0
00
00
o
I
0
0
00
0
01)cq
000
t
t: 0
c01~
I00I
I'd,1I -
00I0
t- m000
00 00 0
000000001-41C) to
0
X000
00
q<Q0c0000
0
00
CO
00 I
000 j
000
C
000000001CM
0
0
00
00
05D11
CO
0
00
0
00
Z2
0
00001C00001
00
o
0.-q
0000
O
00
01o
010
000
,q
.,
t
0
:0
r-04
00.
00
00
0
0
-
ko
00000 0C0COmCr
000 co t0000m000
0
00
0
O
0 00
T04- t-0
4613
cO
-0)
~0
0
k.
f
I0
00
00
000'
00.'.
00
+000
00
b00
0
0-
00
-4
0-
0+0-)
+D0+-D+
0+0~~
010 ~
Zo.r~
~0
.0)
4z
1940
207
EXHIBITS
cy:)
-te xo
coom "(14
Cq 4
00000
0000
0-i qto
r0((
10 4dq
C) 7-4Cq
cl
14
0)000r-4
00li00
C60?61 00
6S 0q01-
6ooe>or-
0000I000-: li
t
000)0) -
0
00
00
-:
X000 m
00000tli0-Z-0
0I0
t
00
t-
r0o-i
cc0
0
t6oor o
( r4000)0C10
416
4:c)
)0t0 C
C0
-
co
050X00.-oC
rm oio t-co
C: )C C )
0CD0CD
CD
0CD C>
0000
0
0
0co0m0
cq CCD00co
tl CD
000)
o00to
0000
c000000
L
o
0
000tom
000
000
-iL o0
000
000
0oo00or
C)00r-
00000D
00m 00
0040
4
00Lo 00
T00000
0
0
000
-,!i
a0t0 00; M 0=00000
6
6
104
000-0
-
0
-t
1 (omC
0000C) 0 -l
00mzq0
0144
w o
)0
0>
0~
q
z
r-4000000C1400
000
0LO00000
000C-C600000
ai400
r0i )t
c)0000
0000004 d40000)
C0-0000cc 0
0000000000
0000000-N
0000- t
000 -4t
0040000
0
z
C000000)
00000000
c
m0000
1000
-4' 0000
-4o
0
U
P:4
0
00
ca
00
79
0)
00'
VJ-&r@r~
00
)/ -) 00)1
&I
0)
H
t0
I-
qi
cc
00000
t-00
0
014r-CD -
00
LCI10C-
00
0
r
d00 a0
208
REPORT OF FEDERAL HOME LOAN BANK BOARD,
1940
EXHIBIT 32
FederalHome Loan Banks- Total dividends declared through June 30, 1940, and the
annual rates paid semiannually for the fiscal years 1939 and 1940
Total dividends declared through June
30, 1940
Federal Home
Loan Bank
Total
U.
S. Government
Members
$845,467.11
1, 685, 484 75
945, 574. 39
695,907.29
1, 723, 203.04
706, 534. 59
1, 661, 687. 45
772, 967. 70
682, 890. 62
423, 256 56
439,190 88
601,171 61
$231, 017. 69
404, 842. 05
186, 426. 77
223,120.94
774, 573.82
248, 376. 26
406, 972. 50
174,160.02
136, 568.11
85, 735 27
66, 645. 09
150, 988 81
1.4, 272, 763. 32 11,183,335. 99
3,089, 427. 33
Boston ...---.$1,076, 484.80
New York- _ 2, 090, 326. 80
Pittsburgh .......
1,132,001.16
Winston-Salem _
919,028.23
Cincinnati ---2, 497, 776. 86
Indianapolis .954, 910.85
Chicago-- __-2, 068, 659. 95
947,127. 72
Des Moines Little Rock .
819, 458. 73
Topeka ------508, 991 83
Portland------505, 835. 97
Los Angeles --752, 160 42
Total--.--.
--
1 Dividends are usually declared on a calendar-year basis.
Fiscal year 1939
Fiscal year 1940
July 1,
1938, to
Dec. 31,
1938
Jan. 1,
1939, to
June 30,
1939
July 1,
1939, to
Dec. 31,
1939
Jan. 1,
1940, to
June 30,
1940
Percent
1
1
1
1
2
11
2
2
1
1
Percent
1
1
1
1
2
1
2
114
1
1
Percent
1
1
Percent
1
1
1
M of 1
1
1
1X
11
1
1/4
(1)
(1)
1
1
1
114
1
11
1
11
114
1
----- - -- - -- -
--- II------- -
209
EulXHIBITSj
Co- ICotICo
00
Co
COlo
CC
Co o
Co(=
Q "Co
Co Co
S
Co
TCo
c6J
Co
Co
CoCo1:14co
c6 o 4 oC
CDoCo
CoICo
0i4
Co(o)
C6
Co
Q
Ctm
00 =
.,-4
I
CtCo
C cq
Co-d
Co414
C o
Co
to- C
P4
Cq
CC
X0cc)
00k--Co Co
4=LOC O
11
m
(Z
Cot-Co
tC)
o
ID
Co
Co1
~Co
Coo
olI
0
o
Co
Co
oC
*
co
Co
C)
0
o'li
CoC)
t
o'd
0 00
oo
C6i-t;
C too
6Co
Co
C
4cr
VZI-
Cof
0
0Co
Co
CoI
00
Co
00
C CoC5
4
q
OmC14
CIO1
Co00
Co- o
i (
C14
C io
CoII
Co co C
Cao00
o o
,0
Cr4Co
t
CoC>
T-
Co
Cl
Co)oN Co0o
m
o
Co
Co o
Co
',Co
Co
tCo
Co
mCo
coCo
Co
-
0C>
o
0o
o ld
-t
o
o:
o
t
co
Co
Coi
o
C
o
Cm
C
e
Co
X0
CC 1
I-cI
o
C
00oi-
C C)
'C)
CD
C
*0
4?4
CD
'Co
0
~C)
~C)Co
)
C-C)
CoCo
c:)
CL
SC3
Co~
Co to
4Z
-;-D
,Cco
0
Co
toCo
00
Co
-C
r
1
C
o
C
o
o
C
No
m~~ooo
C
o
C
tqCo C
m
CofCo
Q
Co
C
Co:
t-Co CoxC
C=o
Co Co
Coco
Cr
qoC6oo
XC0C
t -Com Co
0C
mC
":Co Co
Co Co
Co
Co
o
CoPCo
ltn
Co
<
4
ZQ
C
Co
x oCo
o
C
m
Co
Co0
CmCo
Co
i
00
Co
4Co14l
C
oo
I
NCo1,l
q
viC m
Co
co m
C
q
oCo
0
NC>Coq
N 00
kC3
0
Q0
Co
XC
Co9Co
CoC9Co
o=r-4
Ci4C
Co
4.4
o
Ci
~Il
m r-
CCo
-kICo
C)o=o coNCo Co
C)o
0
C )
cq
C(oo>CC) q
ccco
C
C)
1-4 44o
cCo0
4-D
cCocc
Q)
O
co
Co
mCo
Co
00
o
r--
210
REPORT OF FEDERAL HOME LOAN BANKK BOARD,
011
00
0)
r--i
Go
00
cl
C400
ooRX
000t-00
06t-o(
C)
io
X6
00
cq
001
0
+0
Q
0000 0m00
0
00
0
00w)
0a1)
00)00)00)
00010
4j
c
17,
-41o'
c
C
0Ie
00
00
0000
00
ll
0.011
m
000
00
00000010
01
000)
0
00
00
-N
00
0=
00
t
00
02~4
0)
00
0
c
00
Ct0001
CD
00
R0r)
I
C0)00
C000
00
C000
X00c
t-002
00
00000m
00000
0 -0
00
cq
00
00
00001
00
0
Cq
00
I0
0000
00C1100001-4
co1-1
t-
00
0
0
0
0T0000
1
0
000
00=>
000 100
14
C> 0
0
0000
00m
060
0
00
00
Ic
0)
00
~
I
~
0
0011
01010001
H000mP-1
)
0I0-
r- I
I
000000
cc .:0-0v
0
00
C)
0000
~lo000
00
o
0000
00
001
00
00400110
Cq0011
X0
001o0<=0
00
X600
00
1o0011
00000000CD
0000m 000
":vco
m11C000
000
000
00 00
0-1C>
0
000
N00.O
000
cl
0-
i00O
00
'0-0
0000001C)0-1)0m.0-I
o
I-00-10
0000
0
0000
001
10000
C14
-.1400-It-I1I
-_-:m
to0C)
0m
0000
ql
009
-000
00
100
0000
00
00000t00"I00"
100r-0011
S090
PC
000c
00
=I
00
0)
0)
=
00, 060
7-4
16 CY
00
m0/
0
0)
~00
0~
GO
0
00
10
000~
00
0
0000
in
0)
~0)
~
-4
0)0
-~0)
OC)
0).-.
020
0)0)
*~0
00)
000)
0~
000
'0)..'
00
00
C)
'0)
0
0
0)0d
o-
00
1940
211
EXHIBITS
EXHIBIT 34
FederalHome Loan Bank Board-Statementof receipts and disbursements
of the Board for the fiscal years 1939 and 1940
July 1, 1938, to
June 30, 1939
Balance at beginning of fiscal year- --------------Receipts:
Assessments upon
Federal Home Loan Banks ------------Home Owners' Loan Corporation..--------------------Federal Savings and Loan Insurance Corporation
Examining receipts -------------------------------------Miscellaneous refunds
Receipts from sales of property
Total receipts
--------------
Total cash and receipts
---------
------------------.
Disbursements:
----------Salaries .-- _-_-------------- -----Supplies and materials
-------------Newspapers and periodicals --------- ----- --.
-- --- ---Communications ...-.
-------------------------------------------------Travel
----------------Transportation of things ---------------------Printing and binding-----Photographing and duplicating - - ----------------------------Rents.
----Equipment, furniture and fixtures-Transferred to administrative expenses, Federal Loan Agency_
-------------------
Total disbursements-
-------------------------
Balance at end of fiscal year
July 1, 1939, to
June 30, 1940
$292, 476.78
$238, 425.11
225,000.00
125,615.00
69, 257. 28
643,939.19
6, 787.10
0
1450,000.00
133,716.41
117, 543. 60
675,167.24
19, 780. 16
580.85
1,070, 598.57
1,396, 788.26
1,363,075.35
1, 635,213. 37
888, 650.32
9,405.19
101.67
16,011.95
144,884.78
861.69
15, 365. 17
13, 822. 36
23,502.14
12,044.97
0
1,005,396. 57
12, 602.73
96.18
23, 202. 51
171,793.08
620.45
16,261.20
14,910.89
23,667.02
11,091.74
2,900.00
1,124, 650.24
1, 282, 542.37
238, 425.11
352, 671.00
1 Includes assessment made in advance of $150,000 for the period July 1 to Dec. 31, 1940.
EXHIBIT 35
Federal Home Loan Bank Board-Comparativestatement reflecting, by offices, the
number of Boardemployees as of the close of the fiscal years 1939 and 1940
1939
Offices of Board Members-----------Office of the Governor.
Governor's immediate office------Office of the Comptroller---------Office of the Chief Supervisor-----Federal Home Building Service
Section_
_
Total Governor's office--------Office of the Secretary
---------------
Office of Public Relations -------------
13
-
7
33
23
1939
1940
=
11
11
34
26
Division of Research and Statistics---Legal Department ----------------.-Review Committee ---------Examining Division:
Washington office----------Field-
-
-----------
8
20
71
91
Total Examining Division
21
16
Grand total ---------
6
6
---------
--
17
11
8
1940
10
11
10
9
8
191
233
200
241
347
396
212
REPORT OF FEDERAL
HOME LOAN BANK BOARD,
1940
EXHIBIT 36
Federal Home Loan Bank System-Members of the Federal Savings and Loan
Advisory Council, as of June 30, 1940
Federal Home Loan Bank District
-~I-
Elected or
appointed
Name
--
-John W. Ballard ---H. F. Cellarius ---David G. Davis ----Paul Endicott -I. Friedlander -----.
Paul F. Good----------R. P. Harold
---William E. Hodnett
W. C. Jones, Jr---G. E. McKinnis
F. S. McWilliams -J. J. O'Malley
L. W. Pellett----J. H. Soliday--
Des Moines-----------------------------Cincinnati----------------------------Los Angeles ------------------------------Do
----------------Little Rock----------------Topeka -----------------------------Boston_ -------------------------------Chicago.-------------------------------Little Rock -----------Topeka --------------------------------Portland---------------------------------Pittsburgh----------------------------New York ---------------------------Boston-----------------------------------Pittsburgh
---------------Indianapolis ------------------------------Do
-------------------Winston-Salem --------------------------
E. T. Trigg_--
Elected.
Do.
Appointed.
Elected.
Do.
Appointed.
Elected.
Do
Appointed.
Elected.
Do.
Do.
Do.
Appointed.
Do.
Elected.
Appointed.
Elected.
-
Wm. C. Walz
H. B. Wells---G. W. West-----I
I-
EXHIBIT 37
Federal savings and loan associations-Numberand assets as of the end of each fiscal
year, 1934 to 1940
Date
-
Number of associations
-----Total
June
June
June
June
June
June
June
--30, 1934 --------30, 1935
------------30, 1936 --------------30, 1937
30, 1938
30, 1939----------------30, 1940 ---------
370
851
1,135
1, 286
1, 346
1,386
1,429
New
320
554
637
647
640
636
633
---
Converted
50
297
498
639
706
750
796
Assets (in thousands of dollars)
-------- -Total
$41,402
304, 569
655, 192
986, 297
1, 213,874
1,442,069
1, 728,865
Source: Division of Research and Statistics, Federal Home Loan Bank Board.
New
$3,198
36, 145
116, 670
222, 528
301, 242
397, 239
506, 588
Converted
$38, 204
268, 424
538, 522
763, 769
912, 632
1,044,830
1, 222, 277
213
EXHIBIT'S
0d
02
0
C.)
0)0
00
0)
0
C
0
0)
0
0"
0
<)
0t-
0
I
00000010
-'
C4
C
4oo
I
0
=
01
00 d
>0 =)000c
1
-'o
t-
:1'00
0 0
)1-C
00
4
0
1
0
0-oo
N m-
C
0
0
4I: o
C)
oo
0-
00C610410
-
C
14
0o-
a-)00-)
C
"t'
) C
l0)0)00
0
0000
0CI
o
C)
m
0 0
00
00
0
)
000DCD
c>0c)
=
0x
0
0
0
000000
-4000000
0
00
000000000)
0
1
C)
C)
0
00-,t
Q
"
0
000006
wi0
0
Nd
0
0
-
0
o
)
0
00 'I
t-
I
00
0
Z00 0
C rI
t
x0cq
- - -oo
0
00to=q00t-m0
C)
;)C>
C
-0
tzl
X0
000r-
Iqc
00
000
,
(M C> a)
0
oo
O
00
U*)
0
0
co
0
~c o6
Ngg
m
0
00000
-I t cq000N
00co00X00C1 00
C) = (z =oCD
I00 O-
N
-mX
0
0
0
D 0a
00
lt0- fi00
1-
000
r4rC4C
o0000q
00000000
~e4
0
01t
00-C
0
0
-Xor-4X
0)OQio
0
0e
-)
0
q
Nto)0)
NZ00
r-i
N
000
o20
) 0000
o
-ifN00Q00Q
C N
0
0 m cc m
C6
0000000o m
~ o4o44
o
co
010
m
0) I
000000
0C
10
.0)
oC)0
0
t--.
o t
l .00 00
o
)0to000000m c
0
X0 0 CIOCq
AONd
-C
20)
Piz
zW
z
Z
z60
.N
0)
II
MI=
61
x
CDCIC>a)C
- 0PC
=
a>0
- 1-4
41
4
o4
)
C
0)oX00
m00-1g0
I01
00
000
000t0l
0
0)
0
-14 )0X
0=oC>
I0120c0VDC0
00
01C
q
=
0C6
I
0
0C
0m04c-d0Om
z6
I
006
214
REPORT
OF
C)
FEDJERAL HOME LOAN
C)
CO
01
0
CC=
a>C
a> CDCD CD
000
00
0)0
0
00e
01
OO
cq C
0)
q
O<=
C
D
CoCI
0
o rC
O
CtC'C
BAITK BOARD,
O
C>C
0
C>OCOCOCO(=
Co)
CC O
a
00000000
0
000
o
- C'co
0o
t0
0C
C'
QI,
Q
000
m
m
00000
O CO CO>
NCOCOC4
r
tc)CoOm
OOC
C
C
1940
Co'0CO
C('c '0=C>c:>
'C)COC
C k
oI
00000Itv
m
0mka
00
0!
00
00
00
t-OCCco
C4 t.
O
OCC
OO
COC
0
C)
a)
C)
w
N
Go - m c 0
CIOm
C
_4
r.____ -
)a)C D
0
6
-+-)
CC
c
00.-
C
r4
0 0 _q00 0
.6
0
V_-40000
-t
CO
CO
D
OC9m0
C)
C00
>CO
C C
D
C
00000
9
0000 -CI 00 ,-0
m
00000
Mo
o
o00r- 00 000to
o C)t-'-lr-i
m 4Crtm
r__Co:vCOCOCOCOCO":v
'0C C'q
o
0
tN10
C00000o
r..4
CD'C-CDODCCOCO
C)CD C> C)
OCO
MOCOt0CO
m
x
0
rq
q r.s
CD
aCO
0 m
10CCNOcO
cq
C)
'
40
0
0
.r..Co
00t0t-00000 U0000m Ow
00
t0C>lt 00000C
"1
I
Zl
q
co
C
1
0
000t~-:I
0CD000C
=0
4
CO
CO-4
N
C
0
'0
CO C q0,,C
O
CD
Cc
co
'~CCOCCO
Co
o
CS
C 00
C5CO6'01
rCo
CO
CCO
C OO
t_
00C
COI'0C0
0
0
00
6o
~
CO
COo
CO
C~o
CO
COOCOOC
O
C C '- V
'-
o0
COCCOO
C
Q
l Co ''C
00
CO
0C
CO,0C6'0TC'00000co
t-t
0
O(
lCCo
OC6
O
ICDOCD
Co
CICO=Oa> CI
=
t,:
C -Ct".co - C06.C6O
q
_COCOC=O
1CO OCO
0
COCq
0r_ o
0
(2)
C
Co
CoCO
C3
)
CC
CO
O~qcOcO 1C
COaCCOC
q"
o
C
~
CDCDCD
OCOCCOCODCD
O
rIOCCO
t=X
;
= R C)
C-C)
-C-C o
CCo~_CCCCO
0)00000
0
=rq?_(
01
C-oICO~v-o
0 10000
c
C C)O
CC
o
leCo r_
CONO'I00-I
CO
0
0la
'01
c'-
OOO
C
0
CD D000
0
C
C
iOL6
COD OCCO<C=O
C6O -CO-( -CO
toC
ot')
OO
m1 C
NCCO
dqV
t0
tI
C
(=CC
O-O- O
CoI
;
t-O
t
ko ICOCO-0C14
CO- OCOCCO"1r4r4
CC>c
o
qIqC
- qt
__
1
CO
COt- C-CO
0J
'C
0,OCDCDOCODOCDO
CDC)'C CDCD
C
'q0C0
r- a)
0l6)Ctco
I___ __
___0
_4___
0
0S
ob
4)
1-4 &.
C)
C)
C)
C)
C) co
4=Ot-O CC
a)C) =)
;)
) )
C)C)
>
D
C C
C>
CD CDCD C
C)CDCDO
C)C)
a
)
CD
C
_koItl
t
"tCqC) r._ t'0D
a)
0I
) =C) C)
CO'44
--I
X0
C:)OCO
COl
0
I
C
a
0
CO
X0-l~
X o
o
or~
q
c
C-1)q0 0
q
1)
q
0.bCO
0)
C3
CO
oq1- 0
6
z4.4zwz(z)
00
c0 ) 114c1tvC
CDCo<=C>
6
N4.1 -
CO CDCD D
X0COC=OO
o.edqCO C0C t'
ZH
I
CO~
EXHIBITS
0000000
co00
0000icofo q000r
0
C) C>C)
00
0I> X0000000
0000004 0
00
w0'X6~
Lo00
0
0
C)
'0
C)a> (
000=0000o000cc c
00000> 0000
004
Nd4
01)ciY.
000
'00
0000000t
00
400
00000 r0000000lM-oo
0000000000t 0
= = 00ThN
r00000000000
CD0000000(= D
C
00000000000000
0000m00
0
000-000
215
216
REPORT OF FEDERAL HOME LOAN BANK BOARD,
1940
EXHIBIT 39
Federal savings and loan associations-Privateinvestors in repurchasable shares and
private repurchasable capital, by Federal Home Loan Bank Districts and by
States, June 30, 1989, and June 30, 1940
Number of private investors in
repurchasable shares
Private repurchasable capital
Federal Home Loan Bank
District and State
United States----No. 1-Boston
-----
Connecticut---------Maine----------------
Massachusetts--------New Hampshire ------Rhode Island ---Vermont------------No. 2-New York ---
June 30,
1939
June 30,
1940
Increase
June 30,
1939
1, 299,915
1, 562, 079
262,164
$990, 871, 600
98, 772
119,804
21, 032
87, 534, 300
105, 678, 500
18,144, 200
14, 457
599
75, 330
6, 202
706
1, 478
17, 016
927
90, 582
8, 379
1, 142
1, 758
2, 559
328
15, 252
2,177
436
280
6, 891, 600
357, 200
72, 756, 300
5, 385,100
286, 600
1, 857, 500
10,870,200
601, 300
84, 263, 600
7,013, 600
581, 300
2,348, 500
3, 978, 600
244,100
11, 507, 300
1, 628, 500
294, 700
491,000
12,164
105, 576, 800
130,130, 300
24, 553, 500
3, 277 ----8,887
105, 576, 800
3, 310,000
126,820, 300
3, 310,000
21,243,500
June
194030,
Increase
Increase
$1, 268, 048, 000 $277, 176, 400
185,205
197, 369
----185, 205
3, 277
194,092
---
56, 644
87, 850
31, 206
37, 850, 900
62, 373, 900
24, 523,000
Delaware----------
78
47, 532
9,034
97
77, 521
10, 232
19
29, 989
1,198
151,000
29,901,000
7, 798,900
220, 500
51, 778,000
10, 375, 400
69, 500
21,877,000
2, 576, 500
119,191
160, 748
41, 557
96, 682, 900
144,090, 800
47, 407, 900
Alabama-------------District of Columbia-----Florida
Georgia --------------Maryland -North Carolina -------South Carolina-------Virginia
6, 852
7, 837
29, 822
16, 942
24, 732
8, 373
13, 225
11,408
9, 306
16,020
39, 188
21,454
29, 819
13, 596
15,458
15,907
2, 454
8,183
9, 366
4, 512
5,087
5, 223
2, 233
4,499
4, 476,100
6, 391,500
25, 678, 600
11, 828, 800
17, 374, 700
6,869, 300
12, 367, 200
11,696,700
7,024, 900
13, 961, 300
39, 038,900
16, 528, 600
22,010, 400
12, 291, 600
15, 515, 300
17,719,800
2, 548, 800
7, 569, 800
13, 360, 300
4, 699,800
4, 635, 700
5, 422, 300
3,148,100
6,023,100
No. 5-Cincinnati ---------
255,100
281, 337
26, 237
212, 056,900
242,902,000
30,845,100
Kentucky------------Ohio
Tennessee
47, 419
188,160
19, 521
51,052
206,902
23, 383
3, 633
18, 742
3,862
47,061,400
152, 425, 700
12, 569, 800
52, 354, 700
173,024, 300
17, 523,000
5, 293, 300
20, 598, 600
4, 953, 200
No. 6-Indianapolis------
100, 138
122,805
22, 667
90, 997, 400
108, 279, 200
17, 281,800
70, 291
29,847
84, 762
38,043
14,471
8,196
61, 297, 600
29, 699, 800
71,798,900
36, 480, 300
10,501, 300
6, 780, 500
97, 733
133, 094
35, 361
73, 511, 500
105, 803, 500
32, 292, 000
86, 724
11,009
114,460
18, 634
27, 736
7, 625
66,166, 500
7, 345,000
89, 497, 200
16, 306, 300
23, 330, 700
8, 961, 300
New Jersey --------------New York
No. 3-Pittsburgh
Pennsylvania -------West Virginia
No. 4-Winston-Salem -__
Indiana-------------Michigan
No. 7-Chicago-------Illinois
Wisconsin-------------
81, 785
102,030
20, 245
56, 299, 200
76, 661,100
20, 361, 900
Iowa -------------Minnesota-----------..
Missouri
North Dakota -----South Dakota--------
10, 867
41, 653
25,809
2, 163
1, 293
14,423
54,393
29,029
2, 828
1, 357
3, 556
12, 740
3,220
665
64
8, 169,000
23,155, 200
22, 536, 400
1, 429, 600
1, 009, 000
12, 380,
34, 320,
26,953,
1,855,
1, 151,
600
300
700
300
200
4, 211, 600
11,165,100
4, 417, 300
425, 700
142, 200
No. 9-Little Rock-----
53, 643
60, 532
6, 889
53, 550, 500
66,239,500
12,689,000
Arkansas
Louisiana-----------Mississippi-----------New Mexico-----------------Texas
6, 337
7,003
3, 519
1,130
35, 654
7, 498
7, 444
4,053
1, 340
40,197
1,161
441
534
210
4, 543
7, 766,
10, 716,
3,159,
1, 279,
30, 628,
9,879, 300
11, 278, 700
4,085, 500
1, 743,800
39, 252, 200
2,112,800
562,100
926, 300
464, 300
8, 623, 500
No. 8-Des Moines-----
500
600
200
500
700
217
EXHIBITS
Federal savings and loan associations-Privateinvestors in repurchasableshares and
private repurchasable capital, by Federal Home Loan Bank Districts and by
States, June 30, 1939, and June 30, 1940-Continued
Private repurchasable capital
Number of private investors in
repurchasable shares
Federal Home Loan Bank
District and State
June 30,
1939
June 30,
1940
Increase
June 30,
1939
June
194030,
Increase
68,103
81, 413
13, 310
$65, 728, 500
$80, 324, 300
$14, 595,800
------
15, 127
17,397
2,270
13, 414, 000
15,510,700
2,096,700
----Kansas--Nebraska ---Oklahoma-------------
17, 857
5, 564
29, 555
24, 997
6, 498
32, 521
7,140
934
2,966
13, 571, 600
4, 283 700
34, 459, 200
20, 667, 300
5, 277, 000
38, 869, 300
7,095, 700
993, 300
4, 410,100
No. 11-Portland-----------
113, 059
125,154
12,095
42,828, 600
54, 262, 400
11,433,800
8,487
558
13, 725
8, 631
79, 762
1, 717
179
8, 234
677
16, 192
9, 950
87, 353
2,491
257
-253
119
2,467
1, 319
7, 591
774
78
3, 778, 600
264, 600
7, 298,000
3,863, 500
26, 264,600
1, 280, 200
79,100
4, 763, 800
385, 800
9, 514,800
4, 550, 200
32, 705, 300
2,165, 200
177, 300
985,200
121,200
2, 216,800
686, 700
6, 440, 700
885,000
98, 200
70, 542
89, 943
19, 401
68, 254,100
91, 302, 500
23,048,400
Arizona-------1, 781
67, 657
California
-----Nevada---------------------------1,104
Hawaii-----------------
2, 526
85, 529
560
1, 328
745
17, 872
560
224
1, 259,100
65, 508, 800
------1, 486,200
1,907, 900
87, 005, 800
517, 300
1,871, 500
648,800
21, 497, 000
517, 300
385, 300
No. 10-Topeka-------------
Colorado
Idaho------------------Montana-------------Oregon----------------Utah-----------------Washington -----------Wyoming ------Alaska
No. 12-Los Angeles -
--
Source: Division of Research and Statistics, Federal Home Loan Bank Board.
EXHIBIT 40
Federal savings and loan associations-Investmentsof the U. S. Treasury and the
Home Owners' Loan Corporation, by Federal Home Loan Bank Districts and by
States, June 30, 1939, and June 30, 1940
Bank District and State
June 30, 1939
United States ..---------------No. 1-Boston....
No. 2-New York.----..
-----------------
New Jersey---- ----------------------New York-----------------No. 3-Pittsburgh......-------
See footnote at end of table.
$197, 267, 900
$19, 757, 600
9, 645, 700
8,898, 700
747,000
3,132,500
3,105, 500
257,000
257, 000 ---5,446,200
5, 251, 200
475,000
----285,000
285, 000--50, 000 ----------.----
-
27, 000
195,000
475,000
50, 000
29,143, 300
23, 692, 200
5,451, 100
- -------29,143, 300
291, 000
23,401,200
1291,000
5,742,100
9,413,800
454,900
--------------
Delaware --------.----.-----------Pennsylvania-----------------------.
West Virginia ..------------
Decrease
$217, 025, 500
---------------
Connecticut ----------------------Maine- ..----------------Massachusetts----------------New Hampshire------------------------------------Rhode Island-------Vermont --....
------------
June 30, 1940
9,868, 700
-- - -
---"
6, 690, 700
3,178, 000
---- --- -- --- - -- --- -- 6,360,800
3,053,000
329,900
125,000
218
REPORT OF FEDERAL HOME LOAN BANK BOARD, 1940
Federal savings and loan associations-Investments of the U. S. Treasury and the
Home Owners' Loan Corporation,by Federal Home Loan Bank Districts and by
States, June 30, 1939, and June 30, 1940-Continued
Bank District and State
June 30, 1939
June 30, 1940
..---------
30, 029, 300
27, 210, 300
Alabama-- ------------------------------District of Columbia-- Florida------------------------------Georgia--------Maryland- --------------------------------------North Carolina
South Carolina
Virginia
--------------------------------
1, 310, 500
1,265, 500
45,000
11,856,400
4,396,900
3,857, 500
3,093, 500
1, 922, 500
3, 542, 000
10,487,200
3,925,800
3, 832,500
2, 832, 500
1, 804, 300
3, 062, 500
1, 369, 200
471,100
25,000
261, 000
118, 200
479, 500
No. 5-Cincinnati -----------------------------------
26, 708,100
22, 783, 300
3, 924, 800
Kentucky-------------Ohio --Tennessee------------------------------------------
3, 631, 500
16, 202,000
6,874, 600
3,117, 700
13, 534,800
6,130,800
513, 800
2, 667, 200
743, 800
No. 6-Indianapolis-----------------------------------
12,036,800
10,637,300
, 399,500
8, 932, 500
3,104, 300
7, 774, 800
2,862, 500
1, 157,700
241,800
23, 372, 500
21, 750, 200
1, 622, 300
20, 250, 500
3, 122,000
18, 023,100
3, 727,100
2, 227,400
1 605,100
18, 793, 300
18, 516, 900
276,400
2, 482,000
8, 536, 300
7, 107,000
315,000
353, 000
2,364, 900
8, 466, 000
7, 033, 000
300,500
352, 500
117,100
70, 300
74,000
14,500
500
8,881,600
7,901, 300
980,300
1, 650,000
370,000
754, 500
292, 000
5,815, 100
1,332,300
267,500
702, 700
232, 500
5,366,300
317, 700
102,500
51,800
59, 500
448, 800
----------------------------
9,435, 500
8, 734,200
701,300
Colorado-----------------------------------------Kansas------ ----------------- ------------------Nebraska -------------------------------------------Oklahoma-------------------------------------------
2, 594, 500
3, 255,000
1, 336, 000
2, 250,000
2,461,400
3,236,800
1,153,000
1,883,000
133, 100
18,200
183,000
367,000
18,337, 500
17, 645,900
691, 600
No. 4-Winston-Salem
--------......
Indiana .------------------------------------------Michigan------------------------------------------No. 7-Chicago
--------------------
----------Illinois---------------------------Wisconsin -----------------------------------No. 8-Des Moines ----------------------------------------------------Iowa -------------Minnesota ----------------------------------------Missouri -----------------------------------------North Dakota -----------------------------South Dakota----------------------------------No. 9-Little Rock
--------------
Arkansas -------------------------------------------Louisiana----------------------------------------Mississippi -----------------------------------------New Mexico ----------------------------------------Texas -------------------------------------------No. 10- Topeka
No. 11-Portland ---------
------------------------
Idaho-----------------------------------------------Montana-----------------------------------------------------------------------------------Oregon
-------------Utah
-----------Washington --------------------------------------Wyoming --------------------------------------Alaska--------------------------------------------No. 12-Los Angeles---------------------------------Arizona-------------------------------------------California ------------------------------------Nevada....----------------------------------------Hawaii.
---------------------------- --
I Increase.
50, 000 -----
2,325,600
30,000
4, 597, 500
1, 700,000
8, 643, 000
1,008,100
33,300
---
Decrease
2,819,000
50,000
2,265, 500
60,100
-.-__
30,000
4,468,200
129, 300
1, 700,000 ..-...
__- __
8, 223,300
419, 700
925, 600
82, 500
33,300 ...
20, 773, 200
20, 083,800
689,400
605, 000
20, 168,200
655,000
19,428,800
150,000
739, 400
219
EXHIBITS
EXHIBIT 41
Federal savngs and loan associations-Summary of new mortgage loans made by
reporting associations during the year ended June 30, 1940
Federal Home Loan Bank
District and State
United States--District No. 1 ----Connecticut ------Maine----------------Massachusetts --------New Hampshire -----Rhode Island --------Vermont ------ -----District No. 2-----------New Jersey-----------New York ------District No. 3
Construc
tion
Home purchase
Refin
ing
and recon- Other purditioning
poses
Total
$178, 611,800 $138, 703,900 $85,128,300 $20, 757, 200 $34, 253,600 $457, 454, 800
______________
.
=
I
33,432, 500
11, 217, 500
6, 576,600
1,870,400
2,099, 200
11, 668, 800
2,230, 400
93,400
8, 508, 400
406,800
199, 300
230, 500
1,386,500
109, 700
168, 500
43,900
5,600
1,457, 300
1, 535, 200
418,100
145, 500
1, 600
53, 600
30, 600
I
=1
I
- - I--l-- -1, 253, 700
4, 556, 400
13, 257, 700
635, 500
1,460, 400
118,200
8, 711,300
430, 700
143,100
353,800
92,900
4, 558, 500
313,700
116, 400
108,600
177,800
198,400
89,400
51,200
15, 692,900
13,059, 300
4,467,000
15, 870, 700
5,355,500
354, 000
24, 770, 700
1,714,800
460,400
777,100
35,574,000
584,300
13,500
1,240,200
530, 300
35, 043, 700
1,157,900
1,324,800
29, 512,800
5,000 -__---.
753,600
969, 200
399,300
355, 600
110,500
25.107,900
4,294,400
8, 827,300
12,869, 400
5,333,400
Delaware-------------Pennsylvania---------West Virginia--------
38,700
7,342,000
1,446,600
48,300
11,779,200
1,041,900
18,500
4,263,900
1,051,000
--------
32, 541,000
19, 076,000
11,466,600
2,829, 500
5, 683, 000
71,596,100
Alabama------------District of Columbia
Florida --------------Georgia---------------Maryland------------North Carolina-------South Carolina
Virginia------------
734,000
3,698, 300
12, 427, 500
2,892,900
3,430,500
2,652, 300
3,208,900
3,496,600
640,400
1, 215,400
3,204, 200
1, 773, 100
7, 939, 700
1,157, 900
998,100
2,147,200
793,500
1,626,600
2,812,800
1,804, 100
1,085,700
1, 162,900
982,500
1, 198,500
208,300
203,600
634, 200
556,400
91,200
393,400
486, 500
255, 900
194,600
408,300
2,921,200
460,400
240, 500
450, 000
525,000
483, 000
2,570,800
7,152,200
21,999,900
7,486,900
12,787,600
5,816, 500
6,201,000
7,581,200
22,117,300
24,401,000
12,626,500
3,603,100
5, 241, 200
67,989,100
2, 759,800
16,411,000
2,946,500
4, 158,400
19,044,500
1, 198, 100
1,979,800
8,579,100
2,067,600
757,800
2, 415,100
430,200
1,088,200
3,646,200
506, 800
10, 744,000
50,095,900
7,149,200
District No. 4
District No. 5-----------Kentucky -----Ohio----------------Tennessee - ----District No. 6 ------
9,257, 000
7,421, 100
5,503,000
1,888,800
2, 253, 000
26,322,900
Indiana--------------Michigan--------------
4,422,500
4,834,500
5,809,800
1,611, 300
3,228,400
2,274,600
1,451,100
437, 700
1,344, 500
908,500
16,256,300
10,066,600
--------
10,834,600
14,453,700
11,233,500
2,763,200
3, 255,600
42, 540,600
Illinois
Wisconsin -------------
8,841, 300
1,993,300
12,941,900
1, 511,800
10,405,200
828,300
2,593,400
169,800
2, 724,900
530, 700
37,506,700
5, 033,900
12,929,600
9,367,400
7,189,200
1, 544, 700
2,119, 900
33,150,800
2,210,300
7,799, 200
2,535,600
289,000
95,500
2, 064, 100
3,946, 700
3,096,300
142,900
117,400
1,319,900
3,656,500
2,008,200
109,100
95,500
391, 500
755, 400
305, 600
40,900
51,300
346,600
1,384, 400
292,900
45,400
50,600
6,332, 400
17,542,200
8,238,600
627,300
410,300
10,296,600
5,076,000
3,694,600
1, 552, 500
2,312, 500
22,932,200
1,152,300
1, 548,300
715,800
254, 700
6,625, 500
1, 125,900
565, 600
278, 500
97,800
3,008, 200
790,900
268,800
458,600
199,900
1,976,400
310,100
262, 300
141, 200
66, 500
772,400
621, 700
405,000
219,900
27, 700
1,038,200
4,000,900
3,050, 000
1,814, 000
646,600
13,420,700
7, 653,600
8,298, 700
4,927,900
1,192, 000
3,451, 700
25, 523,900
1,935, 600
1,286,400
1,025,100
3,406,500
2,009,600
1,888,100
560,500
3,840,500
1,407,300
675,100
446,100
2,399,400
257,500
282, 800
70, 000
581, 700
487,800
643,400
203,500
2,117, 000
6,097,800
4,775,800
2,305,200
12,345,100
District No. 7
District No. 8--------Iowa- -------------Minnesota -----------Missouri----- ----North Dakota ------South Dakota --------------
District No. 9..
Arkansas-------------Louisiana-----------Mississippi-----------New Mexico----------Texas _-----------District No. 10. -----Colorado-------------Kansas ..-----
--
Nebraska
Oklahoma-.-----------
----
--
'
-u
220
REPORT OF FEDERAL HOME LOAN BANK BOARD,
1940
EXHIBIT 41-Continued
Federal savings and loan associations-Summary of new mortgage loans made by
reporting associationsduring the year ended June 80, 1940-Continued
Federal Home Loan Bank
District and State
District No. 11
Idaho
------
Construetion
Home purchase
Refinancing
Repairs Other pur
poses
anireon-
$8, 725,000
$5,938, 200
$5,009,800
$1,192,600
$2,605,100
577,500
449,400
353,200
142,900
260,700
157,500
2,207, 500
750,100
4,513, 700
350,800
167,900
1,783,700
68,100
991,200
448,000
3,658,400
306,500
16,600
14, 700
916,500
245,800
3,173,300
284,000
22,300
7,400
232, 500
53,300
634,500
87,200
34,800
14.800
429,900
199,900
1, 547,800
152,000
0
262,500
4,777,600
1,697,100
13,527,700
1,180, 500
241,600
27,890,300
7,327,200
7,010,800
527,000
2,653,900
45,409,200
803,100
26, 623,800
45,000
418,400
342,000
6,664,600
19,500
301,100
127,200
6,721,100
19,500
143,000
50,500
423,400
9,600
43,500
128,600
2,438,100
23,700
63, 500
1,451,400
42,871,000
117,300
969,500
------
Montana-------------Oregon------..
--------Utah
----------Washington .-------Wyoming
Alaska------District No. 12 -
-----
Arizona-----California ------Nevada
------Hawaii -------
Total
$23,470, 700
Source: Division of Research and Statistics, Federal Home Loan Bank Board.
EXHIBIT 42
Federal savings and loan associations-Firstmortgage loans outstanding (net), June
1985 through June 1940
June
June
June
June
June
June
1935----------------------------------1936-----------------------------------1937----------------------------------1938----------------------------------1939 -------------------------1940 --------------------------------
$186, 003, 000
474, 560, 000
742, 354, 000
943, 780, 000
1, 136, 289, 000
1,404,953,000
Source: Division of Research and Statistics, Federal Home Loan Bank Board
EXHIBIT 43
Federalsavings and loan associations-Selectedbalance-sheet items for 1,344 identical
new and converted associations,as of June 30, 1939, and June 30, 1940
[Dollar amounts in thousands]
618 new associations
726 converted associations
All 1,344 associations
June 30, June 30, Percent June 30, June 30, Percent June 30, June 30, Percent
1939
1940
change
1939
1940
change
1940 change
1939
...------$369, 524 $472,631
Total assets .--First mortgage loans
held--------------- 329, 080 424, 876
2, 894
2, 603
Real estate owned ...
Cash and Government
obligations-----------. 24,631 29, 257
218, 406 315,152
Private capital-....--Government invest
ment ...-------Reserves and undivided
----profits I--
+12 $1,379,723 $1,606,763
+16
+17
-18
1,088,265 1, 311, 539
92,122
76,003
+21
-18
75,594
864,481
+18
+18
88,952 104,851
950, 385 1, 179, 633
+18
+24
+28 $1,010,199 $1,134,132
+29
-10
759, 185
89, 228
886, 663
73,400
+19
+44
64, 321
731, 979
92, 793
86, 403
-7
113, 008
99,640
-12
205, 801
186,043
-10
9, 553
13, 696
+43
56, 545
61,381
+9
66,098
75,077
+14
1 Reserves and undivided profits were taken from the July monthly reports in order to reflect the condition
of the institutions after the closing of the books and accumulations from net earnings during the preceding
6 months.
221
EXHIBITS
, EXHIBIT 44
Federal savings and loan associations-Consolidatedstatement of operationsfor 1,384
reporting Federal savings and loan associations,for the year ended December 1939
[Dollar amounts in thousands]
Amount
Item
Ratio to
gross
operating
income
GROSS OPERATING INCOME
Interest:
On mortgage loans-ordinary cash collections ..-------------------------------On mortgage loans-all other
On loans on shares, passbooks, and certificates ------------------------------On real estate sold on contract------- -- --On investments and bank deposits --Other -----------------------------------------------Premium or commission on loans (current only)
Appraisal fees, legal fees, and initial service charges ------ --------------------- ---------------Other fees and fines
Gross income from real estate owned --------------------------------Less-cost of repairs, taxes, and maintenance -----------------------Net income from real estate owned ---------------------------------------------------Gross income from office building
Dividends on stock in Federal Home Loan Banks--------------------Other dividends -----------------------------------------------Miscellaneous operating income----------------------------------Gross operating income
........----------------------------------
Ratio to
net
income
Percent
-----------.
------------------------------------------ -----------------------------------------
$67, 478
805
238
2,984
514
85
1,147
1, 703
322
(7,907)
(6,352)
1,555
882
207
27
308
Percent
86.23
1.03
.30
3.81
.66
.11
1.47
2.18
.41
(10.11)
(8.12)
1.99
1.13
.26
.03
.39
78, 255
100.00
10,405
175
427
267
1,383
804
342
499
2,358
669
501
440
1,546
175
349
224
1, 678
13.29
.22
.55
. 34
1.77
1.03
.44
.64
3.01
.85
.64
.56
1.98
.22
.45
.29
2.14
22, 242
28. 42
41.71
56, 013
71. 58
105.06
146.77
LESS OPERATING EXENSE
Compensation to directors, officers, employees-----------------------Collection expense (agents, etc.) ------------------------------------Legal services-retainer, travel, and special...--------------------------Expense account of directors, officers, and employees ----------Rent, light, heat, etc ------------------------------Repairs, taxes, and maintenance of office building----------Depreciation of office building---------------------------------------Furniture, fixtures, and equipment, including depreciation -----------Advertising .-----------------------Stationery, printing, and office supplies
..----------------------------Telegraph, telephone, postage, and express -------------------------Insurance and bond premiums---------- -------------------------Federal insurance premium-......--------..---------------------------Audit-----------------------------------------------------Supervising examinations and assessments-------------------------Organization dues ...
..-------------------------------------------Other operating expense ..------------------------------------Total operating expense -------------------------------------Net operating income before interest and other charges -----
----
-----------------------------------------------------------------------------------.
-------------------------
LESS INTEREST CHARGES
On deposits, investment certificates, etc -------34
On advances from Federal Home Loan Banks----------------------2,671
On borrowed money.-------------------87
Total interest-------Net operating income-----......
----------------------------------------------
----.
-
.04 -..-3.42
.11 --------
2, 792
3. 57
5.24
53, 221
68.01
99.82
ADD NONOPERATING INCOME
Dividends retained on repurchases and withdrawals -------Profit on sale of real estate-- ------------------Profit on sale of investments --------------Other nonoperating income
--------------Total nonoperating income
.----------.----
Net income after interest and before charges ------
-----------
18
1, 327
318
219 ---
.03
2.49
.60
.41
1, 882
2. 40
3.53
55,103
70.41
103. 35
222
REPORT OF FEDERAL HOME LOAN BANK BOARD,
1940
EXHIBIT 44-Continued
Federalsavings and loan associations-Consolidatedstatement of operationsfor 1,384
reporting Federalsavings and loan associations,for the year ended December 1939
Continued
[Dollar amounts in thousands]
Item
Amount
Ratio to
gross
operating
income
Ratio to
net
income
LESS NONOPERATING CHARGES
Foreclosure costs and back taxes on real estate acquired (unless capi
talized or charged to reserves) -------Loss on sale of real estate-------------------------Loss on sale of investments------------------------------------------
Other nonoperating charges ---------
----
----
Total nonoperating charges
Net income for the year
------
---
Percent
$86
1,143
61
494
-----------
Percent
.16
2.15
.11
.93
1, 784
2.28
3 35
53, 319
68. 13
100. 00
LESS TRANSFERS FOR RESERVES AND DIVIDENDS
For bonus on shares --------Legal reserves ---------------------
-------------.-----.--.
Federal insurance reserve --------
--------------
For contingencies
-------------
------
-
Real estate reserve ----------------Other ..........------------Dividends------------------------Balance to undivided profits-----------.-----------------
122
834
2,986
3,020
609
171
40, 608
4. 969
.23
1.56
5.60
5.66
1.14
.32
76.17
9.32
Source: Division of Research and Statistics, Federal Home Loan Bank Board.
EXHIBIT 45
Federal savings and loan associations-Operatingratios of 1,398 Federal savings
and loan associations grouped as to size of association
[Based on annual reports for 1939]
Number of
associations
Asset groups
$0 to $74,999-------------$75,000 to $149,999------$150,000 to $299,999 ------$300,000 to $499,999 - $500,000 to $749,999 ..------$750,000 to $999,999 ..------$1,000,000 to $1,499,999 ---$1,500,000 to $2,499,999 $2,500,000 to $3,999,999---$4,000,000 to $5,999,999 ..-------------Over $6,000,000-Total associations
.-
Gross
Operating
operatingcomeexpense
to averto average net
age net
assets
assets
Operating
expense
to gross
operating
income
Compensation to
gross
operating
income
Advertis
ing to gross
operating
income
90
187
275
199
155
116
145
110
57
29
35
6. 33
6. 41
6.15
5. 97
5.87
5.86
5. 83
5. 57
5. 49
5. 31
4.92
1 61
1.72
1. 75
1. 72
1. 77
1.62
1 68
1.59
1 45
1 52
1.33
25. 38
26. 92
28.48
28. 75
30.18
27. 70
28. 73
28. 62
26. 50
28. 64
27. 00
13. 00
15. 01
15.11
15. 24
15. 54
14.09
13.95
13.38
12. 21
13.13
11.94
2. 27
1.91
2. 00
2. 48
2. 63
2. 49
2. 99
3.49
3. 00
3. 69
3. 26
1, 398
5 51
1. 54
28.03
13.39
3.03
223
EXHIBITS
EXHIBIT 46
Federal savngs and loan associations-Average annual dwidend rates declared foi
the calendar years 1938 and 1939 1
Federal Home Loan Bank
District and State
1938
1939
United States -..
------
3.49
3.39
No. 1-Boston
---------
3.29
3.11
3.42
3 19
3 27
3.50
3 00
3.33
3.41
3.13
3.04
3.50
3.00
3.03
Connecticut-------------Maine-----------------Massachusetts ----------New Hampshire ---Rhode Island
Vermont---------------No. 2-New York----------New Jersey..-------New York--------------
2.68
---
2
2.58
3.00
2.68
2.58
3.84
3 72
West Virginia-----------
3. 50
3.78
3.99
3.50
3.67
3.91
No. 4-Winston-Salem -----.
3.92
3.80
Georgia-----.----------Maryland---------------North Carolina ---------South Carolina ---------.
Virginia------------------
3.94
3.98
3.98
3.93
3 60
4.15
4.00
3 98
3.77
3.69
3.84
3.87
3.44
4 08
3 82
3.98
No. 5-Cincinnati------------
3.56
3.40
Kentucky --------------
3.93
3.39
4.03
3.70
3.24
4.01
No. 6-Indianapolis --------
3.11
3 09
Indiana -- -----Michigan- ---------------
3.12
3.09
3 12
3.05
No. 3-Pittsburgh
Delaware .--------------Pennsylvania
--------
Alabama----------------District of Columbia-- --Florida
Ohio
------
-----------
Tennessee - ------------
1
Federal Home Loan Bank
District and State
No. 7-Chicago .. --
---
1938
1939
-
3.73
3.53
Illinois-----------Wisconsin-------------------
3.70
3.96
3.52
3.59
------
No. 8-Des Moines
3.38
Iowa......---------- -- --Minnesota---------------Missouri-------North Dakota- ------------South Dakota --------
3.76
3.04
3.56
3.23
3.93
No. 9-Little Rock
Arkansas----------------Louisiana --------------Mississippi
--------New Mexico
Texas -----
------
No. 10-Topeka --------------Colorado..-------------------Kansas --------------------Nebraska ---------------Oklahoma -----------------No. 11-Portland
-------_,
Alaska ----------- ---------Idaho ----------..
Montana ---------------.
Oregon ---------------------Utah . . . . . . . . . . . .
Washington----------------Wyoming- -------------No. 12-Los Angeles -----Arizona ..----------California------------------Nevada-----....-------.. -- Hawaii------------------- -
3.34
.........
3.70
3.04
3.53
3.34
3.78
4.15
3.87
4.06
4.02
4.05
4.09
4.24
4.02
3.84
3.85
3.99
3.84
3.71
3.63
3.33
3.47
3.22
4.05
3.20
3.35
3.20
4.05
3.37
3.25
4.00
3.51
3.50
3.38
3.34
3.32
3.91
4.00
3.46
3.50
3.31
3.04
3.18
3.86
3.89
3.82
4.00
3.90
4 00
3.82
4.00
3 50
3.50
Average weighted by amount of invested capital.
2 The average for District No. 2 is the same as the average for New York because the number of institutions
in New Jersey was so small as to have no effect on the District average.
224
REPORT OF FEDERAL HOME LOAN BANK BOARD,
R
t
2^ &
^
§-.Z
<d
§0
t,
Cd
o
^H
E-4
co
Q0
rQ
1940
225
EXHIBITS
41.)
00
I-
cO I OO
C)
t-C- 00
V0004 CO1C- (0
Q
V- M
tC
C6
C40
m000
=00
000
co
Co
t-Or-(00 -4
~c
t-0w0
CO
C-CMOI00
"O
C
00000
f4t(MCO
.)00 0000C o00
T
,0
C6,4
c
C1 cC-C-rmCo t
4mlam
=C-C COI
CO
oCo
= (M
o
000
to0 m z. w q
00I Ctto
o
to00-40C0
(M00
0
0
0
ld0000
Oct1o11C 6
coC-)
occOLOw0 =
0CI-gO
.0 -w=
w000
CO
~
C-to
~
~
=0mO<D00t00
mCO00
C
0
00
cO0cO
00c
0x6 CO
000CC
CO CO
-0C000
00
00
00
000
00
00
-
~
~
ccO
I00
01000c0
cococo
C)-
CO
r-11
CO
t-
000
'e
Cf
'C4
~
XO
00
X00
0 j
CO1'
0
CC-00
t-'
1-C-(=
COj0CO00
-I
coCCv
'mCO o 0
CC
m
0
C o
I
LO'
CO
00000
CO"1"0
-,::r0
Co
'
0
It
LC
1"
-0C
00Go
00010('Im '000t
001-00 O't0Cd000CO
CO
COCD
0
4"DC
O m0C: '0
I-0
00
0
h
C CmCO 0
0=CC
ICooC
t,:'
'-"C
0
(M'Co
'00000
IC QCO
00
00
INC0c000 00
ca0
CC
0
0
CCC0CO00Cc00C
000
N0CO0t- 0
to00
rCO0000
" "V- o Q
-
0000000O
m0
=
COC-COCCOi
-0r0
C
Oi
Co
CO
4CONCO
CO0
'IR0
co00-0
10
00COI00
000
~
CO
0C
00000 0 0CC-CO
=COt0-00"'00000m
0 CO
CCO100C00
0
000C
00
m m LO C:
RWC000<i
0
0.O0-g'
z- egi0
0
C40000
0
CO~c
C
C
CO O
OCO
C
00
~
o;
C
".00
CO0000
1
00O
rICO
1
w
IN
-40
00CO
"1
0
C- M-CO
-CoCICO":C;o -O OO___L
CC
CO
.1
I
1
_
_
_
e00
0
_
ofC
00
C00CO0a
C- 4~
t
00
0
_
_
_
'
0
0C0000
00
0to= 000o
NCC-C
o
1tv00Cz
0 0
CO
-CO
CCO -t000
Co000cO0N0w
C ) l0
o000
-41100'0
N0C W00
cc CO 0
C -0CO00
CUCo=,d4C"CLO=00000000 D0
0O
C
OC0'0
c
-4
O
C0000
Ncx
0
C0000000
In
CO
0000M C
CO00
0 000 C-o0
00CO
CO O
00CO
=M
CO00
CO0- 0
004 0=0I- ==00 00
'CMCOCOCO00
00
CO00lcOc 000.)00
0
ICl
000<
CO
COi 0C
000
L-
'00
0
'0
CO'-00
00
C00
OC
C
0000 'I
IC-Cro o0
1-44 '0
C
CQ
t.CCCr,
C O00.40-0= 00
17H000C- "'CO 0
C- C CO00
OO0
C COCOCo
1
'0 0 00
CO
000
COO
COO
m
cCO
k-)
0
I
001t-
COC
mCO
Co
m
)
r4
COCo0C
OC~C
CO
I00
CO :,.OmC
I00
='0 '0000
I
I =O
I
0
z,,
'00'd
lOd
000000
ICO~
CO 0COCO4 0=
00 Co00
ICO
CO
C-c00cO mCO 0000
IN
= IN
m0
~
000CO
Ncc000
00o 0000
oCd 0000
00
0
=CO
!:J-q m
C00
O
aOO
Q
oo:
r4CO
CO w
0IQo00=0=0==
I-0
00I-CoO
1
000
00
0
00
0000CCO COL00CCO
t- C) C
oC4 - t-0 c)
-44
(Z) 0
r-C-4O
-4
co00000
C
6IL
C41
Ci
toO
toC
00q
~~
CO
C0000
00C
00
x0
" mC(o=
00000OCO CO
X000
10 r-4
X000000CqO0000
COt00000
000=C-10CO
-0000
C- 0CO
0040000ilC00
C0000CO C00
000Nd
0C-CO 0
C
00
to0
0
000C*
COe C00
-.
O
400
OC0000
0
C1400to
--
C
,COc 00
m
cc
0d
'-CCOCCO
CO
'00
1,CO04Cq000-O
000L-
00.40000:t
C
L00
CO''
CC-'
100Cr4tO-C'000000000
'C- CO00CO
0
cc
000
C O
0C
0000
'
C
''CO
'
COCO00 40000CO- V-CO OoC-oc
0
r0 mC00mC00r0t-m000I0NC
OCO 00C
00ctLa 00
0C:CqM
-- O
COC6O
o
00
CO
-q
6
CO
CO00o
CO000w
cc
4X6CO
CO
,4
001000000000000CO
COCO 00C O O
0cC-0000
C?0 C00c00
4
to
0 V,
C f
_1_
'cfC00O
lC
cee
_1_N_
CT
0
P0
_
0
o 0000 cc
?- t o000Coo rI0Q000
00C0co0
CCq
-000 0C
00
COoCOCOCOIN 00
CO
CIOCfOC
O
CCO0CO
00
00 000000CO00CO
z00000
0
CO
0
COC
COI CO00I -coC
co
CO4
O
*r0
C
MO
0
Ct
6 ,.
6
Ie
00
rnz6
looo
as9-P,<
(D .A
Q6o
o
o
000AI>4
c
1o,
1.
0
CO.4CO
6
Co.q
04,0
5
o
i
C3a
226
REPORT OF FEDERAL HOME LOAN BANK BOARD,
1940
EXHIBIT 48
Federal Savings and Loan Insurance Corporation-Comparisonof all savings and
loan members of the Federal Home Loan Bank System with all insured savings
and loan associations, by Federal Home Loan Bank Districts and by States,
June 30, 1940
[Assets in thousands of dollars]
All savings and
loan members
All insured associations 1
------------------
Bank District and State
Ratio all
Ratio of
assets of
insured
all in
associa- sured
alosa
tions to
ings and assets of
all say
loan
members ings and
loan
members
Number
Assets
Assets
Number
Asst
Assets
United States--........-------- -
3,865
$4, 232, 681
2,235
$2, 708, 529
57.83
63.99
----
211
487, 634
58
139, 954
27.49
28. 70
45
39,919
22
22,248
48.89
22
123
12
4
5
55.73
18,951
378,924
14, 773
30,326
4,741
5
26
2
1
2
1,006
105,044
7,974
1,156
2,526
22.73
21.14
16.67
25 00
40.00
5.31
27. 72
53.98
3.81
53.28
413
457, 506
169
282, 714
40.92
61. 79
289
124
179,257
278, 249
73
96
66, 283
.216,431
25.26
77.42
36.98
77.78
540
254,174
178
122,083
32.96
48.03
7
502
31
2,647
230,089
21,438
1
151
26
279
102,390
19,414
14.29
30.08
83.87
10.54
44.50
90. 56
No. 1-Boston .....-------.....
-----------Connecticut...
Maine-----------------------------Massachusetts----------------------New Hampshire--------------------Rhode Island----------------------Vermont ......--------------No. 2-New York
.....--------
New Jersey-------------------------New York..---------No. 3-Pittsburgh ----------Delaware---------------------------.....................
Pennsylvania --------West Virginia ----------No. 4-Winston-Salem --.
-------------
398
447,303
255
253, 715
64.07
56. 72
Alabama -----------------District of Columbia -----------Florida---------------------Georgia----------------------------Maryland------------------------North Carolina---------------------South Carolina---------------------Virginia-----------------------------
19
20
49
54
69
111
42
34
10,984
135,791
61,783
29,827
63,336
79,463
25,691
40,428
17
11
47
47
42
33
35
23
10,101
30,694
60,369
28, 263
38,199
30,395
24,610
31,084
89.47
55.00
95.92
87 04
60.87
29 73
83.33
67.65
91.96
22.60
97.71
94.76
60. 31
38.25
95.79
76.89
No 5-Cincinnati--------------..................
586
845,194
327
561,961
55.80
66.49
Kentucky ---------------------------Ohio. -------Tennessee--------------------------
95
452
39
95, 569
721, 676
27,949
57
232
38
64,435
469,704
27,822
60 00
51.33
97.44
67.42
65.09
99. 55
214
272, 756
172
205,331
80.37
75.28
158
56
163,827
108,929
128
44
130,658
74,673
81.01
78. 57
79.75
68. 55
461
422, 580
264
268,425
57.27
63.52
345
116
292,621
129, 959
185
79
194, 754
73, 671
53.62
68.10
66. 56
56. 69
238
216, 539
156
157,194
65. 55
72.59
69
39
106
13
11
47, 539
57,270
96,940
10,515
4,275
41
34
66
8
7
20,944
53,358
74,979
5,377
2, 536
59.42
87.18
62.26
61.54
63.64
44.06
93.17
77.35
51.14
59.32
No. 6-Indianapolis ------------Indiana------.-----------------------..
Michigan .-.--------No. 7-Chicago---------------------------------Illinois ...
Wisconsin.--------------------------..
No. 8-Des Moines----------Iowa ----------------------------Minnesota ------------..
Missouri ...-----------------------North Dakota---------------South Dakota ----- ---.------SeeLfootnote[atenid of table.
227
EXHIBITS
Federal Savings and Loan Insurance Corporation-Comparisonof all savings and
loan members of the Federal Home Loan Bank System with all insured savings
and loan associations, by Federal Home Loan Bank Districts and by States,
June 30, 1940-Continued
[Assets in thousands of dollars]
All savings and
loan members
All insured associ
ationsI
Bank District and State
Num
Assets
ber
Num-
r-----r
No. 9--Little Rock ....
Assets
---
--
Ratio of
of
Ratio all assets
all in
insured
sured
associa
tions to associa
tions to
all sav
of
ings and assets
all sav
loan
ings
and
members
loan
members
I-----
- -- I -----------
98 47
274
$221,295
262
$217,914
95.62
Arkansas .-----------.
39
15,320
37
14,901
94.87
97.27
Louisiana . --------.-Mississippi --------.
67
25
14
129
94,806
7,190
5,941
98,038
68
23
13
121
94,855
6,376
5,322
96,460
101.49
92.00
92.86
93.80
100.05
88.68
89.58
98.39
227
169,876
154
136,668
67.84
80 45
39
103
31
54
31, 556
59, 583
17,881
60,856
31
63
19
41
28,140
45,318
9,697
53,513
79.47
61.17
61.29
75.93
89.17
76.06
54.23
87.93
132
145,703
109
119,408
82.58
81.95
8
7,801
8
7,801
100.00
100.00
13
30
10
60
10
1
10,646
32,658
15,520
73,503
5,303
272
8
22
9
52
9
1
9,172
16,145
15,329
67, 100
3,589
272
61.54
73.33
90.00
86.67
90.00
100.00
86.15
49.44
98.77
91.29
67.68
100 00
-------------
171
292,121
131
243.162
76. 61
83.24
.........--------Arizona ------..
California................-----------------------....------------.--------Nevada ..
-Hawaii ..---------....------....
3
161
3
4
4,230
283,406
794
3,691
3
124
1
3
4,230
235,399
617
2,916
100.00
77.02
33.33
75.00
100.00
83.06
77.71
79 00
New Mexico--.-------.
Texas ------------.
No. 10-Topeka --------
Colorado -----Kansas--------Nebraska ------Oklahoma --
No. 11-Portland --.
------------------------------------------------------------------
----
Idaho ----..--Montana -------Oregon--------
-------------------
----- ------------------Utah
Washington -----.. ------------------Wyoming---.. ------------------Alaska -- __----- -------------------No 12-Los Angeles
1 Includes 4 insured nonmembers, 1 in the District of Columbia with assets of $3,446,000, 2 in Louisiana
with assets of $835,000, and 1 in California with assets of $468,000.
Source: Division of Research and Statistics, Federal Home Loan Bank Board.
EXHIBIT 49
Milwaukee Properties Bureau, Inc.
When the community program for Milwaukee was being developed by the
Wisconsin State Banking Commission in the early part of 1939, it was realized
that the success of the undertaking would to a large degree depend upon the effec
tiveness of measures taken to cope with the tremendous overhang of owned real
estate-the total volume of foreclosed residential real estate in the hands of lend
ing institutions at that time amounting to approximately $55,000,000, of which
some 85 percent was held by the savings and loan associations of Milwaukee
County.
In answer to this problem, the State Banking Commission established the
Milwaukee Properties Bureau, Inc., a nonstock, nonprofit corporation. The
Bureau was intended to provide an effective method for the disposition of institu
tionally owned real estate and to encourage institutions to sell properties at
realistic prices without dumping them on the market.
228
REPORT OF FEDERAL HIOME LOAN BANK BOARD,
1940
EXHIBIT 49-Continued
Milwaukee PropertiesBureau, Inc.-Continued
The Properties Bureau serves as a central clearing house for the sale of all
real estate held by each participating savings and loan association. It lists this
real estate for sale at fair market prices with virtually all licensed brokers in the
city. With one minor exception referred to below, neither the Bureau, the asso
ciation which owns the real estate, nor any person other than an approved broker
may make the actual sale. In every instance a uniform commission of 5 percent
must be paid to the broker handling the transaction.
The operation of the Milwaukee Bureau to date is noteworthy principally be
cause it shows the very real results which can be obtained by a cooperative
endeavor to dispose of real-estate holdings. As an indication of the results
which may be achieved under such a plan, the following summary of operations
through June 30, 1940, is illuminating:
Operation of Milwaukee Properties Bureau, Inc., Sept. 30, 1939, to June 30, 1940
[Insured institutions only]
Number
Date
Listings filed
of in
sured
institu
tions par- Number Sales price
ticipat
ing
September 30, 1939- ...----------------------December 31, 1939------------- ----------March 31, 1940---- -------------------June 30, 1940--------------
32
32
32
32
1, 559
1,912
1,957
1,987
$10,265,411
12,403,470
12,699, 220
12,795, 670
Properties sold
Number
175
296
409
532
Amount
$914,193
1,616,986
2,285,886
2,949, 406
The corporate structure of the Milwaukee Properties Bureau provides for six
members, of whom two shall be appointed by the Governor of Wisconsin, two
elected by the participating savings and loan associations, and two named by
the Federal Savings and Loan Insurance Corporation, which is constituted a
third party beneficiary in all listing agreements entered into between the Bureau
and insured savings and loan associations. Three of these individuals serve as
a Board of Directors. They are elected by the members, one from each of the
three groups of designees.
All of the insured savings and loan associations in Milwaukee having 20 percent
or more of their assets in real estate voluntarily joined the Bureau at the time of
its organization. Associations insured subsequent to the date of the Bureau's
incorporation were required to join if their real-estate holdings exceeded that ratio.
In addition, the State Banking Department has followed the policy of requiring
associations in liquidation to list their properties through the Bureau and in most
instances strongly urges the participation of those associations operating under
restrictions imposed by the Department.
Each participating association enters into a listing agreement or contract with
the Bureau, which remains in force until June 30, 1945, unless sooner terminated
by action of the Bureau or not less than three-fourths of the participating associa
tions with the consent of the Federal Savings and Loan Insurance Corporation.
Provision is also made for voluntary withdrawal at the option of any individual
association whenever the amount of its owned real estate falls below 20 percent
of total assets.
EXHIBITS
229
The listing agreement executed by all associations calls for payment of an initial
entrance fee equivalent to M1oof 1 percent of the value of each association's real
estate as shown on its books at the close of the last calendar year. In addition,
each association contracts to pay during the life of the agreement an annual
sustaining fee of M}oof 1 percent of the book value of its real estate as of the close
of the previous year. The annual sustaining fee is payable in monthly install
ments. The Bureau is purely mutual in character and provision is made for re
turn to the participating associations on a pro-rata basis of any property or funds
remaining in its possession at the conclusion of operations.
Any differences of opinion between the association and the Bureau regarding
the price at which a particular piece of real estate should be offered for sale are
ironed out in conference between the manager of the Bureau and the management
of the association. The listing agreement provides that in the event of failure to
agree on a fair list price, the matter shall be referred for arbitration and final de
termination to the board of directors of the Bureau. Full control over tenants,
rentals, reconditioning and all other phases of the management of properties
listed with the Bureau remains in the association, which does, however, agree to
maintain its properties in good salable condition.
As soon as satisfactory offering prices have been agreed upon, the Bureau
proceeds to make complete listings available to all cooperating real-estate brokers.
There are no "exclusive" listings. In addition, full information on each property
is transferred to a Kardex file and kept up to date at the office of the Bureau,
where it is available for inspection both by brokers and the general public. Indi
vidual prospective purchasers desiring to enter negotiations for a particular
property are referred to an approved broker of their choice. Except in the case of
resale by the association to a former owner, every sale must be negotiated through
an approved broker.
The Bureau will entertain no offer on residential real estate at a figure below list
price. However, in the case of certain types of commercial or "one purpose"
properties, where current market value cannot be estimated closely, the Bureau
will consider any reasonable offer. Such properties are appropriately identified in
the listings furnished by the Bureau. If it is found that the real estate listed for a
particular association is not moving as well as it should, the Bureau may reanalyze
the properties involved and by agreement with the association make such modifi
cations in list prices as appear warranted under the circumstances. Likewise,
after 20 percent of any association's real estate has been disposed of, it is the
Bureau's policy to review with the association the prices established on the
remaining properties in order to ascertain that prices are properly in line with
current market conditions.
Minimum down payment on properties sold through the Milwaukee Properties
Bureau is 10 percent in the case of residential real estate and 20 percent in the
case of apartment or commercial property. The unpaid balance of the purchase
money mortgage or contract bears interest at 5 percent computed semiannually.
Required monthly payments of $8.00 per thousand, plus one-twelfth of estimated
current taxes, are calculated to retire the debt in approximately 142 years.
NEW ORLEANS CENTRAL APPRAISAL BUREAU
Established in the summer of 1935 by the Louisiana State Banking Department,
the Central Appraisal Bureau of New Orleans may well be said to represent an
important milestone in the development of the savings and loan industry in this
country.
230
REPORT OF FEDERAL HOME LOAN BANK BOARD,
1940
EXHIBIT 49-Continued
New Orleans Central Appraisal Bureau-Continued
Designed as a means of ensuring adherence by all savings and loan associations
in -the city to sound real-estate valuations in connection with their mortgage
lending operations, the Central Appraisal Bureau was organized by the Depart
ment immediately following and as a collateral part of the New Orleans com
munity rehabilitation program in the execution of which the Federal Savings and
Loan Insurance Corporation participated actively. Analyzing the conditions
which had occasioned the need for a program of reorganization and rehabilitation
in New Orleans, the State Department recognized that a major weakness lay in
the high degree of mortgage loan competition among the building and loan asso
ciations of the city. Extraordinarily keen competition for loans, in combination
with inadequate appraisal techniques and personnel, had resulted in widespread
overlending in the predepression era. The inevitable consequences had been
delinquencies, foreclosures, and excessive losses in the disposition of acquired
properties. It was to prevent a recurrence of such a situation that the Central
Appraisal Bureau was organized.
All savings and loan associations in the city are required to be members of the
Bureau which provides them with a centralized appraisal service. All mortgage
loans made by member associations must be based on valuations arrived at by
the Bureau and no loan may be granted for a term in excess of twenty years or for
an amount in excess of 80 percent of the appraised valuation. In the event of
dissatisfaction on the part of an association with any appraisal furnished by the
Bureau, provision is made for further review and arbitration. In the case of a
construction loan, the Bureau serves the association by estimating the cost of con
struction, appraising the site, and analyzing plans from the standpoint of proper
design, sound structure, and suitability to site. In addition, the association is
furnished with a final valuation of the property after the building has been erected.
The Bureau operates under a manager appointed by a governing committee of
three, elected on a rotating basis. Expenses are covered out of a membership fee
plus a monthly sustaining fee ranging from $5 to $10 depending upon the size of
the association. In addition, each association pays a small charge for each
parcel of real estate appraised. The Central Appraisal Bureau also furnishes a
construction supervision service under the Federal Home Building Service Plan at
a cost equal to twice the standard appraisal fee plus 1 percent of the contract price.
Although the facilities of the Bureau are not, as a rule, available to the general
public, this special service may be obtained through the Bureau regardless of
whether the construction is being financed by a building and loan association, the
theory being that- supervision of new construction under the Federal Home
Building Service Plan will operate in the long run to ensure sounder collateral for
loans which building and loan associations may wish to make at some future time.
The appraisal methods of the Bureau are based on the principles developed by
the Home Owners' Loan Corporation. Appraisers employed by the Bureau are
required to have had specialized technical experience and are subject to strict
examination at the time of employment. They pass through a thorough course of
training by the Bureau, including statistical analysis within the office, field service
under a number of senior appraisers, and continuing study with the American
Institute of Real Estate Appraisers. The Bureau now has in its files complete
appraisals of some 24,000 individual pieces of real estate in and around the city of
New Orleans. A large sectional map of the city shows the location of all proper-
231
EXHIBITS
ties in the city figuring in current transfers or leases as well as those on which
appraisal information already is on file in the Bureau. Other maps and statistical
data showing neighborhood characteristics, transportation facilities, location of
schools and churches, trends in real-estate values and similar information are
currently revised and analyzed in their relation to sound property valuations.
EXHIBIT 50
Federal Savings and Loan Insurance Corporation-Receiverfor Security Federal
Savings & Loan Association of Guymon, Guymon, Okla.-Condensed comparative
statement of condition (cash basis)
Feb 12, 1940
June 30, 1940
ASSETS
Moitgage loans-
--------------------------------
Real estate sold on contract
------------------------------------Real estate owned
--------------------------------Cash and investments
--------------------------------------------------------Other assets
Total
-------------
-------------------------------------
$94, 658. 29
$92, 507. 30
1,107. 80
118,457.27
8,697 00
480. 00
0
104,424 03
11, 842. 81
24 00
223, 400. 36
208, 798 14
14,236.01
2,048.68
0
165, 940. 31
0
651.88
163,965.04
1,975. 27
LIABILITIES AND CAPITAL
Advances from Federal Home Loan Bank of Topeka --------Other liabilities- ----------------------Shares purchased by Federal Savings and Loan Insurance Corporation- ----------------Other share account claims-------------------------------
41,175. 36
42, 205. 95
----------------------------------
223,400 36
208,798 14
Reserve for losses ---------.----------------------Total .---------
--
EXHIBIT 51
Federal Savings and Loan Insurance Corporation-Receiver for Security Federal
Savings & Loan Association of Guymon, Guymon, Okla.-Condensed statement of
operations (cash basis) for the period from Feb. 12, 1940, through June 30, 1940
Gross operating income-----_--------Less operating expense
$3, 114.57
1, 077. 97
Net operating income before interest charges
Less interest charges- --
2, 036. 60
93. 04
Net operating income
Add nonoperating income
1, 943. 56
1, 010. 80
Net income after interest and before charges
Less nonoperating charges -------------
2, 954. 36
2, 681.25
Net income for period - ------------------Add realization on assets specifically reserved at date of receivership - - -
273. 11
1, 108. 23
Net credit to reserve for losses
270198-40-16
1,381. 34
232
REPORT OF FEDERAL HOME LOAN BANK BOARD,
1940
EXHIBIT 52
Federal Savings and Loan Insurance Corporation-Receiverfor Community Federal
Savings & Loan Association of Independence, Independence, Mo.-Condensed
statement of condition, June 26, 1940
ASSETS
Mortgage loans
Share loans---------Other loans---------Real estate sold on con
tract--------Real estate owned ---Office building
Cash and investments Other assets---------Total-----------
LIABILITIES AND CAPITAL
$892, 380. 31 Advances from Federal
12, 427. 73
Home Loan Bank of
3, 840. 81
Des Moines -------$274, 730.
Other liabilities ---2, 276.
64, 909. 46 Loans in process ------2,015.
188, 618. 35 Share account claims -877, 369.
24, 989. 59 Specific reserves ------7, 244.
52, 429. 44 Reserve for losses -----81, 912.
5, 954. 07
Total----------1, 245, 549.
1, 245, 549. 76
50
69
00
95
71
91
76
EXHIBIT 53
Statement of condition-FederalSavings and Loan Insurance Corporation, Wash
ington, D. C., June 30, 1940
ASSETS
Cash in United States Treasury:
Special deposit account ---Disbursing account for administrative
expenses, 1940
$606, 991. 58
7, 369. 36
$614, 360. 94
Accounts receivable:
Insurance premiums-pay
ments due------------$24, 160. 34
Insurance premiums-pay
704, 363. 27
ments deferred- ------Other---------------------------
728, 523. 61
1 945. 61
729, 469. 22
Investments:
U. S. Government obligations and secu
rities fully guaranteed by the United
States (face value)-------------Net unamortized premium and discount
on investments ----------------Accrued interest on investments----------Subrogated accounts in insured associations-
Total assets----------
122, 411, 500. 00
365, 921. 52
-----------
122, 777, 421. 52
603, 588. 95
-- _
2 192, 260. 73
-------------
124, 917, 101. 36
1 Does not include accounts receivable due from insured institutions in receivership, inasmuch as such
amounts have not as yet been definitely established.
2 Estimated recoverable value, $179,187.00.
233
EXHIBITS'
Statement of condition-FederalSavings and Loan Insurance Corporation,Wash
ington, D. C., June 30, 1940-Continued
LIABILIITES AND
CAPITAL
Accounts payable ---------------------Unearned insurance premiums------------------------Capital:
$100, 000, 000.
Capital stock outstanding ----------Reserve fund as pro
vided by law-------$6, 289, 698. 81
Less: Contributions to
insured institutions
537, 471. 73
current fiscal year - 5.752 227
15, 000, 000.
Special reserve for contingencies ---------------------------2, 868, 583.
Surplus
$6, 925. 05
1, 289, 365. 50
00
08
00
73
-
Total liabilities and capital---------
--
-----
123, 620, 810. 81
124, 917, 101. 36
A contingent liability of $323,756.46 exiscs due to commitments in connection
with the prevention of default in insured associations. The Corporation is also
contingently liable to the Federal Home Loan Bank Board in the amount of
$6,870.64. These liabilities are not reflected in the above statement.
EXHIBIT 54
Income and expense statement-FederalSavings and Loan Insurance Corporation,
Washington, D. C., for the period July 1, 1939, to June 30, 1940
Income:
Insurance premiums earned
$2, 631, 241. 15
Admission fees earned------------19, 022. 11
Interest earned on U. S. Government obli
gations and securities fully guaranteed
by the United States---------------3, 387, 717. 14
Miscellaneous---------------------130. 30
-$6, 038, 110. 70
Administrative expenses:
---Personal services
$107, 742. 76
Travel expense ---------8, 194. 03
Printing and binding- - - - 3, 799. 74
Supplies and materials- - - 427. 56
Telephone and telegraph
1,413. 93
Advertising ------------8. 00
Furniture and fixtures ----829. 17
Miscellaneous -----------285. 95
Audit by Home Owners'
Loan Corporation
500. 00
Services rendered by Federal
Home Loan Bank Board 116, 582. 25
234
REPORT OF
PEDE'RAL
HOME LOAN BANK BOARD,
1940
EXHIBIT 54--Continued
Income and expense statement-FederalSavings and Loan Insurance Corporation,
Washington, D. C., for the period July 1, 1$39, to June 30, 1940-Continued
Administrative expenses-Continued.
Administrator's office-Fed
eral Loan Agency -------
$600. 00
Total administrative ex
penses
Nonadministrative expenses:
Personal services
Travel expense-----Printing and binding------Supplies and materials --Telephone and telegraph Examining expense- -----Attorney's fees and expensesMiscellaneous -------------
-----
$240, 383. 39
$4, ( )77. 11
4,3 379. 32
2220. 04
9. 29
1t65. 28
2, 2224. 61
2, 2250. 00
1,5 500. 00
Total nonadmimstrative expenses.
15, 425. 65
$255, 809. 04
Net income from operations -Other income:
Profit on sale of securities-
-------------------------
Net income for period --------------Deduct: Adjustments of net income for prior years
Net income
5,782,301. 66
-
86,548.97
5,868, 850. 63
266. 90
--
5, 868, 583. 73
Distribution of net income:
To special reserve for contingencies
To surplus--------------------------Total-----------------------------
3,000,000.00
----------
2,868,583.73
----------
5,868,583.73
EXHIBIT 55
Federal Savings and Loan Insurance Corporation-Expensesfor the period July 1,
1939, to June 80, 1940
Administrative expenses:
Personal services
---------$107, 742. 76
Travel expenses----8,194. 03
Printing and binding ------3, 799. 74
Supplies and materials -------------------------------427. 56
Telephone and telegraph-----------------------1, 413. 93
Advertising
8. 00
Furniture and fixtures-----------------------------829. 17
285. 95
Miscellaneous--------------------------------Audit by Home Owners' Loan Corporation ----_
-500. 00
Services rendered by Federal Home Loan Bank Board
116, 582. 25
235
EX'HIBITS
FederalSavings and Loan Insurance Corporation-Expensesfor the period July 1,
1939, to June 30, 1940-Continued
Administrative expenses-Continued.
Administrator's office-Federal Loan Agency
$600.00
Total administrative expenses
249, 383. 39
Nonadministrative expenses:
Personal services --------------------------Travel expenses ----------------------Printing and binding------------------------Supplies and materials -----Telephone and telegraph --------------Examining expense - _-Attorneys' fees and expenses
---------Miscellaneous-------------------
4, 677. 11
4, 379. 32
220. 04
9.29
165. 28
2, 224. 61
2, 250. 00
1, 500.00
15, 425. 65
Total nonadministrative expenses
255, 809. 04
------------------------
Grand total
EXHIBIT 56
Home Owners' Loan Corporation-Number and percent of accounts extended or
revised after Oct. 1, 1939, by HOLC Regions and by States, June 30, 1940
Extend Percent
ed and of total
Total
accounts re vised accounts
accounts
I
United States
I
I
-I II.
862, 339
192, 667
22. 3
Region 1-New York
122, 286
42,105
34. 4
Connecticut--------Maine
Massachusetts -New Hampshire
New Jersey -New York-IEhode Island--Vermont --
8,115
2,551
18,028
1,364
27, 306
58, 699
5, 064
1,159
1, 779
529
7,256
278
8,393
21,848
1, 657
365
21. 9
20.1
40. 2
20 4
30 7
37 2
32. 7
31.5
Region 2A-Baltimore
Delaware ------District of Co
lumbia ---Maryland ------Pennsylvania --Virginia-------
77,452
15,426
280
19. 9
1, 451
1, 747
12,731
51,358
10,165
379
2,182
10,748
1,837
21. 7
17. 1
20.9
18.1
Region 2B-CincinnatL
19.3
^-Y
---
Extend
Total ed and Percent
of total
accounts revised accounts
accounts
I-~----I-
I-~---.
Region 3B-Con.
Tennessee -------
12, 062
Region 4A--Chicago
90, 508
24, 854
27. 5
63,357
27,151
16,014
8, 840
25.3
32.6
115, 055
26, 763
23. 3
41,837
73, 218
7, 900
18, 863
18.9
25.8
Illinois .--Wisconsin ----Region 4B-DetroitIndiana-------Michigan --Region 5A-Omaha
Colorado ------Iowa----------Kansas -----Minnesota ------Nebraska -----North Dakota --South Dakota ---
3,021
25.0
80, 582
17, 317
21.5
1 10,156
16, 980
15,124
18,281
11,397
3,752
4,892
1,667
2, 636
3,921
3,473
3, 259
1, 289
1,072
16 4
15.5
25.9
19.0
28.6
34.4
21.9
91, 984
23, 954
26.0
Ohio------West Virginia --
84,165
22,451
Region 5B-Dallas-
62,369
5,271
8. 5
1,503
26.7
7,819
19.2
Region 3A-Atlanta
56,579
14, 987
26.5
New Mexico----Oklahoma------Texas----..--
2,197
20, 230
39,942
193
1, 232
3, 846
8.8
6.1
9.6
Alabama------Florida.-----Georgia -------North Carolina
South Carolina Puerto Rico-----
14,874
12,040
13, 396
10, 833
4,879
557
3,823
2,738
4,028
2,857
1,351
190
25 7
22.7
30. 1
26. 4
27. 7
34.1
Region 6-San Fran
cisco .------Arizona--------
97, 060
8,007
8.2
Region 3B-Memphis
68, 464
13,983
Arkansas .-------Kentucky ------.
Louisiana------Mississippi...--Missouri
- ---------
8, 856
7, 361
12,160
7,268
20.757
1, 223
1, 820
1,650
1, 346
4.
923
-I
--
5, 798
44,918
4,109
3, 229
964
8,231
9,717
17, 684
1,984
426
701
3,793
485
336
63
797
638
1, 069
125
12.1
8.4
11.8
10.4
6.5
9.7
6.6
6.0
6.3
~l
Cahfornia
..-
Idaho----------
Montana--------
~~--
20. 4
.
-
13. 8
24. 7
13. 6
18. 5
23
7 .-.
Nevada--------..----Oregon--Utah.....---Washington .....
Wyoming .-Hawaii------..
--
--;~.~--*-
236
1940
REPORT OF FEDERAL HOME LOAN BANK BOARD,
EXHIBIT 57
Home Owners' Loan Corporation-Netforeclosure authorizations on original loans
and vendee accounts, cumulatively to June 30, 1940, by Regions and by States
Original loans, net Vendee
authorized
loans,
- net auPercent
thorCumu- oftotal izedulative
loans
mmua
tive
closed
Region and State
United States.
182, 114
17.9
1, 289
Region 1-New York
56, 528
34.4
139
Connecticut ----Maine ------- --Massachusetts -New HampshireNew Jersey -----New York---..
Rhode IslandVermont .---...
2, 341
585
9, 021
366
12, 696
29, 782
1, 410
327
22.8
17. 2
36.8
19 6
34. 9
37. 2
23.0
20. 7
Region 2A-Balti
more .
.--------Delaware --District of Co
lumbia -----Maryland------Pennsylvania --Virginia ----Region2B-Cincinnati
5
3
35
4
34
53
4
1
Region and State
Region 4A-Chicago
Original loans, net Vendee
authorized
loans,
net au
Percent
thor
Cumu- of total ized u
lative
loans
mla
tive
closed
15, 883
15.4
64
8,817
7,066
12. 6
21.4
52
12
13, 837
10. 6
102
6,416
7, 421
13. 1
9.1
48
54
Illinois
-----Wisconsin---Region 4B-Detroit-Indiana------Michigan --.---Region 5A-Omaha-
18,057
Colorado-Iowa ----.
Kansas---------Minnesota ------
9.7
13. 9
28. 2
12.9
26.7
23.2
26.2
16
17
23
28
47
4
8
19.0
143
233
14. 2
4
Nebraska-------
257
3, 347
9, 553
2,059
12. 3
21.0
16. 2
17.1
5
13
39
40
North Dakota -South Dakota- -
1, 122
2,740
5, 227
2,711
3,629
1,025
1,603
Region 5B-Dallas -
13,945
19. 7
294
New Mexico ---Oklahoma -------
198
6, 012
7, 735
8.0
25. 1
17.4
6
53
235
12, 207
10-9
118
865
13.3
13
1,241
4,118
376
298
58
899
1, 571
2,654
127
9.2
10.4
9
37
3
15, 449
17.1
12. 5
13, 454
101
72
Ohio ------West Virginia -
12, 685
769
12 9
8.5
9
Region 3A-Atlanta_
8,052
12.7
112
Alabama-------.....
Florida -----......
Georgia----..
North Carolina...
South Carolina -Puerto Rico -
2,936
17.7
1,250
1, 705
1, 538
611
12
9.2
11 5
12 5
10 7
2 0
Region 3B-Memphis
14, 702
Arkansas------Kentucky------Louisiana ------Mississippi-----Missouri .-----Tennessee--------
1,588
1,448
2,232
1,238
6,164
2,032
18.1
15.4
15.7
15. 5
14.1
25.1
14. 8
63
Texas----
-
Region 6-San Fran
cisco ---------
34
26
17
24
11
Arizona---------California:
Northern _--Southern -..
Idaho------Montana
Nevada---
------
---
Oregon -------
144
19
Utah....----Washington .Wyoming --...
8.0
8.1
4.8
9.5
14. 6
12. 3
5.2
-
15
11
27
3
6
19
17
52
31
EXHIBIT 58
Home Owners' Loan Corporation-Profitand loss on sales of real estate, by calendar
years
Number of properties
sold at a profit and
amount of profit
Year
Number
1935 ....--------------.
.
1936 ----------------1937
- . -------------.
1938---1939--
1940 1---
-
------------
----------------
-
-----------
1 January to June, inclusive.
Profit
Number of properties
sold at a loss and
amount of loss
Number
Loss
Total number of prop
Total numberofprop
erties sold
Number
Profit
or loss
(-))
27
366
3,033
$6,926
125, 782
1,218,126
2
235
2,214
5,761
1,729,446
22,957
23,123,114
28,718
-21,393,668
5,442
1, 598, 793
40, 787
56, 684,231
46,229
-55,085,438
2,040
569, 318
22,155
36,030,912
24,195
-35,461,594
$1,528
118,828
1,381, 934
29
601
5,247
+$5,398
+6,954
-163,808
237
rXHIB3ITS'
EXHIBIT 59
Home Owners' Loan Corporation-Analysisof the various elements entering into the
capital value of properties owned and in process of acquiring title, June 30, 1940
Original capitalized value:
Unpaid balance of loans and advances----------------- $343, 023, 865. 70
Unpaid balance of accrued interest -----------------22, 970, 053. 58
Total-------------------------------------------365, 993, 919. 28
Subsequent capital charges:
Taxes and assessments -------------$15, 948, 533. 30
211,
2------------------------490. 95
Insurance-34, 888, 577. 34
Reconditioning and capital repairs -----9, 763, 579. 12
Foreclosure and other acquisition costs-Miscellaneous -----------------------758, 201. 61
Total----------------------------------------
61, 570, 382. 32
427, 564, 301. 60
Subsequent capital credits:
Rents (prior to acquisition of title)
Partial sales (no profit or loss recognized)
Collection of deficiencies
Miscellaneous
Total
$948,
1, 128,
460,
841,
751.
225.
564.
549.
31
48
32
03
3 379, 090. 14
3,----------------------------------
----
Total capitalized value at June 30, 1940 --------------
424, 185, 211. 46
EXHIBIT 60
Home Owners' Loan Corporation-Percentageof vacant unmts to units available for
rent, percentage of rents collected to rent accruals, and average rent per unit, by
months
Vacan
cies
Year and month
1936
July---
--
Percent Percent
18. 6
93. 7
92 4
18. 7
94. 7
15. 9
17. 1
88 5
18. 4
88.8
89.4
17. 5
--
August-------------September ---------October .-------
November
---December .---------1937
-January ------.-February ----------
March-------------April _-------------May---------------June-..--------------July -------------August ------------September----------October ---.-
-
November----------December ---------1938
January
February-----------March------------May---------------June------------------
~-
- --
Average
rent per
unit
$20.59
20. 75
20 04
21.24
21.26
20 92
18. 7
18. 3
17.8
15.0
13. 3
12. 5
11.2
10. 4
10.4
10.4
11 2
12 4
96. 2
95. 3
92.8
99. 5
94 7
96. 3
95. 5
97. 7
97. 3
97. 7
97. 9
96. 7
22. 61
22 90
23.90
23.85
24. 60
24.99
25 27
25 48
25 77
26 10
26. 90
26. 75
13 1
13. 5
14. 3
12. 6
11.6
11.5
93. 3
96 0
99. 7
97. 2
99. 2
98 8
26. 48
27.19
26.91
26 96
27. 40
27. 66
Vacancies
Year and month
I
'
-
--
'-
1938
July---August
SeptemberOctoberNovember-December--
Collec
tions
'
-
Percent Percent
12 0
98.4
99. 2
11.0
98. 4
10 3
9 9
99.6
10 4
96 8
100.3
10. 5
1939
JanuaryFebruary
March -----April--May --------
June --------July
August-----September-October----November -December--
Average
rent per
unit
$27. 93
27.99
28 00
28 25
28 69
28 82
10.9
10. 4
9.3
7.8
7.7
7.4
7 2
7.5
7.6
7.9
8.5
8.6
98.7
99.4
99 8
99.9
100.0
99. 1
99.9
99 5
99 1
99. 5
98. 4
99 3
29.01
28.95
29.14
29. 45
29. 33
29 43
29.78
30 02
29 99
30 11
30. 30
31.53
9 2
9.2
9 4
8.5
8.2
8.3
97 8
99.1
98. 8
98.8
100 0
100. 2
31 55
31.50
31.79
31 94
32 41
32 90
LI--
--
1940
April ---------------
Collec
tions
--
-L
op-e
~D"---
January ----
February--March--April ------May -------JuneI-
-
-
-
-
-
~s
238
REPORT OF FEDERAL HOME LOAN BANK BOARD,
1940
EXHIBIT 61
Home Owners' Loan Corporation-Balancesheet as of June 30, 1940
ASSETS
Mortgage loans, advances, and sales
instruments-at present face value:
Original loans and advances there
on-----------------------$1,734,883, 082. 05
Vendee accounts (purchase money
mortgages, sales contracts, or
instruments used in lieu thereof)
277, 239, 129. 17
Unposted advances on mortgage
loans and vendee accounts .-.638, 222. 99
Interest receivable---------------------------
-
$2, 012, 760, 434. 21
7,493,650. 73
Property: 1
Owned--------------------In process of acquiring title -----
$390, 373, 337. 64
33, 811, 873. 82
424, 185, 211. 46
Less reserve for losses 2--...
------
--
2, 444, 439, 296. 40
47, 098, 067. 85
2, 397, 341, 228. 55
Investments-at cost:
Federal Savings and Loan Insur
ance Corporation (entire capi
tal) ----------------------Savings and loan associations:
Federally
char
tered-_
$163, 130, 800. 00
State
c har
39, 893, 410. 00
tered---203,
$100, 000, 000. 00
024, 210. 00
303, 024, 210. 00
1 Property owned and property in process of acquiring title are stated at values represented by unpaid
balances of loans and advances, unpaid interest to date of foreclosure sale or judgment, foreclosure costs,
net charges prior to date of acquisition, and permanent additions, initial repairs, and reconditioning subse
quent to acquisition. Unpaid interest included in these values amounts to $22,970,053.58.
2 The reserve for losses is being accumulated at an annual rate which, it is intended, will approximate
eventually the total losses which may be sustained in the liquidation of mortgage loans, interest, and prop
erty. During the period of accumulation, therefore, the carrying value of these assets, less the reserve, will
not necessarily represent their probable realizable value.
239
EXHIBITS
Home Owners' Loan Corporation-Balancesheet as of June 30, 1940-Continued
ASSETS-continued
Bond Retirement Fund:
Cash (including $31,449,200.00
deposited with U. S. Treasury
of matured
for retirement
bonds)
UI. S. Treasury bonds-at face
value
$31,466, 997. 63
3, 600, 000. 00
$35, 066, 997. 63
Cash:
Operating funds (includes $16,
762,113.38 payable to Bond Re
tirement Fund in July 1940 and
$11,157,026.02 deposited by bor
rowers-see contra)
Special funds held by U. S. Treas
ury for payment of interest
coupons (see contra)-------
39, 702, 548. 74
11, 339, 080. 36
51, 041, 629. 10
Fixed assets:
Home office land and building-at
cost--------------------Furniture, fixtures, and equip
ment-at cost
Total fixed assets
Less reserve for depreciation -.--
2,987, 819. 93
2,757, 309. 90
5, 745,129. 83
2,543, 958. 79
3, 201, 171. 04
Other assets:
Accounts receivable -------Treasury bonds accepted as repay
ments (to be retired in July
1940)-------------------
129, 609. 90
75. 00
129, 684. 90
Deferred and unapplied charges:
Unapplied property costs and ex
-------------penses---Miscellaneous
16,066. 96
181, 464. 88
197,531. 84
Total assets.
2, 790, 002, 453. 06
240
REPORT OF FEDERAL HOME LOAN BANK BOARD, 1940
EXHIBIT 61-Continued
Home Owners' Loan Corporation-Balancesheet as of June 30, 1940-Continued.
LIABILITIES AND
CAPITAL
Bonded indebtedness (guaranteed as to
principal and interest by the United
States, except $288,600.00 of unpaid
matured 4-percent bonds guaranteed
as to interest only):
Bonds outstanding-not matured
(bonds maturing within 1 year
$190,837,900.00) -----------$2, 603, 359, 700. 00
Bonds matured-on which inter
est has ceased ---------------31,449, 200. 00
$2, 634, 808, 900. 00
Accounts payable:
Interest due July 1, 1940, and prior
thereto (see contra)--------Vouchers payable------------Insurance premiums ---------Commissions to sales brokers- - - Special deposits by borrowers --Miscellaneous
11, 339,
21,
156,
325,
11, 157,
23,
080.
606.
759.
689.
026.
913.
36
89
98
58
02
47
23, 024, 076. 30
Accrued liabilities:
Accrued interest on bonded in
debtedness
---------Other accrued liabilities
4, 985, 617. 89
280, 881. 24
5, 266, 499. 13
Deferred and unapplied credits:
Unamortized premium on bonds
sold----------------------Miscellaneous ------------- -
1, 410, 626. 33
914, 715. 47
Reserve for fidelity and casualties ------------------Reserve against fire and other hazards --------------Capital stock less deficit:
Capital stock authorized, issued,
and outstanding ----------$200, 000, 000. 00
Less deficit after provision for
losses in the manner described in
footnote 2 on page 238 -------76, 453, 005. 43
2, 325, 341. 80
248, 255. 64
782, 385. 62
123, 546, 994. 57
Total liabilities and capital ---------------------
2, 790, 002, 453. 06
NOTE.-Except for property transactions which are recorded on a cash basis,
major items of income and expense are recorded on an accrual basis. Therefore, no
asset value has been recognized with respect to uncollected rentals or prepaid
taxes nor liability for accrued taxes.
241
EXHIBITS
EXHIBIT 62
Home Owners' Loan Corporation-Investmentsin savings and loan associations, by
States, as of June 30, 1940
State-chartered savings
and loan associations
Federal savings and
loan associations
Number
Alabama..----------------------------------------Arizona ..------------------------- ----------------Arkansas----------------California ----------------------------------------------------------
Colorado --
--------Connecticut-.--------Delaware----------------------------------------Florida--------------------------------------------- Georgia
Idaho---------------------Illinois -----------------------------------------Indiana
----------------------------------------Iowa
---------Kansas-------------------Kentucky ---------------------------------------Louisiana---------------------------------------------------------Maine -Maryland ------------------------------------------------------Massachusetts-----------------Michigan ----------------------Minnesota
-----------
Mississippi --------
Missouri----------------------------------------Montana----------------------------------------Nebraska-------------------------------------------------------------------Nevada
New Hampshire-----------------------------------New Jersey---------------------------New Mexico-----------------------------------New York --------------------------------------North Carolina-----------------------------------North Dakota------------------------------------Ohio
-------------------------------------------Oklahoma---------------------------------------Oregon -----------------------------------------Pennsylvania------------------------------------Rhode Island-------------------------------------South Carolina-----------------------------------South Dakota------------------------------------Tennessee---------------------------------------Texas ------------------------------------------Utah .-------------------------------------------Vermont------------....
-----------------------Virginia-----------..
------------------ -----------Washington.......
------------------West Virginia .------------------------------------Wisconsin.......--------------------------------------Wyoming
--------------------District of Columbia------..
------------------------Hawaii....------------------------------------------Alaska .-- -------------------- -------------------Total--
----------------------------------
Amount
Number
13
2
23
53
$905,500
655,000
1,069,000
17,258,700
12
2,276,000
15
460,000
15
2,748,500
0 ---40
8,503,500
36
3,140,000
6
1,906, 500
13, 520,000
71
49
7,014,000
20
1,696,500
20
2,762,000
27
2,996,500
6
202,000
5
257,000
19
3,807,500
10
4,812,000
21
2,319,300
26
7,382,600
29
5,124,000
1
30,000
8
732, 000
0--- -----0
-0---4
291,000
6
137,500
52
17,361,800
15
2,067,500
4
244,000
51
11,053,500
15
1,730,000
19
3,478,500
47
5,597,900
1
285,000
18
1,174,000
4
288,000
34
5, 464, 000
61
4,254,100
6
1,640,000
0 -----------16
2,692,500
23
7,198,000
17
2,318,000
30
3,455,000
9
789,100
0 ----------0-----------1
33,300
960
163,130,800
Amount
--------1
$150,000
1
65,000
1,618,000
10
5
743,000
1
20,000
2
61,000
-----0--0
-----360,000
2
0-----.
916,000
18
13
732,000
4
96, 000
14
2, 197, 000
0---26
6,077,600
0---145,210
2
0---1,102,500
6
0 ----7
905,800
1
275, 000
5,000
1
00------------0
----41
3,238,000
0
11
1,291, 300
4
137, 500
1
600,000
27
8,555,000
1
100,000
0
-----12
395,000
0
----1
75,000
3
23,500
0
----7
2,100, 000
3
1,450,000
0
-----0 --10
1,149, 000
3
255,000
33
5, 055, 000
0
----0..-----0
--0 ..----271
39,893,410
Summary of investments in savings and loan associations,fiscal year 1940
Federal say-
State-char
ings and loan tered
andsavings
loan
Total
associations
associations
Investments-June 30, 1939 (net)-------... ---------------- $173,033,800
Investments-July 1, 1939, to June 30, 1940------------------295,000
Conversions from State to Federal charter-July 1, 1939, to
June 30, 1940..--------------------------------------1,471,000
$43,425,010
1,243,400
$216,458,810
1,538, 400
-1,471,000
----
Total- .-----------------.-------- ---------- 174,799,800
Repurchases-July 1, 1939, to June 30, 1940----------------11, 669,000
Investments-J--une 30, 1940 (net)- -----..
-
---
163,130,800
43,197, 410
3,304,000
217, 997,210
14,973, 000
39, 893,410
203,024, 210
242
REPORT OF FEDERAL HOME LOAN BANK BOARD,
~00-00
41'-'
44
M )
C
,-o(= oo
0
00XM0000
0
00
t-
00o
t*
000
00?-QCDor0 04dq0 0000C> 0
3 q='f;to"m00
-qtom4D c c
00C
m r--4
4a
14-41114O
0
4
0)
0
:4
01
1)
4_q4Q
000
0000
C) .4
t0
0
-4
0 06
00eg
14
0
00
00 =000
M0
0m~
m00000
000
000
to
0000000000
000
00
X0 m r-41
-
00
100
0
0
I0
.,.4
LO'000'
C)tC)00
C)0-C)00
a>00
0
m -00000000
m
0C)0C> )00000
00,
ltq -qr NtoGoI C4 o000)0
0
'0000m
004))
00
C)
4--)
0
cc
00000000
0 -4 r--4
i
00
r-4N
t-= "qt-r- =t-w C
0
0
0
'00)
-4-)-.a
4
o0
03
q 74 4-4
000000
044
420
-Z
'
CA)
A)
04
0
C)
__
;,8X__
_
_
00
rd
44
e4
44
4
_
_
II
__O
4V-4
4444444444o
44
44
4
444444P4P
Z.Z
X0
4
4
0
4.00
1940
243
EXHIBITS
EXHIBIT 64
Home Owners' Loan Corporation-Cashreceipts and expenditures, fiscal years 1939
and 1940
Fiscal year
1939
Receipts:
Collection of interest-.--------------------------------$106,221,106
Dividends on investments .---------.....---...
-----7,487,126
Property income ...------------------------------------------26, 302,911
Repayment of principal and miscellaneous property credits-.--------- 200, 379, 617
Repurchase of savings and loan shares-- -------------------------2,420,000
Miscellaneous unapplied and unposted items and borrowers' special
deposits for taxes and insurance------------------------------3, 985, 601
Total receipts-------------------------
Fiscal year
1940
$90,204,200
7,292,109
26, 243, 551
222, 614, 633
14,973,000
21,178, 525
346, 796, 361
382, 506, 018
25,294, 763
23, 653, 581
Expenditures:
Administrative expense, Federal Loan Agency and Federal Home
Loan Bank Board ---------------------
Interest on bonds------------------ -----------------------Property expense
..------------------------------------------Other nonadministrative expense-----------------------Advances to borrowers .........------------------------------------------Advances for acquisition of, or due to ownership of property...
Purchase of shares of savings and loan associations- .----------------Miscellaneous unposted items and disbursements from borrowers'
special deposits for taxes and insurance ----------Total expenditures ---
--
New receipts ..------
-- -
-------
--------
-------------------
Means of financing:
------------------------------Cash balance at beginning of year
New receipts (above)
--------------------------------Bond sales-------------- -----------------Net funds available -------------------..
Funds allocated for retirement of bonds
Cash balance at end of year--------------------------------
80,892, 556
23, 574, 785
11, 921,863
49, 006, 868
32,187, 530
7,152,200
59, 219,430
22,491,659
13,177, 019
72, 689, 613
19,761,240
1, 538, 400
3, 529, 913
10,090,800
233,560,478
222, 621, 742
113, 235, 883
159,884,276
26, 575, 820
113,235, 883
138, 957, 879
79, 329, 628
159,884,276
117,171, 577
278, 769, 582
199, 439, 954
356, 385,481
1 316, 682, 932
79, 329, 628
39, 702, 549
Includes $76,350,000 proceeds from sale of bonds credited directly to Bond Retirement Fund by the
United States Treasury
244
REPORT OF FEDERAL HOME LOAN BANK BOARD,
1940
EXHIBIT 65
Home Owners' Loan Corporation-Statement of income and expense for the fiscal
year 1940
Operating and other income:
Interest:
Mortgage loans and advances----------$84, 735, 260. 70
Vendee accounts and advances -------------------9, 969, 264. 31
Total-----------------------------Special investments --------------------Total------------------------------Property income
Dividends received from savings and loan associations_
Miscellaneous-------
Operating and other expenses:
Interest on bonded indebtedness -----------------Less amortization of premium on bonds sold- ----Total------------------------------------Amortization of discount on refunded bonds
Administrative and general expenses-------------------------------------------Property expense
94, 745,
26, 267,
7, 253,
260,
932.
858.
959.
062.
15
06
38
23
56, 593, 609. 87
200, 242. 14
56, 393,
1, 466,
25, 627,
22, 008,
367.
777.
932.
718.
73
34
50
72
105, 496, 796. 29
Total expenses
Provision for losses:
On mortgage loans, interest, and property -------For fidelity and casualties ---------------------------For fire and other hazards --------------------------Total-----------------------------------------
41, 407. 14
128, 527, 811. 82
Total income------------------
Loss for fiscal year--------------------------
94, 704, 525. 01
------
40, 000, 000. 00
35, 026. 60
32, 663. 00
40, 067, 689. 60
17, 036, 674. 07
245
EXHIBITS
EXHIBIT 66
Home Owners' Loan Corporation-Statementof income and expense from the
beginning of operations, June 13, 1933, to June 30, 1940
Operating and other income:
Interest:
Mortgage loans and advancesVendee accounts and advances..--
$711, 082, 953. 93
16, 123, 195. 67
727, 206, 149. 60
Special investments_
------
182, 423. 10
Property income
Dividends received-Federal Savings and Loan Insurance
Corporation
Dividends received from savings and loan associations ...
Miscellaneous
Total
Operating and other expense:
$438, 227, 530. 53
Interest on bonded indebtedness--....
Less amortization of premium on bonds
sold
$727, 388, 572. 70
72, 939, 967. 66
3, 035, 326. 09
23, 272, 759. 46
1, 674, 160. 28
828, 310, 786. 19
208, 241. 10
438, 019, 289. 43
Amortization of discount on refunded
bonds---------------------------Administrative and general expense- -Property expense--------------------
7,998,329.31
208, 836, 265. 96
62, 619, 049. 05
-
Net income before losses in the liquidation of assets and
provision for losses-----------------------------Losses in the liquidation of assets: Loss on sale of furniture,
fixtures, and equipment ---. -----------------------------Net income before provision for losses which may
sustained in the liquidation of assets ------------Provision for losses:
On mortgage loans, interest, and prop
erty-------------------------_
$186, 137, 153.
For fidelity and casualties. ----------1, 077, 146.
Fire and other hazards --------------32, 663.
717, 472, 933. 75
110, 837, 852. 44
43, 895. 38
be
110, 793, 957. 06
25
24
00
187, 246, 962. 49
Loss for period June 13, 1933, to June 30, 1940--------------76, 453, 005. 43
246
REPORT OF FEDERAL HOME LOAN BANK BOARD,
1940
EXHIBIT 67
Home Owners' Loan Corporation--Analysisof changes in deficit for the fiscal year
ended June 30, 1940
Deficit at July 1, 1939 -------------------$59, 562, 028. 95
Add: Loss for the period July 1, 1939, to June 30, 1940 ----17, 036, 674. 07
76, 598, 703. 02
Deduct:
Adjustment of property expense-unallo
cated----------------------------Miscellaneous credits-----------------
$145,368.41
329. 18
145, 697. 59
Deficit at June 30, 1940--------------------------------76,
453, 005. 43
EXHIBIT 68
Home Owners' Loan Corporation--Average outstanding original loan per borrower
and average loan balance outstanding, June 30, 1940, by HOLC Regions and
by States
Average
original
amount
United States ....----------------------------
Average
loan
balance
Percent
reduction
$2,930
$2, 268
22. 6
4, 712
3,864
18.0
4,070
2,135
4,111
2,210
4, 406
5, 328
5, 005
2, 435
3,313
1,647
3,655
1,855
3, 739
4, 316
3,166
2, 004
18.6
22.9
11.1
16.1
15.1
19.0
36. 3
17. 7
2,842
2,252
20.8
3, 047
5, 737
2, 757
2, 719
3,036
2, 376
4, 403
2,282
2,154
2,321
22. 0
23. 7
17. 2
20.8
23.6
3, 017
2, 313
23.3
3, 066
2, 512
2, 357
1, 859
23.1
26. 0
1,738
22.3
Alabama ..
----------------------------------------2,065
1,611
Flotida ...----------------------------------------------2,198
1, 665
Georgia ......
....----------------------------------------------2,222
1,733
North Carolina-------------..
.......---------------.------------2,458
1,951
South Carolina ..--.............-----------------......---------------------..........
2,284
1,747
Puerto Rico .................-------------------------------------------2, 896
2, 390
22.0
24. 2
22.0
20.6
23.5
17. 5
Region 1-New York
------------
-
------------
Connecticut ..-------------------------------------------------Maine
----------------------------------Massachusetts
-----------------------New Hampshire -----------------------..-New Jersey ----------------------New York
----------------------Rhode Island --------------------------------------Vermont
-----------------------Region 2A-Baltimore
---------------------------------------
Delaware-----------------------------------------------------District of Columbia ---------------------Maryland
-----------------.
Pennsylvania----------------Virginia.------------------------------------------Region 2B-Cincinnati ---
-
Ohio---------------------West Virginia ------------..
--.
-------------------
Region 3A-Atlanta...----------------------------------------2,236
247
EXHIBITS
Home Owners' Loan Corporation-Averageoutstanding original loan per borrower
and average loan balance outstanding, June 30, 1940, by HOLC Regions and
by States-Continued
---'
Average
original
amount
Average
loan
balance
Percent
reduction
Region 3B-Memphis-----------------------------------------
$2, 420
$1, 843
23. &
Arkansas --------------------------------------------------Kentucky ------------------------------------------------
1, 776
2, 625
2, 683
1, 862
2,842
2,159
1, 298
2, 011
28.9i
2& 4
1, 415
2, 195
1, 661
24.9
24. 0
22&$
23. 1
3,731
2,919
2L8
3, 897
3, 334
3, 006
2, 711
22.9
2, 684
2, 022
24.7
Michigan -------------------------------------------------
2,275
2,911
1, 691
2, 206
25.7
24.2
Region 5A-Omaha ---------------------------------------
1, 941
1,483
23. 6
Colorado .-- - --------------------------------------Iowa ---------------------------------------------------Kansas -----------------------------------------------------
1,939
1,888
1, 674
2, 202
2,003
1,969
1, 741
1, 446
1,395
1, 337
1, 648
1, 559
1, 653
1, 371
25 4
2, 246
1, 630
27.4
Texas..........-----------------------------------------------
2, 033
2, 195
2, 283
1, 478
1, 547
1, 678
27.3
29.5
26.5
Region 6-San Francisco -----------------------------------------.
2, 267
1, 610
29.0
2,335
2,561
1,744
1,959
2,794
1, 952
2,234
1, 795
2,290
2,714
1,695
1,806
1,272
1,425
1,977
1,388
1,619
1,263
1,625
1,865
27. 4
29 5
27. 1
27.3
29.2
28.9
27.5
29. 6
29.0
31.3
Louisiana
------------------------------------------
Missouri-
------------------------------------------------
Mississippi ------------------------------------------------Tennessee -----------------------------------------------------------------
Region 4A-Chicago-------------
---------------------------Illinois......
Wisconsin .. ------------.----------------------------Region 4B-Detroit ------------
-
------------------------
Indiana ---------------------------------------------------
Minnesota------------------------------------------------Nebraska --------------------------------------------------North Dakota---------------------------------------------South Dakota -----------------------------------------------
Region 5B-Dallas
..---------------
New Mexico ---------------------------------------------
Oklahoma --------------------------------------------------
Arizona ----.
California Idaho . Montana_
Nevada-..
Oregon...-Utah-Washington.
Wyoming--....
Hawaii ..-. -
---------------------------------------------------------------------------------------------------------------------------------------------------------------- -------------- --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
i
270198-40-17
2,014
18.7
26. 1
20.1
25. 2
22.2
16.0
21.3
248
REPORT OF FEDERAL HOME LOAN BANK BOARD,
1940
EXHIBIT 69
HomefOwners' Loan Corporation-Numberof employees by departments, divisions,
and sections, as of July 1, 1940
Board Members and assistants---------------------------------------------------------------------Secretary's Office
Research and Statistics-----------------------------------Public Relations-----------------------------------------Financial adviser------------------------------------------
44
128
70
16
5
Total, Board
-------------------------------------------727
General Manager, staff-------------------------------------Property Management--------------------------------------2, 301
Loan Service----------------------------------------------_2, 147
Appraisal and Reconditioning--------------------------------1, 179
Comptroller and Accounting--------------------------------- 1, 192
503
Treasurer-----------------------------------------------11
Budget------------------------------------------------377
Auditor------------------------------------------------254
------------------------------------------Insurance --62
Purchase and Supply -------------------------------------
1263
Total, Management-------------------------------------8,
Legal Department
--------------------------------------------Personnel Department -------------------------------------------Total, HOLC-.....----------------------------------------
753
640
187
2 9, 843
1 Includes personnel of general service departments which serve all agencies under the Federal Home
Loan Bank Board.
2 Includes 21 employees on per diem basis.
INDEX
Advances of the Federal Home Loan Banks-See FEDERAL HOME
LOAN BANKS.
Page
-vi
Agencies of Federal Home Loan Bank Board--------------------Facing 1
-------------------------------Organization chart of_
Amortization-See Extension of loan terms.
145
Appraisal Section of the Home Owners' Loan Corporation -------------Assets-See agency concerned.
Balance sheets-See agency concerned.
Baltimore Rehabilitation Project
----------------------------- 19-22, 145
Bank Presidents' Conference ------------------------------------83
Bonds-See HOME OWNERS' LOAN CORPORATION.
Building and loan associations-See Savings and loan associations.
16-18
Building costs --------------------------------------------------Cost indices for six-room frame house ------------------------17
Material prices------------------------------------------------ 16-18
Index of
----------------------------------------------16
Monopolistic practices, actions against ----------------------17-18
Charters-See FEDERAL SAVINGS AND LOAN ASSOCIATIONS.
Cities, decentralization of------------------------------------------- 20-21
Collections-See HOME OWNERS' LOAN CORPORATION.
Community programs-See FEDERAL SAVINGS AND LOAN INSUR
ANCE CORPORATION.
4
Construction, nonresidential--------------------------------------Construction, residential:
6-8
Apartment-house building, proportion of-----------------------Costs-See Building costs.
4
Dollar volume -----------------------------------------------Expansion of, conditions affecting- ---------------------------5-6
Federal Home Building Service Plan ------------------------87-88
2-4
Increase of--------------------------------------------------Index of_3--------------------------------------------------3
New nonfarm dwellings:
4
Cost of, total-------------------------------------------4
Increase of_4---------------------------------------------7
7---------------------Number of, by type of dwellingPrivate:
Distribution of ---------------------------------------4, 9-10
Increase of
5
5---------------------Index of------------------------------------------------32
Private and USHA-financed, compared----------------------5
Public and private, compared- ------------------------------4-6
Regional distribution of-------------------------------------8-10
Single-family dwellings, predominance of--------------------6-8
Rooms, average number of---------------------------------18
Supply and demand for-_ ------------------------------------5-6
249
250
REPORT OF FEDERAL HOME LOAN BANK BOARD,
1940
Page
Construction, residential-Continued
Two-family homes-----------------------------------------8
USHA-financed---------------------------------------------5
Cook County, Ill.:
Interest rates on mortgages recorded in---- --------------------37
Costs, financing-See Home mortgage finance.
Debentures-See FEDERAL HOME LOAN BANKS.
Debt, home-mortgage ------------------------------------35, 40-44
Default, insured associations in-See FEDERAL SAVINGS AND LOAN
INSURANCE CORPORATION.
Defense program, effect on residential construction ------------------5, 10
Direct-reduction loan plan ------------------------------35, 43, 68, 97
Dividend policy ------------------------------------------48-49
Dividend rates-------------------------------------------------46-48
Federal Home Loan Banks ----------------------------------81
Federal savings and loan associations --------------------------100
46-48
Savings and loan associations - -----------------------------Examinations:
Cost of, reduction in-----------------------------------------86
Examining Division of Federal Home Loan Bank Board------- 83, 86, 112
Federal Home Loan Banks ----------------------------------85
Federal savings and loan associations -------------------------112
111-112
Federal Savings and Loan Insurance Corporation -------------Form, adoption of standard----------------------------------86
Insured savings and loan associations ----------------------111-112
Joint-_-------------------------------------------------112
Number of---------------------------------------------------87
Exhibits, list of:
168-170
Federal Home Loan Bank System ---------------------Federal savings and loan associations ----------------------170
Federal Savings and Loan Insurance Corporation-- -------------171
171-172
Home Owners' Loan Corporation -------------------------Survey of housing and mortgage finance -----------------------168
Expenses-See agency concerned.
Federal Home Building Service Plan
----------------------------- 87-88
Federal Home Loan Bank Act:
Capital stock of Federal Home Loan Banks --------------------- 79-80
38-40
Lending policies ------------------------------------------FEDERAL HOME LOAN BANK BOARD:
Agencies of---------------------------------------------------ivi
Organization chart of------------------------------------ Facing 1
Examining Division---------------------------------------- 83, 86, 112
Federal Home Building Service Plan--------------------------87-88
82
Functions of-------------------------------------------------82
Funds, source of--------------------------------------------------- 62-66
Government investments, program for repurchase of ------------------------------------- 38-40
_
Lending policies-----Personnel of-------------------------------------------------- 82-83
82
Receipts and disbursements of----------------------66-------------------Self-supporting-
INDEX
FEDERAL HOME LOAN BANK SYSTEM:
251
Page
51-52
Activities, summary of ------------------------------------Advances to members-See FEDERAL HOME LOAN BANKS.
Administration of --------------------------------------------- 83-85
Assets of members:
58
Average assets, by size groups ---------------------------54
---------------By type of association----_-------------66
-------------------------------------------Changes in
54
Compared with nonmembers ------------------------------52-56
---------------Growth in-------------75-76
Borrowing capacity of members ---------------------------------------------------------------- 85-87
Examination of members
54-55
Families served by, number of ---------------------------51 -52
--------------------Functions of----------------------64
Government investments, voluntary retirement of ----------------104
--------------------------------------Insurance protection
49
----------Interest rates, reduction of--------51, 62-66
Investments, retirement of----------------------------------Membership:
52-54
--------- ---Admissions to- -------------------53
Applications for ----------------------------------------104
Asset distribution of insured and uninsured members----------Balance sheet, consolidated, of member institutions, Exhibits 19
188, 189
and 20------------------------------------66
Balance sheet of members, summary of----------------------75-76
Borrowing capacity of members- ------------------------73
---------------------------------Borrowing members---51, 68
Borrowings of members, reduction of---------------------51, 70
------Cash holdings of members, increase in- Changes in----------------------------------------------- 52-56
66-71
-----------------Condition of member institutions -Assets -----------------------------------------------66-67
Borrowed money ----------------------------------68
70
Cash ----------------------------------------------Mortgage loans---------------------------------- 68-69
Private investments------------------------------ 67-68
69-70
Real estate-----------------------------------------Reserves-_--------------------------------68
Government investments in member institutions------------62-66
Dividends paid on ---------------------------------65
Repurchases of---------------------------------------- 64-66
Insurance protection
-----------------------------------104
Liquidations
------------------------------------------58
Mergers
----------------------------------------------58
Mortgage-lending activity: Percentage distribution, by type of
association-------------------------------------59-60
Mortgage-lending by member institutions------------ 51, 59-62, 68-69
By purpose of loan ------------------------------61-62
Compared with nonmembers------------------------- 55, 59-62
Index of, by Bank Districts---------------------------61
252
REPORT OF FEDERAL HOME LOAN BANK BOARD, 1940
FEDERAL HOME LOAN BANK SYSTEM-Continued.
Membership-Continued.
Page
Number of members:
By size of community--------------------------------56
By type of institution-------------------------------54
Compared with nonmembers- --------------------------55
Operating ratios of member institutions ---------------------71
Operations of member institutions-------------------------- 59-72
Private investments in member institutions ------------44, 67-68
Real estate owned by member institutions, decrease in---------69-70
Real estate sold "on contract"-----------------------------70
Reserves of member institutions-- -------------------------68
Withdrawals from----------------------------------------- 53-54
FEDERAL HOME LOAN BANKS:
Administration of----------------------------------------83-85
Advances to members:
Amounts advanced -----------------------------------72
Collateral---------------------------------------------75
Decline in demand for-------------------------------72-74
Interest on----------------------------------------73-74
Outstanding------------------------------------------51, 72-74
Repayments of----------------------------------------- 51, 72-74
Soundness of
---------------------------------------- 74-75
Types of------------------------------------------ 74-76
Long-term and short-term ----------------------------74
Secured and unsecured-------------------------------75
Advances to nonmenbers -------------------------------------73
Assets-------...
----- -----------------------------------76-78
Capital stock of----------------------------------------------79-80
Cash held------------------------------------------ 51, 76-78
Debentures--------------------------------------------------78
Deposits:
Demand and time ---------------------------------------- 77-78
78
Interbank -----------------------------------------------77
Interest rates on-----------------------------------------51, 77
Member-----------------------------------------------Directors of, election of---------------------------------------- 84-85
-------------------------------------------- 52,-81-82
Dividends
85
Examination and supervision of-------------------------------Financial condition- -----------------------------------76-81
76-78
Assets
---------------------------------------------Balance sheet (combined and separate), Exhibit 27-----------196
Changes in fiscal year 1940--------------------------------- 77-78
Income and expenses
---------------------------------- 81-83
204
Profit and loss statement (combined and separate), Exhibit 31__
81
Profit and loss statement, consolidated ----------------------52, 81-82
Surplus and undivided profits -----------------------51-52
Functions of-------------------------------------------------Government investments in stock of---------------------------- 79-80
INDEX
253
FEDERAL HOME LOAN BANKS-Continued.
Page
Interest rates, reduction of----------------------------------49, 73-74
Legislation---------------------------------------------80
Liquidity of---------------------------------------------76
72-89
Operations of------------------------------------------------Purpose of---------------------------------------------------51-52
52,80
Reserves------------------------------------------------51, 76-77
Security investments-------------------------------79
Stock subscriptions, members and U. S. Government- -----------85
Supervision of------------------------------------------------Surplus and undivided profits ---------------------------------- 52, 80
Federal Housing Administration----------------------------------18
Home mortgages accepted for insurance -------------------------- 33-34
36-37
Insurance provisions, liberalization of------------------------36
Interest rates, reduction of-----------------------------------35
Federal Land Banks, debt refinancing of----------------------------80, 100
Federal legislation-----------------------------------------------v, 163
Federal Loan Agency ------------------------------------------------------------------------------------ 84-85
Federal Reserve Banks
47
Federal Reserve System, interest payment on time deposits------------83
Federal Savings and Loan Advisory Council ------------------------212
Members, list of, Exhibit 36---------------------------------FEDERAL SAVINGS AND LOAN ASSOCIATIONS:
99
Advertising expenditure ----------------------------------92
Applications, number of-------------------------------------90
Areas served by----------------------------------------------Assets:
90
Combined------------------------------------------------------------------------------------------ 91-94
Growthin
-------------------------------------- 91-92
Cancellations ----Charters, number of------------------------------------------- 91-92
92
Conversions, number of-------------------------------------39
Cost of home financing, influence on-------------------------------------------------- 48, 100
Dividend rates-------------------112
Examination of----------------------------------------------89
Importance of, in savings and loan industry --------------------102
Insurance of accounts required by law-------------------------Investments in:
Private, continued rise in-------------------------------- 46, 94-97
94
Amount of investments-------------------------------Dividends paid on ----------------------------------97
94
Number of investors- -------------------------------Percentage distribution--- -----------------------95
------------------------------- 62-66,94-97
U. S. Government_
97
Dividends paid on- ------------------------------Percentage distribution---------------- --------------95
Repurchases of---------------------------------------- 95-96
100
Legislation, Federal and State-- -------------------------------
254
REPORT OF FEDERAL IIOME LOAN BANK BOARD,
1940
FEDERAL SAVINGS AND LOAN ASSOCIATIONS-Continued.
Page
Lending activity, mortgage---------------------------60
Construction loans
---------------------------------.
97
Increase in----------------------------------97-98
Refinancing loans, decrease of-----------------97
Volume, by purpose of loan-----------------------98
Loans outstanding------------------------------------------93
91-94
Number of associations---- -------------------------------By asset size distribution --------------------------------94
By size of community-----------------------------------94
Changes in
------------------------------------------ 91-92
Operating ratios-------------------------------------------99
-98-100
Operations, statement of--------------------------Progress of------------------------------------------------89-91
Purpose of------------------------------------------------- 89, 91-92
------------------------------------ 98-100
Statement of condition.
Assets---------------------------------------------------- 90-91
Combined balance sheet items for all operating Federals, Exhibits
19 and 20------------------------------------------- 188,189
Consolidated statement for 1,384 reporting Federals, Exhibit 44-_
221
Income and expenses ------------------------------------- 99-100
Selected balance-sheet items for 1,344 identical associations,
Exhibit 43
---------------------------------------220
Taxes, Federal Social Security---------------------------100
FEDERAL SAVINGS AND LOAN INSURANCE CORPORATION:
Administration of, simplification in----------------------119
Admission fees-----------------------------118
Assets, increase in --------------------102, 117
Community programs-----------------------------102, 107-110
Advantages of-------------------------------------107-108
109-110
------Altoona, Pennsylvania, program- --------Chicago program -------------------------108-109
Milwaukee program---------------------------109
Milwaukee Properties Bureau ----------------------110
Exhibit 49 --------------------------227
New Jersey program ----------------------------------109
New Orleans Central Appraisal Bureau ------------110
Exhibit 49----------------------------------------227
Contributios
------------------------------------------ 101-102
Default, operation of associations in:
Community Federal Savings and Loan Association of Inde
116
pendence, Independence, Missouri -------------------Security Federal Savings and Loan Association of Guymon, Guy
mon, Oklahoma--------------------------------------- 115-116
Trenton Building and Loan Association, Trenton, Ohio ------- 116-117
Eligibility requirements---------------------------------------- 38-39
Examinations
--------------------------------------- 111-112
112
Joint-- ---------------------------------------------Federal Home Loan Bank Board, acts as board of trustees for ---- --82
Financial condition------------------------------------117-120
INDEX
255
FEDERAL SAVINGS AND LOAN INSURANCE CORPORATION
kContinued.
Page
Insured associations:
103
Assets of----------------------------------------------103
Average account per investor in------------------------------------------- 114-117
Default, operation of associations in
11-112
1--------------------------------Examination of----_
101-102
------------------------Investments, private_--101
Investors, number of--------------------------------------101
Mortgage lending by--------------------------------------Number of--------------------------------------------- 102-103
Percent of all members insured---------------------------- 54, 104
103-107
Progress of --------------------------------------------111-112
------------------------------------Supervision of
120
Legislation, State ----------------------------------------101
Mortgage lending by insured associations -------------------Operations, summary of-------------------------------------- 101-102
119
Personnel-----__ -----------------------------------------------111
------------------------------Pledge and escrow of shares
118
Premiums-______------------------------------------------101-102
Progress of-----------------------------------------------Reorganization:
108
Insurance as factor in-----------------------------------Methods of--------------------------------------------110-111
108-109
Participation of FSLIC in programs- ----------------102
Progress of programs--------------------------------------110-111
Results of---------118
Reserves
110
----------Segregation of assets
----- 112-114
Settlements ------------------------113
-----------------Optional methods of_
113-114
------------------ ---------Summary of ------------117-119
--- - -----------------Statement of condition
232
-----------------Balance sheet, Exhibit 53 ------233,234
Income and expenses, Exhibits a-4 and 55 ----------------------------------- 119
Condensed statement
---------111-112
-----------------Supervision and examination102
------------------- ----------Surplus and reserves
------------ 111
Write-down of share capital -100
----------------------------IFederal Social Security Taxes
iFinance-See Home mortgage finance.
Foreclosures:
13
Concentration of
Cost of, exorbitant
38
12
Decrease of------------ ----------------------------------Home Owners' Loan Corporation-See HOME OWNERS' LOAN
CORPORATION.
12
Number of, total, nonfarm_---------------13
Rate of-------------------------------------------------------
256
REPORT OF FEDERAL HOME LOAN BANK BOARD,
1940
Page
Government investments:
Federal Home Loan Banks, capital stock of------------ 79-80
Federal savings and loan associations, shares of -----------------63
Home Owners' Loan Corporation, investments by, in savings and loan
associations-.--------------------------------------------63
Repurchases of.-----------------------------62-66
Home mortgage finance:
Amortization period--------------------------------------15
Competition in----------------------------------39
Corporate financing, compared with---------------------------23, 35
Costs of, lowering of-----------------------------------35-38
Debt, home mortgage ----------------------------------35, 40-44
Effect of war on--------------------------------------------1-2
Interest rates, reduction of-------------------------------------38-40
Lending activity:
Analysis of---------------------------------------23-25
Increased volume of---------------------------------23-25
Policies in a competitive market-- ----------------------38-40
Regional distribution of------------------------------------ 29-32
Risk factors---------------------------------------39-40
Savings and loan associations---------------------------25-29
Types of lenders-----------------------------------------23-24
Lending practices, reforms in-------------------------------43-44
Loans outstanding:
Balance of, by types of lenders-----------------------------42
Volume of-----------------------------------------------40
Mortgage recordings-------------------------------------- 24-32
Survey of-----------------------------------------------1-49
HOME OWNERS' LOAN CORPORATION:
Accounts:
137
Average loan amount of accounts foreclosed -----------------Debtor and property, reduction of---------------------157-161
130-131
Delinquent--------------------------------------------131
Extension program on, effect of----------------------------Larger, experience of------------------------------------- 137-13&
131
Performance record---------------------------------------126
Recast and extended -------------------------------------Repaid in full------------------------------------------- 156-157
Status of----------------------------------------------- 129-131
157
Terminated----------------------------------------------161-163
Administration of -------------------------------------Administrative expenses---------------------------------- 122, 161-162
133-134, 143
Advances to borrowers, supplemental-------------------Amortization-See Extension of loan terms.
145-146
Appraisal activity -------------------------------------132,136
Arrearages-------------------------------------------Bond Retirement Fund---------------------------149-150, 160-161
Bonds
-------------------------------------------- 122, 150, 160
151-152
Interest on----------------------------------------
INDEX
HOME OWNERS' LOAN CORPORATION-Continued.
257
Page
Collections--------------------------------------------131-132
Debt liquidation by original borrowers ---------------------155-157
Deficit---------------------------------------------122, 150-151
246
Analysis of changes in, Exhibit 67-------------------------Extension of loan terms:
Act authorizing------------------------------------------123
132-134
Applications for---------------------------------124,
Arrearages at time of extension --------------------125
125
Dollar amount of extensions ----------------------------124
Effect on foreclosures ------------------------------------Effect on liquidationof HOLC----------------------------155
Extension program-------------------------------------- 123-124
Execution of------------------------------------ 124-127, 131
126
Performance of borrowers----------------------------126
Limitation, original borrowers and vendees ------------------Number of extensions ----------------------------------- 124, 126
126
By amortization periods ----------------------------125, 128
Tax and insurance accounts required ------------------Financial condition:
Assets, decrease in----------------------------------------148
Balance sheet, Exhibit 61--------------------------------238
Changes in----------------------------------------- 148-149
246
Deficit, analysis of changes in, Exhibit 67-------------------Income and expenses------------------------------------- 151-153
151
Condensed statement, fiscal years 1939 and 1940 --------244
Statement for fiscal year 1940, Exhibit 65 ------------Statement from June 13, 1933, to June 30, 1940, Exhibit 66245
---------------243
Receipts and expenditures, Exhibit 64-Survey of--------------------------------------------- 148-153
Foreclosures:
134-135
Authorized--------------------------------------------137
Average loan amount of accounts foreclosed ----------------135-136
Causes of--------------------------------------------Extension of loan terms, effect on-----------------------124, 135
Number of
--------------------------------------- 12-13, 135
Operations --------------------------------------134-138
Pending-----------------------------------------------129-130
134
Reduction of-----------------------------------------Vendee accounts-----------------------------134-135, 142-143
134-135
Withdrawals-------------------------------------------Insurance------------------------------------------------146-148
Insurance and tax accounts-See Tax and insurance accounts.
Interest rates, reduction of---------------------_36-37, 121, 151
Savings from------------------------------------------123
Investments:
Loan and property----------------------------------158-159
Federal savings and loan associations, in---------------------95
Member savings and loan associations, in------------------62-66
Dividends received on-----------------------------65
-Outstanding ----------------------------------------149
258
REPORT OF FEDERAL HOME LOlAN BANK BOARD, 19 4 0
HOME OWNERS' LOAN CORPORATION-Continued.
Page
Lending policies, compared with private lenders ----------153
Leniency to borrowers------------------137-138, 141, 154-155
Liquidation of:
General experience---------------------------157-160
Process of-------------121-122, 153-161
Liquidation of debt by original borrowers155-157
Loan service ----------------------------------------132-134
Loans:
Average loan balance outstanding------122, 155
Exhibit 68--------------------------------------246
Extension of terms-See Extension of loan terms.
Outstanding---------------------149, 156
Repaid in full -------------------------------------156-157
Volume of --------------------------------------------24
Losses, loan and property-158-159
Neighborhood conservation ----19-22, 144-145
Waverly area, Baltimore
------19-22, 145
Net worth --------150
Offices, number of -------------------162-163
Operations, general --------------------------------129-147
Origin and purpose---------------------153-155
Personnel--------------------------------------------122, 161-163
Properties acquired:
By deed in lieu of foreclosure
134-138
By foreclosure ------------------138
140
Total ---------------------------------------------------Properties owned:
Capital value of
------------------------------------------138
Elements entering into ---------141, 149
Decline of -----------138, 142
Location of138-139
Number of122,138
Operating income and expense --------------------------142
Properties in process of acquiring title, compared- ------------138
Reconditioning of ------------------------------143
------------ 141-142
Sales experience Sales of--- ---------------------------------14-15, 122, 139-140
Loss on -------------------141
141
Terms of-----------------------------------------Sales policy ------------------------142
142
Units rented ---------------------------------------------143-145
Reconditioning -----------------------------------157-161
Recoveries and losses -------------------Reserves for losses------------------------------------------- 150,152
Revision of loan terms-See Extension of loan terms.
153-155
Risks assumed ---------------------------------------------36, 123,127, 154
Savings to borrowers --------------------------------127
Savings to Corporation -------------------------------------128
Tax arrearage-----------------------------------------------
INDEX
259
HOME OWNERS' LOAN CORPORATION-Continued.
Page
121, 125, 127-129, 146-147
Tax and insurance accounts -----------125, 127
Method of payment -------------------------------------Number of
---------------------------------------128
Required for all extension agreements
_
-125
Required for new vendee accounts ----------------18-------127
Savings to borrowers and to CorporationVendee accounts:
143,149
Amount of-----------------------------------------131-132
Collections -----------------------------------------------------126
Extension of loan terms ---134-135, 143
Foreclosures of
142-143
Increase of----------------------------------------123, 151
Interest charges on-------------------------------------Number of--------------------------------------------- 129,142
142-143
Performance of-----------------------------------------132-134
Servicing of128
---------------Tax and insurance accounts required
Home ownership:
Costs, lowering of---------------Financing costs:
Foreclosures ---------------------Title examination fees-----------------------------------Apartment-house building, proportion of
Demand for-------------------------------------------------Index of residential construction -----------------------------Nonfarm dwellings, number of units
Nonfarm families, number of
Private and public, compared
Single-family dwellings, predominance of------------Survey of-------------------------------------------------Trends in----------------------------------------Income and expenses-See agency concerned.
Income, nonagricultural, rise of------------------Industrial production, index of
Insurance of accounts-See FEDERAL SAVINGS AND LOAN INSUR
ANCE CORPORATION.
Insurance of HOLC properties-See HOME OWNERS' LOAN COR
PORATION.
Interest rates:
Cook County, Illinois-------------------------Reduction of------------------------------------------------Federal Home Loan Banks ------------- 49,
Federal Housing Administration
-Home Owners' Loan Corporation
Variable
Justice Department, Antitrust Division
Labor costs, building------
35-38
38
38
7-8
5-6
3
5-6
6
4-6
6-8
1-49
7-8
2
3
37
35-38
73-74
36
36
38
17-18
17
260
REPORT OF FEDERAL HOME LOAN BANK BOARD,
19 4 0
Page
Legislation:
Federal Home Loan Banks ----------------------------------80
Federal savings and loan associations------ ----------------------100
Federal Savings and Loan Insurance Corporation -----------------120
Lending activity-See Home mortgage finance.
Lending policies in competitive market
---------------------------- 38-40
Letter of Transmittal------------------ I---------------------vi
Loans:
Average size of--------------------------------------------28
Construction------------------------------------------ 25, 32-33,97
Direct-reduction---------------------------- ------35, 43, 68, 97
Distribution of, by purpose --------------------------------33
Long-term and short-term..------------------------------33-35
Refinancing:
Decline of-------------------------------------25,33-35,97
HOLC, volume of_-------------------------------------34-35
Share-account sinking fund- -------------------------------43, 68
Life insurance sales--------------------------------------------46
Milwaukee Properties Bureau -------------------------------------110
Mortgage finance and savings -----------------------------------22-47
Mortgage loans-See Home mortgage finance.
Mortgage pledged shares---------------------------------------.
68
Mortgage recordings-See Home mortgage finance.
National Housing Act
-------------------------------. 101, 112-113
Interest rates, reduction of----------------------------------36
Lending policies ---------------------------------------------38
Neighborhood conservation ----------------------------19-22, 144-145
Decentralization of cities -------------------------------------- 20, 21
Waverly area, Baltimore-------------------------------------- 22, 145
New Jersey Department of Banking and Insurance, limitation of interest
rate-_ --------------------------------------------------------47
New Orleans Central Appraisal Bureau------------------------------110
New York Public Housing Law of 1939-----------------------------4
Operations-See agency concerned.
Organization chart of agencies under Federal Home Loan Bank Board - Facing 1
Personnel-See agency concerned.
Population:
Changes in city ------------------------------------------8-10
21
Declining rate of growth-------------------------------------Postal Savings System, revision of uniform rate- ---------------------47
Real estate:
Foreclosures-See Foreclosures.
Institutionally owned ------------------------------------13-16
Market:
Influence of Government activity on----------------------11
Mixed trends in------------------------------------- 10-12
11
Obstacles to recovery of----------------------------------11
Tax burden ----------------------------------------
INDEX
261
Real estate-Continued.
Overhang:
Page
Geographic distribution of--------------------------------15
Reduction of-------------------------------------13-16
Volume of---------------------------------------------14
Prices, decrease in
---------------------------------------10-12
Sales, increased----------------------------------------- 10-12
Reconstruction Finance Corporation-------------------------------80
Refinancing-See Loans.
Refunding operations- -----------------------------------------35
Rehabilitation of urban neighborhoods- --------------------------19-22
Rents:
Index of residential---------------------------------------18-19
Stability of_
-------------------------------------------------18-19
Reorgani2ation of savings and loan associations-See FEDERAL SAV
INGS AND LOAN INSURANCE CORPORATION.
Reserves-See agency concerned.
Residential construction-See Construction and Housing.
Savings:
Individual long-term-- --------------------------------------- 44-46
Amount of------------------------------------------------ 44-45
45
Changes in--------------------------------------------Declining return on---------------------------------------- 46-48
45
Institutionalization of-------------------------------------Savings and loan associations (See also FEDERAL HOME LOAN BANK
SYSTEM and Savings and loan industry):
32
Construction loans, index of ----------------------------------Dividend rates------------------------------------------------ 48-49
25-29
Home mortgage finance, predominance in field of---------------33
Loans, distribution of, by purpose ----------------------------57
Number of operating--------- ----------------------------------------------------------- 42-43
Mortgage holdings, increase of
---------------------------------- 59-61
Mortgage lending activity
Savings and loan industry:
Consolidation of------------------------------------------- 53, 56-59
Federal savings and loan associations in, importance of-----------89-91
104
---------------------------------------Insurance protection
Senate Resolution No. 150----------------------------------------65
Settlements-See FEDERAL SAVINGS AND LOAN INSURANCE
CORPORATION.
100
Social Security Act Amendments ----------------------------------Summary of activities:
-iv, 51-52
Federal Home Loan Bank System------------------------Federal savings and loan associations----------------------- iv, 89-91
Federal Savings and Loan Insurance Corporation--------- iv-v, 101-102
Home Owners' Loan Corporation--------------------------- v, 121-122
262
REPORT OF FEDERAL HOME LOAN BANK BOARD,
1940
Page
Tax delinquency-See HOME OWNERS' LOAN CORPORATION.
Taxes, Federal Social Security------------------------- -------100
Title examination, cost of----------------------3------------vi
Transmittal, Letter of------------------------------------------120
Uniform Savings and Loan Act--------------------------------U. S. Government, investments of-See Government investments.
United States Housing Authority. construction financed by------------ 4-5, 8
United States savings bonds
4---------------------Vacancies, stability of
----------------------------------------- 18-19
War, effect on Bank Board and agencies---------------------------iII, 1-2
Waverly area, Baltimore --------------------------22, 145
O
@FedFRASER