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Sixth Annual Report
FEDERAL HOME LOAN
BANK BOARD
for the period JULY 1, 1937 -JUNE 30, 1938
covering operations of the
FEDERAL HOME
FEDERAL SAVINGS
FEDERAL
LOAN
HOME
LOAN
AND
LOAN ASSOCIATIONS
SAVINGS AND
INSURANCE
OWNERS'
BANK SYSTEM
CORPORATION
LOAN
CORPORATION
LETTER
from the CHAIRMAN of
FEDERAL
HOME
LOAN
the
BANK
BOARD
,transmitting
Sixth Annual Report
FEDERAL HOME LOAN
BANK BOARD
covering operations of the
FEDERAL
FEDERAL
HOME
SAVINGS AND
FEDERAL
LOAN
HOME
LOAN
SYSTEM
LOAN ASSOCIATIONS
SAVINGS
INSURANCE
OWNERS'
BANK
AND
CORPORATION
LOAN
CORPORATION
for the period
JULY
1,
1937, through JUNE 30, 1938
UNITED STATES GOVERNMENT PRINTING OFFICE- WASHINGTON 1938
FOR SALE
BY THE SUPERINTENDENT
OF DOCUMENTS
.*
*
*
PRICE 30
CENTS
Letter of Transmittal
FEDERAL HOME LOAN BANK BOARD,
Washington, D. C., October 1, 1938.
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 Sixth Annual Report of the
Federal Home Loan Bank Board for the period July 1, 1937, through
June 30, 1938, covering the operations of the Federal Home Loan
Banks, the Federal Savings and Loan Associations, the Federal Sav
ings and Loan Insurance Corporation, and the Home Owners' Loan
Corporation.
During the reporting period there occurred a marked decline in
economic activity which, although harsh in some other fields, served
to emphasize the relative stability of financial institutions. The
notable strength of thrift and home financing institutions during this
period as evidenced both by their growth in assets and their influence
on new construction and home ownership testifies to their soundness
and the place they have achieved in public confidence.
Progress in the housing field is still slow, but residential building
activity in the first six months of 1938 reflected a surprising demand
for new dwellings. For the year 1938 as a whole, it may be expected
that the number of new nonfarm dwelling units will exceed the 1937
number.
Mortgage lending institutions are ready to finance a much larger
volume of residential construction than has been taking place in the
last few years. Home-mortgage loans made by private financial
institutions have almost trebled since 1934, amounting to approxi
mately $1,560 million in 1937. A selected group of long-term sav
ings, which are the chief source of urban mortgage credit, showed an
increase of $2,500 million in 1937. These facts and other recent
III
IV
LETTER
OF TRANSMITTAL
trends in home-mortgage finance and housing, which constitute the
background of the Board's activities, are presented in the "Survey Of
Housing And Mortgage Finance" included in the present report.
The Federal Home Loan Bank System, in its sixth year of operation,
has continued to expand its services as a central reservoir of credit
,for thrift and home financing institutions. On June 30, 1938, out
standing advances of the twelve Federal Home Loan Banks to member
institutions were $196,224,937 as against $167,056,887 at the end of
the preceding fiscal year. Total capital stock, surplus, and undivided
profits of the twelve Banks amounted to $167,981,331, an increase of
$11,576,498 over June 30, 1937. During the fiscal year, the number
of members of the System increased from 3,886 to 3,956 institutions.
New home mortgage loans made by member institutions amounted to
$563 million or approximately 36 percent of the total amount of such
loans written by all institutional lenders in the fiscal year 1938.
As
a result of the steady growth of the System, the Federal Home Loan
Banks entered the financial market in order to raise additional funds.
Since April 1937, five issues of consolidated Federal Home Loan Bank
debentures have been floated, each of which was heavily oversub
scribed. Two of these were short-term and were paid off at maturity,
leaving $90 million debentures outstanding on July 1, 1938.
On June 30, 1938, Federal Savings and Loan Associations, which
are chartered and supervised by the Board, numbered 1,346 as against
1,286 on June 30, 1937. The number of shareholders increased from
801,347 to 1,030,096, and the aggregate assets of these institutions
from $986,298,000 to $1,213,874,000. An encouraging sign of the
soundness of the Federal savings and loan associations is the con
tinuous growth of private savings invested in these institutions. In
an identical group of 1,148 associations, private share investments
increased by 19 percent during the fiscal year. In the same period,
home mortgage loans made by all Federal associations amounted to
$280,887,000, or 40 percent of the total amount loaned by all savings
and loan associations throughout the country.
The Federal Savings and Loan Insurance Corporation has made
substantial progress in the insurance of investments in savings and
loan associations. During the fiscal year, 290 additional institutions
with 269,510 shareholders and total assets of $228,726,000 were in
sured, bringing the total number of insured associations to 2,014,
with combined assets of almost $2,000,000,000 and holding the ac
counts of 1,923,513 people. Total resources of the Federal Savings
LETTER
OF TRANSMITTAL
and Loan Insurance Corporation on June 30, 1938, were $114,077,883,
an increase of $5,091,987 over the preceding fiscal year. Aggregate
losses experienced by the Corporation since the beginning of its
operations in 1934 amount to only $104,845.
The Home Owners' Loan Corporation is engaged in liquidating its
assets in accordance with the provisions of the Home Owners' Loan
Act and with especial regard to the welfare and interests of its bor
rowers. The experience of the Corporation during the fiscal year
1938 has demonstrated once more that the large majority of HOLC
borrowers are able and willing to meet their loan obligations upon
the liberal terms established by Congress. Despite the recession, the
Corporation has made further progress in liquidation. The balance
of original loans and advances outstanding has decreased from
$2,549,524,000 to $2,214,064,000 during the fiscal year. The number
of debtor accounts in default declined from 331,664 to 270,144, partly
because of improved collections, but chiefly because of loan exten
sions granted to borrowers who were not able to meet their obliga
tions in full, and because of foreclosures. However, foreclosure
authorizations of the HOLC declined from 76,896 in the fiscal year
1937 to 47,745 in the fiscal year 1938. On June 30, 1938, the HOLC
owned 82,987 properties at a total capital value of $437,605,041.
The Federal Home Loan Bank Board and the agencies under the
Board, although operating under budgets and appropriations ap
proved by Congress, are not called upon to use any appropriated
funds from the public treasury. The income of the Board itself is
obtained from assessments levied upon the twelve Federal Home Loan
Banks and the -other agencies under the direction of the Board, and
from examination fees. The income of the agencies is obtained
through interest on loans and investments, insurance premiums, or
other similar forms of private revenue. By these separate and
independent revenues, the operations of the Board and its agencies
are carried on without the use of funds derived from taxation.
Respectfully,
H. FAHEY, Chairman,
T. D. WEBB, Vice Chairman,
JOHN
FRED W.
CATLETT,
WILLIAM H.
HUSBAND,
Members.
Contents
Page
LETTER OF TRANSMITTAL
I.
II.
INTRODUCTION ----
I
--------------------------------
1
----------------------------------
SURVEY OF HOUSING AND MORTGAGE FINANCE----------
1. Revival of residential construction --------------2. Obstacles to housing -_-----------------------Limits of actual demand----------------------The "overhang"
----------------------------Building costs-----------------------------Inadequate real-estate laws--------------------Real-estate taxes_---------------------------3. Trends in residential building and mortgage finance___
Construction of nonfarm dwellings ------------Reconditioning-An important task ----------Recent trends in the real-estate market---Home-mortgage lending activity_ --_----------The interest rate----------------------------The flow of savings -------------------------The outlook- -----------------------------III. FEDERAL HOME LOAN BANK SYSTEM -------------------
3
3
5
5
5
7
8
9
10
10
11
12
14
16
17
18
21
Why a National Reserve System?-------------21
Functions of the System -----------------------21
Growth of membership and resources --------------22
Lending activity of member institutions-------------- 24
Condensed balance sheet items of member institutions_-26
Advances of the Federal Home Loan Banks---------- 28
Capital stock of the Federal Home Loan Banks--------31
Debenture issues_ -----------------------------32
Dividends paid and interest charged- ---------------33
Summary of financial operations of the Federal Home
Loan Banks -----------.---------------------34
Administration of the Federal Home Loan Bank System--37
Federal Savings and Loan Advisory Council----------38
vn
CONTENTS
VIII
III. FEDERAL HOME LOAN BANK SYSTEM-Continued.
Bank Presidents' C6uncil
------------------------Federal Home Building Service Plan ---------------Uniform Savings and Loan Act -----------------_
IV. FEDERAL SAVINGS AND LOAN ASSOCIATIONS ------------Place of savings and loan associations in the capital marketOrigin of Federal savings and loan associations -------Comparison with the establishment of the National Bank
System --- -------------------------------_
The growth of the Federal Savings and Loan System---Rise of private investments- ----------------------Lending activity.of Federal associations --- ___-----Financial operations
----------------------------Termination of the Savings and Loan Division __
Enabling State legislation_ ---------------------The structure of Federal savings and loan associations-__
Risk rating and variable interest rates ------_------
VI. HOME OWNERS' LOAN CORPORATION_-----_
-
46
46
48
49
51
52
52
53
55
57
57
-
--
----
The emergency task----------------------___
___
--________
Volume of refinancing --Continuing effects ---------------------------_---_--_
___
Progress in liquidation_--------The trend of collections -_-----------_Methods of dealing with defaults_----_
Tax defaults_------------------------_
_------------_
Costs of loan service
_----Decrease of foreclosures ------------------Cost and time of foreclosure --------------------Acquisition and sales of properties -------------------
39
39
41
43
43
44
57
V. FEDERAL SAVINGS AND LOAN INSURANCE CORPORATION-_
Purpose of the Corporation------- ------_
_
_- -----Growth of insurance protection___-----------------Beneficial effects of insurance_ -----------59
_ _____Operations of insured associations
Local programs-----_------------------_----___- __
Supervision and prevention of default-:
Settlements --- _------_----------_----- _-Terminations and withdrawals_-- _------___Cost of insurance -----------_____
Summary of financial operations _____
_
Personnel --------------------------------
Page
60
61
62
63
64
64
65
66
69
69
69
70
72
73
74
75
75
76
78
81
CONTENTS
IX
VI. HOME OWNERS' LOAN CORPORATION-Continued.
Page
Renting of properties ------ _
--------_
-- 84
Volume of reconditioning
__-------- ___
_
85
Cost and effect of reconditioning ----- __-_-87
Organization and personnel of the Corporation --_
89
Investments in savings and loan associations _90
Summary of financial operations -__
_-_____-_
90
Bonds outstanding -----------------------------93
Recent demands for further liberalization of loan terms_ - 94
LIST OF EXHIBITS -------------------------
97
Exhibits--------------------------------------.
100
INDEX ----------------------- ---------------- 151
FUNCTIONAL
FEDERAL
ORGANIZATION
- CHART
HOME
OF
THE
AGENCIES
LOAN
OF
BAN
THE
BOARD
K
JUL. -
(Created by Federal Home Loan Bank Act-Approved July 22.1932)
FEDERAL HOME LOAN BANK SYSTEM
FEDERAL SAVINGS 1 LOAN INSURANCE CORP.
(Created by Federal Home Loan Bank Act-Approved July 22.1932)
(Created by National Housinq Act 1934-Approved June 27, 1934)
(As Amended)
(As Amended )
LI
G OV E R N 0 R
IDEPUTY GOVERNOR
SUPERVISION
I
OF INSURED INSTITUTIONS
VESTED
IN THE GOVERNOR
ADMINISTRATIVE
M P TROLLER
AN EMERGENCY ORGANIZATION CREATED TO EXTEND RELIEF TO DISTRESSED HOME OWN
ERS WHO WERE IN DANGER OF LOSING THEIR HOMES THROUGH FORECLOSURE SINCE JUNE
12 1936 IT HAS BEEN ENGAGED CHIEFLY IN SERVICING ITS LOANS, LIQUIDATING ITS AS
SETS AND DISCHARGING ITS RESPONSIBILITIES TO BOND HOLDERS AND THE GOVERNMENT
MEMBERS OF THE FEDERAL HOME LOAN BANK BOARD CONSTITUTE THE BOARD OF DI
RECTORS OF THE HOME OWNERS LOAN CORPORATION
I
-- GENERAL MANAGER
ASST. GOVERNOR
-I
CO
I
(Authori3ed by Home Owners' L6an Act -Approved June 13.1933)
(As Amended)
AN INSTRUMENTALITY OF THE UNITED STATES ESTABLISHED TO INSURE THE SOLVEN
CY OF INDIVIDUAL ACCOUNTSUP TO $5000 OF INVESTORS INSUREDINSTITUTIONS SPE
IN
CIFICALLYFEDERAL SAVINGS
AND LOAN ASSOCIATIONS, SUCHELIGIBLE STATE-CHARTER
AND
ED INSTITUTIONS OF THE SAVINGS
AND LOAN TYPE AS APPLY
THE TRUSTEES OF THE
FEDERAL SAVINGS
AND LOAN INSURANCE
CORPORATION
ARE THE MEMBERSOF THE FED
ERAL HOMELOAN BANK BOARD
A CREDIT RESERVE ORGANIZATION FOR THRIFT AND HOME FINANCING INSTITUTIONS RE
GIONAL FEDERAL HOME LOAN BANKS, SUBJECT TO THE REGULATIONS OF THE FEDERAL
HOME LOAN BANK BOARD, MAKE SHORT-TERM AND LONG-TERM ADVANCES TO AND AC
CEPT DEPOSITS FROM THEIR MEMBER INSTITUTIONS
HOME OWNERS' LOAN CORPORATION
ASSISTANT
IGENERAL MANAGER
SUPERVISOR LIQUIDATING
INSTITUTIONS i
OF
SEP SENL MSR
DEP 6ENL MGR
GENERAL
DUTIES
SEPTO GENMGR
SEP GENL M6R
SEP6ENLM6R
APPR AND
RECON
PROPEITYMGMT
GENERAL
DUTIES
LOAN
SERVICE
I CHIEF SUPERVISOR
I
DEPUTY COMPTROLLER CHIEF BANKEXAMINER
FEDERAL
SAVINGS
AND
LOAN
ASST
DEPUTY GENERAL MANAGER
SYSTEM
GENERAL
T
E
D
E
R
A
L
H
T Y PI CA L
FEDERAL
W
O
E
M
L
E
V
E
L
O
O R G A N I Z ATION
HOME
LOAN
BOARD
OF
N
A
OF
BANK
B
A
N
K S
A
F
E
D
E
O F
R A
E
O
BO A R D
EIGHT ELECTED BY MEMBER INSTITUTIONS
FOUR APPOINTED FEDERAL
BY
HOMELOANBANKBOARD
ELECTED
COMMITTEE |
R
M
OF
BY
EXECUTIVE
ASSISTANTS
S
E
O F
'L
O
T
A
H
E
N
f
B
A
N
K
I SECRETARY I
MEMBER
i
STATE CHARTERED
SAV & LOANASSNS.
FEDERAL SAVINGS
AND LOAN ASSNS
REGIONAL
MANAGER
A
CHIEF
ACCOUNTANT
ASSISTANT
TREASURER
FIELD
REPRESENTATIVES
WASHINGTON
STAFF
ASST
REGIONAL
MANAGER
PROPERTY
MANAGEMENT
DIRECTORS
S
SHAREHOLDERS
INSURED
COMMITTEE
PRESIDENT
Ij~s~
LRURER
INSTITUTIONS
I
CHIEF OF FIELD DIVISION
I
(ONEFOREACH
OF ELEVEN
REGIONS)
FEDEF RAL
SAVINGS & LOAN ASSOCIATIONS
I
1
l VICE-PRESIDENT
TREASURER
S
REGIONAL
RECONDITIONING
SUPERVISOR
REGIONAL
PERSONNEL
SUPERVISOR
I
SAVINGS
BANKS
VICE-PRESIDETZI
SSECRETARY
B
I
TREASURER
INSTITUTIONS
,
REGIONAL
TREASURER
STATE (CHARTERED
SAVINGS & LOAN ASSOCIATIONS
ACCOUNTANT]
STATE
ATTORNEY
MANAGER
ONE
FOR EACHOF 54 STATE DIVISION
AND TERRITORIAL
OFFICES
SINSURED
INVESTORS
I
INDIVIDUAL INVESTORS
!
I
i
I
i
AND BORROWERS
ASST STATEMGR
STATE
RECONDITIONING
POERTYMARAGEMENTI APPRAISAL
I AND
SUPVR
INSURANCE
COMPANIES
STATEMOR
AS STAFF
ANCO
INDIVIDUAL BORROWERS
INDIVIDUAL INVESTORS
AND BORROWERS
ASSTREGIONAL
MANAGER
LOANSERVICE
REGIONAL
APPRAISER
SREGIONAL
I P RESI DENT
I
C
H
T Y PICA L
OR G A N IZ ATI ON
OF
FEDERAL
SAVINGS
AND LOAN ASSOCIATION
DIRECTORS
EXECUTIVE
F I
L
MANAGER
(ONEFOREACHOF SIX DISTRICTS)
DEPUTIES
F
I
ASST STATEMGR
LOANSERVICE
I
FEDERAL SAVINGS AND LOAN SYSTEM
(Authori 3 ed by Home Owners' Loan Act -Approved
June 13,1933)
(As Amended)
Approved
0. S. GOVERNMENT
PRINTING OFFICE: 1938-0-98591
LOCAL MUTUAL SAVINGS INSTITUTIONS, CHARTERED AND SUPERVISED BY THE FEDER
AL 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
Jeuec^M^H ..., Chaorman
Federal Home Loan Bank Board,
[8,1937
Washington,D G December
_
I
___
Introduction
T
HE Federal Home Loan Bank Board administers three separate
agencies: (1) Federal Home Loan Bank System, including in its
membership State-chartered home financing institutions and all
Federal savings and loan associations; (2) the Federal Savings and
Loan Insurance Corporation;and (3) the Home Owners' Loan Corpo
ration.
The Federal Home Loan Bank Board serves as the Board of Di
rectors of the Home Owners' Loan Corporation, as the Board of
Trustees of the Federal Savings and Loan Insurance Corporation, and
as the supervisory and regulatory authority of the Federal Home
Loan Bank System and the Federal savings and loan associations.
Each of the agencies under the Board was created separately, but
the laws governing them provided coordination of their activities
under one general direction. This coordination was of basic impor
tance in the development of a sound national system of home financ
ing. It has created a national center for previously scattered and
isolated efforts in the field of thrift and home finance; it has promoted
the spread of uniform and sound practices for home financing institu
tions over the entire country; it has made for the accumulation and
exchange of valuable experience in these fields; and it has permitted
an economy and efficiency of administration that otherwise would
not have been possible.
Essentially, the functions of the Bank Board and its agencies are:
(1) to make more money available for home mortgages and thus to
promote housing and reduce the volume of foreclosures; (2) to equalize
the distribution of home-mortgage funds throughout the country by
using the excess accumulations of areas of abundance in areas of
scarcity; (3) to develop standards of operation among home financing
institutions which would insure greater security of home mortgage
investment and achieve higher and more uniform levels of manage
ment; and (4) to improve lending practices, to lower interest rates,
to make more favorable the terms of mortgage loans for borrowers)
2
REPORT OF FEDERAL HOME LOAN BANK BOARD,
1938
and to enhance the value and attractiveness of individual home
ownership.
Together, the agencies under the Bank Board constitute the largest
institution dealing with housing and home-mortgage finance in the
United States. The work of such an institution and the problems
which it faces are necessarily linked with the general trends in these
fields of economic activity. Its operations not only reflect these
trends, but they are bound-and intended-to influence them. In
the following section, an attempt is made to present the broad facts
related to the particular realm in which the Federal Home Loan Bank
Board operates.
II
Survey of Housing and Mortgage Finance
1. Revival of Residential Construction
R a long time residential construction has been one of the dark
spots in the general economic picture, but at the close of June 1938,
the outlook was encouraging.
With the up-swing in general business activity from 1933 to the
spring of 1937, residential construction revived from the excessively
Fo
low level to which it had fallen during the depression in the early
Thirties. Its revival, however, was only moderate and lagged far
behind industrial recovery as a whole.
In the spring of 1937, a sharp decrease of building set in, preceding
by several months the decline of industrial production which marked
the recession of 1937. The shrinkage of construction was certainly
one of the factors which contributed to the subsequent reduction in
general economic activity. The decline in building, however, soon
came to a halt and in the spring of 1938, residential construction
increased substantially. In May of this year, the index of residential
construction for the first time exceeded the level of 1937.
The resistance of residential building against the effects of the
general decline in business in the first half of 1938, together with the
continuing decrease of foreclosures and fairly stable rents, indicates
a surprising demand for dwellings. It reflects, at the same time, the
efforts made by Governmental agencies in the housing field to lower
the cost and improve the terms of financing, and thus to broaden the
market for new dwellings.
The index of residential construction, based on building permits,
was still 10.3 percent lower for the first six months of this year than for
the corresponding period of 1937. This index, which is shown on
Chart I, is adjusted for seasonal variations and includes a correction
for New York City where there occurred an unusual accumulation of
building permits due to the inception of a new building code. In-
4
REPORT OF FEDERAL HOME LOAN BANK BOARD,
1938
eluding New York City, the number of new dwelling units provided
by building permits in all nonfarm areas was only 1 percent lower in
the first half of 1938 than in the same period of 1937. For the year
1938 as a whole, it may be expected that the volume of residential
building will exceed the 1937 volume.
Despite the revival of residential building in the summer of 1938,
the country still has a long way to go toward an adequate rate of
CHART I
RESIDENTIAL CONSTRUCTION
INDEX OF
AND
INDUSTRIAL
PRODUCTION
1926 = 100
120
-
---
S
1
-
1120
1
-
-1
INDLUSTRAL PRODUCTIONS\
/
80
80
CJ
o
--
60
-
60
40 I
2
- A
RESIDENTIAL CONSTRUCTION,,4
401
20%
I--
-
--
--
20
---
DEC. MAR
1926 '27
'28
'29
'30
I,
'31 '32
'33
'34 '35
'36
JUN SEP
1937
DEC MAR JUN. SEP OEC
1938
Note 1938 Residential Construction data includes correction
for New YorkCity because of irregular conditions aris
ing from inception of new building code
Source. 1-Federal Reserve Board, adjustedfor seasonalvariations
RAN
FEDERAHOMESEOAHN BARDSS
variations
Board;
adjusted normal
for
seasonal
2-Federal Home
LoonBank
construction and the achievement of housing standards comparable
to American living standards in other respects. The "building boom"
which many analysts have seen looming on the horizon has not
materialized up to the present time; and yet a substantial recovery of
residential construction is an important, if not essential, element in
any decisive up-turn of the business cycle. The building industry
holds a key position in the national economy. It is the largest in
dustrial employer of labor. If building flourishes, the country gener-
SURVEY OF HOUSING AND MORTGAGE FINANCE
5
ally is prosperous. If it languishes, other economic progress is
impeded.
,What are the obstacles to a more substantial revival of residential
construction?
2. Obstacles to Housing
LIMITS OF ACTUAL DEMAND
From whatever angle the observer looks at the American housing
scene, he discovers a large potential demand. New construction in
the last seven or eight years did not keep pace with the increase in the
number of households and with the reduction in the number of livable
dwelling units through demolition, fire loss, and the final stages of
deterioration and obsolescence. There is a large accumulated short
age which analysts estimate ranges from 1.5 to 3 million dwelling units.
In addition to the accumulated shortage, the current need, based on
the normal annual rate of replacement and the normal increase of
families, is conservatively estimated to be about 500,000 dwelling
units per year.
However, while the potential demand emphasizes the maximum
expectancy in the development of housing, it is the actual or effective
demand that determines the volume of construction. So long as
family incomes of the masses remain at present levels, and so long as
consumers, because of a feeling of uncertainty of future incomes, may
hesitate to make long-term commitments, the effective demand for
housing will fall short of the social need.
Rents in relation to costs for some years have been insufficient to
induce substantial private building. This is evidenced by Chart II
which shows the movement of market rentals-a determining factor
for new construction-together with the index of building material
prices as indicative of building costs.
Since 1932 there has been a marked gap between the two curves on
the Chart. The fact that rentals were on so much lower levels than
building costs during the past five or six years explains in part the
limited volume of private building in that period. Since the latter
half of 1937, however, the two curves show a distinct tendency to close
the gap, indicating an improving rent-cost relationship.
THE cOVERHANG
There are, in addition, other factors impeding new construction.
A large "overhang" of properties repossessed by financial institutions
6
REPORT OF FEDERAL HOME LOAN BANK BOARD,
1938
during the depression exerts continuous pressure on the building
market. It has frequently been observed that liquidations of these
properties become active and depress the market when rents and
property values begin to rise. This is one of the reasons why it is
still possible in many cases to buy existing homes at less than repro
duction cost.
Residential real estate repossessed by lending institutions is esti
mated to have increased in number of dwellings and in amount about
CHART II
INDICES OF MARKET
RENTALS AND BUILDING MATERIAL PRICES
UNITED STATES
1926 THROUGH JUNE 15,1938
1926= 100 (Converted)
Source () US Dept of Labor
Source() U S Dept of Labor
(2) Notional Industrial Conference Board
AND
DIVISION RESEARCH STATISTICS
OF
FEDERAL
HOMELOAN
BANK
BOARD
tenfold from 1929 to 1936. In 1937, this overhang remained fairly
stationary and amounts at present to approximately $4 billion. The
institutionally owned overhang of one- to four-family nonfarm dwell
ings alone is estimated to represent about 870,000 dwelling units
valued at not less than $2.6 billion (Exhibit 1). If properties repos
sessed by other lenders, particularly individuals, were included, both
these figures would be substantially higher. The reduction of the
overhang will in part determine the time and extent of any further
revival of private building activity.
SURVEY
OF HOUSING AND
MORTGAGE
FINANCE
BUILDING COSTS
The following Chart reflects recent price fluctuations for the construc
tion of a standard six-room frame house. It reveals that the cost of
building materials increased by about 12 percent and the cost of labor
by 14 percent from the spring of 1936 to the summer of 1937. In
recent months, the cost of materials declined, while labor costs re
mained at the high level attained in 1937.1
High building costs are not due exclusively to prices of materials
and labor. Equally responsible, among other factors, are excessive
CHART III
INDICES OF COST OF MATERIALS
AND
LABOR USED
OF STANDARD SIX-ROOM
12013
FRAME
IN CONSTRUCTION
HOUSE
UNITED STATES AVERAGE BY MONTHS- JANUARY 1936
-
100
1938120
,115
115
S
,o
.
110
FEDERAL
SOME
i
I
I
1devices
of05
105chanized 1 193100
production in other fields, has Inot as Iyet applied LOANBANEBOARD
1
i
193193100
DIVISION RESEARCH
OF
ANDSTATISTICS
9591-----2
waste, faulty construction, poor methods of distribution, the present
small-scale operation of the building industry, lack of standardization,
and frequently extravagant profits of contractors and sales agents.
American industry, leading in the development of large-scale me
chanized production in other fields, has not as yet applied devices of
modern mass production to residential building. The prospective
IThe indices underlying the Chart are presented in Exhibit 2. For a description of the basis of these
indices, see Federal Home Loan Bank Review, January and February 1936.
98591-38---2
8
REPORT OF FEDERAL HOME LOAN BANK BOARD, 1938
builder of a home finds some improvements over qualities and stand
ards of previous decades, and some price reduction, but nothing
comparable to the achievements of mass production in other fields.
And yet, with mass production came satisfactory profits to American
manufacturers, whereas the building industry, remaining close to the
handicraft stage of production, suffered more than other industries
and over a greater period of time.
Cooperative agreements which will eliminate jurisdictional labor
disputes and bring about a revision of prevailing wage rates for the
sake of steadier employment and higher annual income would also
help to reduce the cost of building.
INADEQUATE REAL ESTATE LAWS
Less noticed by the public, but highly important, are certain impedi
ments to new construction resulting from present inadequate or in
efficient real-estate laws. Home ownership and development of real
estate on business lines are made difficult by chaotic, cumbersome
legal procedures which needlessly consume time and money. Simpli
fication of such wasteful procedures would be instrumental in pro
tecting real estate as an investment and in encouraging building
activity.
Studies made by the Home Owners' Loan Corporation have revealed
that foreclosure costs and the time required to accomplish foreclosure
are excessive in more than half of our States. In Massachusetts,
home mortgages may be foreclosed within three weeks and at a total
cost of approximately $75. In New York State, on the other hand,
the time consumed is from 5 to 10 months or more, and the cost is from
about $300 to $800. In Illinois, the time consumed is about 18
months, and the cost also is from about $300 to $800. Redemption
periods in the different States range from six months to two years.
Procedures are extremely varied and complicated.
High foreclosure costs not only tend to raise the interest charge on
home mortgages but also unnecessarily restrict the ratio of mortgage
loan to property value and other terms of mortgage lending. From
the standpoint of the consumer, therefore, it is highly desirable that
the several States give consideration to the passage of a modernized
and standardized real-estate mortgage and mortgage foreclosure law
which would give adequate protection to the mortgagor and to the
mortgagee, prevent waste, and encourage liberal home finance. A
draft for a uniform real-estate and foreclosure law has been prepared
SURVEY OF HOUSING AND MORTGAGE FINANCE
9
for a subcommittee of the Central Housing Committee by the Legal
Department of the Federal Home Loan Bank Board.
The same considerations hold true for a reform of land title regis
tration and for a modernization of antiquated building codes and zon
ing ordinances. Simple, rapid, inexpensive, and secure methods of
dealing with land and buildings are imperative. Regional variations
should be reduced.
REAL-ESTATE TAXES
The burden of real-estate taxation also is a deterrent to housing
activity. Present real-estate tax laws had their origin in times when
real estate was almost the only form of tangible property. Now,
however, real property in many States and communities is taxed out
of proportion to other, and particularly to less tangible, forms of
wealth.
Census figures show that between 1912 and 1932, the general prop
erty tax levy by all States, their subdivisions, and the District of
Columbia rose from $13.91 to $40.37 per capita. This average per
capita levy is estimated to have increased to $45.17 in 1934, to $46.72
in 1935, and to $48.72 in 1936. 2
Apart from excessively high tax rates based on assessed values
instead of on earning power, there is a general tendency to overassess
small homes and to underassess large ones. In most States, moreover,
real property taxes are levied and collected through small local units,
each having its own collector. This multiplicity of tax collection
agencies acting for overlapping or adjacent jurisdictions makes col
lection costs unnecessarily high.
A revision of real-estate taxes would be a desirable incentive for the
revival of private building activity. As a general rule, the tax burden
on real property should be more nearly equalized with that borne by
other forms of property and, similarly, the burden upon home prop
erties should be reduced and more nearly equalized with that borne
by other types of real property.
Another aspect of real-estate taxation is the exemption of small
homesteads. By the middle of 1938, more than half the States had
considered legislation, 14 States had passed laws for exemption of
homesteads from taxes or for a reduction of their rates, 2 States had
amended their constitutions to permit such laws, and 3 States had
constitutional amendments pending.
2These Census figures cover the 94 largest cities.
10
REPORT OF FEDERAL HOME LOAN BANK BOARD,
1938
3. Trends in Residential Building and Mortgage Finance
CONSTRUCTION OF NONFARM DWELLINGS
Total construction of nonfarm dwellings was slightly higher in 1937
than in the preceding year. About 296,000 new nonfarm dwelling
units were built as against 282,000 in 1936, representing an increase
CHART 'IV
NUMBER OF NEW NON-FARM DWELLING UNITS BUILT
BY TYPE OF DWELLING;
1920-1937
u,
z
0
700
600
0
O
0t
2
500
(n
o
4n
CO
400
0
B-
0
O
300 I
I-
Source:- National-Bureauof EconomicResearch /920-/936
US Department of Labor- /937-1938
STATISTICS
AND
OF
DIVISION RESEARCH
HOME
LOKANNK BOARD
FEDERAL
of about 5 percent. Available data indicate that the 1937 volume will
at least be maintained in 1938. In the first 6 months of 1938, 161,048
new nonfarm dwelling units were constructed as compared with
162,319 in the corresponding period of 1937. This rate of nonfarm
residential building still lags far behind the normal current need of at
least 500,000 new dwelling units per year.3
The above Chart shows that in recent years, 80 percent of nonfarm
residential construction consisted of one- and two-family homes.
This demonstrates the importance of small home construction in total
s For actual figures underlying the above Chart, see Exhibit 3.
SURVEY OF HOUSING AND
11
MORTGAGE FINANCE
residential building and is a measure of the significance of the field in
which the Federal Home Loan Bank Board and its agencies operate.
Within the field of total residential building, private and public
housing from the beginning of 1937 to June 1938 showed entirely
opposite trends. In the cities of 10,000 population or over (for which
data are available), the number of family units provided by private
housing increased from 144,311 in 1936 to 164,422 in 1937, while the
number of family units provided by public housing decreased from
16,278 to 3,611. In the first 6 months of 1938, practically no new
building permits were issued for public housing projects. However,
local housing projects in connection with the slum-clearance program
under the United States Housing Act of 1937 are in preparation and
will eventually result in an appreciable volume of public housing.
RECONDITIONING - AN IMPORTANT TASK
Little attention has been paid during the last few years to recondi
tioning of residential buildings; and yet reconditioning is highly
important as a source of employment as well as for the upkeep of a
considerable part of our national wealth and the improvement of
housing standards. The following figures demonstrate that since the
beginning of the depression, nonfarm homes and commercial urban
properties have not been maintained on predepression standards;
this, taken together with the small volume of new building, means
that this country has been living on its capital.
Estimated expenditure for alterations, additions, and repairszn 257 reporting cities 1
Year
Amount
1922 .____------..
1923 ---------1924...----------.
1925 -------.-1926 ......-----.
1927 -----------
$297, 311,000
359,679,000
-
300, 359, 000
232,635,000
270.092,000
340,816,000
Year
Amount
Year
1928 --------..
1929 --..
.-----
$309,720,000
353,048,000
1934 -------- ----1935----------
1930.--------..
1931-.....
-- .
1932 ..-------.
.
.---------. 1933
249,019,000
188,885,000
102,249,000
108,025,000
1936-------1937
._-------1938 2....--..
Amount
.
$135,688,000
183,132,000
237,785,000
277,393,000
119, 759,000
1Source: U. S. Department of Labor, Bureau of Labor Statistics.
2 6 months.
The increase of reconditioning expenditure over the last few years
was due, in part, to Government assistance. The Home Owners'
Loan Corporation has expended more than $112 million for the
reconditioning of about 500,000 homes from 1934 up to the summer
of 1938; credit insurance for renovation and modernization loans was
provided by the National Housing Act. Nevertheless, the volume of
12
REPORT OF FEDERAL HOME LOAN BANK BOARD,
1938
reconditioning has not yet reached predepression levels despite the
accumulated need for it.
RECENT TRENDS IN THE REAL-ESTATE MARKET
In accordance with the general economic recovery from 1933 to 1937,
the real-estate market showed remarkable signs of improvement
CHART V
INDICES
OF
RESIDENTIAL
RENTALS
SRentals
) Rentals
(National Industrial Conference Board)
on Identical Occupied Dwellings (Department of Labor)
1926= 100
(Converted)
x
o
80
z
1926
'27
'28
'29
'30
'31
'32
'33
'34
'35
'36
'37
'38
(Prepared by the Division of Research and Statistics, Federal Home Loan Bank Board)
during that period. Rents and the volume of real-estate sales in
creased; vacancies and foreclosures decreased.
The upward movement of rents, however, came to a halt toward
the close of 1937. In the first half of 1938, the index of market rentals,
which reflects rentals for newly tenanted structures as well as for
occupied structures, has declined slightly while rentals on identical
occupied dwellings have remained stationary.
Ever since the middle of 1934, the index of market rentals has been
above the index of rentals on identical occupied dwellings. This gap
SURVEY OF HOUSING AND MORTGAGE FINANCE
13
between the two indices has widened constantly until the end of 1937
a phenomenon which is generally considered favorable to new building.
While residential rents in general are considerably higher than they
were a few years ago, rents of one- and two-family dwellings have
risen much more rapidly than rents of apartments from 1935 to the
beginning of 1938. According to a sample survey by the Bureau of
Labor Statistics covering 14,660 dwelling units in 16 large cities, rents
of one-family dwellings increased by 5.3 percent, rents of two- and
four-family dwellings by 5.7 percent, and rents of apartments by only
4.5 percent from March 1937 to March 1938.
Surveys of several cities indicate that toward the end of 1937, the
rate of vacancies reached a low level. From 1933 to 1937, vacancies
in cities making surveys dropped from an average of 8 or 9 percent to
an average of about 2 or 3 percent. This decline in vacancies was
another symptom favorable to building. In the first six months of
1938, however, vacancies seem to have increased again, although this
increase was not uniform throughout the country and appears to have
affected apartment houses more than one- and two-family dwellings. 4
The volume of real-estate sales, which had been expanding since
1933, decreased sharply in the latter part of 1937, but recovered slowly
in the spring of 1938. Foreclosures which had been declining for four
years continued to decrease in the first half of 1938-generally an
indication of sounder conditions in the real-estate market.
Foreclosure indices 1
[Monthly average (1926=100)]
Period
To
Foreclosures
Total non- nn in metropoliTotalfarm fore- tan communiinmePropoiclosures ,
ties
1934....--.-----------.
1935---......-..---.
1936.
-------.---_
1937--.------------January 1938-......-
339
337
275
225
179
370
366
274
205
170
Period
February 1938 ----March 1938- ....
--April 1938...------May 1938.--------June 1938.. ------
Foreclosures
Total non- in metropol
farm fore- tanmeropo
n communi
closures
ties
172
195
191
194
189
157
176
177
181
177
1 Division
2
of Research and Statistics, Federal Home Loan Bank Board.
It is estimated that about 15 percent of nonfarm foreclosures are on commercial properties.
While the improvement of the foreclosure situation is an encourag
ing fact, account must be taken of the moratorium laws which cover
a considerable part of the country's mortgages. If moratorium laws
4 Urban Residential Vacancies, 1930-1938, Survey of Current Business, August 1938, U. S. Department
of Commerce.
14
REPORT OF FEDERAL HOME LOAN BANK BOARD,
1938
had not been in such general effect, foreclosures would doubtless have
been higher. Moreover, the trend during the fiscal year 1938 was
favorably influenced by the decrease of foreclosures of the Home
Owners' Loan Corporation.
It is interesting to note that foreclosures have been much higher
in larger communities than in smaller ones. This is brought out in
the following table:
Foreclosures segregated by county size groups
Number of foreclosures per 1,000 nonfarm homes
Year
0 to 4999
5,000 to
19,999
dwell
dwellngs ,s dwellings
1934
_.------------..--------------------1935
..--------------------------------1936
-----------------------------------1937 ---------------------------------------1938 1..----...-----------------------------
1 6 months.
4. 2
4.0
4 2
3.9
3. 1
7.0
6 9
6. 0
5.7
5.0
20,000 to
60,000 dwell
59,999
dwellings
ings and
over
12 8
12 6
10. 9
9.1
7.1
20.7
20 8
15 8
11.9
10.1
Projected on annual basis.
HOME-MORTGAGE LENDING ACTIVITY
Whatever the causes of the slack in residential construction, scarcity
of mortgage funds at reasonable terms is not one of them. Private
lending institutions of all types are able and willing to finance a much
larger volume of residential building than has been taking place in
recent years.
As is evidenced by the following table, the estimated volume of
home-mortgage loans made by private financial institutions has almost
trebled from 1934 to 1937 and reached $1,559 million in the latter year.
In the first six months of 1938, however, the estimated volume of home
mortgage loans written by such institutional lenders showed a decrease
of approximately 11 percent as compared with the corresponding
period of 1937-a small reduction in view of the drop in general
economic activity.
15
SURVEY OF HOUSING AND MORTGAGE FINANCE
Estimated volume of home-mortgage loans made by institutional lenders
[Amounts in millions of dollars]
Calendar years
Type of institution
1934
Savings and loan associations .---.--------.-----Commercial banks 2------a____--- -----
Life insurance companies- .-----. ------.--------Mutual savings banks--..-- ------------------Total....------------------------------
1936
1935
1937
January to2
June 1938
334
364
504
652
804
55
184
300
355
268
132
139
60
515
845
1,210
1,559
703
16
80
77
80
158
100
170
1
Estimates of the Division of Research and Statistics of the Federal Home Loan Bank Board based on
special surveys and mortgage recordings. Figures are revisions from those in the Fifth Annual Report.
2 Preliminary. Figures for commercial banks exclude trust departments.
The above table indicates that of the total estimated amount of
home-mortgage loans made by institutional lenders during the last
few years, savings and loan associations alone provided about one
half. In 1937, their volume of new home-mortgage loans was twice
as large as in 1934. Life insurance companies, for want of other
earning assets, have expanded their home-mortgage lending activity
since 1934. Commercial banks likewise have increased their lending
activity, particularly in connection with mortgage insurance under the
National Housing Act. The share of commercial banks and insurance
companies in total home-mortgage lending, however, has always been
substantially smaller than that of savings and loan associations.
Within the field of home-mortgage lending, member institutions of
the Federal Home Loan Bank System are responsible for a large
portion of lending activity. Of the estimated total volume of home
mortgage loans made by institutional lenders in the last two years,
members of the Bank System accounted for about 40 percent. Of the
estimated total amount of home-mortgage loans made by savings
and loan associations during the same period, associations which were
members of the Federal Home Loan Bank System accounted for
about 75 percent, and Federal savings and loan associations alone for
approximately 35 percent.6
Despite the increase in total lending activity in recent years, the
estimated total home mortgage indebtedness has constantly decreased.
This was due mainly to the acquisition of mortgaged properties by
lending institutions, and to amortization of outstanding mortgages.
The estimated total home-mortgage debt at the end of 1937 was
6 For more detailed information, see pp. 24 and 49 of the present report.
16
REPORT OF FEDERAL HOME LOAN BANK BOARD, 1938
$17.3 billion, compared with the peak of almost $22"billion in 1930.
The following table shows the estimated distribution of nonfarm home
mortgage holdings among the various types of lenders in the last few
years:
Estimated outstanding mortgage loans on nonfarm one- to four-family homes,
by types of lenders 1
[Millions of dollars]
Type of lender
1934
Savings and loan associations-..----------------$4,012
Commercial banks-- -------------------------- 1, 189
Mutual savings banks.....---------------------- 3,000
Life insurance companies
_----_ ------------------_
1,535
Home Owners' Loan Corporation ------ - - ------------ - - - 2,209
2
- - - - ----Individuals and others . .
6,200
Total ---..-..
---------
--------------------
18,145
1935
1936
1937
$3,467
1,189
2,850
1, 351
2,897
6, 000
$3, 361
1,230
2,750
1, 305
2, 763
6, 000
$3,480
1, 400
2,700
1, 330
2,398
6,000
17,754
17,409
17,308
IEstimates of the Division of Research and Statistics of the Federal Home Loan Bank Board. For
sources, see Exhibit 4.
2Includes trust departments of commercial banks, real estate, bond companies, title and mortgage com
panies, philanthropic institutions, construction companies, RFC Mortgage Co., etc.
Loans for new construction amounted only to about 30 percent of
total home-mortgage loans made by savings and loan associations,
commercial banks, life insurance companies, and mutual savings
banks in 1937-a reflection of the still restricted activity in residen
tial building. The remainder served for home purchase, refinancing,
reconditioning, and other purposes.
Estimated home-mortgage loans made by selected types of institutions in 1937,
according to purpose 1
Construction
_------------------- $234, 000, 000
Savings and loan associations_
-Commercial banks .-------- ----.. -- ------------------- 100, 000,000
Life insurance companies --.
_---------------------67, 000, 000
Mutual savings banks
.
......----------------------35, 000, 000
Total --.-.
---.
_
-- ------------------
..----------------
436,000,000
All other pur
poses
$570,000,000
255, 000,000
201, 000,000
97, 000, 000
1,123,000,000
I Estimates of the Division of Research and Statistics of the Federal Home Loan Bank Board.
for commercial banks exclude trust departments.
Figures
THE INTEREST RATE
During 1937, the interest rate on mortgage loans continued the down
ward trend which started in 1934 and which was due in part to the
huge refinancing program of the Home Owners' Loan Corporation.
SURVEY OF HOUSING AND MORTGAGE FINANCE
17
Complete information on interest charges in 1938 is not yet available,
but individual reports indicate falling or steady rates for the over
whelming proportion of cities.
The Bank Board has for several years made studies of the'trend of
interest rates charged on home-mortgage loans by savings and loan
associations. The results demonstrate that there has been an unprece
dented reduction since the depression, a reduction that was to a large
extent brought about through the efforts of the agencies under the
Board. The average effective interest rate charged in 1931 by sav
ings and loan associations was 8.0 percent; in 1937, however, the aver
age effective interest rate charged by Federal savings and loan asso
ciations was 6.31 percent, a decrease of more than 20 percent since
1931. These rates, it is important to note, are the effective rates
covering not only interest, but all service charges and other loan fees.
They thus represent total cost to the borrower.
THE FLOW OF SAVINGS
While recent data on total savings are not available, the trend of
certain types of individual savings can be ascertained. In Exhibit 5,
selected data on private long-term savings of chiefly small investors
and bank depositors are presented, including those types of savings
which are competitive with savings and loan shares and those which
constitute sources of urban mortgage credit: individual long-term sav
ings in commercial banks, mutual savings banks, life insurance com
panies, postal savings, and United States savings bonds. On the basis
of these data, it may be estimated that the aggregate increase in all
these types of savings amounted to about $3 billion during 1937.
In the same period, the growth of private savings invested in those
savings and loan associations which are members of the Federal
Home Loan Bank System amounted to about $200 million.
The flow of individual savings into the various types of institu
tions and investments during 1937 showed marked differences. Sav
ings deposits in national banks rose by 4.5 percent and in mutual
savings banks, by 1 percent. Savings in life insurance companies
were 7.4 percent higher than at the end of 1936. Postal savings
accounts reftained nearly stationary. Holdings of United States
savings bonds, which are a comparatively new type of investment,
rose by more than 100 percent. The increase of private funds invested
18
REPORT OF FEDERAL HOME LOAN BANK BOARD,
1938
in member associations of the Federal Home Loan Bank System
during 1937 was approximately 10 percent. Within the membership
of the Bank System, Federal savings and loan associations showed the
largest increase of private investments. The total amount of private
share accounts in these institutions increased by 17.4 percent (exclud
ing associations which were newly established and those which were
converted from State to Federal charter during the year).
THE OUTLOOK
At the close of the fiscal year 1938, reassuring signs of economic recov
ery have become noticeable, particularly in the realm of housing. It
appears as if the potential demand due to an accumulated housing
shortage is now transforming itself into effective demand and that,
without untoward incident such as a sudden increase in building
costs, a further recovery of residential construction may be expected.
The Federal Home Loan Bank Board is directly concerned with
the financing of home ownership. In this field it is important to
note that home-mortgage finance is today in a much sounder position
than at any time in the past decade. Property values are higher
and more stable than in the early Thirties. Total home-mortgage debt
has declined. Interesticharges on home-mortgage loans have been
greatly reduced. Financial institutions generally are in a better posi
tion to serve their communities than they have been since 1930. A
plentiful supply of mortgage money is available. The rate of fore
closures has dropped.
Though much remains to be done, a fundamental reform of home
mortgage finance has been achieved since the summer of 1933 when
the Home Owners' Loan Corporation and the Federal Home Loan
Bank System began their effective work. Within five years, a sub
stantial portion of the Nation's home-mortgage indebtedness has been
transferred from a short-term to a more adequate long-term basis.
The straight mortgage loan has to a large extent been replaced by
the sounder amortized direct-reduction loan. Scientific appraisal
practices have been introduced providing better security for mort
gages. In connection with construction loans, sounder building stand
ards have been developed by lending institutions. Cenfidence in
home-mortgage investment has'been revived, and insurance protec
tion has been extended to savings which constitute the source of
funds for such investment. These reforms will constitute a solid
basis for further progress.
SURVEY OF HOUSING AND MORTGAGE FINANCE
19
On the other hand, it cannot be overlooked that the building pros
pect is still clouded by the large volume of institutionally owned real
estate acquired by foreclosure. These properties constitute a trouble
some burden to many lending institutions and a constant threat to
the real-estate market. An intelligent program for their absorption
would help to spur new private construction.
The liberalization of lending practices in recent years is another
subject for careful evaluation. Together with the decrease in inter
est rates, the ratio of mortgage loan to property value has continu
ously been raised. A more liberal lending policy appeared feasible
because of the substantial reform of mortgage lending practices, the
marked progress in stabilization of real-estate values, and the gen
eral improvement of appraisal methods which have taken place in the
last few years. The continuous extension of loan limits, however,
while broadening the market, involves a greater risk to all types of
lending institutions. Mortgage lenders as well as Government agen
cies dealing with mortgage finance are aware of th'e fact that high
loan ratios render the improvement of standards for home-mortgage
lending ever more important. In order to make high ratio lend
ing sound, more refined appraisal techniques are required, greater
care must be exercised in the evaluation not only of the particular
structure, but also of the neighborhood and its future, and stricter
standards must be observed in examining the personal credit of the
borrower. The adaptation of mortgage lending policies to these
requirements calls for added skill and alertness on the part of lending
institutions and improved supervision and control on the part of
public regulatory authorities.
20
REPORT OF FEDERAL HOME LOAN BANK BOARD,
In
o
I
1
1<
J0
C
.Ij
193 8
III
Federal Home Loan Bank System
WHY A NATIONAL RESERVE SYSTEM?
home-mortgage finance was
PRIOR to problem. As the result of local seldom regarded as a
national
efforts, considerable
1930,
progress had been made in the promotion of thrift and in the pro
vision of funds for the financing of homes. This progress was evi
denced by the growth of savings and loan associations and similar
institutions throughout the country. However, as the country
developed, these institutions provided neither a sufficiently standard
ized system of thrift and home financing nor a sufficiently regular
supply of funds for mortgage lending on reasonable terms.
The terms and conditions of lending funds on home mortgages
varied greatly in different parts of the country. In many com
munities the flow of money into the home-financing field was uncer
tain and unsatisfactory. Moreover, practically every thrift and
home-financing institution in the country was an isolated unit with
no permanent reservoir of credit at its command. Thrift and home
financing institutions were dependent largely upon borrowings from
commercial banks to meet any extraordinary demand for loans and
withdrawals. In times of disturbance and distress, however, com
mercial banks themselves were in need of money and tended to call
their loans, thus aggravating rather than mitigating difficult situations.
It took the sad experience of the years 1930 to 1933 to bring about the
realization that the welfare of home ownership as well as the economic
position of the country was seriously in danger as a result of these
conditions.
FUNCTIONS OF THE SYSTEM
The Federal Home Loan Bank System, established by the Federal
Home Loan Bank Act of 1932, was created to effect a much needed
reform in the field of home finance. Its primary purpose is to furnish
21
22
REPORT OF FEDERAL
HOME LOAN BANK BOARD,
1938
local thrift and home-financing institutions with a permanent reser
voir of credit. The Federal Home Loan Bank System is thus designed
to perform the same function in the field of home-mortgage credit
that the Federal Reserve System, created in 1913, performs as a
credit reserve for commercial banks, and that the Federal Land
Banks, set up in 1917, perform in the field of farm finance.
In the history of our monetary system, the Federal Home Loan
Banks represent another constructive step toward the achievement of
stability in the country's financial structure, and greater resistance
against the evils of booms and slumps. Through its discount facili
ties, the Bank System provides protection against sudden withdrawals
of funds from member institutions. Through the issuance of deben
tures, it is in a position to tap the general credit resources of the
country. The System has become an important factor in the supply
of mortgage funds and thereby in the promotion of housing. The
Federal Home Loan Bank System, furthermore, provides a means of
equalizing the distribution of mortgage credit throughout the country
by shifting funds to those localities and areas in which they are most
needed. To the Nation as a whole, therefore, the System has brought
an increase in the volume of credit available for home finance and also
a better distribution of home-mortgage funds over the country.
At the same time the Federal Home Loan Bank System has been
influential in the development of sound and economical policies for
the operation of home-financing institutions. It has played an
important part in securing widespread adoption of savings and
investment plans which are simple, attractive, and safe, and which
tend to encourage the accumulation of savings.
In order to give each section of the country access to the facilities
of the Bank System, the United States, including Puerto Rico, the
Virgin Islands, and the Territories of Alaska'and Hawaii, has been
divided into twelve districts with a Federal Home Loan Bank in each
area, as shown on the map opposite page 21. The Board of each
District Bank is composed of twelve directors, eight of whom are
elected by member institutions and four appointed by the Federal
Home Loan Bank Board to represent the public interest.
GROWTH OF MEMBERSHIP AND RESOURCES
At present, the twelve Federal Home Loan Banks and their 3,956
members, holding total assets of $4,308,104,000, constitute the largest
FEDERAL HOME LOAN BANK SYSTEM
23
home-mortgage credit pool in the world. Practically every commun
ity in the Nation is now actively served by one or more member thrift
and home-financing institutions.
The following graph shows the continuous growth of membership
and total assets of member institutions:
CHART VI
GROWTH OF MEMBERSHIP AND RESOURCES OF THE
FEDERAL HOME LOAN BANK SYSTEM
FIGURES AS OF JUNE 30
NUMBER OF
MEMBER INSTITUTIONS
3,956 ----------------------------------3,886 -------.---.
ESTIMATED ASSETS
(Millions of Dollars)
.
4,308
-------------
3,640----
3,806 --------------------3,324 -
--3,272
-
3,201 --------------3,028 --------
2,580-----
847--- -
DIVISION RESEARCH STATISTICS
OF
AND
FEDERAL
HOME
LOAN
BANK
BOARD
Membership in the Federal Home Loan Bank System is open to
building and loan associations, savings and loan associations, home
stead associations, cooperative banks, savings banks, and insurance
companies, which are engaged in making long-term home loans.
The bulk of present membership consists of savings and loan associa
tions. Only those institutions are selected which, upon application
for membership, are found to be solvent, well-managed organizations
engaged in sound and economical home financing. Under the law,
all Federal savings and loan associations (further reference to which is
made in another section of this report) are required to be members of
the System.
98591--38-----3
24
REPORT OF FEDERAL HOME LOAN BANK BOARD, 1938
The following table presents a comparison of the number and esti
mated assets of members, by type of institution, as of June 30, 1937,
and June 30, 1938:
Net increse in fiscal
year
June 30, 1938
June 30, 1937
Assets (mAssets (mil
Assets (mil
Number lions of dol- Number lions of dol- Number lions of dol
lars)
lars)
lars)
Savings and loan associations --.....
3, 866
3,470
3,909
3,700
State-chartered. ---------------
2,585
2,484
2, 572
2,487
Federally-chartered_.
---
1,281
986
1,337
1, 213
56
227
20
337
47
608
27
271
8
163
9
203
1
40
12
174
38
405
26
231
3,886
3,807
3,956
4,308
70
501
Other members-----..
.
-----.
--.--------...
Savings banks_--------- --Insurance companies-.--------. .
Total..---------------------
43
-13
230
3
1 Includes homestead associations and cooperative banks.
During the fiscal year ended June 30, 1938, membership of the
Federal Home Loan Bank System showed a net increase of 70 institu
tions, of which 26 were insurance companies. The decrease in number
of State-chartered savings and loan associations was in large part due
to conversions from State to Federal charter and to mergers and
consolidations.
Exhibit 6 gives the number and estimated resources of member
institutions for each Federal Home Loan Bank District by fiscal years.
LENDING ACTIVITY OF MEMBER INSTITUTIONS
With its present membership, the Federal Home Loan Bank System
represents a considerable percentage of the volume of home-mortgage
lending by all financial institutions. The estimated total amount of
home-mortgage loans made by financial institutions (savings and loan
associations, commercial banks, savings banks, insurance companies)
in the fiscal year ended June 30, 1938, was approximately $1,474
million.
Of this total, $563 million was loaned by member savings
and loan associations. In other words, approximately 40 percent of
the amount of home-mortgage loans written by institutional lenders
in that period was loaned by member institutions of the Federal
Home Loan Bank System. Since the average mortgage loan made,
by savings and loan associations is smaller than that made by other
financial institutions, the lending activity of member associations
was even higher in terms of the number of loans or the number of
homes financed.
25
FEDERAL HOME LOAN BANK SYSTEM
The following Chart shows the estimated volume of new loans made
by savings and loan associations in the fiscal years 1937 and 1938, by
type of institution: 1
CHART VII
VOLUME
100
OF NEW MORTGAGE LOANS MADE BY SAVINGS AND LOAN
ASSOCIATIONS, BY TYPE OF ASSOCIATION10
------------------
an--------------
100
'90
eeo 10o Ile/e,-e
70
-
70
E,
60
-1
o
00
/
FSTATE-MEMBER
"I
BA, BO
o
-
.
-
-
1936
60
el
40
cj .
-
.
-0 -
-
-
-
.. ..
-
1937
20
-
--. 0
1938
DIVISION RESEARCH
OF
AND STATISTICS
FEDERALHOMELOAN
BANK
BOARD
Over the last two fiscal years, total member associations accounted
for 75 percent of the amount of all loans made by savings and loan
associations, both member and nonmember-a measure of the sig
nificance of the Bank System in the savings and loan field.
The peak of recent lending activity of savings and loan associations
was reached in June 1937 with total loans of $92,211,000. From July
1937 to January 1938, the monthly volume of new loans showed a
gradual decline. Since January, lending activity has increased again,
1The Chart includes loans for "other purposes" as well as home-mortgage loans.
26
REPORT OF FEDERAL HOME LOAN BANK BOARD,
1938
reaching $73,067,000 in June 1938. During the fiscal year 1938, total
loans made by all savings and loan associations amounted to about
$820,686,000 as compared to $868,345,000 during the preceding fiscal
year, a decrease of 5.5 percent. In view of the sharp decline in other
business indices, this is a very slight decrease of activity.
Exhibits 7 and 8 give a detailed account of the volume of new loans
made by savings and loan associations in the fiscal year 1938, classified
by type of loan and type of institution.
The following table shows the distribution of total loans made by
member institutions for construction, home purchase, refinancing,
reconditioning, and other purposes in each of the fiscal years 1937
and 1938:
Distributionof new mortgage loans made by members of the Federal Home Loan Bank
System, according to purpose
Fiscal year 1937
Fiscal year 1938
Purpose of loan
Dollars
Construction.. ---------------Home purchase_- ------------Refinancing
--- ----------------Reconditioning ----------_
--Other. -------------- ---------------.
_
Total ...----.------------------------
_
----_ --
Percent
Dollars
Percent
185, 388, 000
217,518, 000
146, 582,000
39, 535, 000
63, 003,000
28.4
33. 4
22 5
6.1
9. 6
177, 548, 000
209, 272,000
134, 558,000
41,981,000
66, 201,000
28. 2
33 2
21.4
6 7
10 5
652,026, 000
100. 0
629, 560, 000
100. 0
Construction and reconditioning loans were approximately 35 per
cent of total loans throughout the period under consideration. One
third of total loans went for home purchase, and about 21 to 23
percent was used for refinancing purposes.
CONDENSED BALANCE SHEET ITEMS OF MEMBER INSTITUTIONS
Member institutions of the Federal Home Loan Bank System are
required to submit to the Banks reports covering their operations
during each calendar year. On the basis of these reports, the Division
of Research and Statistics of the Federal Home Loan Bank Board
has prepared a consolidated statement of balance sheet items re
flecting the business trend of member institutions during the year
1937. This information is presented in Exhibit 9, which shows actual
dollar amounts, and Exhibit 10, which gives the percentage distribution
of balance sheet items.
FEDERAL
27
HOME LOAN BAINK SYSTEM
Generally, movements during 1937 were favorable in most of the
major balance sheet items. In each type of member institution,
first-mortgage loans outstanding increased in proportion to total
resources; the ratio of second mortgages to total assets dropped; the
ratio of real estate owned likewise decreased, except for the nine
savings banks covered in the report. The decrease in the ratio of
cash to total assets reflects the feeling that liquidity at present is not
so essential as it was in past years, and that there are sufficient
mortgage risks good enough to prompt a shift of available funds from
cash to first mortgages.
Member institutions of the FederaljHome Loan Bank System at
the end of 1937 held first-mortgage loans amounting to nearly $2.8
billion. This total was distributed among the several types of insti
tutions as follows:
Type of member institution
Amount of first
mortgages held
at end of 1937
$872, 513,000
Federal savings and loan associations ---------------------472,429,000
Insured State-chartered associations--..-------------------1, 238, 345, 000
Noninsured State-chartered associations-----------------------59, 376,000
Savings banks
..------------115, 193, 000
Insurance companies----------------- ---------------
Total-------------------------------------
2,757,856,000
ercen
total
31.64
17.13
44.90
2.15
4.18
Ratio to total
maemers of
sme bype
same type
79 39
72. 03
69.07
29.45
31.34
100.00
The ratio of first mortgages to total assets naturally is higher for
Federal and State-chartered savings and loan associations than for
savings banks and insurance companies, since the latter invest only
part of their funds in home mortgages.
The $2,583,000,000 of first-mortgage loans held by Federal Home
Loan Bank members of the savings and loan type represents approx
imately 70 percent of the $3,700,000,000 in mortgages held by all
savings and loan associations.
During 1937, the ratio of real estate owned to total assets decreased
from 15.74 percent to 12.54 percent for all member institutions. With
the rate of foreclosures still above normal, this decrease indicates a
favorable movement in the real-estate market. A substantial portion
of the real estate disposed of, however, was sold "on contract"; that is,
on an installment contract without immediate transfer of title. The
ratio of real estate sold on contract to total resources increased from
2.82 percent to 3.20 percent during the year.
28
REPORT OF FEDERAL HOME LOAN BANK BOARD,
1938
At the end of 1937, the ratio of private share investments ("other
free shares" and "pledged shares") to total resources was 62.89 percent
in Federal and 66.14 percent in State-chartered member associations.
Approximately 20 percent of total assets of Federal associations and
1.5 percent of total assets of State-chartered members were represented
by Government share subscriptions (HOLC and Treasury). Nearly
10 percent of the resources of Federal associations were obtained by
advances from the Federal Home Loan Banks to these associations,
as compared with 7.67 percent at the close of 1936. In the case of
State-chartered member associations, this ratio was 3.92 percent and
3.50 percent, respectively. The ratio of other borrowed money to
total resources has constantly decreased in the past few years and is
now almost negligible.
The ratio of reserves to total assets decreased in 1937. This decline
was due mainly to the fact that the increase in total resources has
outrun the accumulation of reserves.
ADVANCES OF THE FEDERAL HOME LOAN BANKS
By means of advances, the Federal Home Loan Banks provide their
member thrift and home-mortgage institutions with additional funds.
They thus increase the liquidity of member institutions and contribute
to the expansion or maintenance of their lending activities. Advances
are made on a secured or unsecured basis. Secured advances are
collateralized by home mortgages or obligations of or guaranteed by
the United States. Advances secured by home mortgages may be
made up to 90 percent of the unpaid principal of home mortgages
insured under Title II of the National Housing Act and up to 65 percent
of the unpaid principal of other home mortgages, but not in excess
of 60 percent of the appraised value of the home. Unsecured advances
for not more than one year may be made to members whose creditor
liabilities (not including advances from the Federal Home Loan Banks)
do not exceed 5 percent of their net assets. All advances, whether
secured or unsecured, are further collateralized in each case by an
investment of the borrower in the stock of the Bank of at least one
twelfth of total outstanding advances to such borrower. It will thus
be seen that the margin of protection behind these advances is sub
stantial.
During the fiscal year ended June 30, 1938, the total amount of
advances made was $105,432,158, and the total amount repaid,
29
FEDERAL HOME LOAN BANK SYSTEM
$76,264,107. The balance of advances outstanding as of June 30,
1938, was $196,224, 937, as compared to $167,056,887 on June 30, 1937.
The following Chart illustrates the growth of lending activities of
the twelve Federal Home Loan Banks from the beginning of oper
ations to June 30, 1938:
CHART VIII
ADVANCES AND REPAYMENTS BY MONTHS AND
BALANCE OF ADVANCES OUTSTANDING
JUNE
1937
DEC
JUNE
1938
DEC
DIVISION
OFRESEARCH STATISTICS
AND
FEDERAL
HOME
LOAN
BANK
BOARD
During the past fiscal year, the volume of advances outstanding
reached a new high. Such advances amounted to $200,000,000 at the
end of 1937, but fell off during subsequent months as a result of heavy
repayments of member institutions which, in turn, reflected the
reduced demand for mortgage loans. Advances outstanding decreased
to $183,125,490 at March 31, 1938, increased in the following months,
and reached $196,224,937 on June 30, 1938.
Exhibit 11 presents a tabulation showing by months, from the
beginning of operations, the amount of advances and repayments, and
the balance of advances outstanding. The total volume of gross
advances of the Banks in the 6 years of operation was $446,364,316.
Exhibit 12 shows advances outstanding of each of the twelve Banks
at the close of each fiscal year.
30
REPORT OF FEDERAL HOME LOAN BANK BOARD,
1938
Of the $196,224,937 outstanding on June 30, 1938, $163,386,013
was collateralized by mortgages, obligations of or guaranteed by the
United States Government, and capital stock of the Banks, while
$32,838,924 was noncollateralized, except for capital stock of the
Banks paid in by borrowing members. Exhibit 13 gives detailed
information on the trend of collateralized and noncollateralized ad
vances by half-year periods.
The following figures show the percentage of long-term and short
term advances at the end of each fiscal year, long-term advances being
loans up to 10 years, and short-term advances being loans up to 1 year.
The data reveal an increasing tendency of the member institutions to
borrow on a long-term basis.
Percentage of long-term and short-term advances to members as of June 30
Long-term
1933-----------------1934 ----------
36.6
68.0
1935-----
64.4
----------
Short-term
63.4
32.0
35.6
Long-term
1936....------1937-.-----..
----
1938----------
-
-
63.0
70.8
76.0
Short-term
37.0
29.2
24.0
The growing credit requirements of the members in recent years are
reflected in the increasing number of borrowing members as compared
to non-borrowing members. The ratio of borrowing members to total
membership was 54.6 at the close of the fiscal year 1935, 63.6 at
June 30, 1936, 67.3 at June 30, 1937, and 67.8 at June 30, 1938.
Exhibit 14 indicates the changes in the percent of members borrowing
from each of the twelve Banks.
The borrowing capacity of the members is far from being exhausted
by the present volume of advances. On June 30, 1938, the 3,956
members of the Federal Home Loan Bank System had a potential
borrowing capacity of approximately $1,454,000,000, or seven times
the present borrowings. The potential borrowing capacity represents
the approximate amount for which each member can legally obligate
itself or 50 percent of its net assets whichever amount is lower. The
amount of potential borrowing capacity does not necessarily mean
that the members of the System can borrow to that limit, since lines
of credit may be established for lesser amounts. However, it does
give an indication of the maximum extent to which the twelve Federal
Home Loan Banks may be called upon to supply credit in the home
financing field.
31
FEDERAL HOME LOAN BANK SYSTEM
CAPITAL STOCK OF THE FEDERAL HOME LOAN BANKS
The sources of funds which may be advanced to members are the
capital stock of the Federal Home Loan Banks, debentures of the
Banks, deposits of member institutions in the Banks, and interbank
deposits.
The capital stock of the Federal Home Loan Banks is made up by
subscriptions of member institutions and of the Federal Government.
Each member institution must subscribe to the capital of the Federal
Home Loan Bank of which it is a member to the extent of one percent
of the aggregate unpaid principal of its home mortgages, but not less
than $500. A borrowing member institution is required to have paid
in an amount not less than one-twelfth of its outstanding advances
from the Bank.
Realizing the need for the creation of a national mortgage reserve
system and in order to give the system its initial financial impetus, the
Congress committed the Treasury to subscribe to the capital of the
Federal Home Loan Banks up to a total amount of $125,000,000.
During the fiscal year ended June 30, 1938, the Secretary of the
Treasury paid $4,227,000 on this commitment with the result that the
entire Treasury subscription amounting to $124,741,000 was paid in
at the end of the fiscal year.
During the fiscal year 1938, there was a net increase in members'
subscriptions to stock in the Federal Home Loan Banks of $5,038,200;
total payments on members' stock subscriptions aggregated $5,240,695.
As of June 30, 1938, the members of the Federal Home Loan Banks
had subscribed to 368,720 shares of stock in the Banks, against which
$36,771,205 had been paid to that date, leaving a balance of $100,795
still due on account of such subscriptions.
The combined capital stock structure of the Federal Home Loan
Banks may be summarized as follows:
June 30, 1937
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------------------------------------
June 30, 1938
$31,833, 800
124.741,000
-
$36,872,000
124,741,000
31,530,510
120,514,000
36,771,205
124, 741,000
303, 290
100, 795
4, 227,000 -------
32
REPORT OF FEDERAL HOME LOAN BANK BOARD,
1938
There is attached as Exhibit 15 a statement, as of June 30, 1938,
reflecting by districts and States the number of member institutions,
their estimated resources, the amount of shares subscribed by such
institutions, the balance of advances outstanding, the number of
borrowing member institutions, and the estimated borrowing ca
pacity of such member institutions.
DEBENTURE ISSUES
Up to the middle of 1937, the capital of the Federal Home Loan
Banks was sufficient to meet the members' demands for advances.
With the constantly increasing requirements resulting from the
growth of the System and the rising activity of its member institutions,
however, the Federal Home Loan Banks found it necessary to enter
the financial markets in order to raise additional money. It may well
be said that with this independent financing, the Federal Home Loan
Bank System has come of age.
From the outset, the Congress anticipated access by the Bank
System to the financial resources of the country. According to the
Federal Home Loan Bank Act, each Federal Home Loan Bank has
power, subject to rules and regulations prescribed by the Bank Board,
to issue debentures, bonds, or other obligations upon such terms and
conditions as the Board may approve. The Act also provides that the
Board may issue consolidated Federal Home Loan Bank bonds which
shall be the joint and several obligations of all the Federal Home Loan
Banks, and shall be secured and be issued upon such terms and condi
tions as the Board may prescribe. In addition, the Act provides that
the Board may issue consolidated Federal Home Loan Bank debentures
which shall be the joint and several obligations of all Federal Home
Loan Banks. The issuance of such debentures has been safeguarded
by special restrictions. According to the Act, no debentures shall be
issued at any time if any of the assets of any Federal Home Loan
Bank are pledged to secure any debts or subject to any lien, and
neither the Board nor any Bank shall have power to pledge any of the
assets of any Federal Home Loan Bank, or voluntarily to permit any
lien to attach to the same while any of such debentures are outstanding.
Debentures outstanding shall at no time exceed five times the total
paid-in capital of all Federal Home Loan Banks as of the time of issue
of such debentures, and it is the duty of the Board not to issue de
bentures in excess of the notes or obligations of member institutions
FEDERAL HOME LOAN BANK SYSTEM
33
held by all Federal Home Loan Banks and secured by home mortgages
or obligations of or guaranteed by the United States.
The securities issued to date are consolidated Federal Home Loan
Bank debentures. The advantage of a consolidated issue appeared
compelling from the various viewpoints of convenience, expense, and
rate obtainable in the market.
Up to July 1, 1938, five issues of these debentures have been offered
amounting to a total of $142,700,000, of which two issues amounting
to $52,700,000 were repaid at maturity. The total amount outstand
ing as of July 1, 1938, was $90,000,000. The debentures were im
mediately accepted by the financial community. Each of the offer
ings was heavily oversubscribed, and the market for all issues has been
generally at a premium over the original offering price.
Debenture issues of the Federal Home Loan Banks
No of series
A --------------------------------- ---....
B 1-------... ----------C.--------------------------D---------------------------E -----------------------------
Date of issue
Maturity
Amount
Interest rate
Percent
-
Apr.
July
Dec.
Apr.
July
1,1937
1,1937
1,1937
1,1938
1,1938
Apr.
July
Dec.
Apr
July
1,1938
1,1938
1,1940
1,1943
1,1939
$24, 700, 000
28, 000,000
25,000,000
23,500,000
41,500,000
1Y
1%
2
2
1
1 Series A and B have been repaid.
Detailed information with respect to the participation of the twelve
Banks in the debenture issues is set forth in Exhibit 16.
DIVIDENDS PAID AND INTEREST CHARGED
In the fiscal year ended June 30, 1938, each of the Federal Home Loan
Banks declared dividends ranging from one percent to two percent per
annum. The annual dividend rate on the average capital stock of the
twelve Banks for the fiscal year ended June 30, 1938, amounted to 1.57
percent.
The United States Government is receiving annually the same re
turn on its capital as is received by the member institutions. From the
beginning of operations through June 30, 1938, the twelve Banks have
declared dividends totalling $10,296,705, of which $8,184,586 went
to the United States Government, and $2,112,119 to private member
institutions. Exhibit 17 shows the dividends declared by each Bank
to members and to the Government.
34
REPORT
LOAN BANK BOARD,
OF FEDERAL HOME
1938
On June 30, 1938, the twelve Federal Home Loan Banks were
charging interest on advances to members ranging from 3 percent to
3% percent. Such rates are set out in detail in Exhibit 18.
Apart from consolidated debentures, borrowings of the twelve
Federal Home Loan Banks have been in the nature of interbank
deposits. Such deposits may be termed to be on a demand basis and
bear rates of interest ranging from 1 percent to 2 percent per annum.
SUMMARY OF FINANCIAL OPERATIONS OF THE
FEDERAL HOME
LOAN BANKS
During the fiscal year ended June 30, 1938, the consolidated gross
income of the Federal Home Loan Banks was $7,260,623. Total
expenses during the period in question were $2,504,733. The net
income of the twelve Federal Home Loan Banks for the fiscal year
1938, therefore, amounted to $4,755,890, as compared with $3,630,236
in the preceding year. The Banks were earning about 3 percent on
their capital.
Consolidated profit and loss account of the twelve Federal Home Loan Banks
Fiscal year 1937
Fiscal year 1938
$4,472, 810
$5, 952, 844
Gross operating income:
Interest earned on advances .----------------------------------
335, 578
751, 354
4,808, 388
6, 704,198
Less-Operating charges:
Compensation, travel, etc-....-------------------------------774, 326
Interest on debentures--....
----------------------------52, 481
Debenture expense-commissions-----_
-----------9, 590
Debenture expense-other-------------------------------------10,105
Interest on deposits-members-------------------------------149,175
Assessment for expenses of FHLBB .-----------------------------382, 352
890, 255
935,179
101,874
42, 719
162,109
302, 440
Interest earned on investments
------------------------
Gross operating income -----------------------------
Total operating charges--------.-----------------Net operating income
-
-------
------
1,378, 029
2, 434, 576
3, 430, 358
--------------------------
4, 269,622
98,965
150, 294
403,306
152,440
Add-Nonoperating income:
Profit on sale of investments-..--------------------- ---------FHLB Board assessment refund- ---------------------------------
Miscellaneous.--------------------------------------------------Total nonoperating income ----------
------
-----..
-
726
680
249, 985
556,426
Less-Nonoperating charges:
Loss on sale of investments -------------------------------------
Premium charged off on investments ----------------------------Total nonoperating charges ------Net nonoperating income..-------Net income_ ------------------
---------
---------
462
49, 646
375
69,782
50,108
-----------------
-----
70,157
199, 877
486, 269
3,630, 236
4, 755, 890
FEDERAL
HOME
LOAN
BANK
35
SYSTEM
There is attached as Exhibit 19 a detailed statement of profit and
loss for each of the Banks for the period July 1, 1937, through June 30,
1938.
On June 30, 1938, the total assets of the twelve Banks stood at
$265,770,804, an increase of $68,807,254 during the fiscal year. Total
capital stock, surplus, and undivided profits of the twelve Federal
Home Loan Banks aggregated $167,981,331 as against $156,404,833
at the end of the preceding fiscal year. An analysis of the surplus
and undivided profits of the twelve Federal Home Loan Banks indi
vidually and collectively, as of June 30, 1938, is given in Exhibit 20.
Consolidated statement of condition of the twelve Federal Home Loan Banks
June 30, 1937
June 30, 1938
ASSETS
Cash:
On hand ..---.....------------------$115,849
On deposit with:
----_____------5, 752, 210
U. S. Treasurer ........
2,096,497
Commercial banks ..........--------------Federal Home Loan Bank of New York, agent ----------------15,000
Other Federal Home Loan Banks.------------------------.----.---.--------.------In transit--..------.--------------------------.
_
22, 496
Total cash.......-----------------..
.--------..
8, 002, 052
Deposit with U. S. Treasurer for matured obligations----------.-------------Investments:
U. S. Government obligations and securities guaranteed by U. S_..
21,244,449
Advances outstanding:
Members-----------....
--------------------------..
167,053, 742
Nonmembers.....---------..........
----------------------3,145
Total advances outstanding......---........
.--.
-------------167, 056, 887
Accrued interest receivable:
Deposits-other Federal Home Loan Banks ...---------------------- ........
-------------------------Investments------------...
171, 526
Advances to members ------------------------------417,040
Advances to nonmembers...-----------......
------------....
27
Total accrued interest receivable-----...........------------.588,
593
Deferred charges:
Prepaid debenture expense..------------------------..-----51, 785
Prepaid assessment-Federal Home Loan Bank Board .-----.
5,929 --Prepaid surety bond and insurance premiums---------------------8, 520
Other----- ------------------------------------66
Total deferred charges------------........---------- ----....66, 300
Other assets:
Accounts receivable.......-------......
........-----------------4, 492
Miscellaneous---.
.
..---------------------------775
Total other assets----------..
-------------------------5,267
Total assets.-----.
.
-----------------
-----
196,963, 548
$46,742
28, 917,145
5, 346,433
15,000
9, 536
34, 334, 856
6. 302
34,445,173
196, 222,132
2,805
196, 224, 937
186, 384
453, 707
24
640,115
106,161
7,777
66
114,004
4,440
975
5,415
265, 770,802
LIABILITIES AND CAPITAI
Liabilities:
Deposits:
Members-time..--------. - ----- ------------.
12, 329,633
16, 668,818
Members-demand --------...-------------------2,417,925
3, 204, 538
Applicants----------------------------207, 525
117,725
---------------- ----Other Federal Home Loan Banks..--.......Prepayment on advances ...........-......------240, 602 ------- .
...
Total deposits-------.........................------------15,195, 685
19,991,081
36
1938
REPORT OF FEDERAL HOME LOAN BANK BOARD,
Consolidated statement of condition of the twelve Federal Home Loan Banks-Contd.
June 30, 1937
June 30, 1938
LIABILITIES AND CAPITAL-continued
Liabilities-Continued.
Accrued interest payable:
Deposits-members..-----------..-------------------$21,246
Deposits-other Federal Home Loan Banks .....
----- Debentures.-------.----------------------------92,625
Total accrued interest payable------..--------
-----...
----------
Total dividends payable--------......-----------------..
Premiums on debentures
-
-----------------
360,770
422,904
125, 030
642,153
207,145
849,298
-----.
1,226
-----------------------------------------
Debentures outstanding------------
334,167
113,871
547,934
Dividends payable:
U. S. Government---------------------Members ------------------Accounts payable ...-----
$26, 603
--------------------
6,500
75,521
24,700,000
1 76,500,000
Matured obligations'
Consolidated debentures ---------------------------------Interest on consolidated debentures
----------------------------------
5,000
1, 302
Total matured obligations ---------------------------------.
----
6,302
40, 558,717
97, 789,472
Capital:
Capital stock (par):
Members (fully paid)..._
--------------------Members (partially paid)--------------------------
31,336, 700
497,100
36, 653, 700
218,300
Total---------------------------------------Less unpaid subscriptions----------------------------
31,833,800
303,290
36,872,000
100,795
Total liabilities.................-
U. S. Government subscription
Less amount uncalled-----..----
---------------------
----------------------------------
Total paid in on capital stock
Surplus:
Reserve as required under section 16 of Act....
Reserve for contingencies-------.---.--
__-------------------------- 044,510
152,
.....-------------.
.
------------------
Total surplus-.--.-------..---------------------------Undivided profits.-----------------------------------Total surplus and undivided profits....----...--------.
Total capital-..-------
31,530,510
36, 771, 205
124,741,000
124, 741, 000
4,227, 000 ..---
---------
--------------------------
Total liabilities and capital_------------_------------------
161,512, 205
2,403, 301
--------
3, 354, 480
8,952
2,403,301
1,957, 020
3, 363,432
3,105,693
4,360,321
6,469,125
156,404,831
167,981, 330
196,963,548
265, 770,802
1 On Julyl, 1938, Series B, amounting to $28,000,000, was repaid and a new Series E issued, in the amount
of $41,500,000, making a total amount outstanding of $90,000,000 as of July 1, 1938.
A detailed statement of condition on June 30, 1938, for each of the
Banks is attached as Exhibit 21. A significant trend in the operations
of the Federal Home Loan Banks during the past fiscal year has been
the increase in liquidity. On June 30, 1938, cash and investments
(which consist of obligations of or guaranteed by the United States)
were $68.78 million as against $29.24 million at the end of the preceding
fiscal year, a net gain of almost $40 million.
FEDERAL HOME LOAN BANK SYSTEM
37
In the reporting period, the proportion of Government capital in
the Banks to their combined resources has continued to decrease.
From January 1934 to June 30, 1938, the percentage of Government
funds has dropped from 82 percent of their combined assets to 46.9
percent, while the percentage of private funds has risen correspond
ingly. This increase of private funds was due to the augmented
purchase of stock in the Banks by member institutions, to mounting
deposits of the latter in the Banks, and to the sale of consolidated
debentures of the Bank System.
ADMINISTRATION OF THE FEDERAL HOME LOAN BANK SYSTEM
Under the direction of the Board, immediate supervision over the
operations of the twelve Federal Home Loan Banks is vested in the
Governor of the Federal Home Loan Bank System. Each Bank is
being examined at least twice a year. The supervision of member
institutions is exercised by the Chief Supervisor in Washington and
through the officers of the Federal Home Loan Banks, who act. as
agents of the Board for this purpose. Each member institution is
required to furnish at least annually a report of its financial condition
and operations. In addition, the Examining Division of the Board
makes annual examinations and audits of Federal savings and loan
associations, insured State-chartered savings and loan associations and
member institutions where such members are not subject to State
examination and supervision. Examinations are handled by the
Washington office with a Chief Examiner in charge and 12 district
offices, located in each of the Federal Home Loan Bank districts, with
district examiners in charge.
On June 1, 1938, a revised codification of the rules and regulations
for the twelve Federal Home Loan Banks was issued to comply as to
form with the Act of June 19, 1937, amending the Federal Register Act.
In the process of revision, only a few changes were made, all of which
were of minor importance. The new codification has been filed with
the Codification Board and will be published in the Federal Register.
As of July 1, 1938, total personnel of the Federal Home Loan Bank
Board numbered 313 as against 359 on July 1, 1937. This includes,
however, nine general departments which serve all agencies under the
Board.
The Federal Home Loan Bank Board operates on a self-supporting
basis through assessments made upon the twelve Federal Home Loan
Banks, the Home Owners' Loan Corporation, the Federal Savings
38
REPORT OF FEDERAL HOME LOAN BANK BOARD, 1938
and Loan Insurance Corporation, and through fees received from
savings and loan associations examined.
In the fiscal year 1938, total receipts of the Federal Home Loan
Bank Board amounted to $1,298,015 as compared with $1,031,275 in
the preceding period. Disbursements totaled $1,262,132 as against
$1,118,367 in the fiscal year 1937. The balance as of June 30, 1938,
including a cash balance of $256,594 carried over from the previous
year, amounted to $292,477. Exhibit 22 presents a tabulation show
ing in detail the administrative receipts and disbursements for the
last two fiscal years.
FEDERAL SAVINGS AND LOAN ADVISORY
dOUNCIL
The Federal Savings and Loan Advisory Council, created by the
Congress under the Federal Home Loan Bank Act, as amended, held
two meetings during the year. It is the function of this Council to
confer with the Federal Home Loan Bank Board on general business
conditions and on special conditions affecting the Federal Home Loan
Banks, their members, and the Federal Savings and Loan Insurance
Corporation. It may request information and make recommenda
tions on matters within the jurisdiction of the Board affecting the
Federal Home Loan Banks, their members, and the Federal Savings
and Loan Insurance Corporation. The Council consists of one mem
ber elected by each of the twelve Boards of Directors of the Federal
Home Loan Banks and six members appointed by the Bank Board.
At the meetings held during the year, the Council discussed numerous
matters of importance to the agencies under the Board and made
valuable suggestions.
The officers and membership of the Council in the last fiscal year
were as follows: I. Friedlander, chairman, ninth district, elected by
bank; Col. C. B. Robbins, vice chairman, eighth district, appointed
by Board; H. F. Cellarius, secretary, fifth district, elected by bank;
E. H. Weeks, first district, elected by bank; LeGrand W. Pellet,
second district, elected by bank; James Bruce, second district, ap
pointed by Board; J. J. O'Malley, third district, elected by bank;
G. W. Bahlke, fourth district, elected by bank; G. W. West, fourth
district, appointed by Board; T. H. Tangeman, fifth district, appointed
by Board; F. S. Cannon, sixth district, elected by bank; Morton
Bodfish, seventh district, elected by bank; H. G. Zander, seventh
district, appointed by Board (at the second meeting, F. O. Schneider
served as alternate); J. F. Scott, eighth district, elected by bank;
FEDERAL HOME LOAN BANK SYSTEM
39
G. E. McKinnis, tenth district, elected by bank; F. S. McWilliams,
eleventh district, elected by bank; R. H. Cake, eleventh district,
appointed by Board; and E. M. Einstein, twelfth district, elected by
bank.
BANK PRESIDENTS' COUNCIL
The Bank Presidents' Council, created by a resolution of the Board
and consisting of the executive heads of the twelve Federal Home Loan
Banks, also held two meetings during the reporting period. It con
sidered current problems in the operation of the Banks and the
supervision of member institutions, and contributed a number of
helpful recommendations on these phases of the Bank Board's
activities.
FEDERAL HOME BUILDING SERVICE PLAN
Sound mortgage lending depends closely on sound construction. If
houses are jerry-built or poorly designed, property values and con
fidence in home ownership are threatened, and, finally, the security of
mortgage loans representing the savings of millions of people is
endangered. It was only a logical step forward in the fulfilment of
its program, therefore, when the Federal Home Loan Bank Board in
1936 adopted the Federal Home Building Service Plan.
A marked improvement in home construction can be effected by
this Plan. Technical control, while the basis of all other types of
construction, has generally been lacking and usually unavailable in
small house building. In the course of the reconditioning operations
of the Home Owners' Loan Corporation, the disastrous effects of poor
design and shoddy construction upon home ownership, resulting in
loss of values and shrinking equities, have been revealed. The
Federal Home Building Service Plan provides a way of avoiding such
uneconomical practices.
The facilities of the Plan enable member institutions of the Federal
Home Loan Bank System, or other approved lenders, to provide pro
spective home owners with a complete home-building service, including
sound financial and architectural advice and supervision of construc
tion. The Plan is especially designed to serve those lower income
families who had usually not been able to afford the services of an
architect.
Lending institutions are being supplied with a portfolio of home
designs in which economical and attractive designs are arranged
according to size and cost of construction. The lender accordingly is
98591-38---4
40
REPORT OF FEDERAL HOME LOAN BANK BOARD,
1938
enabled to be of practical assistance to home owners and to all those
who undertake to supply small houses to the public. By virtue of the
Plan, the lender can assume an active role in promoting sound housing,
and at the same time is being supplied with desirable mortgage oppor
tunities and with a means of competing successfully for the better
loans in an increasingly competitive market.
The Plan is being operated in cooperation with the Regional Home
Loan Banks, using the facilities of the agencies under the Board.
While sponsored and promoted by the Board, the Plan is essentially a
local undertaking. Once established with the facilities and material
prdvided by the Board and the Regional Banks, the Plan is
carried out by approved lenders and architects and technicians in
accordance with prevailing local home building practices and local
financing policies. However, the procedure provides a Certificate of
Registration to be issued to the home owner reciting the protective
measures under which the house has been built and serving as a testi
monial of its sound construction and worth. This Certificate is
registered by the Board for the protection of home owner and
mortgagee.
Where the Plan has been put into operation, local architects and
technicians have been willing to provide suitable advisory and super
visory services at a moderate fee. This service includes advice in the
selection of an economical design, suitable to the site and neighborhood
and meeting family requirements, supply of complete and detailed
working drawings and specifications, checking of quotations and bids,
and what is most important, inspection of materials and periodic
supervision of construction.
In a number of the larger communities technical service is being
developed through local formation of groups of architects or technical
bureaus, generally sponsored or supported by the organized architec
tural profession. While the formation of such groups or bureaus has
been encouraged to provide technical service for lending institutions
under the Plan, their facilities are available to other users. Hence,
this effort is providing fundamentally needed services capable of mak
ing an appreciable contribution to the improvement of small home
building practices. In many localities response to the Plan has
prompted an associationof building-material manufacturers and dis
tributors working with a committee of prominent architects to con
sider development of a design and supervision service for general use
in all home building, however sponsored or financed.
FEDERAL HOME LOAN BANK SYSTEM
41
The past year saw the Federal Home Building Service Plan pass
into the operating phase. At the close of the fiscal year 1938, the use
of the Plan was in prospect by over 150 member institutions in about
50 localities. Applications for approval have been received from about
250 architects, and approval has been given to 281 home designs de
veloped especially for use in this service by leading architects through
out the country. At the end of the 1938 building season, about 400
designs will have been approved and made available within the locali
ties for which designed or in other localities where suitable to local
customs and building practices.
UNIFORM SAVINGS AND LOAN ACT
Through the supervision of member institutions by the Federal Home
Loan Bank Board and the provision of uniform Federal charters for
the Federal savings and loan associations,2 much has been done to
establish sound and standardized practices in the field of home finance.
However, the Board supervises only a portion of all the existing insti
tutions of the savings and loan type. One of the basic difficulties in
the operation and supervision of State-chartered associations is the
large variety of State laws under which they operate. In many in
stances, moreover, State legislation is now obsolete in the light of
good mortgage lending practice. There is an urgent need, therefore,
for greater uniformity and for a review of State laws to the end of per
fecting legislation in the light of recent experience.
To serve as an illustrative guide for those States engaged in develop
ing new legislation or revising their old laws in accordance with present
day conditions, the Legal Department of the Board, in cooperation
with the Supervisory Committee on State Legislation of the United
States Building and Loan League, has prepared a Uniform Savings and
Loan Act. This draft has been made available to all State savings and
loan supervisory authorities and to State legislatures in those States
where there is at present no adequate savings and loan legislation.
The act has recently been passed in somewhat modified form by the
State of Georgia.
2See Section IV of the present report.
IV
Federal Savings and Loan Associations
PLACE OF SAVINGS AND LOAN ASSOCIATIONS
IN THE CAPITAL MARKET
S
and loan associations are a vital part of the American
capital market; yet they are much less known to the general public
than many other institutions of our financial organization. Stock
exchanges, for example, are more conspicuous; banks and bank trans
actions of varied kinds are employed by a larger number of individuals;
and insurance companies enjoy greater prominence. The savings and
loan business, while totalling many billions of dollars of assets, has
been less in the public eye than these other institutions.
There are many reasons for this. The savings and loan business is
chiefly a small man's business. There is no impressive "bigness" in it,
It is a local business and has until recently received little recognition
as a national factor. Savings and loan associations are almost uni
versally mutual in character, which means that the investors and
borrowers own and control the business. Moreover, in their operations,
savings and loan associations are normally limited to two purposes
the advancement of savings and the financing of homes in their
communities.
While the savings and loan business has been noteworthy for its
AVING
strictly local pattern, it is the largest single factor in the Nation's
home-mortgage finance. Of the $17.3 billion of estimated nonfarm
home mortgages outstanding on December 31, 1937, savings and loan
associations held $3.5 billion or about 20 percent, the largest single
block. Moreover, savings and loan associations in the past decade
have accounted for about one-half of the new mortgage loans made on
nonfarm one- to four-family homes by all private financial institutions.'
What this means in terms of our national economy is evident from
the fact that nonfarm home mortgages are the largest single item of
1
See also Section II, p. 3.
43
44
REPORT OF FEDERAL HOME LOAN BANK BOARD,
1938
private long-term debt in the United States. Of the almost $75 billion
total private long-term indebtedness in 1934, nonfarm home mortgages
accounted for $18.1 billion or 24 percent.
CHART IX
DISTRIBUTION OF PRIVATE LONG-TERM
ACCORDING TO PURPOSE
DEBT
UNITED STATES - 1934
Source: United States Department of Commerce
"Long-Term Debts in the United States"
DIVISION OF RESEARCH AND STATISTICS
BOARD
LOAN BANK
FEDERAL HOME
ORIGIN OF FEDERAL SAVINGS AND LOAN ASSOCIATIONS
Savings and loan associations have been operating in this country for
more than 100 years under charters of the individual States and under
various names such as building and loan associations, cooperative
banks, and homestead associations. Federally-chartered institutions of
FEDERAL SAVINGS AND LOAN ASSOCIATIONS
45
this type are of comparatively recent origin. Their establishment
came as a result of the depression which brought to light existing
weaknesses in the structure of many financial institutions.
When Congress, in the special session of 1933, considered measures
for the relief of home owners under threat of dispossession, it was con
fronted with the almost equally urgent problem of devising ways and
means to revive thrift and home financing. Immediate relief for dis
tressed home owners was provided by the refinancing operations of
the Home Owners' Loan Corporation.
However, to minimize the
possibility of a recurrence of such a crisis, and to strengthen private
home financing as an effective instrument of home ownership, assist
ance beyond temporary relief was imperative. Moreover, there were
1,555 counties in the United States-approximately one-half of the
total number of counties-in which there were no local home-financing
institutions whatever.
The necessity of dealing with these problems induced the Congress
to embody in the Home Owners' Loan Act of 1933 provisions for the
creation of Federal savings and loan associations as private institu
tions under Federal charter. The purpose of authorizing the estab
lishment of these institutions was twofold: (1) To provide thrift and
home-mortgage lending facilities in those communities where such
facilities were unavailable or inadequate; and (2) to combine under
Federal charter the best policies and practices developed in the savings
and loan industry during the 107 years of its experience. The organ
ization, incorporation, and supervision of Federal savings and loan
associations were vested in the Federal Home Loan Bank Board.
Federal associations were to be established either by conversion from
State to Federal charter, or by the granting of charters to newly
organized institutions. In order to supply immediate funds for home
finance and to encourage private investments, the Secretary of the
Treasury, and later the Home Owners' Loan Corporation, were
authorized, within limits fixed by Congress, to subscribe to the shares
of Federal savings and loan associations. It was furthermore provided
that each association which obtains a Federal charter must apply and
qualify for membership in the Federal Home Loan Bank System, and
when the Federal Savings and Loan Insurance Corporation was
created in 1934, all Federal associations were required to secure
insurance of their accounts by this Corporation.
46
REPORT OF FEDERAL HOME LOAN BANK BOARD,
COMPARISON WITH THE ESTABLISHMENT
1938
OF
THE NATIONAL BANK SYSTEM
The program for the encouragement of a national system of thrift and
home-mortgage finance has a highly instructive parallel in the develop
ment of national banks. The circumstances leading to the authoriza
tion of Federal savings and loan associations are indeed in many re
spects similar to those which led to the establishment of national banks
in 1863. Just as until 1863 the banks of the country were loosely
regulated and without any element of unity, so up to 1933 there was
in the United States a heterogeneous group of thrift and home-financ
ing institutions which, although numerous, were poorly distributed
geographically and in many areas incapable of meeting adequately the
home-financing needs of the people.
Before the Civil War, banking operations in this country were
carried on either by private individuals and firms or by institutions
chartered under State laws. With the exception of the First and
Second Banks of the United States (which engaged in commercial
banking to only a very limited extent), there were no nationally-char
tered institutions licensed to engage in general banking operations.
The various State laws were widely divergent, and except in New
England and New York, extraordinarilylax.
The National Bank Act of 1863 provided for a voluntary conversion
of State banks into national banks. To insure uniform and construc
tive regulatory policy, responsibility for the supervision of national
banks was vested in a specially created agency of the Government,
the Office of the Comptroller of the Currency. With the passage of
the National Bank Act and the adoption of strengthening amend
ments, material improvement in the banking structure was brought
about. Some measure of stability and cohesion was created and
stricter and more uniform regulation and controls were established.
The same objectives which made national banks desirable were thus
responsible to a large extent for the action of Congress authorizing
the establishment of Federal savings and loan associations under
uniform and constructive regulation by a Federal agency.
THE GROWTH OF THE FEDERAL SAVINGS AND LOAN SYSTEM
The following table and Chart X shows the growth in number and
combined assets of Federal savings and loan associations since their
inception:
47
FEDERAL SAVINGS AND LOAN ASSOCIATIONS
Estimated assets (in thousands of
dollars)
Number of associations
Date
Total
June
June
June
June
June
30,
30,
30,
30,
30,
1934
----------------1935
1936 ------- -------------1937 ---1938-------------------
370
851
1,135
1, 286
1, 346
New
320
554
637
647
640
Converted
50
297
498
639
706
Total
$41,402
304, 569
655, 192
986, 297
1, 213, 874
New
Converted
$3, 198
36,145
116, 670
222, 528
301, 242
$38, 204
268, 424
538, 522
763, 769
912, 632
CHART X
NUMBER
AND ASSETS
OF FEDERAL SAVINGS AND LOAN ASSOCIATIONS
FIGURES AS OF JUNE 30
SConverted
Associations
and
Savings Loan
Federal
DIVISIONOF RESEARCH
AND STATISTICS
ANK BOAR
FEDERAI HOME LOAN
NewlyCharteredFederal Savings and Loan Associations
With the present number of 640 new and 706 converted Federal
savings and loan associations, the objective of a wider geographical
distribution of adequate thrift and home-financing facilities has to a
large extent been achieved. On June 30, 1938, 2,868 counties or ap
proximately 94 percent of all counties were being served wholly orin part
by Federal associations (which are permitted to lend over an area within
50 miles of their location). A map prepared as of June 30, 1938,
indicates the counties now being served by Federal associations, and
the counties which in 1933 had not had the benefit of local home
financing institutions (Exhibit 23).
p
During the fiscal year ended June 30, 1938, the number of Federal
savings and loan associations increased from 1,286 to 1,346, the
48
REPORT OF FEDERAL HOME LOAN BANK BOARD,
1938
number of investors in such associations from 801,347 to 1,030,096,
and the estimated total assets from $986,298,000 to $1,213,874,000.
In this period, 90 new charters were issued, of which 13 were for newly
established Federal associations and 77 for converted State-chartered
associations. On the other hand, there were 30 terminations of char
ter because of consolidation, merger, or liquidation. Exhibit 24
presents comparative data on Federal associations chartered, number
of investors and total assets by States and Bank districts as of June
30, 1937, and June 30, 1938.
Of the 1,346 Federal savings and loan associations recorded as of
June 30, 1938, there were 81 new and 235 converted Federal associa
tions with assets over $1,000,000; 367 new and 442 converted had
assets over $100,000 and up to $1,000,000; and 192 new and 29 con
verted associations had assets of less than $100,000.
RISE OF PRIVATE INVESTMENTS
Recent trends indicate an increasing importance of private invest
ments in the capital structure of Federal savings and loan associations.
Since November 1935, the Secretary of the Treasury has no longer
subscribed to share-accounts in Federal associations, and under a new
policy adopted by the Federal Home Loan Bank Board in 1937,
investments of the Home Owners' Loan Corporation have been re
stricted to cases of special importance such as community-wide rehabil
itation programs. However, Federal savings and loan associations
have been able to expand their total share capital considerably by a
steady increase of private share investments. In the fiscal year ended
June 30, 1938, Governmental investments on the one hand and private
investments on the other increased as follows:
Amount of investments in all Federal savings and loan associations
[In thousands of dollars]
Type of investor
June 30, 1937
June 30, 1938
crease (-) or
U. S. Treasury_----.-------------- -----Home Owners' Loan Corporation.-------------- .594,928
Private investment (repurchasable capital) ------------
-$48,184
$-150,356
$47,802
170,764
763, 725
-$381
+20, 408
+168, 797
On June 30, 1938, the ratio of private investments to total invest
ments was 77.7 percent as against 74.8 percent on June 30, 1937.
Exhibit 25 shows private investments and investments of the United
States Treasury and of the Home Owners' Loan Corporation by States
as of June 30, 1937, and June 30, 1938.
49
FEDERAL SAVINGS AND LOAN ASSOCIATIONS
The continuous increase of private investments is a most encourag
ing sign of the soundness of the Federal savings and loan associations.
In an identical group of 1,148 associations, 2 private investments have
grown from $469 million at the end of 1936 to $607 million on June 30,
1938, an increase of 29.4 percent. The increase during the fiscal
year 1938 was 19 percent.
Private investments in 1,148 identical Federalsavings and loan associations
Private in-
vteis
Date
Percent in
icrease over pre
ceding period
Dec. 31, 1936.-----------..-----..-----------------------
June 30, 1937-........---------------.
Dec. 31, 1937---------------------------------------------------June 30, 1938------------
----------------
$468,822,200 ------------
510,006,100
8.8
550,395, 900
606,674,400
7 9
10.2
As is indicated by the foregoing figures, the rate of increase in
private investments slowed down slightly in the second half of 1937.
In the first 6 months of 1938, however, private investments have in
creased rapidly, and their rate of increase has exceeded that of the
corresponding period of 1937 despite the reduced national income.
LENDING ACTIVITY OF FEDERAL ASSOCIATIONS
In the fiscal years 1937 and 1938, Federal savings and loan associations
have supplied more than 35 percent of the total amount loaned
on mortgages by all savings and loan associations. Between August 8,
1933, on which date the first charter was issued to a Federal savings
and loan association, and June 30, 1938, these institutions loaned
$799,775,158, exclusive of loans made for the purpose of refinancing
loans previously held by them.
The following table shows the amount of loans made by reporting
Federal savings and loan associations from January 1935 through
June 1938, by half-year periods:
Number of
Period
----------------------January-June 1935 ----------......
July-December 1935.--------.-----------------------------------------January-June 1936
---------------------------.....
July-December 1936...------------------ .
January-June 1937.----------------------------------------July-December 1937---------------------------------------January-June 1938..-------------------------------------
Amount of
associations at mortgage loans
during period
end of period
851
1,023
1,135
1, 212
1,286
1,328
1, 346
$42, 572, 638
74, 781, 919
91,034, 700
135,101, 799
157, 550, 000
146, 606, 100
134, 280,900
2 A group of identical associations was chosen in order to eliminate the effect of conversions of State
chartered into Federally chartered associations, and newly established Federal associations during the
period under consideration.
50
IEPORT OF FEDERAL -HOME LONAN
BANK
BOARD,
1938
There was an increase in volume in every six months' period up to
the middle of 1937 when, in accordance with the general decrease in
economic activity and residential construction, the volume of new
loans fell off. As compared to the drop in other business indices,
however, the lending activity of Federal associations has been well
maintained.
CHART XI
HOW THE AVERAGE DOLLAR LOANED BY REPORTING FEDERAL SAVINGS
AND LOAN ASSOCIATIONS WAS SPENT
1936
1935
FIRST 6 MONTHS
LAST 6 MONTHS
FIRST 6 MONTHS
LAST 6 MONTHS
1937
FIRST 6 MONTHS
....CONSTRUCTION
I
LAST 6 MONTHS
....HOME PURCHASE
Ii...REFINANCING
FIRST 6 MONTHS
.....
REPAIRS and RECONDITIONING
... OTHER PURPOSES
AND
DIVISION RESEARCH STATISTICS
OF
FEDERAL
HOME
LOAN
BANK
BOARD
In the last few years, there has been a gradual shift in the purposes
for which mortgage loans were made by Federal associations. Con
struction loans and loans for home purchase have grown in relative
importance, while the proportion of refinancing loans has constantly
decreased; the percentage of repair and reconditioning loans has
remained fairly stable. In the first half of 1935, 48 percent of total
loans were for refinancing; in the corresponding period of 1938, only
23 percent were for this purpose. Loans for home purchase, on the
other hand, were 17 percent of the total in the first half of 1935 and
FEDERAL SAVINGS
AND LOAN
ASSOCIATIONS
51
29 percent in the corresponding period of 1938, and construction
loans increased from 20 percent to 33 percent. During recent years,
Federal savings and loan associations have thus been participating
more fully in the financing of home construction by devoting more
and more of their lending funds to this purpose.
A summary of loans made by reporting Federal savings and loan
associations during the fiscal year ended June 30, 1938, by States and
Bank districts and according to purpose, is presented in Exhibit 26.
Exhibit 27 shows total mortgage loans outstanding of Federal associa
tions by States and Bank districts together with Federal Home Loan
Bank advances to these associations.
FINANCIAL OPERATIONS
Consolidated balance sheets available for the calendar year 1937
indicate that the operations of Federal savings and loan associations
during the year were, on the whole, satisfactory (see Exhibits 9 and
10). The ratio of first-mortgage loans to total assets increased from
76.26 percent at the end of 1936 to 79.39 percent at the end of 1937.
During the same period, the ratio of second mortgages dropped from
0.15 percent to 0.06 percent. The ratio of real estate owned decreased
from 10.82 percent to 8.41 percent, while the ratio of real estate sold
"on contract" increased from 2.93 percent to 3.33 percent. The in
creased lending activity of Federal associations was accompanied by
a reduction in the ratio of cash to total resources from 4.77 percent
to 4.05 percent.
On the liability side of the balance sheet, the ratio of Government
share subscriptions to total assets was 19.65 percent at the end of 1937
as compared to 19.46 percent at the close of 1936. Advances from
Federal Home Loan Banks increased from 7.67 percent to 9.31 percent
of total resources during 1937, while the ratio of other borrowed money
decreased from 0.28 percent to 0.21 percent. The ratio of reserves and
undivided profits dropped from 6.07 percent to 5.35 percent.
The standardized accounting system used by Federal savings and
loan associations and the standard form of annual reports required by
the Federal Home Loan Bank Board result in comparable income and
expense data for these associations. For the first time in the history
of the savings and loan business, therefore, a close analysis and
comparison of operating costs on a broad basis has been possible.
Analyses of this type help the management of an individual associa
tion to determine its efficiency and earning power as compared with
52
REPORT OF FEDERAL HOME LOAN BANK BOARD, 1938
other associations; they are useful tools for shaping operating policies;
they likewise assist the Federal Home Loan Bank Board in setting
standards for supervision and regulation.
Exhibit 28 presents the results of an analysis of operating costs for
1937, including 1,301 reporting institutions out of a total number of
1,328 Federal savings and loan associations in existence at the end of
that year. Since the normal expense and income ratio for a small
association may not apply to a large institution, the reporting associa
tions were grouped as to size. The break-down as to size discloses that
the ratio of operating expense to gross income is generally lower in
institutions with more than $1,000,000 assets than in the smaller
institutions. Likewise, the ratio of operating expense to net assets
tends to decrease with growing size of institutions, at least above the
$500,000 bracket. The ratio of net operating income to average
invested capital, on the other hand, clearly shows a tendency to be
higher in the smaller institutions and lower in the larger institutions.
TERMINATION OF THE SAVINGS AND LOAN DIVISION
On January 11, 1938, the Savings and Loan Division of the Federal
Home Loan Bank Board was discontinued and the remaining Washing
ton personnel transferred to the Office of the Governor of the Federal
Home Loan Bank System. Through this Division, the Board took a
prominent part in rehabilitating those applicant institutions which did
not measure up to the Board's standards of eligibility for conversion
into'Federally-chartered institutions, or for insurance of share accounts,
or for Treasury and Home Owners' Loan Corporation investments.
These programs included financial and corporate reorganizations of
associations, write-down of assets, and in many cases, segregation of
the sound and liquid assets from frozen assets, the former being used
as the capital of a live and going institution, and the latter being
subject to gradual liquidation.
The field services heretofore performed by the Division have been
assumed by the officers of the Federal Home Loan Banks. A tabula
tion of receipts and disbursements of the savings and loan promotion
fund for the fiscal year ended June 30, 1938, is attached as Exhibit 29.
ENABLING STATE LEGISLATION
During the fiscal year, the legislatures of two States, Georgia and
Pennsylvania, enacted laws specifically permitting conversion of State
chartered member associations of the Federal Home Loan Bank Sys-
FEDERAL SAVINGS AND LOAN ASSOCIATIONS
53
ter into Federal savings and loan associations. Such enabling legis
lation has now been enacted in 40 States and in the Territory of Hawaii.
In the reporting period, legislation was enacted in 19 States relating to
investment by guardians, executors, administrators, insurance com
panies, or fiduciaries in the shares of Federal savings and loan associa
tions.
THE STRUCTURE OF FEDERAL SAVINGS AND LOAN ASSOCIATIONS
The plan of operation adopted for Federal savings and loan associations
in 1933, and modified in subsequent years, followed closely the model
developed by a committee of the United States Building and Loan
League. A Federal savings and loan association receives its capital
as payments of investors on share accounts and lends such capital
chiefly upon the security of first liens on homes. Borrowers are
permitted to repay their loans in monthly installments over a period
up to 20 years.3
Federal savings and loan associations are subject to supervision by
the Federal Home Loan Bank Board. Through its cooperation and
counsel, the Board seeks to assist and guide individual managements
as helpfully as possible without assuming or accepting the inherently
local functions and responsibilities of management. By decentraliza
tion-designating the officers of the twelve Federal Home Loan Banks
as its supervising agents for institutions in the respective Bank dis
tricts-supervision by the Board tends more fully to respond to the
varying conditions of the different sections of the country and to the
particular needs of each institution.
Each Federal savings and loan association is locally owned and
locally managed. Its directors are local leaders selected by its mem
bers. Each borrower is a member and is entitled to vote and partic
ipate in its meetings. Each investor may cast one vote for each $100
invested, or fraction thereof, but, regardless of the amount of his
investment, no investor may cast more than 50 votes.
Loans made by Federal savings and loan associations are based
upon a type of contract that is easily understood, and the borrower's
pass book clearly indicates the progress made toward the attainment
of that goal which every home owner cherishes; namely, a debt-free
home. This type of loan is known as the "direct-reduction loan".
The amount by which each monthly payment exceeds the interest is
3
Twenty-five years for a limited amount of home-mortgage loans insured under the National Housing
Act, as amended.
54
REPORT OF FEDERAL HOME LOAN BANK BOARD,
1938
applied directly to the reduction of the principal. Interest is calcu
lated monthly on the unpaid balance of the loan. This type of loan
results in a lowering of the interest cost to the borrower in comparison
with older-type loans, and also brings about a distinct improvement in
the morale of the borrower because he has a much clearer under
standing of the transaction as a whole, and is in a position to know, at
all times, the exact status and unpaid balance of his loan.
Federal savings and loan associations are not permitted to assess
fees and fines for late installment payments by their savers. The
borrower is not penalized for inability to meet current obligations
other than by a proper charge for interest on the unpaid balance of the
loan. His obligation is completely independent of the earnings of the
institution, or the dividends declared on share accounts, or of any
other contingency not written into the loan contract.
The payment of a bonus for regular and systematic long-term in
vestment has replaced the system of fines and forfeitures which has
often been the subject of criticism. The encouragement of long-term
investment is sound policy for a financial institution which lends its
funds primarily on long-term mortgages.
When the Federal savings and loan association is described as the
national bank of the home-financing field, two things are implied:
First, that it receives its charter from an agency of the Federal Govern
ment and is supervised by that agency; and second, that in contrast
to the wide variety of practices employed by State-chartered institu
tions, each Federal savings and loan association, no matter where
located, conforms to the same general pattern of structure and
operation.
One effect of chartering Federal savings and loan associations
throughout the country has been to encourage the movement toward
standardized practice in State-chartered institutions of similar type.
Many such institutions have adopted the direct reduction loan plan
and other features of the Federal savings and loan associations when
opportunity has been afforded them to witness the results of such
practices in the growth of Federally chartered associations.
Further progress in simplifying the Federal charter was made with
the issuance of a new form of charter, together with a complete revision
of rules and regulations, on December 1, 1936. For a summary of
the revisions made, see the Fifth Annual Report of the Federal Home
Loan Bank Board, pages 24-25.
Since its approval, the revised charter has been issued to all newly
organized or newly converted associations. Those chartered prior to
FEDERAL SAVINGS AND LOAN ASSOCIATIONS
55
December 1, 1936, may adopt the new charter at their own option.
On June 30, 1938, a total of 1,206 revised charters had been granted to
old and new associations, leaving only 140 associations operating under
the 1933 charter.
RISK RATING AND VARIABLE INTEREST RATES
Comparatively new features in the lending practice of savings and
loan associations are risk rating and variable interest rates. A loan
made upon a modern, well-constructed home in a good neighborhood,
to a borrower with a regular income adequate to make the necessary
monthly payments, can safely be made at a lower rate of interest than
a loan secured by an old, poorly designed home in a deteriorating
community, to a borrower whose income is irregular and where collec
tion expense may, therefore, prove high. Similarly there is less risk
of loss in a loan amounting to 50 percent of the appraised value of a
property, than in an 80 percent loan, if other circumstances are the
same. Finally, a 10-year maturity because of its quicker amortization
generally represents a smaller risk than a 20-year maturity.
Thus, on the basis of a number of factors, the degree of risk can be
determined and the rate of interest varied accordingly.
An association which charges a low interest rate exclusively can
afford to make only those loans which carry a minimum of risk. Its
volume of loans will therefore be restricted. An association charging
a high rate of interest on all its loans will attract only those borrowers
who are not able to obtain funds at a lower cost elsewhere. Such an
association will experience a high collection cost and will risk the poten
tial acquisition of real estate through foreclosure. By the application
of risk rating, an association is able to attract good risks at lower
interest rates and to make some loans where the risk is slightly greater
but the return higher, thus buttressing its average risk through
intelligent diversification.
The problem which savings and loan associations face is to secure
a volume of business and resultant income sufficient to maintain
expenses, to pay a competitive dividend, and to provide adequate
reserves; at the same time they must avoid delinquencies and the
acquisition of real estate in the future. The variable interest rate plan
has helped some associations to solve this problem.
Federal savings and loan associations are not required to adopt the
variable interest rate plan but may charge, within the framework of
their State laws, such rates of interest and other charges as their boards
of directors may determine.
98591-38--5
I
_ _ _
_
_ _
Vg
Federal Savings and Loan Insurance
Corporation
PURPOSE OF THE CORPORATION
T
HE Federal Savings and Loan Insurance Corporation was created
in June 1934 under Title IV of the National Housing Act, as part
of the Federal Government's attempt "to encourage improvement in
housing standards and conditions." Its principal function is to
strengthen the confidence of the public in savings and loan associations,
which, as has been shown in preceding sections of this report, are one
of the chief sources for home-mortgage funds throughout the country.
The Corporation protects every investor against the loss of savings
and credited earnings held in insured savings and loan associations to
a maximum of $5,000 and thus adds another safeguard to the basic
security of such associations.
The establishment of the Federal Savings and Loan Insurance
Corporation followed by 1 year the creation of the Federal Deposit
Insurance Corporation which protects deposits in commercial banks
up to $5,000. Through the adoption of these plans for Government
protection of small depositors and investors, Congress recognized that
security of savings has become essential to national welfare.
The protection afforded by the Federal Savings and Loan Insurance
Corporation is based on the principle of mutual insurance. Annual
premiums are charged to the insured associations and are available to
meet the operating expenses of the Corporation and to accumulate
a reserve fund for the payment of losses. The $100,000,000 capital
of the Corporation was subscribed by the Home Owners' Loan Cor
poration, which in turn is a Federal instrumentality.
GROWTH OF INSURANCE
PROTECTION
On June 30, 1938, 2,014 savings and loan associations in 46 States and
two Territories of the United States were taking advantage of the
protection offered by the Corporation. Their total assets reached
57
58
REPORT
OF FEDERAL HOME LOAN
BANK
BOARD,
1938
$1,978,476,000. The number of investors in these associations was
1,923,513. Since the accounts of 98 percent of the investors in insured
institutions do not exceed $5,000 each, the great majority of investors
is assured of 100 percent protection of its investments.
During the fiscal year ended June 30, 1938, 290 additional thrift and
home-financing institutions were insured, with 269,510 account
holders and aggregate assets of $228,726,000.
The following graph shows the rapid progress of insurance protection:
CHART XII
PROGRESS
NUMBER OF ASSOCIATIONS
2,014.-------------
OF INSURED
ASSOCIATIONS; JUNE 30, 1935-1938
NUMBER OF INVESTORS
(THOUSANDS)
923--------------------
ASSETS
(MILLIONS)
97
------------
DIVISION RESEARCH
OF
AND STATISTICS
HOME
LOANBANK
BOARD
FEDERAL
Exhibit 30 presents in detail the number, investors, and assets of
instired institutions, segregated as to new Federal savings and loan
associations, converted Federal associations, and State-chartered
associations, together with an analysis of the average size of insured
institutions, by States and Federal Home Loan Bank Districts.
All Federal savings and loan associations, as soon as they are
chartered, must apply and qualify for insurance. In addition to
1,336 Federal associations, 678 State-chartered associations had
become insured up to June 30, 1938. It is the object of the Corpora-
59
FEDERAL SAVINGS AND LOAN INSURANCE CORPORATION
tion gradually to make clear to all eligible associations the broad
basic value of insurance as a protection and support to institutions
that in themselves are inherently sound but nevertheless may
encounter unforeseen and indeterminable risks.
BENEFICIAL EFFECTS OF INSURANCE
After nearly four years of experience, it can be said with certainty
that insurance of accounts has encouraged the flow of investors' money
CHART XIII
ASSETS
-
2,600 --
-
--
OF
INSURED
-
--
--
ASSOCIATIONS
-
-
_
--
-
2,400
2,200
--
-
2.000 -
-
-
--
2 400
I
---
-
I
-
11
-
-
i
.8001
2,200
2000
1...8.
U,
a
2,600
I
1,600
600 r
I
-1'***
I
1,200
So
o
-
1000
FfrC-**'
*
E N ER
AS ET S
ING S
-
1W -0
Soo
400 u
(CU
MULATVE)
-
-
200
00
\
NSON
THRU
1934
AUG
JF
MAMJ J ASOND
1935
JFMAMJJASONDJFMAM
J
1936
JJA
1937
Divisionof Research and StatisIcs
Federal Home Loan Bank Board
SONDJFMAM
JASOND
1938
*Estimates based upon current reports from approximately 90% of all insured associations
into the savings and loan associations, decreased withdrawals, in
creased reinvestment of funds, increased the supply of' mortgage
funds, and in general has strengthened the confidence of the commu
nity in this type of home-financing institution.
Evidence of the beneficial effects of insurance is the growth in
resources of those associations which have obtained insurance. This
growth is reflected in the above Chart, which shows the trend of
"entering assets" and "present assets" of insured associations from
the beginning of operations through June 30,1938. The dotted line on
60
REPORT OF FEDERAL HOME LOAN BANK BOARD, 1938
the Chart represents the assets as of the date of insurance of each
association; the addition of these entering assets yields a cumulative
total at the end of each month as shown by the dotted line. The
solid line represents the total amount of assets of insured associations
at the end of each month, as reflected by their current balance sheets.
The spread between the two lines shows clearly the progress made by
savings and loan associations after insurance of their accounts.
Insurance is of greatest value in strengthening the confidence of
the public when it is widely advertised. Associations receiving a
certificate of insurance, therefore, usually undertake an extensive
advertising campaign to acquaint the public with the benefits of
insurance. Newspapers, radio, literature, and direct mail have all
been used by associations in announcing the advantages of insurance.
Insured institutions are encouraged to use the insignia of the Insurance
Corporation for advertising purposes.
The Corporation attempts to point the way for fair and honest
advertising. Through the Federal Home Loan Banks, it exercises
supervision over the publicity of insured associations, thus enforcing
Section 7 (e) of the Rules and Regulations which states: "No associa
tion shall use advertising (whether printed, radio, display, or of any
other nature) or make any representation which is inaccurate in any
particular or which in any way misrepresents its services, contracts,
investments, or financial condition." A detailed advertising guide
was distributed to insured institutions during the year.
OPERATIONS OF INSURED ASSOCIATIONS
The trend of operations of insured savings and loan associations in
the fiscal year 1938 was gratifying. During the year, private invest
ments in 1,405 identical instutitions, covering Federal and State
chartered associations which were insured over the entire reporting
period, increased by 13.1 percent. Average net cash earnings of all
insured institutions were approximately 4 percent of invested capital.
The following table presents a summary of selected balance sheet
items of insured associations as of June 30, 1938:
FEDERAL SAVINGS AND LOAN INSURANCE
61
CORPORATION
Selected balance sheet items for all insured associations as of June 30, 1938
[Dollar amounts are shown in thousands]
Federal associations
I tem
associations
ItemTotal
New
Total New
1
State-chartered associations
Converted
Total
Member 2 mNon 2
member
2,014
1, 336
638
698
678
675
3
Assets.----------------- $1,978,476
1, 481, 893
First mortgages held--.....
143,004
FHLB advances.------...
6, 259
Borrowed money-.--------Government investment. 258, 403
Private repurchasable capi
316, 517
tal----------------1,
$1, 208, 357
942, 110
101,318
2, 319
218, 567
$301,242
269, 827
35, 089
460
100, 541
$907,115
672, 283
66, 229
1,859
118,026
$770,119
539, 783
41, 686
3,940
39, 836
$767,028
536, 999
41, 686
3,890
39,836
$3, 091
2, 784
0
50
0
760, 695
142, 027
618, 668
555, 822
553,384
2, 438
106, 423
56, 870
6, 625
50, 245
59, 553
49,328
225
Number of associations--...
General reserves and undi
vided profits-.-----....
--
1
Does not include 10 recently chartered Federal associations not insured as of June 30, 1938.
2 Members and non-members of the Federal Home Loan Bank System.
Ratios computed on the basis of the above figures show that, on
June 30, 1938, 75.0 percent of total resources of all insured associations
was invested in first mortgages. The ratio of private repurchasable
capital to total assets was 66.5 percent, the ratio of Government
investment, 13.1 percent, and the ratio of reserves and undivided
profits, 5.4 percent.
The importance of insured institutions in the field of home-mortgage
finance can be measured by the fact that of the $726,558,000 loaned
on homes by all savings and loan associations during the fiscal year
1938,1 insured associations accounted for $364,903,000 or approxi
mately 50 percent.
LOCAL PROGRAMS
In certain communities the extension of insurance protection has been
delayed by the weakened condition of the local savings and loan struc
ture. In these localities it requires the combined efforts of the Insur
ance Corporation, the Federal Home Loan Banks, and the State
Supervisors to rehabilitate the institutions and restore public confi
dence.
The Federal Savings and Loan Insurance Corporation has continued
to cooperate with State officials in rehabilitating associations in various
parts of the country. In approximately 30 States, it has participated
in rehabilitation programs with State supervisory officials by making
joint analyses of problems, by setting forth tentative conditions upon
1See
Exhibit 8, total loans less loans for "other purposes."
62 -
REPORT OF FEDERAL HOME LOAN BANK BOARD,
1938
which insurance could be obtained for institutions, by assisting insti
tutions directly to effect reorganization, and by granting insurance
following reorganization.
The Corporation has participated in group meetings with State
Supervisors for the purpose of discussing general questions of policy
and procedure and in individual conferences with officials of various
States where problems concerning State and community programs
were discussed.
SUPERVISION AND PREVENTION
OF DEFAULT
Prevention of default is the most important aspect of effective insur
ance protection, and close supervision the most adequate means of
administering such preventive policy. The Corporation, therefore,
exercises constant supervision of insured institutions.
Through study of the examinations, audits, monthly reports, and
annual reports required to be submitted by the associations, through
conferences with State Supervisors and Building and Loan League
officers, and through personal contacts with the associations, the
Federal Home Loan Banks, which act as agents of the Corporation,
scrutinize the financial condition, management, lending policies, and
operations of insured associations. When serious violations of the
letter or spirit of the Act or Rules and Regulations are noted, they are
called to the attention of the association and adequate steps are taken
to see that such violations are promptly corrected.
All insured associations are required to be examined annually.
Federal savings and loan associations are examined by the Examining
Division of the Federal Home Loan Bank Board. In the case of State
chartered insured associations, the Examining Division for the Cor
poration conducts joint examinations with State regulatory authorities
in 25 States; in the remaining States, examinations are conducted by
the Examining Division of the Federal Home Loan Bank Board.
In 16 States and the Territory of Hawaii, a uniform examination
form is in use in whole or in part. This form was developed in con
ferences between the National Association of State Building and Loan
Supervisors, the United States Building and Loan League, the Ex
amining Division of the Federal Home Loan Bank Board, and repre
sentatives of the Insurance Corporation.
During the fiscal year 1938, the Federal Savings and Loan Insurance
Corporation assisted a number of associations which encountered
difficulties, by effecting mergers with other insured institutions, or by
FEDERAL
SAVINGS AND
LOAN
INSURANCE
CORPORATION
63
the development of a program of accelerated reserve accumulation,
reduction of expenses, disposal of real estate, or general reorganization.
SETTLEMENTS
In the event of default and liquidation of an insured institution, other
measures having failed, the Corporation must make available to each
of the insured investors in that institution either (1) a new account in
an insured association equal to his insured investment in the institu
tion in default, or (2) at the option of the insured investor, the full
insured amount of his account-10 percent in cash, 45 percent in
debentures of the Corporation payable within one year, and 45 per
cent in debentures of the Corporation payable within three years.
The Corporation, however, is authorized to prevent the default of
an insured institution or to restore an insured institution in default to
normal operation by making a loan or contribution to, or purchasing
the assets of, such institution; but the amount so expended shall not
be greater than that which the Corporation finds to be reasonably
necessary to save the expense of liquidating the institution.
In three cases during the fiscal year 1938, the Corporation exercised
this latter authority:
Because of inability to carry on operations on a sound and profitable basis
the directors of a newly organized Federal association in the South requested the
Corporation to make a contribution to the association in order to restore its capital
and so to enable the association to redeem all accounts. After it had been deter
mined that this procedure was for the good of the industry as a whole and that
the amount involved would be less than the cost of liquidation, the Corporation
made a contribution of $192.30 to the association. The institution thereupon,
as previously agreed, redeemed its accounts, paying its investors in cash in full.
The Federal Home Loan Bank Board canceled the charter of the association and
the Federal Savings and Loan Insurance Corporation canceled the certificate of
insurance.
A Federal savings and loan association in New England, chartered in January
1936, experienced difficulty because of local floods and poor business conditions.
On April 7, 1938, the board of directors of the association unanimously decided
to dissolve and requested the Insurance Corporation to contribute a sum to restore
the capital, permitting all investors to be paid. Since the required amount of
$530.73 was less than would be required to liquidate the association and since it
seemed unlikely that the association would be able to operate effectively, the
Corporation contributed this sum. The association redeemed its accounts, paying
its investors in full, and its charter and insurance certificate were canceled.
A considerable impairment in a midwestern State-chartered instjtution was
discovered in the spring of 1938. Thorough examination and audit of the affairs
of the association were made by the Corporation and all assets were appraised;
the total impairment reached $102,097.60.
Finding that this amount was less
64
REPORT OF FEDERAL HOME LOAN BANK BOARD,
1938
than the loss through liquidation and also that the association is valuable to its
community and has prospects for continued success, the Corporation made a
contribution of $102,097.60 in order that the association might continue operations
on a solvent basis.
The contributions made by the Corporation in these three settle
ments were $102,820. Aggregate contributions made by the Cor
poration since the beginning of operations amount to $104,845.
TERMINATIONS AND WITHDRAWALS
According to rules and regulations promulgated by the Corporation
under authority of the National Housing Act, the Corporation may
terminate the insured status of an association because of violation of
any provision of the Act or the rules and regulations after ample oppor
tunity for hearing has been given.
The Corporation has not found it
necessary to exercise this power during its four years of operation.
Similarly, an institution may terminate its insured status, provided
all insured investors are notified of its intention and are given oppor
tunity to approve or disapprove such proposal. A Federal savings
and loan association may not terminate insurance without relinquish
ing its charter. No association has terminated its insured status in
this manner during the lifetime of the Corporation.
During the fiscal year 1938, 30 insurance certificates were canceled
by the Corporation. Of the cancellations, 22 were due to merger
with other insured institutions, 7 were due to liquidation and pay
ment of all obligations in full, and 1 was due to failure of an association
to meet all conditions of insurance. Since 1934, 54 certificates have
been canceled because of mergers, 17 because of dissolution, and 1
because of failure to meet all conditions of insurance.
COST OF INSURANCE
Each insured institution pays an annual premium of one-eighth of
one percent of the aggregate of all accounts of an insurable type plus
creditor obligations. The Corporation is authorized to make an
additional annual assessment up to one-eighth of one percent to cover
losses and expenses. Such assessments, however, have not been
necessary. When the reserves of the Insurance Corporation equal
5 percent of its potential liabilities, premium payments cease.
In accordance with the Act, associations applying for insurance
after the first year of operation are required to pay, upon approval of
their applications, an admission fee as a fair contribution to the
reserves already accumulated. During the fiscal year 1938, the fourth
FEDERAL SAVINGS AND LOAN INSURANCE
CORPORATION
65
year of operation of the Corporation, the fee was $0.04 for each $100
of the aggregate of creditor obligations and accounts of an insurable
type.
Insured institutions pay the expenses of the annual examinations
required by the Insurance Corporation. In the case of Federal
savings and loan associations, this involves no additional cost since
the examinations conducted by the Examining Division for the
Federal Home Loan Bank Board are accepted by the Insurance
Corporation. Examinations of insured State-chartered associations
are made at some extra cost in States where joint examinations are
conducted, and at a cost of about three hundredths of one percent of
assets for associations of average size in States where examinations
are not conducted jointly with the State authorities.
SUMMARY OF FINANCIAL OPERATIONS
In the fiscal year ended June 30, 1938, the Corporation had a premium
income of $1,881,450 as compared with $1,346,078 in the preceding
period. Admission fees totalled $65,927 as against $66,351 in the
fiscal year 1937. As in the previous year, additional income of
$3,000,000 was earned on the Corporation's capital invested in Home
Owners' Loan Corporation bonds. Earnings on invested reserves
amounted to $262,774 as compared with $146,211 in the preceding
year. Including miscellaneous items, total income during the fiscal
year reached $5,210,256 as against $4,558,777 in the fiscal year 1937.
Total administrative expenses of the Corporation during the
fiscal year 1938 were $192,227 or 3.7 percent of the total income, as
against $158,582 in 1937. Nonadministrative expenses incurred in
connection with contributions to impaired associations amounted to
$621. All expenses have been paid from the interest earned on the
invested reserves.
As in preceding years, all income above expenses has been placed
in the reserve account. The ultimate soundness and reliability of the
Insurance Corporation depend upon the accumulation of reserves
adequate to absorb all losses which the Corporation may have to
assume in the liquidation of, or in making contributions to, associations
having impaired capital. It is to the financial interest of the insured
associations, as well as of the Insurance Corporation, to build up
reserves as rapidly as possible until they equal 5 percent of the insured
risk of the Corporation, at which time the Congress has provided
that the payment of premiums shall cease. On June 30, 1938,
66
REPORT
OF FEDERAL
HOME LOAN
BANK BOARD,
1938
reserves totalled $13,124,723, after deduction of $102,820 for contri
butions during the year was made.
Total resources of the Corporation as of June 30, 1938, were
$114,077,883, an increase of $5,091,987 over the end of the preceding
fiscal year. Capital and surplus amounted to $113,124,723 as com
pared with $108,235,357 on June 30, 1937. The total potential
liability of the Corporation as of June 30, 1938, was $1,400,000,000 or
approximately 12 times the capital and surplus of the Corporation.
Under no circumstances could the potential liability become real as
such eventuality would imply the complete failure of every insured
association without any recovery value in any asset. Present experi
ence indicates that failures are relatively few under normal business
conditions and that the basic security of the assets of any liquidating
association is substantial.
Exhibits 31, 32, and 33 present detailed statements of financial
condition and of income and expense during the fiscal year 1938.
PERSONNEL
Since the activity of the Federal Savings and Loan Insurance Corpo
ration is in the field of thrift and urban home financing, the Congress
stipulated in the enabling act that the members of the Federal Home
Loan Bank Board should act as trustees of the Insurance Corporation.
The trustees were authorized to promulgate rules and regulations and
to appoint officers and employees of the Corporation.
The Corporation uses the services of various general service divisions
under the Board such as the Review Committee, the Division of
Research and Statistics, the Public Relations Department, the
Personnel Department, the Examining Division, the Legal Depart
ment, the Budget Officer, and the Secretary's Office, and it shares
in the expenses of those divisions. A small staff, therefore, appears
directly on its pay roll. The Corporation's staff increased by 23 during
the fiscal year ended June 30, 1938, due to the continuous expansion
of the Corporation's activities and due to an adjustment with the
Federal Home Loan Bank Board in accordance with which the
Corporation reduced its annual contribution to the Board for services
rendered from $84,522 to $54,670, placing on its pay roll employees
of the Board who are actually engaged in the work of the Corporation.
67
FEDERAL SAVINGS AND LOAN INSURANCE CORPORATION
Employees on the pay roll of the Federal Savings and Loan Insurance Corporation
as of June 30, 1938
Division
Employees
General Manager's Office --- -----------------------------------10
Treasurer's Office-----------------------------------------------5
Legal Department-----------------------------------------21
Review Committee --------------------------------------------4
Office of Secretary of Board--------------------------------------1
Total ----------------------------------------
--
-
41
VI
Home Owners' Loan Corporation
THE EMERGENCY TASK
T
Home Owners' Loan Corporation (HOLC) was created June
13, 1933, as an emergency instrumentality of the Federal Govern
ment. Its refinancing operations ceased June 12, 1936. Its principal
activities at present are the collection and servicing of its loans, and
HE
the management and sale of the properties acquired. Its objective is
to conclude its operations, if possible, without loss to the Federal
Government and the taxpayer, and. to assist as many borrowers as
possible to preserve and ultimately own their homes free and clear
of debt.
The Corporation was called into existence to refinance the mort
gages of distressed urban home owners and to stem the flood of fore
closures resulting from the unprecedented economic collapse of the
early Thirties. In 1933, hundreds of thousands of home mortgages
were in default. Home owners throughout the country already had
lost their properties through foreclosure or were in imminent danger
of doing so. Financial institutions were threatened with irreparable
losses. Deflation was rapidly destroying all property values.
The emergency was one with which private enterprise was hope
lessly unable to cope. To meet the situation, Congress created the
Home Owners' Loan Corporation and charged it with the duty of
taking over the mortgages on small nonfarm homes, the owners of
which were in actual default and could not otherwise escape fore
closure. The Corporation was provided with a capital of $200 mil
lion, subscribed by the United States Treasury, and with the authority
to issue bonds in exchange for defaulted mortgages
VOLUME OF REFINANCING
The total number of applications filed for refinancing of home mort
gages was 1,886,491, aggregating $6,173,355,652. Of this number, the
Corporation closed 1,017,948 loans for an amount of $3,093,450,641.
69
70
REPORT OF FEDERAL HOME LOAN BANK BOARD,
1938
In addition, 8,002 supplemental loans for reconditioning were made to
borrowers who had previously received refinancing loans
Of the nearly $3.1 billion loaned by the Corporation, some $2.7
billion, or just under 90 percent of the total, went to former mortgagees
in payment of the indebtedness due them. Approximately $230
million, or over 7 percent, was applied to the payment of taxes, assess
ments, etc.; nearly $70 million, or over 2 percent, to the repair and
reconditioning of the properties mortgaged; and the balance of $50
million, or about 1 percent, to insurance, appraisal, and legal fees and
other costs incidental to the processing of the application and the
granting of the loan.
Of the total of $2.75 billion used to pay off the original lenders,
approximately 79 percent was disbursed to financial institutions, and
about 21 percent to individuals and other noninstitutional mortgage
creditors.
Through exchange of its readily marketable, interest-bearing bonds
for the frozen mortgages held by financial institutions, the Home
Owners' Loan Corporation helped materially to combat the financial
crisis in 1933. Nearly $400 million of its bonds went to closed financial
institutions, permitting the release of funds to depositors and relieving
the pressure for payment upon debtors of such institutions.
In many instances, the mortgage debts originally owed by HOLC
borrowers were scaled down in the process of refinancing. In all, it is
estimated that this reduction was in the neighborhood of $200 million
or about 7 percent of the original debt.
Those borrowers whose loans were refinanced prior to April 1934
were given the option of a temporary moratorium on principal repay
ments, but under the amended Act of April 27, 1934, this optional
moratorium was withdrawn.
CONTINUING EFFECTS
The direct achievements of the HOLC were the relief given to over one
million home owners, the placing of thousands of financial institutions
on a more liquid basis, and a marked contribution to the stabilization
of real-estate values. Its operations were thus an important factor in
the general economic recovery of 1933 to 1937.
However, the lasting effects of the HOLC will long outlive its
immediate accomplishments. Through the acquisition of the bulk of
dubious mortgages, the HOLC has to a considerable extent cleared the
HOME OWNERS'
LOAN
CORPORATIO
71
field of home mortgage credit. In connection with its refinancing op
erations, interest rates were reduced and loan terms improved to the
borrowers' advantage. Practically all of the Corporation's loans,
even though below the average as risks, now bear 5 percent interest
per year as against 6, 7, or 8 percent which many borrowers were pay
ing before their loans were refinanced by the HOLC. Many of the
original mortgages taken over by the Corporation were of the short
term variety, repayable in one lump sum at maturity. The disadvan
tages of this type of mortgage from the borrower's standpoint are
obvious. The HOLC loans, on the other hand, were based on the
"direct-reduction" plan providing for the gradual and orderly retire
ment of the principal indebtedness through regular monthly payments
over a long-term, 15-year period. The Federal Government, by
underwriting more than $3 billion of these loans in one enormous
operation, thus made available to one million distressed home owners
the most advantageous low-cost loan amortization plan in the history
of the United States.
The Corporation's standard use of the "direct-reduction" plan has
stimulated a general acceptance of long-term amortized mortgage loans
by private financial institutions throughout the country. In addition,
by extending the first mortgage loan to as much as 80 percent of the
appraised value of the property, the Corporation has encouraged a
similar liberality for amortized loans on the part of private lenders.
With its large reconditioning program on which more than $112
million has been expended, the HOLC has assisted in the recovery
of the building industry and the reemployment of workers in the build
ing trades. At the same time, it has demonstrated to private home
financing institutions the advantages that a well-directed recondition
ing program can yield both in protecting an institution's active loans
and stimulating the rental and sale of acquired properties.
Finally, another highly important achievement has been the
improvement of appraisal technique. The importance of reliable
appraisals to the real estate market and to a sound mortgage credit
structure can hardly be overestimated. Reliable appraisals form the
basis for secure investment, and the collapse of mortgage finance
during the depression might well be attributed in part to the previous
lack of uniform and scientific appraisals. The HOLC played an im
portant part in making the country "appraisal conscious". In the
course of its operations, the HOLC contributed largely to the develop
ment of a scientific appraisal technique and the training of a skilled
98591-38-6
72
REPORT OF FEDERAL HOME LOAN BANK BOARD,
1938
appraisal personnel. For the first time in the history of American real
estate, a nation-wide scientific appraisal procedure and a standardized
appraisal formula were developed which could be applied to all types
of residential property throughout the country.
PROGRESS IN LIQUIDATION
During the fiscal year ended June 30, 1938, the Home Owners' Loan
Corporation has made further progress in liquidation. The following
table reflects the trend of liquidation from the beginning of operations
to June 30, 1938, together with comparable figures as of June 30, 1937.
The table shows that at the end of the fiscal year 1938, $432.5 million
of the total borrowers' indebtedness of $3,133.8 million (including
original loans and advances) had been repaid. An amount of $487.2
million was transferred to property and other accounts, including
sales on extended terms to third parties at foreclosure, etc. The
balance of original loans and advances outstanding on June 30, 1938,
was $2,214.1 million as compared with $2,549.5 million at the end of
the preceding fiscal year.
Realization upon HOLC loans
Up to June
30, 1937
- $3, 093, 459, 363
Original amount of loans closed---------------------Advainces to borrowers, and interest merged with principal in extension
agreements---....-------------------------------------------18,863, 605
Cumulative gross indebtedness of borrowers-------Less principal repaymerits 1----------------
-------------
Unpaid balance..---------------------Less balances transferred to property 2 and to other accounts --------....
Balance of original loans and advances outstanding- ------------
3, 112,322,968
Up to June
30, 1938
$3, 093, 450, 642
40,325,427
3,133, 776,069
270,068,891
432, 520, 240
2, 842, 254, 077
292, 730,356
2,701,255,829
487,191, 512
2, 549, 523, 721
2, 214,064, 317
1 In addition to the principal repayments to June 30, 1938, approximately $15,000,000 has been received
from property sales, vended payments, and other items applicable to the capital value of property.
2 Includes both property owned and property in foreclosure on which a foreclosure judgment has been
obtained or foreclosure sale has been held subject to a redemption period. Subsequent to the transfer of
defaulted loans to property, the unpaid principal balance of the loans so transferred has been increased by
approximately $105,000,000 to June 30, 1938. This increase is comprised of (1) the unpaid interest on the
loan account at time of transfer, (2) initial repairs and improvements, and (3) acquisition costs, taxes, and
other items applicable to the period prior to the acquisition of absolute title.
On June 30, 1938, 34,907 loans totalling $79,159,173 had been volun
tarily paid in full by original borrowers. This compares with 19,325
paid-in-full loans totalling $42,885,406 as of June 30, 1937.
In addition to the above cited terminations of original loans by
voluntary payment in full, a number of accounts have been terminated
by cash sales to third parties at time of foreclosure, paid-in-full vendee
LOAN CORPORATION
73
instruments, and cash sale of acquired properties.
table gives a summary of terminated accounts:
The following
HOME
OWNERS'
Comparison of cumulative total of HOLC accounts terminated for June 30, 1937, and
June 30, 1938 1
June 30,
1937
Mortgage loans paid in full.--.-.-------.
..--------------------------Cash sales at foreclosure...
.------------------------------------------------Vendee instruments paid in full-------------------------------------------Cash sales of acquired properties----.----------------------------------.
Total accounts terminated.--...--------------------------------
June 30,
1938
19,325
164
13
181
34,907
458
71
1,025
19, 683
36,461
1 An account is terminated when it is fully collected either through payment of the loan or cash sale of the
acquired property.
THE TREND OF COLLECTIONS
During the fiscal year 1938, payments applied to original loan accounts
aggregated $278,984,255, of which $162,451,349 represented repay
ments of principal, and $116,532,906 payments of interest. This
compares with aggregate payments of $291,065,215, during the fiscal
year 1937, of which $149,028,280 was principal and $142,036,935,
interest.
The decrease of interest payments and the increase of principal
repayments is the natural result of the direct-reduction amortization
plan on which the HOLC mortgage loans are based. Interest on these
loans is calculated monthly on the constantly reducing principal of the
loan. Interest payments, therefore, decrease continuously in the
course of operations. The amount of principal repayments, on the
other hand, necessarily increases because a growing percentage of the
borrowers' monthly payments is being applied to the reduction of the
principal.
At the end of the fiscal year 1938, there were 270,144 accounts in
actual default, that is, in arrears for more than 3 months, as against
331,664 at the end of the preceding fiscal year. This decrease was
due partly to improved collections as reflected in transfers from de
faulted accounts to current accounts and to payments of defaulted
loans in full, but also to extension agreements 2 and the elimination
of accounts through transfer to property account." The decline of
defaulted accounts as a whole should therefore not be taken to indi
cate an improvement of collections.
2 See p. 74.
3 See pp. 81-82.
74
REPORT
OF FEDERAL HOME LOAN BANK BOARD,
1938
The following table gives a summary of debtor accounts which are
in"arrears from 1 to 3 months and over 3 months:
Number and amount of accounts in arrears1
NUMBER OF ACCOUNTS IN ARREARS 1 TO 3 MONTHS AND AMOUNT OWED
Year
June ---------_----------------December-----------------June---------------------December
--------------June
-----------------
1936
1936
1937
1937
1938
Number
Percent of
total
accounts
232,056
233,498
218,003
233,598
247, 522
23.1
24.0
23.4
25.9
28.2
Amount
Percent of
total ma
turities
$7, 755,000
8, 406,000
7,869,000
8,050,000
8,027,000
1.7
1.4
1.1
0. 9
0.8
NUMBER OF ACCOUNTS IN ARREARS OVER 3 MONTHS AND AMOUNT OWED
June-----------------------December
.-----------------------June...----------------------------- -December---------------June---------------------------
1936
1936
1937
1937
1938
397,533
371, 236
331, 664
290,464
270,144
39.5
38.1
35.7
32. 2
30 8
$108, 844,000
120, 293,000
113,260,000
105,972, 000
98,761,000
24. 4
20.0
15. 3
12. 0
9.8
1The table covers all accounts in arrears prior to the transfer of defaulted loans to property account.
The above figures should be interpreted in the light of the fact that
nearly 50 percent of all borrowers in default are liquidating their
arrearages by systematic payments. This means that one-half of
the defaulted borrowers make regular payments for the liquidation
of their arrearages in addition to their current monthly remittances.
METHODS
OF DEALING
WITH
DEFAULTS
It is the policy of the HOLC to exhaust every means of avoiding fore
closure. Individual attention is given to each defaulted borrower.
Each case is handled on its own merits with a view to enabling the
borrower to retain his home. Efforts are made to find jobs for those
borrowers who, because of unemployment, have become seriously in
arrears. Attempts are made to obtain public assistance for the most
needy cases. Those borrowers who are found to be burdened with
obligations beyond their income have frequently been assisted in
renting or selling their properties.
In February 1937, moreover, the HOLC established a new policy
providing for loan extensions as a means of assistance to those bor
rowers who are not able to meet their obligations in full. Under this
procedure defaulted loans can be recast, in certain types of cases, to
arrange for the liquidation of arrearages over a period within the
borrower's ability to pay, but not to exceed the present term of the
loan. In August 1937 the plan was extended to include any bor
rower in arrears who has demonstrated, over a substantial period,
HOME OWNERS'
LOAN
CORPORATION
75
his ability to pay a sum in addition to the monthly installment called
for in the loan contract, provided that the condition of the security
justifies an extension.
In the fiscal year 1938 a great deal of effort was devoted to the
handling of such loan extensions. Nearly 39,000 extensions were
granted, the majority of which involved borrowers who had demon
strated their ability to make liquidating payments over a substantial
period, thereby justifying the recasting of the entire present balance
and defaulted interest. In many of these cases, delinquent taxes
were advanced by the Corporation and included in the extension
amount. In about 1,100 cases, accounts of defaulted borrowers were
extended in order to enable the borrowers to sell their properties.
A sufficient initial payment by the purchaser to demonstrate good
faith was a prerequisite to each extension of this latter type.
TAX DEFAULTS
One of the most serious problems is the liquidation of the tax arrear
ages of borrowers. Approximately 40 percent of HOLC borrowers
are delinquent in taxes for one or more of the years 1933 to 1937.
While this situation has been recognized from the outset, a great deal
of attention was devoted to the problem during the past fiscal year in
order to offer the greatest possible assistance to borrowers and at the
same time assure the greatest measure of protection to the Corpora
tion. Through field representatives, an intensive campaign was con
ducted to urge the prompt payment of tax arrearages by borrowers.
However, in many cases it is impossible for borrowers to pay the total
amount of taxes out of their small incomes. Borrowers were, there
fore, permitted to make monthly deposits with the Corporation for
the purpose of liquidating tax arrearages or paying accruing taxes.
At the end of June 1938, special deposit agreements of this sort were
in effect with 34,116 borrowers and the balance of deposits in these
accounts aggregated $1,437,869.
COSTS
OF LOAN
SERVICE
The costs of loan service are, of course, influenced by the fact that,
unlike any other home-financing institution, the HOLC has refinanced
only home owners threatened with the loss of their properties. This
makes collection costs necessarily high. To conduct its loan service
effectively, the HOLC cannot merely mail out collection bills each
month. Continuous and extensive contact, both mail and personal,
must be maintained with its borrowers regarding arrears in interest
76
REPORT OF FEDERAL HOME LOAN BANK BOARD,
1938
or principal payments, taxes and assessments, or regarding advances
made by the Corporation for necessary repairs, taxes, or insurance.
Furthermore, its loan service extends to all areas of the United States,
thickly and scantily populated alike. Finally, the HOLC as a public
agency has to gear its loan service not only to the protection of the
Government's interests but to the welfare of its borrowers. The pro
cedures maintained for the rehabilitation of borrowers are costly,
and the HOLC is under considerable expense in the development of
tax-liquidating arrangements and extension agreements as explained.
On June 30, 1937, personnel engaged in the servicing of loans
totaled 3,682 with annual salaries of $6,008,620. On June 30, 1938,
this had been reduced to 2,693 employees with total annual salaries
of $4,891,160, a reduction of 27 percent in number of employees and
19 percent in annual salary cost. At the end of the fiscal year there
were 405 accounts in arrears for every employee in the eleven Regional
Loan Service Divisions. In State and district offices and loan service
stations, there were 172 borrowers being contacted personally for
every loan service employee, including service representatives and
supervisory and clerical personnel.
During the fiscal year 1938 the average annual servicing cost, in
cluding pay roll, mileage, and subsistence per account in arrears, was
$14.50. Regional office expense accounted for $4.25 of this amount
while the salaries and travel expense in State and district offices and
loan service stations amounted to $10.25 per account in arrears. The
entire salary and travel cost of loan servicing during the fiscal year was
equivalent to 2.3 percent of the total amount collected from borrowers.
DECREASE OF FORECLOSURES
Despite the business recession, which developed in the latter part of
1937, the trend of foreclosures authorized by the HOLC was down
ward. In the fiscal year ended June 30, 1938, there were 47,745 fore
closures authorized as compared with 76,896 in the. preceding fiscal
year; in the second half of the fiscal year, 22,763 foreclosures were
authorized as against 24,982 in the first half. Withdrawals of fore
closure actions during the fiscal year 1938 totalled 7,143 as against
6,032 in the preceding fiscal year.
These figures reflect the policy of the HOLC to extend every rea
sonable consideration to the borrower before proceeding to foreclosure
as the last resort. This course is pursued even though the borrower
may'be'many months in arrears, beyond the required minimum of
90 days as provided in the Corporation's mortgages and trust deeds.
HOME OWNERS'
77
LOAN CORPORATION
Thefollowing graph presents the trend of foreclosures authorized
and properties acquired, by months, from January 1936, through
CHART XIV
FORECLOSURES
AUTHORIZED
8
PROPERTY
ACQUIRED
(BY MONTHS)
Co
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DIVISIONOF RESEARCH
AND STATISTICS
FEDERALHOME LOAN BANK BOARD
JFMAM J
1936
June 1938.
AM J JASOND JFMAM
1937
1938
It shows that the peak of foreclosure authorizations was
reached in the summer of 1936, and that, except for an increase in
78
REPORT OF FEDERAL HOME LOAN BANK BOARD,
1938
the spring of 1937 and minor variations, the trend has been downward
ever since.
In Exhibit 34, a summary of foreclosure operations of the HOLC is
set forth. It shows that from 1934 to June 30, 1938, 152,292 fore
closures were authorized, of which 13,855 cases have been withdrawn
100,022 properties were acquired. The remainder comprised cases in
which properties have been redeemed or sold to third parties, and
cases in which final disposition of the title was awaiting expiration of
redemption periods or the completion of other steps in foreclosure
proceedings.
COST AND TIME OF FORECLOSURE
Owing to the extent of its operations, the Corporation has accumu
lated what is perhaps the widest experience in foreclosure procedure
and cost in this country. The two foreclosure maps on pages 79
and 80 show the unreasonably large diversity of foreclosure costs
and periods of time required to complete foreclosure in the various
States. They demonstrate convincingly the need for greater uni
formity in State mortgage and foreclosure laws.
The two common methods of foreclosure are: (1) Foreclosure by
court action, under the mortgage; and (2) foreclosure under power of
sale contained in the deed of trust or mortgage, involving the simple'
procedure of advertisement. Under court action, both the foreclosure
costs and the time required to foreclose are greater than under the
power of sale method.
In about 30 States in which the HOLC has foreclosed by court
action, the cost has averaged about $175 and, in the remaining 19
States, including the District of Columbia where the power of sale
method is used, the cost has averaged about $70 a case. Most of the
latter States are located in the southeastern part of the United States,
with a few in the East, Mid-West, and South. In five of the States
in which court action has been used-New York, New Jersey, Illinois,
Nevada, and Arizona-the cost has ranged from $200 to $350.
However, the HOLC foreclosure costs have been far less than those
of private lending agencies. Great care has been taken to keep these
costs as low as feasible. Under the direction of the Washington Office,
fee schedules have been se) up in each State upon a fair and reason
able basis. As a result, the HOLC has saved approximately $1,500,000
in fees in one State alone.
HOTME OWNERS'
79
LOAN CORPORATION
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REPORT OF FEDERAL HOME LOAN BANK BOARD, 193 8
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HOME
OWNERS'
LOAN
81
CORPORATION
In the States which use the power of sale procedure, only about
1 to 2 months is required to complete the foreclosure; in States which
use court action and in which there is no redemption period, about
3 to 4 months is required to foreclose; whereas in most of the Western
States in which the law allows a redemption period, the average time
to complete foreclosure is about 14 months. Twenty-five States
(mostly in the West) have redemption periods ranging from 6 to
24 months. In five of these States, the redemption period is 6 months;
in another, 9 months; in six States, the period is 12 months; and in
another, 18 months; and one State has a 24 months' redemption
period.
Six of the States have moratoria laws applicable to HOLC loans.
Steps are being taken to test their constitutionality in Wisconsin and
Iowa, where such laws most affect the HOLC operations by reason
of the extra cost and additional time required to complete foreclosure.
ACQUISITION AND SALES OF PROPERTIES
With the increase in the number of properties acquired and in process
of acquisition, property management has become a progressively more
important factor in the program of liquidation in which the HOLC
is engaged. It is a highly specialized task involving not only the
reconditioning, rental, and eventual sale of properties in such a way
as to produce a maximum return and recovery on the Corporation's
investment, but likewise a thorough consideration for real estate and
economic conditions both locally and generally.
In the following table a survey is given of properties under juris
diction of the Property Management Division of the HOLC:
Properties
Properties
owned
June 30, 1936-------------------------December 31, 1936--- ----------------June 30, 1937.
--------------------------December 31, 1937------------------.------ June 30, 1938..-.--------------------
-
5,133
20, 856
42,486
65, 950
82,987
in process of
acquiring
title
2, 391
15, 416
27,610
25,410
20,145
Properties
on which
foreclosure
or deed acceptance
pending
21,151
29,359
25,064
21, 460
17,*043
Total prop
erties
28, 675
65,631
95,160
112,820
120,175
82
REPORT OF FEDERAL HOME LOAN BANK BOARD,
1938
Exhibit 35 shows properties under jurisdiction of the Property
Management Division on June 30, 1938, by regions.
During the fiscal year 1938, 55,453 properties were acquired as
against 39,534 in the preceding fiscal year. In the same period there
was a total sale of 15,350 properties as against 2,231 properties in the
preceding year. On June 30, 1938, properties owned totalled 82,987,
while those in process of acquiring title numbered 20,145. This com
pares with 42,486 and 27,610 properties, respectively, on June 30,
1937. The capital value 4 of owned properties on hand as of June 30,
1938, was $437,605,041 as against $211,484,565 as of June 30, 1937.
Cumulative sales of the Corporation as of June 30, 1938, amounted
to 17,532 properties sold at a total price of $62,998,733. This com
pares with a capital value of these properties as on the books amount
ing to $70,747,947.
Chart XV on the opposite page shows the number of properties
sold by months and cumulative.
It is the policy of the Corporation to liquidate through sale, and if
possible, without loss all acquired properties as rapidly as is consistent
with the best interests of the Government. However, at all times the
need for continued stabilization of the real-estate market is taken into
consideration. Properties which the HOLC is obliged to take over
are priced in line with their current market value and potentialities
for sale. It is not the policy of the Corporation to dump them on the
market at sacrifice prices.
It is the practice of the Corporation to sell, rent, and manage its
properties through real-estate brokers where satisfactory arrange
ments can be made for such purposes. The Corporation has appointed
more than 2,800 contract sales and management brokers .and more
than 15,000 other approved brokers.
Average monthly receipts of the Property Management Division,
including rents collected and miscellaneous receipts, increased from
$488,563 in the fiscal year 1937 to $1,573,495 in the fiscal year 1938.
The cumulative total of collections since the beginning of operations
4 The capital value of property is comprised of the following elements. (a) Unpaid principal balance of
loans, advances, and interest merged with principal in extension agreements, at the time of foreclosure judg
ment or foreclosure sale where such sale is not preceded by a judgment; (b) unpaid accrued interest to date
of foreclosure judgment or foreclosure sale where such sale is not preceded by a judgment; (c) all foreclosure
and acquisition costs; (d) all expenditures, less all receipts, regardless of nature, applicable to the period
between foreclosure as described in (a) and the acquisition of absolute title; (e) initialrepairs or recondition
ing regardless of nature; (f) assessments with benefits of more than 1 year; and (g) improvement or other
expenditures which enhance physical value.
HOME OWNERS'
83
LOAN CORPORATION
increased from $7,595,617 as of June 30, 1937, to $26,477,551 as of
June 30, 1938. The net operating income of the Property Manage
ment Division cumulative to June 30, 1938, amounted to $2,766,497.
This net operating income is derived from the management of owned
properties under the jurisdiction of the Division after deduction of
property expense for taxes, insurance, maintenance, miscellaneous,
and management commissions, from the total rental property income
received.
CHART XV
PROPERTY SALES
BY MONTHS AND CUMULATIVE
20
5
16--
4
i
Cumulative Sales-Left Hand Scale
Monthly Sales- Right Hand Scale
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1938
DIVISION RESEARCH
OF
ANDSTATISTICS
FEDERALHOME
LOANBANK
BOARD
For the fiscal year 1938, personnel expense of the Property Manage
ment Division amounted to $4,418,466. On the basis of June 1938
figures, the pay roll of the Division was $3.41 per month per property
under the jurisdiction of the Division. As of July 1, 1938, the number
of Property Management employees was divided as follows: Home
Office, 102; Regional Offices, 863; and State and District Offices, 1,922.
84
REPORT OF FEDERAL HOME LOAN BANK BOARD,
1938
RENTING OF PROPERTIES
Of the dwelling units under the jurisdiction of the Property Manage
ment Division available for rental, 5 65,805 units were rented, and
9,323 6 were vacant at the end of the fiscal year 1938.
The following Chart presents the trend of vacancies and rental de
linquencies from July 1936 through June 1938 (for actual figures see
Exhibit 36):
CHART XVI
VACANCIES
0.
a
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O Z a
1937
(I) Percentages of vacant units to units available to yield income
(2) Percentages of tenants in possession delinquent more than one month
to units rented
DIVISION RESEARCHANDSTATISTICS
OF
FEDERALHOMELOANBANK
BOARD
The Chart shows that vacancies as well as rental delinquencies were
almost continuously decreasing during the period under consideration.
At the end of 1937 and in the first few months of 1938, vacancies and
aUnits not available for rental comprise those upon which authorized foreclosure or voluntary deed ac
ceptances are pending, where the Corporation does not have possessory rights or income; those vacant
subject to expiration of redemption period; those in charge of receiver, held vacant for repairs, held vacant
for immediate sale, adversely occupied, and those awaiting report.
6Including 661 units in which tenants were in process of eviction.
HOME OWNERS'
85
LOAN CORPORATION
rental delinquencies slightly increased as a result of adverse business
conditions, but toward the end of the fiscal year a more normal situa
tion was restored.
In the last two fiscal years, the average monthly rental per unit rented
showed a steady increase which was almost unaffected by the recession
in 1937. This average rose from $20.59 in July 1936 to $26.90 in
November 1937 and reached $27.66 in June 1938 (for complete figures
see Exhibit 36).
CHART XVII
AVERAGE PRICE PER UNIT RENTED
30
-1
U 25-
--
--
-
-_
--
-
-
---
0O0
25
4
m
_
20
151
20 Q
^
^
1936
-
1937
15
1938
DIVISION
OF RESEARCH
AND STATISTICS
FEDERAL
HOMELOAN
BANK BOARD
While the above Chart reflects the continuous efforts on the part of
the HOLC to improve its rental operations, it confirms, at the same
time, the general picture of a stable rental market given in Section II of
the present report.7 Because of the large extent of its rental opera
tions, the experience of the HOLC in this field may safely be taken as
indicative of the general trend throughout the country.
VOLUME OF RECONDITIONING <
In view of the dire need for wholesale reconditioning in this country,
particular attention may be drawn to the reconditioning experience of
the Corporation. It is the policy of the HOLC that every home on
which it holds a mortgage be in such condition of repair that the
property will be protected against serious deterioration and will con
stitute adequate security for the Corporation's long-term loan. In
Pp. 12-14.
86
REPORT
OF FEDERAL
HOME LOAN BANK BOARD,
1938
cases where title has been acquired, the reconditioning operations place
the property in a condition to invite sale or rental and to compete
favorably with typical properties in the immediate neighborhood.
Since the beginning of reconditioning operations up to the end of
the fiscal year 1938, the Corporation has completed 615,034 cases of
reconditioning with a total expenditure of $112,883,184.8 Approxi
mately 500,000 small homes thus were protected against undue
deterioration.
It is estimated that each 1,000 dollars of repair expenditure repre
sents in excess of 100 days of labor. On this basis, the reconditioning
operations of the HOLC have created between 11 and 12 million
working days for masons, carpenters, plumbers, "painters, and others
in the building trades. Thousands of contractors throughout the
Nation have benefited. The manufacturing of building materials
has been stimulated and the sale of such materials in local communities
greatly increased.
The following table presents detailed information on the various
types of reconditioning cases completed during the fiscal year and
since the beginning of operations:
Reconditioning operations (contracts completed)
July 1, 1937
through June
Cumulative
through June
30, 1938
Type of case
30, 1938
Property Management ----.-----------------------------------------Advances.--------.--------------------------------------------------Insurance---.------------_..--------.-----------------------------------..--Refinancing--..Total ---------
---------------------------------
109,934
2,104
5, 781
721
159,161
8, 566
29, 967
1417,340
118,540
1615,034
1 Includes 52,269 reconditioning jobs estimated by the Reconditioning Division as having been completed
by the Corporation before the organization of the Reconditioning Division on June 1, 1934.
"Property Management" indicates reconditioning completed on properties under the jurisdiction of the
Property Management Division.
"Advances" cover cases in which reconditioning advances have been granted to borrowers since closing
loans.
"Insurance" refers to reconditioning covered by insurance proceeds and performed under the supervision
of the Reconditioning Division.
"Refinancing" refers to reconditioning loans given in connection with the original refinancing of mortgage
loans by the. Corporation.
8 These figures include 52,269 reconditioning jobs amounting to approximately $6,800,000, which had
been completed by the Corporation before the organization of the Reconditioning Division on June 1,
1934. They include also 29,967 insurance loss cases amounting to $4,779,802, completed under the super
vision of the Reconditioning Division in which the reconditioning was covered by insurance proceeds
instead of by advances by the Corporation. They do not include maintenance by contract management
brokers in behalf of the HOLC or reconditioning in insurance loss cases in which the work was not super
vised by the Reconditioning Division.
HOME OWNERS'
87
LOAN CORPORATION
In the fiscal year 1938, the trend of reconditioning operations was
upward, due primarily to the increase in "Property Management"
cases; that is, in cases where, by reconditioning, acquired properties
have been prepared for sale. During the fiscal year, the total number
of reconditioning contracts completed was 118,540, amounting to
$23,146,876. This compares favorably with the 84,395 cases aggre
gating $16,015,838 in the preceding fiscal year.
COST AND EFFECT OF RECONDITIONING
HOLC experience indicates that, on the average, rehabilitation of
typical home properties can be undertaken with comparatively little
expenditure per property. Average expenditure for reconditioning on
a cumulative basis from the beginning of operations was $184 for all
types of reconditioning cases. Average reconditioning expenditure
for the preparation of acquired properties for the rental or sales market
was $310 on initial type of cases.
The overhead costs to be attributed to reconditioning operations
are not included in these figures. The average salaried personnel
cost per case disposed of has decreased steadily, as is indicated by the
following figures:
December 1936-------------------------------------$27. 60
June 1937---------------------------------------17. 47
December 1937--------------_
June 1938
--
----
_-12.
--
----------------------------------------
85
8. 15
Chart XVIII on the following page shows the purposes for which
the average reconditioning dollar was spent. The diagram is based
upon a sample analysis of representative initial reconditioning cases
on acquired properties in process during March 1938.
The experience of the Corporation has demonstrated that the
expenditure of reasonable amounts for putting properties into good
shape has a favorable influence on sales. Reconditioned properties
are commanding rentals substantially higher than before recondi
tioning, and there is a ready market for them irrespective of season,
as promptly as they can be put into shape. In many sections of the
country where, in the past, properties could be rented or sold only for
May and September or October occupancy, there is no difficulty in
overcoming this barrier after reconditioning.
The success of the Corporation's reconditioning policy has done
much to stimulate private owners and lending institutions in adopting
a similar practice. Operators in the real-estate field are becoming
98591-38-7
88
REPORT OF FEDERAL HOME LOAN BANK BOARD,
1938
more and more convinced of the importance of reconditioning and its
appeal to the prospective renter or purchaser.
It is of particular significance that through the reconditioning oper
ations of the HOLC, technical direction and supervision of recondi
CHART XVIII
WHERE THE RECONDITIONING
DOLLAR GOES
Misc.- Linoleum, Shades,
Hardware, Cleoning, etc.
4
Stucco /0
:
..
.. Exterior Paintn
;~~s Ix :::~~::::::~:'::~::::::2
~~33d
Stoves
a
Ranges
0~
tioning have been injected into the making of mortgage loans on
existing homes as distinguished from new homes. All of the construc
tion techniques of plans, specifications, contracts, and supervision, have
been employed in the reconditioning of homes which in ordinary
practice are not the subject of such professional attention.
HOME OWNERS'
89
LOAN CORPORATION
The extension of similar services to the construction of small homes
through the Federal Home Building Service Plan (see p. 39) is one of
the most important developments from this experience.
ORGANIZATION AND PERSONNEL OF THE CORPORATION
When the HOLC was established in 1933, the Federal Home Loan
Bank Board was charged with the responsibility of organizing and
operating the Corporation. Forty-eight State offices were estab
lished and, in addition, offices in the District of Columbia, Hawaii,
and Puerto Rico.
In the early part of 1934, it became apparent that it was impractical
to handle the tremendous volume of administrative work through the
central office in Washington. Regional offices were therefore estab
lished in the following cities: Boston, New York, Baltimore, Atlanta,
Memphis, Cincinnati, Chicago, Detroit, Dallas, Omaha, and San
Francisco.
Besides these 11 regional offices, there were 53 State, division, and
Territorial offices, 56 district offices, and 242 loan service stations
operating at the end of the fiscal year 1938.
Loan service stations are posts of duty established strategically at
points of loan concentration permitting contact with the Corporation's
borrowers at a minimum of inconvenience and expense. Most of these
small offices are in post-office space or the homes of HOLC represen
tatives and involve no rental cost to the Corporation. A few are in
rented space and some have collection facilities.
The personnel of the Corporation as of the end of the fiscal year
totalled 13,140, including 45 employees on a per diem basis. Of this
total, 1,549 were in the home office, 5,311 in the regional offices, and
6,280 in the State, division, and district offices. During the fiscal
year, July 1, 1937, to July 1, 1938, there was a total reduction of
1,826 employees.
Trend of personnel
Home office
December 31, 1935---- --------------June 30, 1936.-----------------------2,086
December 31, 1936----------------------------June 30, 1937--------------------January 1, 1938-.-- ----------------July 1, 1938---------. -------------------------
2,379
-
1,982
1,834
1,751
1,549
ReionSl
eofies
5,169
5,409
6, 015
5,950
5,947
5,311
State and
district
offices
12,436
8, 296
8,018
7,182
7,205
6, 280
Total
19,984
15, 791
16, 015
14,966
14,903
13,140
90
REPORT OF FEDERAL HOME LOAN BANK BOARD, 1938
Detailed information on the number of employees by departments,
divisions, and sections is given in Exhibit 37.
INVESTMENTS IN SAVINGS AND LOAN ASSOCIATIONS
By the Home Owners' Loan Act and subsequent amendments, the
Corporation was authorized to invest $100,000,000 in the capital stock
of the Federal Savings and Loan Insurance Corporation, and, within
certain limits, to make investments in Federal and in State-chartered
insured or uninsured savings and loan associations which are member
institutions of the Federal Home Loan Bank System.
Investments in savings and loan associations during the fiscal year
ending June 30, 1938, totaled $28,964,610 as compared to $119,890,300
in the preceding fiscal year. These investments were divided as
follows:
Federal associations-------------------------State-chartered associations------------------- _
$18, 864, 900
10, 099, 710
During the same period, an amount of $259,000 was retired, making
net investment in savings and loan associations of $28,705,610. This
brought the net total of investments in savings and loan associations
on June 30, 1938, to $211,726,610, as compared to $183,021,000 on
June 30, 1937.
During the fiscal year, the Corporation received $6,134,331 as divi
dends on its investments in savings and loan associations. This
compares with $2,345,742 received during the preceding fiscal year.
Detailed statements of HOLC investments in savings and loan
associations are attached as Exhibits 38 and 39.
SUMMARY OF FINANCIAL OPERATIONS
For the fiscal year 1938 the operating and other income of the HOLC
was $142,145,615, including $6,134,331 in dividends received from
investments in savings and loan associations. In the same period,
operating and other expenses were $123,944,216. Thus, total income
(before giving effect to losses in liquidation of assets during the fiscal
year and provisions for losses on mortgage loans, properties, etc.)
exceeded total expenses by $18,201,399.
Cumulatively to June 30, 1938, the total expenses of $587,168,834
(which includes $101,047,066 as provisions for reserves) exceeded the
total income of $557,527,853 9 by $29,640,981. This amount, to
o This includes dividends of $11,596,187 received from investments in savings and loan associations and in
the Federal Savings and Loan Insurance Corporation.
HOME OWNERS'
LOAN CORPORATION
91
gether with net losses in liquidation of assets totaling $11,252,311,
represents the deficit as of June 30, 1938 of $40,893,292, as compared
with a deficit on June 30, 1937 of $31,740,151.
Detailed statements of income and expenses for the fiscal year ended
June 30, 1938, and from the beginning of operations to June 30, 1938,
as well as an analysis of changes in deficit for the fiscal year ended
June 30, 1938, are attached as Exhibits 40, 41, and 42 respectively.
The Corporation's condensed balance sheet as of June 30, 1938,
is presented in the following table:
Home Owners' Loan Corporation-Financial
statement as of June 30, 1938
ASSETS
Mortgage loans, advances and sales instruments-At present
face value
-------------------------------------- $2, 265, 153, 189. 38
Interest receivable
----------------------------17, 307, 484. 89
Property:
Owned------------------------- $437,605,041.06
In process of acquiring title----------78, 601, 360. 14
516, 206, 401. 20
(At amounts represented by the un
paid balances of loans, advances and
unpaid interest; foreclosure and
other net costs to dates of acqui
sition; initial repairs and recondi
tioning, permanent additions and
betterments subsequent to acqui
sition. Unpaid interest to dates of
acquisition included in these costs
amounts to $33,863,140.)
2, 798, 667, 075. 47
Less-Reserve for losses 1
-----
-
--------------
99, 977, 653. 88
2, 698, 689, 421. 59
1 The "Reserve for Losses" represents an accumulation of annual charges, which it is estimated will
approximate eventually the total losses which may be sustained in the liquidation of mortgage loans, in
terest, and property. The total is the sum of amounts determined as follows:
(1) One-quarter of 1% of the original face amount of all loans recorded to June 30, 1935. Since that date
monthly additions have been made to this reserve at the rate of one-quarter of 1% per annum on the
unpaid balances of these loans and other loans made subsequent to that date.
(2) Total interest due and unpaid on mortgage loans as at June 30, 1938.
(3) Total unpaid interest, foreclosure, and other net costs to dates of acquisition of properties.
Losses amounting to $48,348.54 on mortgage loans have been charged to the Reserve. In addition, losses
aggregating $7,749,213.71 on the capitalized value of property sold and commission and selling expenses of
$3,459,202.24 have been charged directly to profit and loss.
92
REPORT OF FEDERAL HOME LOAN BANK BOARD,
1938
Home Owners' Loan Corporation-Financial
statement as of June 30, 1938-Con.
ASSETS-Continued
Investments-At cost:
Federal Savings and Loan Insurance
Corporation (entire capital)-------- $100, 000, 000. 00
Savings and Loan As
sociations:
Federal-chart
ered----$170, 764, 300. 00
State-chartered
40, 962, 310. 00
211, 726, 610. 00
$311, 726, 610. 00
Bond Retirement Fund:
Cash------------ --------------United States Treasury Bonds, at face
value----------------------------
90, 266, 430. 98
1, 100, 000. 00
91, 366, 430. 98
Cash:
Operating funds (including $16,028,
526.55 payable in July 1938 to Bond
Retirement Fund, representing allo
cation for month of June 1938) -----Special funds held by United States
Treasury for payment of interest
coupons (see Contra)_------------Special funds held for borrowers (see
Contra) ------------------------
26, 575, 819. 03
10, 657, 333. 34
1, 517, 474. 03
38, 750, 626. 40
Fixed assets:
Home office land and building, at cost_
Furniture, fixtures and equipment, at
cost----------------------------
Less-Reserves for depreciation ___
2, 971, 539. 49
3, 051, 561. 26
6, 023, 100. 75
2, 123, 027. 47
3, 900, 073. 28
Other assets:
Accounts receivable-----------------Treasury bonds accepted as repayments
(Retired in July 1938) ----Deferred and unapplied charges:
Unamortized discount on refunded
bonds--------------------------Unapplied property costs and expenses__
Miscellaneous-----------------------
149, 480. 31
150. 00
149,630.31
4, 820, 560. 36
1, 235, 284. 08
56, 718. 59
6, 112, 563. 03
3, 150, 695, 355. 59
HOME
OWNERS'
LOAN
CORPORATION
93
statement as of June 30, 1938-Con.
Home Owners' Loan Corporation-Financial
LIABILITIES AND CAPITAL
Bonded indebtedness:
(Guaranteed as to principal and interest by the United
States):
$2, 952, 169, 125. 00
Bonds outstanding, not matured ---------------824, 725. 00
Bonds matured, on which interest has ceased 2-----Accounts payable:
T -- J..
^44 .
.
.
. . .
.
.
.1
-- 1
l ' O0
.
iinteresi coupons due July 1, luoo anu
-prior thereto (see Contra)----Insurance premiums_--Commission to sales brokers---Special deposits by borrowers (see
Contra)------------Contracts outstanding for the repair
and reconditioning of properties --Miscellaneous ------------
2, 952, 993, 850. 00
$10, 657, 333. 34
1, 056, 320. 98
689, 356. 23
1, 517, 474. 03
5, 243, 989. 94 t
28, 645. 45
19, 193, 119. 97
Accrued liabilities:
Accrued interest on bonded indebted
ness---------------------------Other accrued liabilities--------------
16, 138, 122. 45
293, 398. 46
Deferred and unapplied credits -------------------Reserve for fidelity and casualties
Capital stock less deficit:
Capital stock:
Authorized, issued, and outstanding_- $200, 000, 000. 00
Less-Deficit before full provision for
losses which may be sustained in the
liquidation of assets ---------40, 893, 291. 81
16, 431, 520. 91
1, 970, 156. 52
1, 000, 000. 00
159, 106, 708. 19
3, 150, 695, 355. 59
1 For footnote see page 91.
2 This figure includes $592,225. 00 of 4% bonds which are guaranteed as to interest, but not as to
principal.
BONDS OUTSTANDING
In addition to its capital of $200,000,000, the HOLC has been author
ized to issue bonds to a total not exceeding $4,750,000,000. These
bonds were the primary source of funds for the vast refinancing pro
gram of the Home Owners' Loan Corporation and the above-mentioned
investments.
The bond authorization has not been fully used. The gross amount
of bonds issued through June 30, 1938, was $4,498,305,775. Of this,
$1,206,852,225 has been refunded and $338,459,700 retired, a total of
$1,545,311,925, in cancelled obligations. This left a net liability for
94
REPORT OF FEDERAL HOME LOAN BANK BOARD,
1938
bonds outstanding of $2,952,993,850, as compared to $3,013,149,650
on June 30, 1937. All bonds outstanding are guaranteed by the
United States Government as to principal and interest, excepting
4 percent bonds which were guaranteed as to payment of interest only.
A statement showing the coupon dates of the bonds, the coupon rate,
the callable date, maturity date, total amount of each issue, the
amount refunded and retired, and the balance outstanding is set
forth in Exhibit 43.
In accordance with the provisions of the Home Owners' Loan Act,
all payments made by borrowers on principal of the loans held by the
Corporation have been applied to the retirement of bonds or are in
the bond redemption fund for such retirement. By Board resolution.
certain other receipts must likewise be applied to the retirement of
bonds. Through June 30, 1938, total payments allocated to the sink
ing fund amounted to $445,854,344.
The HOLC continued its policy of exchanging 2Y percent bonds
for those bearing 2% percent and 3 percent rates, when advantageous
market conditions prevailed. The amount of exchanges to June 30,
1938, involved approximately $1,200,000,000 of the Corporation's
securities and will result in a net saving in interest to the HOLC of
approximately $19,000,000. Of the cumulative total exchanges,
over $750,000,000 was completed during the fiscal year 1938. Largely
as a'result of such exchanges, the average interest rate on all bonds
was reduced from 2.585 percent as of June 30, 1937, to 2.527 percent
as of June 30, 1938.
RECENT DEMANDS FOR FURTHER LIBERALIZATION
OF LOAN TERMS
During the reporting period, demands for far-reaching changes in the
Corporation's loan terms have been made, and such demands have
led to the introduction of various resolutions and legislative proposals
in Congress. The principal demands are: First, to lower the rate of
interest; second, to extend the amortization period; and third, to intro
duce a moratorium on principal payments for a number of years.
A few fundamental considerations may help to clarify the issues
in question. The refinancing job of the Corporation was accom
plished by using the credit of the Federal Government in place of the
exhausted credit of home owners. Through the use of Government
credit, the Corporation's borrowers obtained the benefit of loans
more liberal than generally ever before available from any source.
It was not intended, however, to grant the HOLC borrowers outright
HOME OWNERS' LOAN CORPORATION
95
Government subsidies. When the Corporation was put into opera
tion, it was planned by Congress to be self-liquidating; the loans were
to be repaid with interest sufficient to cover the rate paid by the Cor
poration on its bonds, through which the necessary capital was
obtained, plus the costs of operation, and the necessary reserves for
unavoidable losses.
From the past experience of the HOLC, it can be said with certainty
that the present interest rate of 5 percent is necessary to pay the
interest on its bonds, to meet operating expenses, and to cover losses.
Each year from the beginning of operations, the Corporation has
shown a deficit even with the present 5 percent rate, despite con
tinuous effort to keep expenses down. This deficit reached $40,693,292
at the end of the fiscal year 1938. Should the interest rate on its
loans be reduced, the Corporation would face a much larger deficit.
The loss of revenue would amount to several hundred million dollars
over the term of years, depending on the extent of reduction. All
this would have to be defrayed by the taxpayers in the shape of defi
ciency appropriations direct from the United States Treasury.
Reduced interest rates or other liberalizations of loan terms, to be
financed by tax payments of the total population, would grant favors
to a very small minority of the population. It must be remembered
that, despite the huge refinancing operations of the Corporation, its
borrowers and their families represent but 3 percent of the country's
total population. This minority enjoys already the lowest effective
interest rate on urban mortgages in the United States. Almost with
out exception, the cost to the home owner under the HOLC amortized
mortgage is less than rent for a home of corresponding value. In
addition, it permits the borrower actually to acquire final ownership
free of debt.
In all probability, the subsidy involved in the above-mentioned
demands would be ineffective. The problem of those borrowers who
are unable to meet their obligations on existing terms would not be
solved by a reduction of interest and a more liberal plan of principal
repayment. At the time foreclosures were authorized, these loans
were delinquent for an average of 21 months, the borrowers had been
from 2 to 3 years behind in the payment of taxes, and in addition the
property had generally suffered from want of repairs. The difference
in the monthly payment of the average HOLC loan of $3,000 between
a 5 percent and a 3Y percent interest rate on the present 15-year plan
is only $2.28. A difference of so small an amount would not remove
96
REPORT OF FEDERAL HOME
LOAN BANK BOARD,
1938
the difficulties of the borrowers whose performance has been so
unsatisfactory as to necessitate foreclosure.
The same considerations hold true for an extension of the amortiza
tion period and the proposed moratorium on principal payments.
Such measures would not begin to relieve those borrowers who have
fallen down as hopelessly as to be facing foreclosure. For the over
whelming majority of borrowers who are meeting their contractual
payments in regular stride, an extended period of repayment or a
moratorium would be needless. In the case of those borrowers who,
though not seriously enough in arrears to be considered for foreclosure,
are temporarily unable to meet their payments in full, the proposed
measures would provide no really needed benefit beyond what those
borrowers are already receiving. The Corporation already has ample
authority to make appropriate adjustments wherever the facts war
rant, and it is using this authority to the fullest possible extent.
As has been brought out in the preceding sections of this report, the
Corporation extends its mortgagors every reasonable leniency. In
the average foreclosure case, the borrower has had occupancy free of
charge for a period amounting to over 4 years and has paid no taxes
for approximately 5 years, including the period of default before
refinancing by the HOLC.
Among the Corporation's borrowers there are, however, a number
of cases where the family has suffered a permanent reduction in income
and where the only solution is a corresponding permanent adjustment
in family expenditure. In these cases carrying charges on the present
homes, even if considerably reduced, would remain far beyond the
borrowers' capacity to pay. The fact that, through the Corporation,
the Federal Government is the creditor of such borrowers creates in
some instances a particular resistance against the necessary adjust
ments. The Corporation, however, cannot involve the Government
in certain loss by permitting a borrower to remain in a home indef
initely without payment and without prospect of payment. It is the
province of other agencies of the Government to take care of those
who cannot themselves provide for their shelter needs.
There are, moreover, many cases of foreclosure accounted for by
willful default, noncooperation, abandonment of the property, death
of the borrower, and outside legal complications. Plainly in all these
cases a reduced interest rate and a further liberalization of loan terms,
while throwing a heavy financial burden upon the Federal Govern
ment and upon the taxpayer, would present no solution of the bor
rower's problem.
_
___.
__
Y~
List of Exhibits
SURVEY OF HOUSING
AND MORTGAGE
FINANCE
Page
1. Estimated volume of one- to four-family nonfarm dwellings
owned by financial institutions in 1929 and at the end of
1937-------------------------------------------2. Indices of cost of materials, and labor used in construction
of standard six-room frame house -------_----____-3. New nonfarm residential building in the United States---4. Sources of estimates on outstanding mortgage loans on
nonfarm one- to four-family homes - _--------------_
5. Selected data on individual long-term savings ---------FEDERAL
HOME
LOAN
BANK
100
101
101
103
SYSTEM
6. Number and assets of member institutions of the Federal
Home Loan Bank System_ --------------------_
__
7. Estimated volume of new mortgage loans made by all sav
ings and loan associations by type of institution ..----8. Estimated volume of new mortgage loans made by all sav
ings and loan associations classified by purpose-------9. Balance sheet items for all (3,927) member institutions for
the calendar year 1937 compared with all-(3,757) mem
ber institutions for 1936---------------------------10. Percentage distribution of balance sheet items for all (3,927)
member institutions for the calendar year 1937 compared
with all (3,757) member institutions for 1936---------_
11. Advances and repayments by months from beginning of
operations through June 30, 1938, showing totals for
each fiscal year and balance outstanding at end of each
month------------__-----_----- -------12. Advances outstanding by Bank Districts at the close of
each fiscal year, 1933-1938 -- -------------------
100
97
104
105
105
106
108
110
111
98
REPORT
OF FEDERAL
HOME LOAN BANK BOARD,
1938
Page
13. Statement reflecting the trend of collateralized and non
collateralized advances outstanding by half-year periods14. Percent of members borrowing as of designated dates-----.
15. Statement showing by districts and States the number of
member institutions, their estimated resources, amount
of shares subscribed by member institutions, the balance
of advances outstanding, the number of borrowing mem
ber institutions, and the borrowing capacity of member
institutions as of June 30, 1938 --------------------16. Statement of consolidated debentures outstanding -----17. Total dividends declared through June 30, 1938, and
annual rates by six months' periods -----------------18. Statement reflecting interest rates charged by the Federal
Home Loan Banks to member institutions for advances
as of June 30, 1938 -----------------------------19. Statement of profit and loss for the fiscal year ended June
30, 1938 --------------------------------------20. Analysis of surplus and undivided profits for the fiscal year
ended June 30, 1938 ----------------------------21. Statement of condition as of June 30, 1938-------------22. Statement of receipts and disbursements of the Federal
Home Loan Bank Board for the fiscal years 1937 and
1938
---------------------------------------FEDERAL SAVINGS AND
112
114
115
116
117
121
123
129
LOAN ASSOCIATIONS
23. The progress of Federal savings and loan associations
and areas serviced (map)_--------_---------_ Facing
24. Number of associations chartered, number of investors,
and assets, by States and Bank Districts, June 30, 1937,
and June 30, 1938
-----------------------------25. Private investments, and investments of United States
Treasury and Home Owners' Loan Corporation, by
States and Bank Districts, June 30, 1937, and June 30,
1938
---------------------------------------26. Summary of new mortgage loans made by reporting Fed
eral savings and loan associations during year ended
June 30, 1938, by States-------------------------27. Mortgage loans outstanding, and Federal Home Loan
Bank advances, by States, June 30, 1937, and June 30,
1938---------------------------------------
111
112
128
130
132
133
135
99
LIST OF EXHIBITS
Page
28. Analysis of operating cost----------------------------29. Statement of cash receipts and disbursements of the Sav
ings and Loan Promotion Fund for the year ended June
30, 1938 ----------------------------------------FEDERAL SAVINGS AND
LOAN INSURANCE
OWNERS'
138
140
141
142
LOAN CORPORATION
34. Summary of foreclosures ---_
_----------------------_
35. Properties under jurisdiction of Property Management
Division, June 30, 1938, separated by regions ----------36. Vacancies, rental delinquencies, and average price per
unit rented, by months-----------------------------37. Number of employees by departments, divisions, and
sections as of July 1, 1938---------------------------38. Statement of investments in savings and loan associations__
39. Investments in savings and loan associations, by States
as of June 30, 1938---------------------------------40. Summary of income and expenses for the fiscal year ended
June 30, 1938------------------------------------41. Summary of income and expenses from beginning of oper
ations to June 30, 1938-----------------------------42.. Analysis of changes in deficit for the fiscal year ended
June 30, 1938------------------------------------43. Bonds issued, refunded, and retired to June 30, 1938, and
outstanding as of June 30, 1938----------------------
137
CORPORATION
30. Number and assets of all insured associations, and number
of investors, by States and Federal Home Loan Bank
Districts, June 30, 1938-----------------------------31. Financial statement as of June 30, 1938---------------32. Income and expense statement for the period July 1, 1937,
to June 30, 1938
__----------------------------------33. Expenses for the period July 1, 1937, to June 30, 1938 ---HOME
136
142
143
143
144
144
145
146
147
148
149
EXHIBIT 1
Estimated volume of 1- to 4-family nonfarm dwellings owned by financial institutions
in 1929 and at the end of 1987
1929
Types of institutions
Number Number
of prop- of dwellerties
ing units
Building and loan associations 1 .
Mortgage and other companies 1 __
Mutual savings banks 2-
20,000
10,000
Number Number
of prop- of dwellerties
ing units
Amount
25,000 $75,000,000
15, 000 50,000,000
303, 000
80,000
379, 000
125,000
80,000
125, 000
84,031
80,000
75,000
331, 006,820
305,484,000
225,000,000
103,000 335,000,000
623,903
868, 031
2,591,490, 820
3,000
Home Owners' Loan Corporation-...-----------------------Life insurance companies 3 . .-----. 10,000
15,000 50,000,000
Commercial banks 2
-- --30,000
45, 000 150,000,000
Total--------------------
Amount
10,000,000
2,000
---
1937
72, 000
65,950
49,953
45,000
$930, 000, 000
400,000,000
400,000, 000
1 Estimate; Federal Home Loan Bank Board.
2 Estimates based on Annual Reports of the Comptroller of the Currency.
3 1929: Estimate, the 1937 figures are based on a questionnaire survey of 80 (including the 34 largest) life
insurance companies holding $25.1 billion of $26.3 billion total assets of all life-insurance companies.
EXHIBIT 2
Indices of cost of materials, and labor used in construction
of standard 6-room frame house
[United States average by months-January 1936=100]
1936
1937
1938
Month
Materials
Labor
Materials
Labor
Materials
Labor
January -------------------------
100.0
100.0
104.9
104.7
108.9
113 7
February.. ----------- -----March-----------------------April -----------May------------------------June--------.-----------July -------------August--------------------------September----------------------October.------------------November----------------December ---------------------
100. 2
100.4
100.5
100. 5
100. 5
100.8
101.2
101. 3
101.4
102.1
103.3
100. 0
100.0
100.9
101.8
102. 3
102.5
102. 3
103. 0
103.7
104.1
104.1
106. 9
109.1
110.9
111.8
111.9
111.9
112.1
111.9
111.2
110. 6
109.6
105. 2
106.8
109.4
110. 6
112. 4
113.9 .---114. 2 .
113.9
9.....
113.9 .
114. 0 -114 0 ----
108.1
107.2
106.6
106. 3
106.1
113. 7
114.2
114.2
114. 0
114. 3
Source: Federal Home Loan Bank Board, Division of Research and Statistics.
100
-----
EXHIBITS
101
EXHIBIT 3
New nonfarm residential building in the United States
[Thousands of dwelling units]
Type of dwelling
Type of dwelling
Year
1-family
1922------1923 .
...------..
1924 ----------1925-------1926
.---.-----.
1927
..------..
1928-------1929------1930
..------- .
437
513
534
572
491
454
436
316
185
Year
2-family
Apartment
Total
146
175
173
157
117
99
78
51
28
133
183
186
208
241
257
239
142
73
716
871
893
937
849
810
753
509
286
1-family
1931 ..----------.
1932 ..------..- .
1933-----------1934-------1935 .------..- 1936 ---------1937-----------.
Jan.-June 1937 -Jan.-June 1938 -_
147
61
39
42
110
207
225
126
120
2-family
21
6
4
3
6
10
14
6
6
Apart- Total
ment
44
7
11
10
28
65
54
30
35
212
74
54
55
144
282
293
162
161
Source: For 1922 to 1936: National Bureau of Economic Research. For 1937 and 1938: Department
Labor, on the basis of building permit reports for cities of 2,500 population or over. For communities
less than 2,500 population, an arbitrary 10% increase has been assumed; slightly less than for the 2,500
5,000 group as estimated by the Department of Labor. These figures are preliminary and are subject
revision on the basis of a field survey now being conducted in rural nonfarm areas.
of
of
to
to
EXHIBIT 4
Sources of estimates on outstanding mortgage loans on nonfarm one- to four-family
homes
The estimates on outstanding nonfarm home-mortgage loans repre
sent the results of exhaustive studies made of the mortgage holdings
of savings and loan associations and life insurance companies and as
complete an investigation as possible of the mortgage holding statistics
which were accessible for other types of institutions.
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
breakdown of their mortgage loan portfolios. The estimates for
mutual savings banks were developed by applying to the total mort
gage holdings of these banks, as reported by the Comptroller of the
Currency, additional material collected by the Division of Research
102
REPORT OF FEDERAL HOME LOAN BANK BOARD, 1938
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 mortgages 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.
The estimates for commercial banks and for individuals and others
are preliminary. For commercial banks, use was made of a study con
ducted 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 other years,
except that in recent years adjustment has been made because of the
large amount of FHA loans made by commercial banks.
Finally, in the case of individuals and other types of mortgagees,
estimates have been developed after reviewing many studies, bulletins,
and researches of various Government and private agencies. Included
in these sources are the Financial Survey of Urban Housing, the
refinancing operations of the HOLC by type of mortgagee, local surveys
conducted by the National Association 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 Mort
gage Bankers' Association, hearings of the Sabath Committee investi
gating real-estate bond holdings committees, and such mortgage
recording statistics as have been procured in recent years from several
larger communities in the United States possessing about 17 percent
of the urban population.
103
EXHIBITS
EXHIBIT 5
Selected data on individual long-term savings
[Amounts in millions of dollars]
Dec. 31,
1935
Postal savings.------------------------2 % postal savings bonds ----.-.-U. S. savings bonds 1----------------------------Life insurance companies 2 -.. _..... __
National banks 3........
_
-..
State commercial banks 4
.........
.
_.
Mutual savings banks -----
---
----------
Member savings and loan associations of the Federal
Home Loan Bank System 6-----....
.
June 30,
1936
Dec. 31,
1936
1, 201
1, 232
1,260
122
121
120
153
316
475
17, 542 ---------19,133 5,906
6,068
6, 360
4, 997 ---------
10, 055
2, 358 --------
10,144
June 30,
1937
Dec. 31,
1937
1, 268
119
800
-----
6, 511
5,479 ---
10, 208
2, 510 ------
1, 270
118
964
20, 510
6, 646
10,255
2, 725
1 Current redemption value. Over 85 percent of the dollar amount of these bonds is purchased by individ
uals.
2 Reserves plus unpaid dividends and surplus to policy-holders, except that deduction is made of policy
notes and loans and net deferred and unpaid premiums. Estimated from Spectator Life Insurance Year
Book and Proceedings of the Association of Life Insurance Presidents.
3 Deposits evidenced by savings passbooks.
4 Includes loan and trust companies, stock savings banks, and State commercial banks. Deposits evi
denced by savings passbooks. Source: Comptroller of the Currency.
6 Time deposits of individuals, partnerships, and corporations. The latter 2 items are relatively small.
Source: Comptroller of the Currency.
6 Private shares including pledged shares, and deposits and investment certificates.
98591-38-8
104
REPORT
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EXHIBITS
EXHIBIT 7
Estimated volume of new mortgage loans made by all savings and loan associations,
by type of institution, July 1, 1937, to June 30, 1938
[In thousands of dollars]
District
Total
Federal
Statechartered
members
1----------$78,951 $19,709 $38, 516
2 -------------78,075 20,644 20,210
3 ----------- 64, 638 12,599 19, 460
4_.----------- 109,891 37,880 52,464
137,424 49,720 62,689
5
------------6---------36, 779 16,817 16,815
7 ------------82,133 26,945 37,611
8 ---------- 48,438 19,844 15,705
Nonmembers
$20,726
37, 221
32,579
19, 547
25,015
3,147
17,577
12,889
District
Total
Federal
State
chartered
members
Non
mem
bers
9 --------$45,877 $16,987 $26, 682
10
.-42,956 18, 074
12,350
11------------ 28,241 15,732 10,186
12-.------. 67,283 26,900 35, 021
$2, 208
12, 532
2,323
5,362
United States,
total-......
820,686 281,851 347,709
191,126
EXHIBIT 8
Estimated volume of new mortgage loans made by all savings and loan associations,
classified by purpose, July 1, 1937, to June 30, 1938
[In thousands of dollars]
District
1 ....
2.--...--
Construetion
Home
purchase
Refinancing
Reconditioning
Other
Total
_-----------------------------.
....-.
$16, 613
22, 621
$32, 650
31,136
$15, 200
12, 291
$6, 356
5,290
$8,132
6,737
$78, 951
78, 075
3..---.---.....--------4._.
--- ----5-..----- -------------6-------------------7 .... _ -------------8---------------------9 ......
----10---------------------11 ------....
----------------..
.
12 ----------------------
9, 567
32, 995
27, 869
9,050
15, 379
13, 466
15,101
10, 750
9, 917
29,855
30, 571
28, 761
58, 261
12,785
28, 258
14,830
14,114
14, 472
6, 308
14, 402
13, 061
27, 376
25, 372
6,418
22,266
11,832
6,811
6, 951
5, 786
14, 074
5,073
6, 452
9, 953
3,948
7, 729
3,490
3,541
2, 873
2, 334
2, 350
6, 366
14, 307
15,969
4,578
8, 501
4,820
6,310
7, 910
3,896
6, 602
64, 638
109, 891
137,424
36,779
82, 133
48, 438
45,877
42, 956
28, 241
67, 283
213, 183
286, 548
167, 438
59, 389
94, 128
820, 686
United States, total-..
_-------
106
REPORT OF FEDERAL HOME LOAN BANK BOARD,
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REPORT OF FEDERAL HOME LOAN BANK BOARD,
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110
REPORT OF FEDERAL HOME LOAN BANK BOARD,
1938
EXHIBIT 11
Federal Home Loan Banks-Advances and repayments by months from beginning of
operations through June 30, 1938, showing totals for each fiscal year
and balance outstanding at end of each month
Advances
Advances
1932: December_
1933: January __---February--March.-------April -------May-..-------June -----------
$837,500.00 ---- - - -- 2, 744,100.00
$540.00
5, 927, 686.00
49, 900.00
13,839, 305.00
208, 290.00
7,919,996 66
470,142. 36
8, 731, 803.46
218,064.01
8,894,211.29
283,836.45
--------------
Total, 1933 ---------
-------
48,894, 602.41
November-----------------------------------
-------------------------------December
1934: January----------------------------------------February-----------------------------------
March -------------------------April
-----------May-------------------------------------------June ----------------------------------------------
-
1934: July-.....----------------------------------August
September .-----------------------------October
-------------------------November ---------------------------December--------------------------------------1935: January------------------------------------February---------------------------------------March -----------------------------
April-
-
---
---
-
May
-------------June ----------------------------------
--
Total, 1935------------------------1935: July .....--------------------August-----------------September _--------------------------------
-
October---------------------------
November------------------------------------
December
--------------
1936: January---
---------
-----------------------
February--------------------
March.-----------------
------
----
April .....------.---------.-May
--------------------...................
June--.--------------- -----------------Total, 1936----
----
1936: July...----------.---------------------
August-------------September------October ---November
--
--------------
-----------..
-----------------------------
December -..----------- ----------------1937: January-----------------------February ..-----......-.---------..
March...-------------------------------April-----------------------------------------------------May--....----------------June....
.............
June-------------------------Total, 1937----------
--------
3, 625, 627. 20
2, 783, 993. 07
2, 080, 298. 85
2, 578, 656. 64
1,840, 083.07
3,360,040. 71
6,905,190 64
6, 741, 283 73
6,049,326. 43
2, 708,390. 27
1,969, 691.09
1, 956, 566. 82
3,429, 257. 89
1,823,487. 24
1,962,811. 21
2,904,027.83
3, 835, 875 33
2, 707, 884.11
5,065, 083.46
3, 642, 285. 52
4,095,348 35
3, 222, 002. 32
2, 257, 757. 96
3,895, 079. 28
38, 840,900. 50
8, 507, 318. 61
7,830,488. 60
9, 575, 961.09
9,486,822.93
6,414,125 55
13, 472, 534. 33
6, 569, 659. 50
4, 259,601. 50
8, 591, 366.93
9, 640, 452. 75
12,169,985.12
17, 768, 735. 50
4,993,024. 46
4, 713, 861. 22
5,026,810. 43
4,313,114. 62
4,093, 534. 98
5,333, 013.45
8,225,339. 56
6, 799, 768. 55
7,076, 711.86
6,214,114.07
4,824, 662. 61
4, 203,048.04
114,287, 052.41
65, 817, 003.85
$837,500.00
3, 581,060. 00
9,458,846.00
23,089,861.00
30, 539, 715. 30
39,053,454. 75
47, 663, 829. 59
42, 599,148. 52
5,073, 606. 40
6, 972, 058. 39
6,369, 573. 73
8,067, 246 14
5,329, 092 01
8, 413, 841.26
5,070, 567. 64
3, 784,453 46
4,511,032 74
5,836,425 27
7,206,946, 28
11, 560,381 00
standing
25,387, 445. 72
3, 620, 784 66
2, 571, 464. 64
3,196, 250.00
3,378,053. 23
2,108,155 00
2,903,950.45
2, 232, 355 00
1,297, 856. 24
2,122, 943. 15
4,103, 529. 21
3, 795,063. 50
5,352,903. 53
78,195, 224. 32
October----------------------------------------
527, 669.10
355, 589.92
508, 336. 65
1, 250, 594. 83
697, 977.03
866,469. 77
1, 637, 490.30
1, 843, 691. 90
3, 414,043. 28
5, 559,183 52
5, 583,348. 25
3,143, 051.17
36, 683, 308. 61
September ------------------------
Balance out
1, 230, 772. 82
6,,608, 503. 54
6, 622,178. 59
6, 822, 576. 20
7, 535, 213.49
7, 271, 869. 26
7,109, 721. 00
5, 237,169. 41
3,356, 593 14
2, 899, 014. 56
2,356,399. 93
4,103,127.10
2,949, 604. 00
62, 871,970. 22
--1933: July....------..--------------August...--------------------------
Total, 1934 -- _
epaym
Repayments
53, 744, 664.03
60,011, 252.70
66, 325, 492. 25
72, 610, 110. 91
79,184, 003. 14
85,427,254. 37
89,026,933.48
90, 539, 834. 72
90, 024, 806.00
86,822,022.41
85, 341, 801. 26
85, 148, 354.09
85, 143, 511. 55
84, 930,983. 12
86,046,934. 27
86, 846,330. 86
87,114, 402. 79
86, 658,312. 53
81,985,476.89
76, 542, 049. 40
72, 615, 666. 12
74,010, 805.06
75,836,177.47
79, 232, 514.18
80,876,862.69
86,025,433. 84
90, 432,196.36
95, 595, 414. 67
97, 088, 631.35
102, 794, 588. 50
102, 800, 072. 68
102,942,240. 62
103,357,925.01
105, 972,347. 96
110, 921, 536. 28
118, 586, 838. 00
122,101,132.15
125, 217,759. 53
129, 766, 910.19
134, 940, 618. 50
137, 261, 209. 07
145,400,729.95
143,745,049.89
141,204,882.84
142, 719, 537.91
146, 145, 876. 59
153,491, 199.10
167,056,886. 56
111
EXHIBITS
Federal Home Loan Banks-Advances and repayments by months from beginning of
operations through June 30, 1938, showing totals for each fiscal year
and balance outstanding at end of each month-Continued
Repayments
Advances
-1937: July..---------------------August.----..
--.-------------September ..----------------_
----_
October...--------------------------November-----__
December ---....
--------------1938: January ....------- --- ------__
---_
February -...-.
.
.
. --- ..------- -----March..........----------.
April.------- -------....
-_
--------May--....-. ------ ----------- -- - June-......-------------------
Total, 1938__
__
Grand total to date
-
--------
10, 221, 429. 84
11, 116, 419. 02
9, 330, 371.28
8, 991, 254.84
7,001,123. 74
17, 590, 772.89
3, 722, 730.00
4,070, 622. 57
4,900, 573.80
6,088,928.11
7, 551, 480.00
14, 846, 451.86
7, 707, 421. 76
5, 080,175 81
5, 426, 303. 27
4, 461,350. 20
3, 706, 692. 48
4,831, 686.17
13, 279, 451. 72
7,090, 461.42
9, 293, 152. 19
5,464, 846. 38
4, 791, 230.17
5, 131, 335. 58
105, 432,157. 95
out
saningt
169, 570, 894. 64
175, 607,137. 85
179, 511, 205. 86
184,041,110. 50
187, 335, 541.76
200,094, 628. 48
190, 537, 906. 76
187, 518,067. 91
183,125, 489. 52
183, 749, 571. 25
186, 509,821.08
196, 224, 937. 36
76, 264, 107. 15
446, 364, 315 92
-------
B
Balance
250,139, 378 56
EXHIBIT 12
Federal Home Loan Banks-Advances outstanding by Bank Districts at the close of
each fiscal year, 1933-1938
June 30
1933
1934
1935
Boston --------$2, 245, 925 00 $2, 982,340.82
New York ..---3, 526, 500.00 13,414, 258. 25
Pittsburgh.---4, 686, 947.34 10, 236, 810.34
Winston-Salem -_ 4, 990,400.00 6,164,934.16
Cincinnati ----10,541,499.00 16, 876, 551.82
Indianapolis-..4, 522, 576. 25 6,174, 450. 93
Chicago.------. .
6,364,776.62 11, 299,317. 00
Des Moines-..2, 399, 600.00 4,373, 084.84
Little Rock-..
-4, 836,182.14 4, 631,160.05
Topeka ---- -- 1, 569, 400.00 3, 945, 824. 99
Portland..----- 1,111, 408.08 2,146, 650.77
Los Angeles-...
868, 615.16 2, 902,970.12
Total
-----
47,663,829.59
1936
$2,275,230.86
14,059,169.43
10,163,204. 84
6,080, 260.40
15, 373,686.20
4,095, 285. 50
12,324,760. 32
3, 519, 830.24
3,305, 630. 65
2, 838, 711.12
2,207,408.00
2,989,336. 62
1937
1938
$3, 518,784. 57
16,113, 360.04
12,440,437.03
8, 826, 208. 68
20, 576, 290.96
6, 389, 683.44
20,141, 668.81
7,192, 262. 09
8,331, 450.46
6,108, 935. 50
3, 016,172. 29
5, 931, 584.13
$7, 540,012.31
19,084,080.31
14, 584, 513.29
13, 660,614. 82
26, 337,086. 50
9,475,516. 75
27, 779,232. 64
11,091, 987. 99
10, 734, 265. 04
8,038, 541.51
5, 903, 378. 26
12, 827, 657.14
$8,260,689.10
17, 604, 256.88
17,312,068.05
18,599, 959.05
28,388, 514.11
12,084,384.74
32,557, 741. 63
15,083,069. 64
11, 623,047. 84
11,284,314. 79
6, 913, 525. 48
16, 513,366. 05
85,148,354 09 79, 232,514.18 118, 586, 838 00 167,056, 886. 56 196,224,937. 36
EXHIBIT 13
Federal Home Loan Banks-Statement reflecting the trend of collateralized and
noncollateralzzed advances outstanding by half-year periods
Total advances outstanding
June
Dec.
June
Dec.
June
Dec.
June
Dec.
June
Dec.
June
30,
31,
30,
31,
30,
31,
30,
31,
30,
31,
30,
1933-----.-------1933----.....
-------1934...---------------1934-------1935
---------1935 ...-------------1936
------ 1936 --_
__--1937---------------1937.
-1938-----------------------
$47, 663, 830
85, 427, 254
85,148,354
86, 658,313
79, 232, 514
102,794, 588
118, 586, 838
145, 400, 730
167,056, 887
200,094, 628
196,224, 937
Collateralized advances
Amount outstanding
$46, 521,239
84, 299,622
82, 740, 248
82,032,059
68,045,199
77, 212, 211
90, 893, 235
111, 596, 594
130,944,112
159,285, 784
163,386,013
Noncollateralized ad
vances
Percent
of total
Amount outstanding
97. 6
98. 7
97. 2
94. 7
85. 9
75.1
76. 6
76. 8
78. 4
79. 6
83.3
$1,142, 591
1,127, 632
2, 408,106
4, 626, 254
11,187,315
25, 582, 377
27, 693, 603
33, 804,136
36,112, 775
40,838, 844
32, 838,924
Percent
of total
2.4
1.3
2. 8
5. 3
14.1
24. 9
23.4
23.2
21. 6
20. 4
16.7
112
REPORT
OF FEDERAL HOME
LOAN BANK BOARD,
1938
EXHIBIT 14
Federal Home Loan Banks--Percent of members borrowing as of designated dates
June 30-
June 30
1934
Boston----- New York--......
Pittsburgh--._ Winston-Salem_Cincinnati--._Indianapohs.--...
Chicago_-----
1935 1936 1937
43.5
54.8
75.1
60.5
66.8
59.8
79.7
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
1938
39.9
63.2
80.8
71.7
56.0
66.8
81.1
1934 1935 1936 1937 1938
Des Moines----..
64.8
Little Rock---...
45.5
Topeka...----..._ 63.0
Portland-----. .
67.4
Los Angeles--...
57.1
51.7
33.1
42.5
55.8
46.9
60. 7
59 5
63.2
60.6
61.3
68.7
62.7
67.5
67.2
68 2
68.7
60.1
66.8
69.3
73.4
Total....... 63.8
54.6
63.6
67.3
67.8
EXHIBIT 15
Federal Home Loan Banks-Statement showing by Districts and States the number
of member institutions, their estimated resources, amount of shares subscribed by
member institutions, the balance of advances outstanding, the number of borrowing
member institutions, and the borrowing capacity of member institutions as of
June 30, 1938
Number
of mem
ber insti
tutions
District No. 1, Boston:
Connecticut -... ---Maine ---------Massachusetts ------New Hampshire -----Rhode Island ---------Vermont_-- _. -------Total.--.---........ .
District No. 2, New York:
New Jersey-----------------.
New York...
Total.........---District No. 3, Pittsburgh:
Delaware --Pennsylvania---------West Virginia.-------Total---.......---District No 4, Winston
Salem:
Alabama --------District of Columbia---....
Florida----------Georgia-------Maryland -------------.
North Carolina ------South Carolina ------Virginia ------Total -----------.
District No. 5, Cincinnati
Kentucky -------Ohio--- ---------Tennessee--------Total_--
---------
Estimated
resources
Amounts
subscribed
by mem
bers
Balance of
advances
outstanding
Number
of bor
rowing
member
institu
tions
Borrowing
capacity of
member in
stitutions
46
21
118
15
4
4
$486, 600 $2, 278, 382 60
$79,455,000
573, 365.00
153, 900
17, 869,000
2,467, 500 4, 528, 987.00
467,888,000
742, 676. 50
165, 300
26, 404,000
210,000
76, 575.00
25, 967,000
60, 703.00
35, 700
3,794,000
36
14
19
9
3
2
$20, 900,000
4, 460,000
127,355,000
7,345,000
208
621, 377,000
3, 519, 000
8, 260, 689. 10
83
166,930,000
295
124
246,014,000
228,071,000
2, 246, 900
1,913,800
11, 730,410.86
5, 873, 846.02
199
66
107,000,000
98,000,000
419
474,085,000
4,160, 700 17, 604, 256. 88
265
205,000,000
7
530
32
2,209,000
216, 813,000
17,
673,000
41,517.50
21,700
2,143, 800 15,130,941.33
257,200 2,139,
609.22
3
428
29
448,000
53,470,000
5,660,000
569
700 17,312,068.05
236,695,000 2,422,
460
59,
578,000
23
18
53
57
86
112
40
39
24, 526,000
114, 803,000
41,713,000
25, 367,000
50,599,000
153,921,000
23,105,000
28,802,000
605,808.75
957,160.00
4,769, 299. 29
2,164,097. 63
3,479, 628. 04
3,116, 613.94
1, 201, 535. 00
2,305, 816.40
14
15
44
50
63
74
31
26
11,645, 600
54,945,700
16, 875,000
10, 248,100
22, 202, 000
47,765,300
10, 249,100
11,487, 900
428
462,836,000 3,623,00018,599,959.05
307
185,418,700
94
428
42
88,852,000
647, 697,000
53, 801,000
879,300 5, 715,931. 20
5,940,100 20,151,916. 41
277,000 2, 520, 666. 50
69
213
34
31,000,000
198,000,000
7,000,000
564
790,350,000
7, 096, 400 28, 388, 514. 11
316
236,000,000
120, 800
913, 200
515,400
273,200
562,100
715, 500
196, 600
326, 200
5,975,000
895,000
113
EXHIBITS
Federal Home Loan Banks-Statement showing by Districts and States the number
of member institutions, their estimated resources, amount of shares subscribed by
member institutions, the balance of advances outstanding, the number of borrowing
member institutions, and the borrowing capacity of member institutions as of
June 30, 1938-Continued
Number
of member institutions
District No. 6, Indianapolis:
Indiana---------------Michigan--- ----
Estimated
resources
Amounts
subscribed
by members
Balance of
advances
o
outstanding
Number
of borrowing
member
institutions
Borrowing
capacity of
member in.
stitutions
156
52
$50, 215, 978
31, 168, 510
239, 983,000
2, 541,700 12,084,384. 74
139
81,384,488
239, 507,000
150,048,000
2, 750,000 20, 531,344. 32
1, 609,300 12,026,397. 31
291
100
86, 581, 442
48, 584,821
482
Total.---.-----
108
31
353
129
District No. 8, Des Moines:
Iowa_------------Minnesota------------Missouri --------------North Dakota South Dakota
___------
$1, 710, 400 $9, 461, 081. 74
831,300 2,623,303.00
208
Total-----------District No. 7, Chicago:
Illinois_-----------Wisconsin.------. _--
$141, 847, 000
98,136,000
389, 555,000
4,359, 300 32, 557, 741. 63
391
135,166, 263
61
33, 525,000
385, 500
1, 710,095. 40
34
14, 815, 466
40
115
36, 152,000
89, 776,000
600,300
847, 400
6,350, 726.00
5, 946,116. 24
29
86
13, 821, 278
27, 227, 157
13
9, 484,000
49,000
401, 254.00
9
1, 886,482
243
178, 300,000
1,980, 700
15,083,069. 64
167
62,082,837
41
70
28
16
138
14, 743,000
124,074,000
20,043,000
4, 969,000
169,033,000
146, 300
988, 300
88, 300
41, 100
732, 300
559. 52
784.41
828.96
580.00
294. 95
30
47
14
7
78
5, 300,000
41, 750,000
4, 900,000
2,050,000
54, 250,000
293
332, 862,000
1, 996,300 11, 623,047. 84
176
108, 250,000
40
105
35
52
27,
105,000
61,179,000
39, 448, 000
53,788,000
1,368,356. 25
5,453,193.29
1,124,496. 25
3,338, 269.00
28
74
20
33
9, 546,922
24, 293, 716
9, 745, 501
19,744, 642
232
181, 520,000
1, 557, 200 11,284,314. 79
155
63,330, 781
1
9
13
29
10
65
10
117,000
6, 523,000
8, 989,000
25, 807,000
13,410,000
55, 301,000
4,047,000
1, 400
68,000
70, 600
204, 500
192,500
483,400
44, 600
15, 586.13
604,761.62
203,030. 70
1,170,991. 81
1, 667,337.49
2, 798,883.92
452, 933.81
1
9
7
24
9
35
10
30, 756
2,746,889
1, 838, 937
9, 793,122
5,011, 151
19,117, 630
1, 217,094
Total-----.............
137
114,194,000
1,065,000
6,913, 525.48
95
39, 755, 579
District No. 12, Los Angeles:
Arizona------.......
.
California. ----------Hawaii_. -Nevada...-------------
3
164
4
2
2,334,000
280, 711,000
2,570,000
732,000
47,300
544,461.86
2,465, 100 15, 721, 705.41
23,600
153,000.00
91,393. 78
14,000
3
121
2
1
816,000
108, 814,000
1,133,000
365,000
173
286,347,000
2, 550,000 16, 510, 561.05
127
111, 128,000
Total
___
..-------..
District No. 9, Little Rock:
Arkansas_-------Louisiana -------------Mississippi ---------New Mexico----------Texas...---------.
Total
-----
District No. 10, Topeka:
Colorado -------..
Kansas---------------Nebraska_-------Oklahoma ---------Total --..----District No. 11, Portland:
Alaska----------------Idaho...
--Montana_.----Oregon----------------Utah._--Washington..---------Wyoming...--------.__
Total------
14
Loan to nonmember mort
gagee, District No. 12...3, 96
Grand total------------
I
9, 363,000
98, 500
194, 300
663,900
174,000
525,000
----- ---------...-..
872,00
4, 3, 104,03,
9
674, 878.00
1,054,
5, 322,
252,
225,
4, 767,
2,805.00
2,93
3, 956 1
4,308,
104,00036,,872,I1
1
000 1861224 937.36
I
I
-- -
4,332,454
1 ..
2
2. 2 1
2, 682 1,454,024, 648
I
I
114
REPORT OF FEDERAL HOME LOAN BANK BOARD,
1938
EXHIBIT 16
Federal Home Loan Banks-Statement of consolidated debentures outstanding
Series E
Series C
Series D
2 percent due 2 percent due 1 percent due
July 1, 1939
Dec. 1, 1940
Apr. 1, 1943
Total out
standing
-'-------'-------
Boston.---------New York---...
Pittsburgh-- __ __
Winston-Salem
Cincinnati-- -Indianapolis ---Chicago------Des Moines ___-Little Rock ------Topeka ------Portland ----------Los Angeles _-------
-------------------------- ---------------------------------------------------------- -------------------------------------------------------------------------
$8, 500, 000
9,000, 000
14, 350, 000
6,250,000
20, 250,000
9, 500, 000
4,000, 000
4, 750, 000
2.025,000
11, 375,000
3, 500, 000
-- - -I--I
Total-----
90,000,000
I
$4, 000,000
2, 500,000
2, 500, 000
2, 500,000
3,000,000
4,500, 000
1, 500, 000
2,000, 000
$1,500, 000
3,000,000
2, 750,000
2,000, 000
8, 000, 000
3, 000, 000
500,000
750,000
-
-
1, 000, 000
-
1
25,000,000
I
$3, 000, 000
8, 500, 000
9,100,000
1,750,000
9, 250, 000
2,000,000
2,000,000
2,000, 000
2,025,000
6,875, 000
1-
23, 500,000
I
-
41, 500, 000
I
115
EXHIBITS
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REPORT
OF FEDERAL
HOME LOAN BANK BOARD,
1938
EXHIBIT 18
Statement reflecting interest ratescharged by the Federal Home Loan Banks
to member institutionsfor advances as of June 30, 1938
Location
Rate
effect
Boston ....- __--
..
New York ----Pittsburgh-....--.
Winston-Salem
Cincinnati -------
Indianapolis _--_-
Chicago ._----___
Des Momes
_----
Little Rock ----.
Topeka -- _...
--..
Portland -------..
Los Angeles_
Percent
3
Type of loan
All advances. All 10-year advances made after Jan. 15,1937, shall be written
at 3 percent for 2 years, with the right to increase the interest rate to not
more than 4 percent for 8 years thereafter.
All advances for 1 year or less.
3
334 All advances for more than 1 year shall be written at 4 percent, but interest
collected at 33/ percent during 1938.
31 All advances for 1 year or less. All advances for more than 1 year are to
be written at 4 percent, but until further notice credit will be given on
all outstanding advances for the difference between the written rates of
5, 4 1'/ percent, or 4 percent and 31/ percent per annum.
All advances, with the provision that interest rate may be increased to not
3
more than 4 percent after 30 days' written notice.
31
All advances executed for a period not exceeding 2 years between Aug. 1,
3
1935, and May 16, 1937.
All advances executed after May 15, 1937. If advances are written with
314
a maturity in excess of 1 year, the written rate shall be 31/ percent, but
until further notice interest to be collected at 34 percent.
All secured advances executed prior to Feb. 1, 1938, to be collected at 3
3
percent.
All secured advances executed after Jan. 31, 1938, to be written at 33/ percent
3
but until further notice interest to be collected at 3.
All unsecured advances made under Section 11 (g) (4) of the Act will be
3
written and collected at 31 percent.
34 All secured advances are written to bear 3 percent but until further
notice interest collected at 34 percent.
3543 All unsecured advances.
31-34 On all outstanding advances at Apr. 1, 1938, written at 3 percent or more
upon which 34 percent or less is being paid, the interest on and after said
date, until further notice, shall be collected at 3 4 percent.
All advances made on and after Apr. 1, 1938, shall be written at 34 percent,
and interest collected at 34 percent until further notice.
All advances. All advances maturing before Dec. 31, 1938, are to be written
3
at 3 percent. Advances maturing after that date to be written at 4 per
cent but until Dec. 31, 1938, interest to be charged at 3 percent.
All advances.
3
All advances to members secured by mortgages insured under Title II of the
3
National Housing Act.
334 All advances for 1 year or less. All advances for more than 1 year are written
at 4 percent, but interest collected at 3 percent so long as short-term
advances carry this rate.
All advances.
3
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EXHIBITS
EXHIBIT 22
Statement of receipts and disbursements of the Federal Home Loan Bank Board
for the fiscal years 1937 and 1938
July 1, 1936, to
June 30, 1937
July 1, 1937, to
June 30, 1938
$343,685.47
$256,593.79
232,003.40
221,948. 32
82,442.05
24,106.11
469, 444. 52
1, 331.32
150,000.00
295,144.14
64,615.90
0
783,874.27
4,381.17
1, 031, 275. 72
1, 298,015.48
1,374, 961.19
1, 554,609.27
847,416.40
4,460. 96
0
14,872.96
134, 617. 25
212. 33
12,804.11
2,890.83
13,805. 69
4,189.95
8,036. 92
857,807.09
10,511.97
59.75
28,881.49
176, 876. 56
787.92
13, 756.64
22, 979.17
18, 514.96
6,956.94
0
1,043, 367.40
1,137,132 49
-----------------------Balance at beginning of fiscal year.-----Receipts:
Assessments upon
Federal Home Loan Banks---------..--------------------.....
Home Owners' Loan Corporation----......---....--Federal Savings and Loan Insurance Corporation.----...--- --- .
Savings and Loan Promotion, Federal Home Loan Bank BoardExamining receipts----------------------------- --------Miscellaneous refunds----------------------------------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--..---------------- --Special and miscellaneous----------------------------------------...
.........-------Total disbursements.
Repayment to Home Owners' Loan Corporation and Federal Sav
ings and Loan Insurance Corporation for retirement of amounts
-previously advanced by the Corporations ----.------------Balance at end of fiscal year.
.------------
-------------------
75,000.00
125,000.00
1, 11, 367.40
256, 593.79
1,262,132 49
292, 476. 78
EXHIBIT 23
PROGRESS OF FEDERAL SAVINGS AND LOAN ASSOCIATIONS AND
AREAS SERVICED
[See map facing page 128]
130
REPORT OF FEDERAL HOME LOAN BANK BOARD,
1938
EXHIBIT 24
Federal Savings and Loan Associations-Number of associationschartered,
number of investors, and assets, by States and Bank Districts,
June 30, 1937, and June30, 1988
Number of associa
tions chartered
Number of investors
Assets
-i
-
June June r In- June
30,
30,
30,
1937 1938 crease 1937
District No. 1, Boston:
Connecticut-...------.--.
Maine--..
Massachusetts -.
.New Hampshire.--..
Rhode Island-....--.
Vermont---.........Total--
---
------
District No. 3, Pitts
burgh:
Delaware-------Pennsylvania. ----West Virginia- .-Total-----
--
District No. 4, Winston
Salem:
Alabama---------District of Columbia.
Florida...-----Georgia--....-Maryland....
---North Carolina- .South Carolina -- Virginia ......-Total--
3,153
77
71(
cr In
ease
1938
crease
June 30,
1937
$9, 815 $5, 352 $6, 895,255
114 317, 079
473
66,049 13, 702 70,743,849
655 5,352,557
3,808
46(
83,670
537
328
1, 038
993, 766
June 30,
1938
_______
Increase
$9, 298, 000 $2, 402,745
517, 000
199,921
87,399, 000 16, 655,151
6,085, 00(
732,443
311,330
395, 00(
1,480, 00(
486,234
48
District No. 2, New
York:
New Jersey--...--.
New York--.....Puerto Rico----Virgin Islands-----Total.-
$4,463
11
359
4 52, 346
June 30,
1938
________
--.......
51
3 61,108
81,720 20,612 84, 386,176 105,174,000 20,787,824
62
64
2 102, 236
160,318 58,082 111,925,464 129,394,000 17, 468, 536
62
64
2 102,236
160,318 58,082 111,925,464 129,394,000 17,468,536
46
21
60
14 12,458
21 ---- 6,680
24,580 12,122 16,018,476
7,085
405 10, 477, 054
28,061,000 12,042,524
12, 595, 000 2,117,946
67
81
14 19,138
31,665
40,656,000
14,160,470
15
4,234
2
1
25
48
1 2 12,781
9,770
43-...- _
29
7 9,899
16
2 3,970
8,542
30 ..---21
1 5, 935
5,368
6,998
19,386
12,751
14,104
5,349
10,482
8,257
4,269,797
20,300
24,275,881
12,420,458
15,667,240
7,299,694
9,689,117
10,985,607
5, 725,000
6,090,000
32, 964,000
15,513,000
20,357,000
9,531,000
12,792, 000
14, 668, 000
1,455,203
6,069, 700
8,688,119
3,092, 542
4,689, 760
2,231, 306
3,102,883
3,682, 393
82, 695 27,539 84,628,094
117,640,000
33,011,906
15
1
'50
43
22
14
30
20
12,527 26,495,530
1,134
6,973
6,605
2,981
4,205
1,379
1,940
2,322
195
204
9 55,156
District No. 5, Cincin
nati:
45
Kentucky- ...--- ..
Ohio----..........96
Tennessee---.........
37
50
109
38
5 34,943
13 129,126
1 11,675
54,690,000 9, 672, 639
37,249 2,306 45,017,361
156, 177 27, 051 149, 355, 926 172,457,000 23,101,074
19, 770,000 3,673,805
318 16,096,195
11,993
178
197
19 175,744
205,419 29,675 210,469,482 246,917,000 36,447,518
66
67
1 66,366
67,154
22
27
5 15, 588
21,048
5, 460 18, 643, 398
Total--------
88
94
6 81,954
88,202
6,248 93,522,301 108,431,000 14,908,699
District No. 7, Chicago:
Illinois.. ----Wisconsin ...-----..
98
28
101
27
3 48,164
1
4,235
61,911 13,747 75,272,305
7,530 3,295 7, 246, 628
91,189,000
9,970,000
15,916,695
2,723,372
126
128
2 52,399
69,441 17,042 82,518,933
101,159,000
18,640,067
Total--........
District No. 6, Indianap
olis:
Indiana --........
Michigan---.........
Total------1
Reduction.
788 74, 878, 903
78, 990,000
4,111,097
29,441,000 10,797,602
131
EXHIBITS
Federal Savings and Loan Associations-Number of associations chartered,
number of investors, and assets, by States and Bank Districts,
June 30, 1937, and June 80, 1938-Continued
Number of associa-
Number of investors
tions chartered
June
30
1937
June c rIn- s e June
ea
3' 8 crease 1937
3
9
1938
1937
District No. 8, Des
Moines:
Iowa-------Minnesota-..--.-Missouri.----------..
North Dakota..---.
South Dakota -..Total--......-----District No. 9, Little
Rock:
Arkansas.......--...
Louisiana-.....--..
Mississippi ....-.--..
New Mexico-........
Texas-..----
Total.-----District No. 10, Topeka:
Colorado.........
Kansas--------Nebraska-----.......
Oklahoma.-------Total-------District No. 11, Portland:
Alaska.---...........
Idaho
------Montana....
--Oregon..............
Utah...------Washington ---......
Wyoming..-------.
Total----
35
12
20
8
89
164
108
rIn- s e
ea
crease
June3 7
1 9 30,
1937
June3 830,
19
In
Increase
1938
7,583
32, 337
21, 932
1, 818
1,157
1,495 6,839,977
6,990 25,394,435
1,274 30, 956, 574
51 1,522, 689
133 1,344,727
9,250,000
32,356,000
33,910,000
1, 523,000
2,410,023
6, 961, 565
2,953,426
261, 311
178,273
1 3 54,884
64,827
9,943
78,823, 000
12,764, 598
33
12 4,461
12-..
5,826
21
1 2,
454
8_ ..-810
91
2 16,046
165
1938
6, 088
25,347
20, 658
1,767
1,024
11
12
111
June 8
1 9 3 30,
Assets
1 29, 597
673 7,987,236
408 11,290,693
461 2, 781, 331
139
1,006,385
788 21,967, 887
9,400,000 1,412,764
12,119,000
828,307
3, 552,000
770,669
1,465,000
458, 615
36, 653, 000 14,685, 113
44,066 14,469 45,033,532
63,189,000 18,155,468
13, 791
7,465
4,429
6,957 10,088,360
2,423 6,965,332
1,173 4,623,498
17, 268,000
10, 190,000
5,942,000
7,179,640
3,224,668
1,318,502
3,786, 634
23
22
15
24
1
21
11
15 --.
32
33
1 26,847
25,440 1 1,407 39,122,366
42,909,000
92
93
1 41,979
51,125
9, 146 60, 799, 556
76,309,000 15,509,444
1
8
1
23
6
36
1---38
9
1 5,956
2
1
33
22
11 9,579
6 --5, 432
36 --.... 72,451
86
7,223
508
11,003
8,352
73,
723
48
52,031
1,267
5,195, 542
475
80,381
1, 424 9, 905,307
2,920 5, 066,149
1,272 31,995,112
117,000
6,524,000
328,000
11, 668, 000
6, 612,000
36,052, 000
64,969
1,328,458
247,619
1, 762,693
1,545,851
4, 056,888
84
85
102,257
7,890 54, 114,870
63,561,000
9,446,130
9
6,834
5,042
3, 256
5, 134
6,234
2,915
949
28,834 12,
66,058, 402
1,784,000
9 ...... 878
1 94,367
1,362
484
1,820,348
2,260,000
439,652
District No. 12, Los
Angeles:
Arizona -----2
3
1
468
1,453
985 1,379,520
1,889,000
509,480
California ....- 67
72
5 31,215
45,819 14,604 63, 318,729 78,939,000 15, 620, 271
Hawaii.... ----1
1 ----944
1,089
145 1,539,395
1,793,000
253, 605
Nevada..---.........
1-..--1
158 ------1158
107,864- -------1 107,864
Total..............
Grand total--......
I
Reduction.
71
76
1, 286J 1,346
5 32,785
48,361 15,576
66,345, 508
82,621,000
16,275,492
60J801, 34711, 030, 096 228, 749 986, 297,84811,213,874,000 227,576,152
132
REPORT OF FEDERAL HOME LOAN BANK BOARD,
1938
EXHIBIT 25
Federal Savings and Loan Associations-Private investments and investments of
U. S. Treasury and Home Owners' Loan Corporation, by States and
Bank Districts, June 30, 1937, and June 30, 1938
U. S. Treasury and H. O. L. C.
investment
Private investment 1
June 30,
1937
June 30,
1938
Increase
June 30,
1937
June 30,
1938
District No. 1, Boston:
_----- $2, 660, 906
Connecticut ...
81,884
Maine
. ---------50, 973, 738
Massachusetts ------3,391,236
New Hampshire -------Rhode Island -------68,095
834,068
Vermont .---------
$4, 478. 426
219,019
63, 927, 252
4,327,715
167, 825
$1,817, 520
137,135
12, 953, 514
936,479
99,730
$2, 762, 500
166,500
4,069, 200
475,000
.----------.
$3, 132, 500
207,000
5, 246, 200
475,000
185,000
_
Total -- ------District No. 2, New York
New Jersey-------New York.----Puerto Rico
Virgin Islands-----------
58,009,927
74,387,313
16,377, 386
7, 523, 200
9, 295, 700
1, 772, 500
68, 743, 635
84, 231, 683
15, 488, 048
27, 938, 400
29, 973, 300
2, 034, 900
Total-.....- -----District No. 3, Pittsburgh.
Delaware ------Pennsylvania ----------West Virginia ------
68, 743, 635
84, 231, 683
15, 488,048
27, 938, 400
29, 973, 300
2, 034, 900
6, 954, 408
4, 886,344
14, 589, 204
5,858, 255
7, 634, 796
971,911
5, 252, 200
2,675,000
6, 386, 200
3, 144,000
1,134, 000
469, 000
Total -------District No
4, Winston
Salem:
Alabama -------District of Columbia ..
Florida--------Georgia ---------Maryland -------------North Carolina -----South Carolina -----------Virginia..
11, 840, 752
20,447,459
8, 606,707
7,927, 200
9, 530, 200
1, 603. 000
2,432, 683
20, 300
7, 884, 884
5,844, 696
8,837,094
2, 916, 500
6, 423, 996
6,010,057
3,477, 873
4,361,951
14, 289, 075
7, 918, 722
11, 295, 416
4,403, 507
9,033,839
8, 217, 654
1.045,190
4, 341, 651
6,404,191
2,074,026
2,458,322
1, 487,007
2, 609,843
2, 207, 597
1,010,500
1, 260, 500
11, 040, 400
4, 207, 900
3,150,000
2, 539, 500
1,691, 500
2, 710,000
11,832,400
4,449, 900
3,825,000
3,013, 500
1,922, 500
3,390,000
250,000
50, 000
792,000
242, 000
675,000
474,000
231,000
680, 000
Total--- --District No. 5, Cincinnati:
Kentucky ._... ---Ohio ..... .----Tennessee. ------------
40,370, 210
62,998,037
22, 627, 827
26, 349, 800
29, 743, 800
3, 394, 000
32, 825, 540 40, 564, 956
106, 732, 849 127, 666, 710
6, 238, 990
8,481, 653
7. 739, 416
20, 933, 861
2, 242,663
3,176,000
15, 660, 000
6, 404, 600
3, 926, 000
16, 517, 000
6,884, 600
750,000
857, 000
480,000
145, 797,379 176, 713,319
30, 915, 940
25, 240, 600
27, 327, 600
2,087, 000
54,352,611
12, 624, 549
55, 370, 948
21, 570,124
1,018,337
8, 945, 575
7,700,000
3,074, 800
8, 632,000
3, 443, 300
932,000
368, 500
--------Total District No. 7, Chicago:
-----------Illinois_
Wisconsin -------
66, 977,160
76, 941, 072
9, 963, 912
10, 774, 800
12,075, 300
1,300, 500
40, 256, 473
51, 442, 491
11, 186,018
18, 685,000
20, 481, 500
1, 796, 500
2, 681, 890
4, 621, 766
1, 939, 876
3,055, 500
3,487,000
431, 500
Total-----..............
District No. 8, Des Moines:
Iowa....--------------Minnesota ------- __
_
Missouri--- ....---North Dakota---.......-.
South Dakota----........
42, 938,363
56,064,257
13,125,894
21, 740, 500
23,968, 500
2, 228, 000
3, 318,040
11,198,979
18,178, 297
1, 005, 209
688, 835
4,893, 781
15,452, 265
19,630, 426
1,122,741
828, 039
1, 575, 741
4,253,286
1,452,129
117, 532
139, 204
2, 311, 500
8,016, 700
6, 404, 000
260, 000
353,000
2, 447, 000
8, 573, 300
7,116,000
305,000
353, 000
135, 500
556, 600
712, 000
45,000
34, 389, 360
41, 927, 252
7, 537, 892
17, 345, 200
18, 794, 300
Total__-----District No. 6, Indianapolis:
Indiana- _---_
__
Michigan--__-_-
Total--.....----1 Excludes pledged shares.
- .
.
.
..
.
1,267,076
, - - -,
- ----
433,008
r- .
.-
,
50,000
,
,
•
,
Increase
$370,000
40,500
1,177,000
185,000
50,000 -----.
50, 000
i,,.
•
--. .
1, 449,100
,
133
EXHIBITS
Federal Savings and Loan Associations-Private investments and investments of
U. S. Treasury and Home Owners' Loan Corporation, by State and
Bank Districts, June 30, 1937, and June 30, 1938-Continued
U. S. Treasury and H. O. L. C.
investment
Private investment 1
June 30,
1937
June 30,
1938
Increase
June 30,
1937
June 30,
1938
$4,312,657
9, 046,040
1, 555, 914
536, 537
12,765,564
$5,681,743
9, 262, 662
2, 295, 771
891, 887
24,061,905
$1,369,086
216, 622
739, 857
355, 350
11,296,341
$1,894,500
506, 500
738, 500
347,000
5,672, 60
$1,924,500
435, 500
771, 500
342, 000
6,099,100
$30,000
271, 000
33, 000
25,000
426,500
28, 216, 712
42,193, 968
13, 977, 256
9,159,100
9, 572, 600
413, 500
5, 737,021
2,664,617
2,545,843
28,611,976
11,646, 927
5,032,105
3,579,046
31,523,223
5, 909, 906
2,367,488
1,033,203
2,911,247
2,368,000
2,698,000
1, 331, 00CO
2,140,000
2, 615,000
2,855,000
1,441,000
2,485,000
247, 000
157,000
110,000
345,000
Total... .-----39, 559, 457
District No. 11, Portland.
Alaska-- --.........--...
9,700
Idaho....
--------....
.
2,458, 043
Montana-...-----------30,225
Oregon..
-----3,499, 064
Utah
------------2,761,348
Washington
.---------17,266,563
494,891
Wyoming - __-----
51,781,301
859, 000
District No. 9, Little Rock:
Arkansas-...---------Louisiana -....---_
Mississippi .-----------New Mexico -----------Texas
---------
Total---District No. 10, Topeka:
Colorado.... _
-------Kansas.....------------Nebraska---_
___
Oklahoma -------
Total
Increase
8, 537, 000
9, 396,000
18,512
739, 620
183,235
1, 600, 866
813,119
3,347,636
231,290
18,700
1,850, 600
30,000
4, 339, 500
1,205,000
8,612,000
876,500
33,300
14,600
2, 325, 600
475, 000
30,000 ..--- _--.
4, 621, 500
282,000
1,700,000
495,000
8,813,000
201,000
1,008,100
131, 600
26, 519, 834
33, 454,112
6, 934, 278
16, 932, 300
420, 771
29,749,295
1, 336, 000
858,120
40,233,386
1,493, 274
437, 349
10,484,091
157, 274
590, 000
590, 000 ..---18,457,000
19, 768, 200
1,311, 200
25, 000 -----------2 25, 000
31, 565, 169
------
District No. 12, Los Angeles:
Arizona.--.....- .......
California......--------Hawaii.....
Nevada....
-----------
12,221,844
28,212
3,197, 663
213,460
5,
099, 930
3,574,467
20,614,199
726,181
42, 584, 780
11,019, 611
19, 072,000
59,103
18, 531, 500
1, 599, 200
...........2 59,103 .----
20, 358, 200
1,286, 200
Grand total--------1594, 927, 958 1763, 553 1,68, 796, 595 198, 540, 100 218,567, 000
724,
20,026,900
Total....
-------
1
Excludes pledged shares.
2 Reduction.
EXHIBIT 26
Summary of new mortgage loans made by reporting Federal savings and loan
associations during year ended June 80, 1938
CosrcState and F. H. L. B.
District
UNITED STATES
..
..-------.
Hm
Construction
District No. 2___------
Other
Repairs and
recondl
tioning
Refinanc
ing 2
Other
purposes
Total
$94, 450, 600 $84,406,400 $61, 058, 700 $17, 594, 300 $23, 377, 000
......- 5, 538,100
District No. 1--.....
Connecticut---------Maine -----Massachusetts ---------.--New Hampshire
Rhode Island ---------_
Vermont . ------.
Reiac
Home
purchase
6, 260, 000
807,400
65,800
4, 625, 700
345, 900
155, 600
259,600
1, 281, 500
,43,200
3, 775, 300
245, 700
91, 900
100, 500
10,0" J00
New Jersey.-------------.-New York------------- 1
--97,900
I-
1,014, 500
75, 000
3,497, 700
334, 200
66,100
137,100
1, 385, 900
5,124, 600
5,757,900
5, 757, 900
: .:
I
.
. ...
:
..
796, 500
3, 366, 200
796, 500
-I
19, 678, 800
3, 348, 800
148, 600
96, 800
22,400
238,900
32, 500
13, 694, 700
996, 500
799, 500
425, 600
1, 502,200
150,800
3,900 -----------317, 500
25, 900
576, 700
53, 600
3, 366,200
.-
$280, 887, 000
1,370,200
.
I-
.
....
976,400
--
976, 400
.
20,994,900
I-----
20, 994, 900
1 Reporting associations held about 97.5% of total assets of all Federal savings and loan associations.
2 Refinancing of associations' own mortgages includes only the amount of increase in the mortgage.
-
134
REPORT OF FEDERAL HOME LOAN BANK BOARD, 1938
Summary of new mortgage loans made by reporting Federal savings and loan
associationsduring year ended June 30, 1938-Continued
State and F. H. L. B.
District
Construetion
Home
purchase
Refinanc- Repairsand
recondiing2
tioning
Other
urposes
otal
District No. 3...--------Delaware----Pennsylvania --.. _-----_
West Virginia--....--
$3,106, 600
$4, 928,600
$3, 079,800
2, 141, 000
965, 600
3, 944, 400
984,200
District No. 4....------Alabama----..........
.
District of Columbia .
Florida--......---Georgia------Maryland --------.
North Carolina -----South Carohna ------Virginia ----------------
15,155,400
10,286,700
412, 300
199,200
6,092, 300
2, 000,900
1, 207, 500
1, 374, 000
2,165, 200
1, 704, 000
District No. 5 - ------..-Kentucky _---Ohio ....-------Tennessee.------
14,105, 600
2,460, 800
9, 228, 300
2,416, 500
$594, 700
$485, 200
$12,194, 900
-----
-----
------
2, 051, 300
1, 028, 500
248, 800
345, 900
238, 600
246, 600
8, 624, 100
3,570,800
6, 523, 600
335, 300
165,400
1,467, 200
1, 279, 700
550, 800
756,100
841, 400
1,127, 700
1,929,900
408,700
130,800
1, 758, 500
923,200
4, 106, 600
687,600
851,000
1,420, 300
3,467, 000
195, 600
15, 000
1,482, 300
439,200
128, 700
385,400
461, 100
359, 700
37, 362,600
1,474, 000
522,600
11, 282,800
5,041, 400
6,068, 100
3,439, 700
4,671, 800
4, 862, 200
17, 758, 700
4, 102, 000
12,882, 500
774,200
10, 508,800
2, 501,200
6, 592,600
1, 415, 000
3, 232,200
4, 211, 200
1,110,800
2, 533, 800
566, 600
49, 816, 500
846, 500
1, 944, 300
441,400
,------- -------------------1
--
122, 100
12, 200
482, 500
398,400
74, 500
236, 600
353, 100
250, 500
11,021,300
33,181, 500
5, 613, 700
District No. 6-----Indiana
_------------Michigan-------------
4, 201, 900
5, 594,200
3,662, 300
1, 640, 800
1, 667, 000
16, 766,200
2, 635,200
4, 745,400
2, 647,800
1,353, 900
1,213, 600
12, 595,900
1, 566, 700
848,800
1.014, 500
286, 900
453,400
4,170,300
District No. 7---Illinois--------Wisconsin- .--- _-____._
5,133,200
3,810,300
1, 322, 900
9, 444, 900
8,207,900
1, 237, 000
7,474,900
6,800,300
674,600
2,468, 800
2,323,000
145,800
2, 291, 800
2,101,100
190,700
26, 813, 600
23, 242, 600
3, 571, 000
District No. 8
___
Iowa ...--------_____
Minnesota._-----_-_
Missouri ..----- __.--North Dakota ---South Dakota ----_-____
5, 369,100
1, 101, 200
2, 746, 000
1,284,000
140,400
97, 500
5,895,800
1, 021,600
2,918,100
1, 786,600
81, 500
88,000
5, 555, 800
704, 900
2, 643,800
2,076, 300
44,500
86,300
1,480,900
294, 900
499, 700
584, 200
46, 700
55,400
1, 554, 600
263, 500
873, 200
290,200
93,900
33,800
19, 856, 200
3, 386.100
9, 680, 800
6, 021,300
407,000
361,000
District No. 9.- -Arkansas --------Louisiana.--------. _--_
Missisppi ---New Mexico ____---__
Texas-------- _-_-_
7,464,300
848,800
1,467, 700
409,000
359,400
4,379,400
3,636,600
810,000
525,400
170, 300
72,600
2, 058, 300
2,895,800
659, 500
348, 800
376,200
93,900
1,417,400
1, 323,000
253, 400
201,900
144,400
46, 900
676, 400
1,705,400
501, 700
300,200
157, 500
23,400
722, 600
17,025,100
District No. 10 ...-----Colorado
--------Kansas .--------Nebraska _---__-__-__
Oklahoma ------- ___-__
5, 055,100
859,000
694,400
551, 800
2, 949, 900
6, 307,400
1,354,100
996, 700
394, 700
3, 561, 900
3,255, 500
941, 000
392,200
335,800
1, 586, 500
868, 600
253,400
143, 300
73, 600
398, 300
2,393,900
327, 500
229,400
164,900
1, 672, 100
17,880, 500
3, 735, 000
2,456, 000
1, 520.800
10,168, 700
District No. 11 -------5, 229, 000
3, 731, 700
Idaho----............ 582, 100
391,500
Montana.
_-----17, 500
11,400
Oregon--.._--.......1, 164, 500
641,400
_
Utah-----494, 500
314,300
2, 548, 300
Washington .----2,083, 200
Wyoming----329,400
289, 900
92, 700 -----------Alaska ---------.___
3, 670, 800
1,052,000
2,001,600
15, 685,100
365,000
4, 600
756, 200
230, 300
2,155,400
150, 500
8,800
141,800
10,700
212,000
40,400
573, 600
59,800
13, 700
141,000
42,200
325, 700
81,300
1,330,800
80,000
600
1, 621, 400
86,400
3,099,800
1, 160, 800
8, 691, 300
909, 600
115,800
District No. 12_---Arizona- .. -...--California....
Nevada_-- -----Hawaii-------2
3, 073,400
2,844,000
1,257,400
596, 200
9, 254,100
13,994,400
465,.10
.--
4,803,900
17,60
5,940, 600
1440
821,000
1,30
1, 252, 700
7,0
26,812, 600
8,0
465,100
13, 381, 000
174, 600
4,404, 800
154, 400
5,678,200
18, 300
783,100
75, 400
1,130, 200
887, 800
25,377, 300
148, 300
224, 500
108, 000
19, 600
47,100
547, 500
Refinancing of associations' own mortgages includes only the amount of increase in the mortgage.
Prepared by Division of Research and Statistics, Federal Home Loan Bank Board.
135
EXHIBITS
EXHIBIT 27
Federal savings and loan associations-Mortgage loans outstanding and Federal
Home Loan Bank advances, by States, June 30, 1937, and June 30, 1938
Mortgage loans outstanding
June 30,
1937
June 30,
1938
Increase
June 30,
1937
June 30,
1938
$8, 346, 206
462, 648
59, 864,148
5, 360, 499
368,078
1, 271, 381
$2, 456, 958
168, 648
15 120,457
914, 599
297, 278
353, 281
$842, 061
37, 670
3,511, 306
525, 800
15,000
38,328
$1,136, 336
66, 654
4,281,815
452, 910
31, 575
60, 703
$294, 275
28,984
770, 509
172, 890
16,575
22, 375
56, 361, 739
75, 672, 960
19,311,221
4, 970,165
6,029,993
1,059, 828
83,006, 700
97,401, 009
14,394, 309
5, 515,097
4, 701,832
1813,265
83,006, 700
97, 401, 009
14,394,309
5,515,097
4, 701, 832
1813, 265
12, 569, 529
8, 059,100
22, 740, 570
10, 202, 826
10, 171.041
2,143, 726
1, 870, 424
786, 836
3, 810, 481
1, 428,186
1,
940, 057
641. 350
20, 628, 629
32, 943, 396
12, 314, 767
2, 657, 260
5, 238, 667
2, 581. 407
975, 821
368, 332
417, 570
190,910
4,613,045 ..-------7,367,113
3,253, 172
4, 707, 299
3,105,278
1,420,545
1,839,518
4,312, 307
1,353, 390
2, 441, 884
2, 265, 861
1, 224, 154
1,464, 379
2, 988, 291
861, 822
1,026,350
3, 534, 114
1, 353,180
1,808,838
49,238
190,910
1, 454, 127
418,973
1,088,494
240, 225
164, 528
455, 658
District No. 1, Boston:
$5, 889, 248
Connecticut-----------294,
.---------- 000
Maine ... _
44, 743, 691
Massachusetts ------New Hampshire -----4, 445, 900
70,800
Rhode Island .--------918,100
Vermont- -...........
Total--------District No. 2, New York:
New Jersey ..---New York ..
_-----Puerto Rico- ---------Viri,in Islands. --------Total.......--------......
District No 3, Pittsburgh:
Delaware- ----__. ----Pennsylvania ------...
West Virginia- .--...Total ---------District No. 4, Winston
Salem
Alabama........--------District of Columbia-...
Florida -----..............
Georgia ----------Maryland-................
North Carolina-----......
South Carolina---------Virginia..
_------__
Total -
....
Federal Home Loan Bank advances
__----
3,424,100
4,399, 921
-....- 4,613,045
.
21,394, 600 28, 761, 713
11,249,412 14,354,690
10,564, 192 14,876,499
6,371, 768
8, 637, 629
8, 496, 900
11, 465,191
9,353, 600 12, 887, 714
Increase
70,
854, 572 100, 016, 402
29,161, 830
9, 834, 595
13, 896, 748
4, 062,153
31,479, 239 40, 109, 721
112, 154,448 131, 149, 630
13, 674, 600 17, 312, 325
8, 630, 482
18,995,182
3, 637, 725
3, 649, 104
7,166, 032
1, 755, 421
4,625,226
6,925, 509
2, 520, 667
976,122
1240, 523
765, 246
Total ...........-..... 157,308,287 188, 571, 676
31,263,389
12, 570, 557
14,071,402
1, 500, 845
District No. 5, Cincinnati:
Kentucky..--....- __
---Ohio..........-------Tennessee-- -........
...
District No. 6, Indianapolis
Indiana....---Michigan---....
.--Total-- ---------
52, 869,147
11,973,800
64,842,947
60,880, 200
17,971,078
78, 851, 278
8, 011, 053
5,997, 278
14,008,331
5, 795. 679
882,253
6,677,932
7,894, 708
1,348,585
9,243,293
2,099, 029
466,332
2,565,361
District No. 7, Chicago:
Illinois.---------Wisconsin----..........
Total-----..............
55, 299, 933
6,467,100
71, 392,442
8,959, 435
16,092, 509
2,492, 335
7, 253,240
818,430
10,122, 509
1,041,420
2,869, 269
222,990
61,767,033
80, 351, 877
18,584, 844
8,071. 670
11,163, 929
3, 092, 259
District No. 8, Des Moines:
Iowa.. ---------Minnesota ......... -Missouri-....--...-North Dakota---.........
South Dakota....------Total-------------
5, 960,102
20, 015, 364
20, 909, 500
1,070,400
1,033, 700
8,271,103
26,464, 578
23, 512,038
1,374,028
1, 297,425
001
214
538
628
725
622, 238
4,127, 400
2, 733, 854
124,991
189, 850
1, 229,860
6,165,812
3, 548,078
194,871
225,833
607, 622
2,038,412
814,224
69,880
35,983
48, 989,066
60,919, 172
11,930, 106
7,798,333
11,364,454
3,566,121
I Reduction.
98591-38-
10
2,311,
6,449,
2, 602,
303,
263,
136
1938
REPORT OF FEDERAL HOME LOAN BANK BOARD,
\Federal savings and loan associations-Mortgage loans outstanding and Federal
Home Loan Bank advances, by States, June SO, 1937, and June 30, 1938-Con.
Mortgage loans outstanding
June 30,
1937
District No 9, Little Rock:
Arkansas------.-------------Louisiana-.---..
Mississippi_ _
New Mexico---------Texas--- -------- -----
nee
Increase ,
Jun,
1937
0,
1938
Increase
6, 451, 100
9, 848, 200
2,478, 900
925, 300
18,294,147
7, 996,060
10, 970, 613
3, 236, 088
1, 348, 095
29, 997, 767
1, 544, 960
1,122,413
757,188
422, 795
11, 703, 620
774, 296
450, 423
241, 937
80, 275
1,426, 341
789,
439,
170,
181,
2, 163,
730
319
237
200
209
15, 434
111,104
171, 700
100, 925
736, 868
37,997, 647
53, 548, 623
15, 550, 976
2, 973, 272
3, 743, 695
770, 123
7, 846, 664
5, 610, 588
3, 891, 300
26, 061,300
11, 560,825
7,854, 458
5, 023, 873
30, 114, 557
3, 714,161
2, 243, 870
1,132, 573
4, 053. 257
765, 934
877, 610
289, 875
1, 766, 301
1,008,
1,422,
460,
2, 996,
645
660
049
859
242, 711
545, 050
170,174
1,230, 558
---------- 43,409,852
54,553,713
11,143,861
3,699,720
5, 888, 213
2,188, 493
686
067
648
532
518
769
542
58, 286
1, 212, 667
153, 748
1, 639, 622
916, 418
3, 551, 769
435, 542
2, 800
463, 925
5,000
891, 022
541, 250
1, 976, 267
212, 558
15, 586
604, 762
54,172
1, 090, 857
857, 579
2, 558, 391
332, 613
12, 786
140, 837
49,172
199, 835
316, 329
582, 124
120,055
Total--. ---------District No. 10, Topeka
Colorado--..------------------Kansas
-_
Nebraska Oklahoma ----------
Total_ -
June 30
1938
Federal Home Loan Bank advances
District No. 11, Portland
46, 400
Alaska------------------4, 725, 400
Idaho-------50, 900
Montana------------8,176, 910
Oregon
Utah
_
--3, 746, 100
Washington----------26.161,000
-1,
562,000
Wyoming
104,
5, 938,
204,
9, 816,
4, 662,
2,, 712,
1, 997,
44, 468, 710
52 436, 762
7, 968, 052
4,092, 822
5, 513, 960
1, 421,138
District No. 12, Los Angeles:
Arizona -----------1, 033, 400
California-------------50,474,100
, 446, 900
Hawaii-----------84, 793
Nevada.---- -----------
1, 6S1, 465
66,185, 755
1, 612,465
...
648,065
15, 711, 655
165, 565
184, 793
288,075
7,018, 789
25, 000
.----
441, 080
10,066, 731
147, 500
-----------
153, 005
3, 047, 942
122, 500
53,039, 193
69,479,685
16, 440,492
7, 331,864
10,655,311
3,323,447
76, 193, 297 101, 511,497
25, 318, 210
Total ---------------
Total--------------Grand total-
..-------
742, 674, 375 944, 746, 553 202, 072, 178
SReduction.
EXHIBIT 28
Federal Savings and Loan Associations-Analysis of operating cost ,1 average income
and expense ratios together with percent of net operating income to average
invested capitalfor the twelve-month period ended December 31, 1937,
by asset groups
Asset groups
$0 to $74,999-------------------------------$75,000 to $149,999---------------------------206
$150,000 to $299,999---------------------$300,000 to $499,999.------------------------154
$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 __-----------------
Number of
associations
reporting
174
244
-
156
91
105
92
30
26
23
Percent
operating
expense to
Percent
operating
expenseto
gross income
average net
25 2
27. 8
28. 8
29.4
30.3
29.0
28. 8
28.1
26 6
26.9
23.2
1 70
1.77
1. 83
1.82
1.90
1.70
1. 68
1.63
1.46
1.31
1. 22
assets
Percent net
operating
o
o
average
invested
capital
5 26
5.20
4. 82
4. S1
4 76
4.66
4.64
4.67
4. 66
4.06
4.36
SThe operating expense is confined to normal operations, and does not include items of a nonrecurring
nature. Likewise, the operating income is that which has been earned from the usual type of business
transaction.
EXHIBITS
137
EXHIBIT 29
Statement of cash receipts and disbursements of the Savings and Loan Promotion
Fund for the year ended June 30, 1938
Balance as of June 30, 1937-----------------------------------
Receipts:
Miscellaneous refunds ----------------------------------Total cash and receipts.------------------------------Disbursements:
Salaries-----------------$2,
350. 08
Supplies and materials- ----------------------89. 77
Communications------------------------------20. 37
Travel ------------------------------------- 2, 635. 63
Transportation of things ------------------------1. 22
1,202. 26
Printing and binding -------------------------Photographing and duplicating ----------------- _
669. 32
Equipment, furniture and fixtures ---------------113. 69
$40, 235. 20
911. 12
41, 146. 32
7, 082. 34
Balance as of June 30, 1938_-------------------------------- 1 34, 063. 98
1This balance is available for disbursements contracted before the termination of the Savings and Loan
Division.
138
REPORT OF FEDERAL HOME LOAN BANK BOARD,
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140
REPORT OF FEDERAL HOME LOAN BANK BOARD,
1938
EXHIBIT 31
Federal Savings and Loan Insurance Corporation-Financial
statement
as of June 80, 1988
ASSETS
Cash in U. S. Treasury_-----------------------------Accounts receivable:
Insurance premiums due.
------------$1, 700. 70
Insurance premiums deferred-----------525, 380. 87
73. 08
--Other-----.---------------------
$118, 043. 97
527, 154. 65
Investments:
U. S. Government securities and securities
wholly guaranteed by the United States- 112, 601, 500. 00
248, 113. 65
Premium less discount on investments....
112, 849, 613. 65
Accrued interest:
On investments---------- ----------------------------
583, 070. 24
077, 882. 51
Total assets-----------------------------------114,
LIABILITIES AND CAPITAL
Accounts payable:
For purchases and services....--------Funds held in escrow (Clinton F. S. & L. A.,
Clinton, Tenn.)------------------
$4, 716. 39
73. 80
4, 790. 19
Deferred income:
Unearned insurance premiums---------Credits due insured associations ---------
948, 368. 86
.02
948, 368. 88
Capital and surplus:
Capital stock outstanding-------------100, 000, 000. 00
Reserve fund as provided
by law.------------- $4, 227, 543. 83
Less: contributions to in
102, 820. 39
sured institutions-......
4, 124, 723. 44
9, 000, 000. 00
Special reserve for contingencies--------113, 124, 723. 44
----------------------- 114, 077, 882. 51
Total liabilities and capital.
EXHIBITS
141
EXHIBIT 32
Federal Savings and Loan Insurance Corporation-Income and expense statement
for the period, July 1, 1937, to June 30, 1938
Income:
Insurance premiums earned
---------------$1, 881, 450. 30
Admission fees earned ------------65, 926. 84
Total-------------------------
1,947, 377. 14
Expenses: 1
Administrative-----------------------------------Noadministrative-- -----------------------------
192, 227. 45
620. 64
Total------------------------------------------192, 848 09
Net operatingincome-----------------------------------1, 754, 529. 05
Other income:
Interest earned on investments-- --------------------Amortization of discount on bonds--------------------Miscellaneous receipts61.---------------------------------6
3, 262, 774. 37
42. 80
72
Total-----------------------------------------3, 262, 878. 89
Other deductions:
Amortization of premium on bonds---------------------
21, 795. 38
Total--------------------------------------------21, 795. 38
Otherincomeless other deductions------------------------3, 241, 083. 51
Net income for period---------------------------------Deduct adjustments of prior years ---------------------------
4, 995, 612. 56
3, 426. 09
Net income-----------------------------------------------4, 992, 186. 47
Allocated to special reserve for contingencies----------------3, 000, 000. 00
Allocated to reserve---------------------------------1
Detail Expense Accounts are shown in following table.
1 992, 186. 47
142
REPORT OF FEDERAL HOME LOAN BANK BOARD,
1938
EXHIBIT 33
Federal Savings and Loan Insurance Corporation-Expensesfor the period
July 1, 1937, to June 30, 1938
Administrative expenses:
Personal services
$117, 630. 35
Printing and binding
---------4, 486. 40
Supplies and materials
371. 06
Travel expense-----------------------------8, 961. 59
Telephone and telegraph
453. 04
Special expense fund-Director of Public Relations
766. 01
Advertising --------------------------2, 244. 10
Furniture and fixtures------------------------------1, 325. 87
Miscellaneous
720. 20
Services rendered by Federal Home Loan Bank Board
54, 669. 93
Audit by Comptroller's Office of the Federal Home Loan Bank
Board-----------------------------------------598. 90
Total administrative expenses ------------------------
192, 227. 45
Nonadministrative expenses:
T ravel expenses--------------------------------------T(
elephone and telegraph ---------------------M[iscellaneous -------------------------------------------
589. 05
21. 69
9. 90
Total nonadministrative expenses- -----------------------
620. 64
Grand total---------------------------------------192,
848. 09
EXHIBIT 34
Home Owners' Loan Corporation-Summaryof foreclosures
Cases
Year
Fore
closures
authorWithizedjudgment
35
1934--------.... ------------------------535
1935, January-June-----.........
3,900
1935, July-December----......-...
23,181
1936, January-June-----------1936, July-December...----------42,879
34,017
1937, January-June.............----24,982
1937, July-December.-----------.......
1938, January-June.............-----22,763
Cumulative totals, June 30,1938-
152,292
Pending
Properties
In pr
a
ors
oc- Redeemed Sold to
third
by borrower
party
Acquired
title2
4
10
182
484
3,170
2, 862
3,562
3, 581
22
425
2,870
19, 821
29, 453
24,129
21, 209
17,028
0
6
290
1, 564
15, 666
28,690
25,762
20,560
0
0
0
0
20
76
119
59
0
2
6
23
80
154
168
120
9
114
983
4,449
15,875
23,225
26,981
28,386
13,855
17,028
20,560
274
553
100,022
1 At end of period.
SOCases in which judgment or sale has taken place but a delay for possible redemption or other reasons
is necessary before title in absolute fee can be obtained. Figures refer to end of period.
143
EXHIBITS
EXHIBIT 35
under jurisdictionof Property
Home Owners' Loan Corporation-Properties
Management Division, June 30, 1938, separatedby regions
Properties
owned
Region 1A, Boston.................---------------------.....-----Resion IB, New York ......--------....----------------Region 2A, Baltimore-------------------------Region 2B, Cincinnati------------------------Region 3A, Atlanta ..-------------------------Region 3B, Memphis------------- -----------------Region 4A, Chicago ---.....---.....---------------...------------Region 4B, Detroit
...---------------------------Region 5A, Omaha
Region 5B, Dallas.-----------------------------------Regiqn 6, San Francisco.
Total, United States----. ----------------
Properties
Properties - on which
in process
foreclosure
of acquiring
or deed
title
acceptance
pending
Total prop
erties under
jurisdiction
jurisdiction
6,296
20,420
9,235
7,347
2,642
9,040
5,036
5, 547
6, 758
6, 633
4,033
116
895
91
737
1,647
145
4,759
1,864
5, 567
842
3,482
325
9, 355
743
1,135
608
637
612
666
975
1,450
537
6,737
30, 670
10,069
9, 219
4,897
9, 822
10,407
8,077
13, 300
8,925
8. 052
82, 987
20, 145
17, 043
120,175
EXHIBIT 36
rental delinquencies, and average price
Home Owners' Loan Corporation-Vacancies,
per unit rented by months
Vacancies 1
1936-July--.---------August------...
--.
SeptemberOctober----.....----.
November- ..
December ...-1937-January--------.
February-------.
March---------April-----------......
May-----------..........
June------------..........
Rental
delinquencies 2
Percent Percent
18.6
9.7
17.7
11.9
15.9
10.1
17.1
8.4
1&8'4
7. 5
17. 5
8. 7
18. 7
9.1
18. 3
9.9
17. 8
10. 4
15.0
8.2
13.3
7.3
12. 5
6. 8
Average
price
per unit
rented
$20. 59
20.75
20. 04
21.24
21. 26
20.92
22. 61
22.90
23.90
23. 85
24.60
24.99
Vacancies 1
1937-July--........----------.
August------....
September--...
October----...---November .--December-......
1938-January---.-----.....
February-------...
March---------April-----------..........
May------------......
June..------
Rental
delinquencies 2
Percent Percent
11.2
6.3
10.4
5.2
10.4
4. 7
10.4
4. 2
11. 2
3. 3
12. 4
3. 2
3. 5
13.1
13. 5
3.6
14. 3
3. 3
12. 6
3. 0
11.6
2.2
11.5
1. 9
1 Percentages of vacant units to units available to yield income.
2 Percentages of tenants in possession delinquent more than one month to units rented.
Average
price
per unit
rented
$25.27
25.48
25.77
26.10
26.90
26.75
26. 48
27.19
26.91
26.96
27.40
27. 66
144
REPORT OF FEDERAL
tIOME LOAN BANK BOARD,
193_
EXHIBIT 37
Home Owners' Loan Corporation-Number of employees by departments, divisions,
and sections as of July 1, 1938
Board Members and Assistants --------------------------Secretary's Office --------------------------------------Research and Statistics----------------------------------Public Relations_----------------------------------------Adjustment ---------------------------------Financial Adviser. --------------------------------------
43
138
61
18
4
4----3
1267
Total, Board ------------------------------------------General Manager, Staff------------------------------------ 1, 264
Assistant General Managers-----------------------------26
Property Management -----------------------------2, 901
Loan Service--------------------------------------------2, 693
Appraisal and Reconditioning -------------------------- 1, 598
Accounting -----------------------------------------1, 221
Treasurer---------------------------------------------719
1 16
Budget-------------------------------------------------512
Auditor---------------------------------------------370
Insurance.
--------------------------------------------1
Purchase and Supply ---------------------------------95
11, 415
1,268
1
190
----------------------Total, Management-------------Legal Department---------------------------------------------Personnel Department----------------------------------------
H. 0. L. C., total-----------------------------------------
2
13, 140
1
Includes personnel of general service departments which serve all agencies under the Federal Home
Loan Bank Board.
2 Includes 45 employees on per diem basis.
EXHIBIT 38
Home Owners' Loan Corporation-Statement of investments in savings and loan
associations
Fiscal year 1937 Fiscal year 1938
Investments:
$96,681, 300
Federal savings and loan associatins--------------------- -----23, 209, 000
State-chartered savings and loan associations---------------------119,890, 300
---------------------------------..
Total ----------------...
Repurchases:
12, 000
---------Federal savings and loan associations--------------------------------------------State-chartered savings and loan associations---12, 000
Total
----------------------------------------------------Net investments:
96, 669,300
Federal savings and loan associations---------------------------209.000
State-chartered savings and loan associations-----------........-----------23,
119,878, 300
Total
-------------------------------------------------Net cumulative investments-end of year:
150, 356,400
Federal savings and loan associations...-----.---------------------32, 664, 600
State-chartered savings and loan associations---------------------183, 021,000
Total.--------------------------------------------
$18,864, 900
10,099,710
28,964,610
219,000
40,000
259, 000
18, 645,900
10, 059,710
28, 705, 610
170, 764, 300
40,962, 310
211, 726,610
145
EXHIBITS
EXHIBIT 39
Home Owners' Loan Corporation-Investments in savings and loan associations,
by States, as of June 30, 1938
Federal savings and
loan associations
State building and loan
associations
Number
Number
Amount
Amount
Alabam a - - - - - - - - - - - - - - - - - - - - --13
$870, 500 - - - - -- - - - - - Arizona- - - - - - - - - - - -- - - - - - - - - --2
590, 000
1
$150, 000
Arkansas --- - - - - - - - - - - - - -- - - - --25
1,311,000
1
65,000
Calilornia - - - - - - - - - - - - - - - - - - - - - -54
17, 109, 700
12
2,7158, 000
Colorado ---------------------16
2, 349,000
4
780, 000
Connecticut -------- -------------15
2, 775, 500
3
71,000
D elaware - - - - - - - - - - - - - - - - - - - - - - - - - - --- 44 --- 9,- 500-- -- -- - --272,
--Florida --- - - - - - - - - - - - - - - - - - - - - - 4
, 7, 0
- - - - -- - -- - Georgia
--------------------- ---40
3, 377, 000
2
400, 000
Idabo
- - - - - - - - - - - - - - ----- - -- - - 7
1,930,000 - - - - -- - - - - - Illinois-----------------------------------------82
14, 297, 500
11
680, 000
Indiana-------------------------------------------49
7, 326, 000
17
1, 050, 000
Iowa --------------------------------------21
1,644,000
5
181,000
Kansas ----------------------------------------17
2,302, 000
19
2, 682, 000
Kentucky ------------- ----------------------------29
3,319, 000-----------Louisiana------------------------------------------8
378, 000
28
5, 967, 600
M aine-- - - - - - - - - - - - - - - - - - - - - - - 6
218,500 - - - - -- - - - - - M aryland ----------------------18
3, 800, 000
3
325, 710
M assacbusetts -- - - - - - - - - - - - - - - - - ---10
4,807,000 - - - - -- - - - - - M icbigarn -----------------------22
2,6e94, 300
8 -890,000
M innesota-- - - - - - - - - - - - - - - - - - - - - 28
7,404, 600 - - - - -- - - - - - 16
485, 000
1
20, 000
Mississippi -------------------------------M issouri -------- ----------- ----30
5, 134, 000
6
847,400
M ontana---- - - - - - - - - - -- - - - - -- - -1
30,000
1
275, 000
Nebraska ------------------------------9
767, 000
2
10,7000
Nevada-- - - - - - - - - - - - ---------------------- - -- - - - - - - - - - - -- - - - - New ilampsbire--------------------------------1
400, 000-----------New Jersey--------------------------------------------- -------------18 - 1,325, 000
New Mexico--------------------------------7
173,500-----------New York -------------------------------55
19,658,800
16 - 1,871,600
North Carolina-------------------------------13
2,050,7000
7
267, 500
Nortb Dakota --------------------4
244, 000
1
600, 000
Ohio----------------------------------------------55
12,812,000
35
10,595,000
Oklahoma ----------------------18
2, 210,7000
1
25, 000
Oregon ------------ -- - ---- - - - - -- - --19
3p518, 500 -- - - - - - - --Pennsylvania --------------------44
5, 562, 400
17
754,500
R bode Island-- - - - - - - - - - - - - - - - - - - - 1
185, 000 - - - - -- - - - - - South Carolina-------------------------------------18
1,219, 000
1
75,000
South Dakota --------------------4
288,7000
2
27, 000
Tennessee - - - - - - - - - - - - - - - - - - - - - - 36
5, 744, 000 - - - - -- - - - - - Texas---------------------------------------------67
4, 539, 100
8
2,400, 000
Utah -----------------------------------------6
1,640,000
-3
1,450,000
Vermont ------------------------------------------1
50, 000-----------Virginia-------------------------------------------19
2,897, 500
1
135, 000
Wasbington ---------------------------------------24
7,588, 000
11
1, 174, 000
West Virginia ----------------------------------17
2, 314, 000
3
270, 000
Wisconsin -----------------------------------------27
2, 747, 500
17
3,480,000
Wyoming------------------------------------------9
853, 600-----------District of Columbia--------------------------------1
50, 000-----------Hawaii --------------------------------------------1
25,000-----------Alaska------------- -------------------------------1
33,300-----------Total --------------------------------------Less: Rtepurchases----------------------------------
1,010
110
170,995,300
231, 000
265
1
41,002,310
40,000
Net investment------------------------------------
1, 000
170, 764,7300
264
4,92
Does not include 5 additional partial repurchases.
1
146
REPORT OF FEDERAL HOME LOAN BANK BOARD,
1938
E KHIBIT 40
Home Owners' Loan Corporation--Summary of income and expense for the fiscal
year ended June 30, 1938
Operating and other income:
Interest-------------------------------------------- $119, 685, 378. 84
Rent ------------------------------------------16, 160, 089. 61
Dividends received from savings and loan associations---6, 134, 330. 72
Miscellaneous -------------------------------------165, 816. 17
142, 145, 615. 34
Operating and other expenses:
Interest on bonded indebtedness--$75, 768, 685. 19
Amortization of discount on refunded
bonds------------------------2, 351, 438. 38
Administrative and general expenses -- _- 31, 984, 319. 61
Property expenses
13, 836, 853. 79
Miscellaneous -----------------------2, 919. 01
123, 944, 215. 98
Net income before losses in the liquidation of assets and
provision for losses----------------------------Losses in the liquidation of assets during the
fiscal year ended June 30, 1938:
Loss on capitalized value of property sold - $7, 801, 280. 92
Commission and selling expense on prop
erty sales------------------------3, 083, 493. 66
18, 201, 399. 36
10, 884, 774. 58
Less-Profit on sale of furniture, fixtures and
equipment_-------------- -------
6, 510. 36
10, 878, 264. 22
Net income before provision for losses which may
sustained in the liquidation of assets -_---_--_-__
Provision for losses:
On mortgage loans (based on Y of 1% per
annum on the unpaid monthly balances
of mortgage loans) ----------------$5, 839, 614.
On property (equivalent to unpaid inter
est, advances and foreclosure costs to
dates of acquisition on all property ac
quired, less property sold, during the
21, 160, 122.
fiscal year)----------------------171, 063.
For fidelity and casualties -------------
be
7, 323, 135. 14
50
74
98
27, 170, 801. 22
Loss for fiscal year ----------------
------
19, 847, 666.08
147
EXHIBITS
EXHIBIT 41
Home Owners' Loan Corporation-Summaryof income and expenses from beginning
of operations to June 30, 1938
Operating and other income:
Interest--..------------------------------------$524, 399,
Rent----------------------------------------------20,
317,
Dividends received:
Federal Savings and Loan Insurance Corporation-,.3, 035,
Savings and loan associations-------------8, 560,
Miscellaneous------------------------------------1,214,
Operating and other expenses:
Interest on bonded indebtedness------- $309, 426, 351. 10
Amortization of discount on refunded
bonds--------------------------3, 893, 286. 45
Administrative and general expenses_-155, 216, 368. 90
Property expenses------------------17, 582, 772. 31
Miscellaneous----------------------2, 988. 76
688. 46
129. 46
326. 09
861. 16
848. 27
557, 527, 853. 44
486, 121, 767. 52
Net income before losses in the liquidation of assets and
provision for losses----------------------------Losses in the liquidation of assets during the period from June
13, 1933 to June 30, 1938:
Loss on capitalized value of property
sold----------------------------$7,
749, 213. 71
Commission and selling expense on prop
erty sales-----------------------3, 459, 202. 24
Loss on sale of furniture, fixtures and
equipment---------------------- -43, 895. 38
71, 406, 085. 92
11, 252, 311. 33
Net income before provision for losses which may be
sustained in the liquidation of assets --------------Provision for losses:
On mortgage loans (based on % of 1%
per annum on the unpaid monthly
balances of mortgage loans) .------.
$26, 377, 419. 63
On interest receivable (equivalent to
interest due and unpaid at June 30,
1938)-------------------------12, 785, 211. 26
On property (equivalent to unpaid in
terest, advances and foreclosure costs
to dates of acquisition on all property
on hand at June 30, 1938) ------60, 863, 371. 53
For fidelity and casualties -----------1, 021, 063. 98
60, 153, 774. 59
101, 047, 066. 40
Loss for the period (Deficit as at June 30, 19381...-See financial statement, footnote 1, p. 91.
1
40, 893, 291. 81
148
REPORT OF FEDERAL HOME LOAN BANK BOARD, 1938
EXHIBIT 42
Home Owners' Loan Corporation-Analysi'sof changes in deficit for the fiscal year
ended June 30, 1938
Deficit as at June 30, 1937_-----
$31, 740, 150. 62
Add:
Loss for the fiscal year ended June 30,
1938-----------------------$19, 847, 666. 08
Cumulative property expenses, less
property income, deferred pending
sale, carried as an asset at June 30,
1937, written off in the current
fiscal year----------------------7,
730, 562. 73
Administrative and general expenses
applicable to prior years ---------1, 426, 908. 65
Additional loss on sale of real estate
applicable to prior years as a result
of revised capitalization procedure
adopted by the Board of Directors
on May 14, 1937 ---------------272, 824. 75
Reduction of property income appli
cable to prior years credited during
the current fiscal year to property
in process of acquiring title, as a
result of revised capitalization
procedure--------------------- -288, 100. 07
Adjustment of interest receivable
controls in various regional offices,
applicable to prior years, in order to
effect reconcilement with detailed
accounts-----------------------541, 675. 25
Deduct:
Capitalization of various expendi
tures charged to property expense
in prior years, resulting from
revised capitalization procedure- Elimination of reserve for depreciatior
of property owned as at June 30
1937------------------------Reduction of reserve for losses or
interest receivable to an amounit
equivalent to interest due and
unpaid at June 30, 1938 -------Miscellaneous credits (net)-
30, 107, 737. 53
61, 847, 888. 15
7, 216, 468. 63
1, 500, 234. 15
12, 230, 782. 50
7, 111. 06
20, 954, 596. 34
Deficit as at June 30, 1938 before full provision for losses which
may be sustained in the liquidation of assets 1--------------1 See financial statement, footnote 1, p. 91.
40, 893, 291. 81
EXHIBITS
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149
Index
Advances of the Federal Home Loan Banks to members-See FEDERAL
HOME LOAN BANK SYSTEM.
Page
Agencies of Federal Home Loan Bank Board1-----------------------1
Organization chart of------------------------------------Facing 1
Assets-See Financial statements or agency concerned.
Balance sheets-See Financial statements or agency concerned.
Bank Presidents' Council-- -------------------------------------39
Bonds, Home Owners' Loan Corporation--------------------------93-94
Outstanding, Exhibit 43, June 30, 1938-------------------------149
Building and loan associations-See Savings and loan associations.
Building costs:
High, cause of--------------------------------------------------7
Index of material prices, Chart II, 1926-19386
6-----------------Indices of cost of materials and labor:
Chart III, 1936-1938---------------------------------------7
100
Exhibit 2, 1936-1938--------------------------------------Central Housing Committee9
9-----------------Charters, Federal savings and loan associations------------- --------54
Number of, Exhibit 24, 1937 and 1938 --------------------------130
Collections, Home Owners' Loan Corporation----------------------73-75
Construction:
Costs (See also Building costs)
7-----------------Index of, Chart I, 1926-1938
4
4-----------------Non-farm dwellings ------------------------------------------10
Number of, by types:
10
Chart IV, 1920-1937--------------------------------------Exhibit 3, 1922-1938-------------------------------------101
5
5-----------------Obstacles to
Outlook for----------------------------------------------------18
3
Revival of-------------------------------------------------3-4
Trends in, 1937 and 1938---------------------------------------Debentures, Federal Home Loan Bank-----------------------------32
Issues of, Table------------------------------------------------33
Participation of Banks, Exhibit 16-------------------------------114
Debt:
Home mortgage, decrease of------------------------------------15
Private long-term, distribution of, Chart IX, 1934-1938- ---------44
Default:
Federal Savings and Loan Insurance Corporation -------------------62
Prevention of--------------------- ------------------------62
Settlement, terms of --------------------------------------63
98591-38---11
151
152
REPORT OF FEDERAL HOME LOAN BANK BOARD,
1938
Page
Default-Continued.
Home Owners' Loan Corporation ------------------------------73
Methods of dealing with- -----------------------------------74
Number of accounts in--------------------------------------73
Summary, Table, 1936-1938----------------------------------74
Direct-reduction plan:
Loans by Federal savings and loan associations -----------------53-54
Use of, by Home Owners' Loan Corporation ---------------------71
Districts, Federal Home Loan Bank, map of ------------------------20
Examinations:
Development of uniform form----------------------------------62
Federal Home Loan Bank System members -----------------------37
Federal Savings and Loan Insurance Corporation -------------------62
64
Cost of
--------------------------------------------------Expenses-See Financial statements or agency concerned.
Exhibits, list of_---------------------------------------------97-99
Federal Home Loan Bank System ------------------------------97
Federal savings and loan associations --------------------------98
Federal Savings and Loan Insurance Corporation ------------------99
Home Owners' Loan Corporation- ------------------------------99
Survey of housing and mortgage finance-- ------------------------97
Federal Home Building Service Plan--------------------------39-41, 89
Federal Deposit Insurance Corporation -----------------------------57
FEDERAL HOME LOAN BANK BOARD
v--------------------Administration of agencies--------------------------------------1
Agencies:
Functions of
1
1----------------------Organization chart of -------------------------------------Facing 1
Agents of, officers of Federal Home Loan Banks as -----------------53
Debenture issues-----------------------------------------------32
Examining Division- --------------------------------------37
Development of uniform examination form --------------------62
Financing of home ownership - -------------------------------18
Home Owners' Loan Corporation, organization of- ----------------89
Personnel-------------------------------------------------37
Receipts and disbursements -----------------------------------38
Exhibit 22, 1937 and 1938-----------------------------------129
66
Service divisions of, general-------------------------------------53
Supervision of Federal savings and loan associations ----------------FEDERAL HOME LOAN BANKS-See FEDERAL HOME LOAN
BANK SYSTEM.
FEDERAL HOME LOAN BANK SYSTEM-------------------iv, 21-43
Administration of-----------------------------------------------37
Advances to members-See FEDERAL HOME LOAN BANKS.
Assets of members, Chart VI and Table------------------------- 23-24
104
Exhibit 6, 1933-1938---------------------------------------Exhibit 15, June 30, 1938-----------------------------------112
ixb~x153
FEDERAL HOME LOAN BANK SYSTEM-Continued.
Page
Balance sheet items, consolidated statement of, members'.
106
Dollar amounts, Exhibit 9, 1936 and 1937 -----------------------108
Percentage distribution, Exhibit 10, 1936 and 1937---------------30
Borrowing capacity of members----------------------------------112
Exhibit 15, June 30, 1938------------------------------------Percent of members borrowing, Exhibit 14, 1934-1938--------112
20
Districts, Federal Home Loan Bank, map of -----------------------37
Examinations of members --------------------------------------62
Development of, uniform examination form----------------------FEDERAL HOME LOAN BANKS:
28-30, 51
Advances to members ------------------------------------29
Amount advanced, Chart VIII, 1933-1938 ---------------------51
Federal savings and loan associations, to----------------------18
Interest rates on------------------------------------------116
Exhibit 18, June 30, 1938---------------------------------29
Outstanding, Chart VIII, 1933-1938 ----------------------------- 110
By months, Exhibit 11, 1932-1938 ----------------------111l
By Bank Districts, Exhibit 12, 1933--1938 -------------------28-30
Collateralized and noncollateralized-----------------------112
Exhibit 13, 1933-1938 ----------------------------------Repayments, Chart VIII, 1933-1938 --------------------------29
Exhibit 11, 1932-1938 --------------------- --------------110
Types of -----------------------------------------------30
Collateralized and noncollateralized, trend of, outstanding --28, 30
111l
Exhibit 13, 1933-1938 ----------------------------------Long and short term, trend of, Table, 1933-1938--------------30
53
Agents of the Federal Home Loan Bank Bosrd-------------------Agents of the Federal Savings and Loan Insurance Corporation------- 62
31, 32, 35
Capital stock of, subscriptions to --------------------------Members', Table, 1937 and 1938 -----------------------------31
112
Exhibit 15, June 30, 1938 ---------------------------------31
U. S. G3overnment, Table, 1937 and 1938 ----------------------32,33
Debentures ------------------------------------------------33
Issues of, Table----------------------------------------114
Participation of Banks, Exhibit 16 ----------------------------31, 34
Deposits, interbank----------------------------------------34
Interest rates on------------------------------------------Districts, map of--------------------------------------------20
Dividends -----------------------------------------------33-34
Declared, Exhibit 17, 1933-1938-----------------------------115
Financial statements:
Balance sheets:
Consolidated, Table, 1937 and 1938-----------------------35-36
Exhibit 21, June 30, 1938 ---------------------------------123
Operations (See also Exhibits 19 and 21)---------------------34-35
Profit and loss account -------------------------------------34
Consolidated, Table, 1937 and 1938 -------------------------3-4
Exhibit 19, June 30, 1938 ---------------------------------117
154
REPORT OF FEDERAL HOME LOAN BANK BOARD,
1938
FEDERAL HOME LOAN BANK SYSTEM-Continued.
FEDERAL HOME LOAN BANKS-Continued.
Page
Financial statements-Continued.
Surplus and undivided profits - -----------------------------35
Analysis of, Exhibit 20, June 30, 1938----------------- -----121
21
Functions of_ ----------------------------------------------Funds, source of----------------------------------------------31
Interest rates--------------------------------------------34
116
Exhibit 18, June 30, 1938----------------------------------Rules and Regulations, revision of-----------------------------37
Stock subscriptions ---------------------------------------31
31
Members', Table, 1637 and 1938 ----------------------------Exhibit 15, June 30, 1938------------------------------112
U. S. Government, Table, 1937 and 1938
------------31
Supervision of -----------------------------------------------37
21
Functions of----------------------------------------------- ---Membership:
23
Eligibility for ------------------------------------------------22
Growth of, in number and assets ------------------------------104
By Bank Districts, Exhibit 6, 1933-1938 ---------------------24
By type of institution, Table, 1937 and 1938-------------23
Chart VI, 1933-1938--------------------------------------18
Investments in shares of, private -----------------------------103
Exhibit 5, 1935-1937------------------------------------------------------------------------ 15, 24-27
Mortgage lending by_
26
Members, Table, 1937 and 1938------------------------------27
Mortgages held by members, Table, 1937-- -------------------25
Savings and loan members, Chart VII, 1936-1938- -------------Purpose of loan, Table, 1937 and 1938-------------------26
22
Federal Land Banks----------------------------------------------22
Federal Reserve System -----------------------------------------38
Federal Savings and Loan Advisory Council- ----------------------Members, list of, 1937-1938----------------------------------38-39
, 47-57
FEDERAL SAVINGS AND LOAN ASSOCIATIONS-----------51
Advances from Federal Home Loan Banks------------------------Facing 128
Areas served by, Exhibit 23, county map -------------------17, 54
Charges to borrowers- --------------------------------------54
Charters-------------------------------------------------------Number of, Exhibit 24, 1937 and 1938---------------------------130
-48
Conversions ----------------------------------------------53
Direct-reduction loans -----------------------------------------53
Federal Home Loan Bank Board, supervision by -------------------54
Fees, fines,, penalties, etc---------------------------------------Financial statements:
Assets:
47
Progress of, Table and Chart X------------------------------130
State breakdown, Exhibit 24, 1937 and 1938 ------------------106
Balance sheet, consolidated, Exhibit 9, 1936 and 1937------------108
Percentage distribution of items, Exhibit 10, 1936 and 1937--- ---
INDEX
155
FEDERAL SAVINGS AND LOAN ASSOCIATIONS-Continued.
Page
Financial statements-Continued.
Income and expense ----------------------------------------51, 52
Analysis of, Exhibit 28, December 31, 1937--------------136
Operations-See Exhibits 9, 10, 24, and 28.
Funds, source of -------------------------------_ 45, 53
Growth of ---------------------------------------------------46
Home Owners' Loan Corporation, investments by
90
State breakdown, Exhibit 39, June 30, 1938 ----------------------145
Total, Exhibit 38, 1937 and 1938 -------------------------------144
Insurance of accounts required --------------------58
Interest rate------------------------------------------------17
Variable ------------------------------------------------55
Investments in:
Amount of----------------------------------48
Exhibit 25, 1937 and 1938 -------------------------------132
Tables, 1936-1938----------------------------------------- 48-49
Home Owners' Loan Corporation-See Exhibits 25, 3$, and 39.
Dividends paid on ---------------------------------------90
Restrictions of------------------------------------------48
Number of, Exhibit 24, 1937 and 1938 ---------------------130
Private, rise of, Tables, 1936-1938----------------------------48-49
Amount, Exhibit 25, 1937 and 1938--------------------------132
U. S. Treasury, Exhibit 25, 1937 and 1938 -------------------- 132
Lending activity, mortgage -----------------------------_
14,49
Amount of ----------------------------------------------49
Exhibit 26, June 30, 1938----------------------------------133
Direct-reduction loans ---------------------------------------53
Loans outstanding, Exhibit 27, 1937 and 1938------------------135
Purpose of, Chart XI, 1935-1938------------------------------50
Repayment of loans-------------------------------------------53
Management of_ ---------------------------------i---.- 53
43
Mortgage debt, percent held by --------------------------------Mortgage lending-See Lending activity.
National banks of home financing field, described as------------54
National Bank System, comparison with --------------------------46
Number of associations - -----------------------------------46
Table and Chart X, 1934-1938 --------------------------.
47
Origin and purpose------------------------------------------44
Private investments, rise of------------------------------------48
Amount, Exhibit 25, 1937 and 1938---------------------------132
Risk rating by
----------------------------------------------55
Rules and Regulations, revision of-------------------------------54
Savings and Loan Division------------------------------------52
Savings and Loan Promotion Fund, receipts and disbursements, Ex
hibit 29, June 30, 1938--------------------------------------137
Termination of------------------------------------------------52
Structure of------------------------------------------------53
Supervision by Federal Home Loan Bank Board----.-----------5
156
REPORT OF FEDERAL HOME LOAN BANK BOARD,
1938
Page
FEDERAL SAVINGS AND LOAN INSURANCE CORPORATION----------------------------------------------,57-67
64
Admission fees----------------------------------------------Advertising of insurance-- --------------------------------------- 60,61
Agents of, Federal Home Loan Banks as---------------------------62
Associations, insured:
57-58
Assets of-------------------------------------------------Entering, Chart XIII, 1934-1938----------------------------59
59
Present, Chart XIII, 1934-1938-----------------------------58
Progress of, Chart XII, 1935-1938---------------------------138
Summary of, Exhibit 30, June 30, 1938 ----------------------138
Average size of, Exhibit 30, June 30, 1938-----------------------61
Balance sheet items, Table, June 30, 1938 ----------------------45
Federal Home Loan Bank System, membership in ----------------61
Home mortgage finance, importance in- ----------------------60
Investments, private, increase in-------------------------------58
Investors in, insured- ------------------------------------138
Number of, Exhibit 30, June 30, 1938------------------------Progress of, Chart XII, 1935-1938------------------------- --58
57
Number of_--------------------------------------------------82
Chart XII, 1935-1938-------------------------------------138
Exhibit 30, June 30, 1938 ---------------------------------60
Operations, progress of----------------------------------------58
Progress of, Chart XII, 1935-1938 ----------------------------62
-------------------------------------------Supervision of------------------------------------------ 64-65
Costs of insurance
62
Default------------------------------------------------------63
Prevention of------------------------------------------------Settlement, terms of------------------------------------------63
Examinations----------------------------------------------62
64
Cost of-----------------------------------------------------65, 66
Federal Home Loan Bank Board, use of general service divisions of ---Financial statement:
140
Balance sheet, Exhibit 31, June 30, 1938------------------------Income and expenses------------------------------------------65
142
Analysis of expenses, Exhibit 33, 1937 and 1938 ---------------141
Statement of, Exhibit 32, 1937 and 1938----------------------Operations-See Exhibits 31, 32, and 33.
Insurance protection:'
Beneficial effects of-------------------------------------------- 59-60
Growth of---------------------------------------------------- 57-59
57-58
--------------------------------Investors, insured--------138
Number of, Exhibit 30, June 30, 1938--------------------------58
Progress of, Chart XII, 1935-1938-----------------------------66
Liability of, potential ------------------------------------------57
Origin and purpose. -------------------------------------------66
--------------------------------Personnel-----------------64-65
Premiums ----------------------------------------------140
Due and deferred, Exhibit 31, June 30, 1938---------------------
INDEX
FEDERAL SAVINGS AND LOAN INSURANCE CORPORATION
Continued.
Promotional programs---- ---------------------------------Purpose of the Corporation -----------------------------------Rehabilitation programs, participation in
Reserves
------------------------------------------------Rules and Regulations, violations of----------------------------Service divisions, general
------------------------------------Settlement, methods of------------------------------------------Settlements, cases during fiscal year 1938-----------------------Supervision of insured associations-- -----------------------------Termination of insurance ---------------------------------------Financial statements:
Federal Home Loan Bank Board-See page 38 and Exhibit 22.
Federal Home Loan Banks-See pages 34-37 and Exhibits 19, 20, and 21.
Federal Home Loan Bank System, members-See Exhibits 9 and 10.
Federal savings and loan associations-See page 51 and Exhibits 9, 10,
24, and 28.
Federal Savings and Loan Insurance Corporation-See page 65 and
Exhibits 31, 32, and 33.
Federal Savings and Loan Insurance Corporation, insured associations
See page 61 and Exhibit 30.
Home Owners' Loan Corporation-See pages 90-92 and Exhibits 40, 41,
and 42.
Savings and Loan (Division) Promotion Fund-See page 52 and
Exhibit 29.
Foreclosures
Home Owners' Loan Corporation----------------------------Cost of, by States, map --------------------------------------Methods of_-----------------------------------------------Studies of
Summary of, Exhibit 34, 1934-1938---------------------------Time required, by States, map- ------------------------------Trend of, graph --------------------------------------------Indices of, Table-----------------------------------------------Metropolitan communities, in--------------------------------Non-farm, total --------------------------------------------Number of, by county size groups, Table, 1934-1938 ----------------Trend of------------------------------------------------------Home Owners' Loan Corporation, graph ---------------------Uniform foreclosure law suggestedHome mortgage finance ----------------------------------------Debt, home mortgage, decrease of ------------------------------Estimates, sources of, Exhibit 4 -----------------------------Institutional lenders, loans made by, types of -------------------Chart VII, 1936-1938---------------------------------------Table, 1934-1938-------------------------------------------Insured institutions, importance of, in ---------------------------Interest rates .----------------------------------------------
157
Page
61-62
57
61-62
65-66
62
65,66
63
63-64
62
64
8
8-----------------76-81
80
78
8
8-----------------142
79
77
13
13
13
14
13
77
8
8-----------------3-20
15
101
21, 33
25
15
60
16, 55
158
REPORT OF FEDERAL HOME LOAN BANK BOARD,
1938
Home mortgage finance-Continued.
Page
Loans outstanding:
Amount by purpose, Table, 1937 -----------------------------16
Amount by types of lenders, Table, 1934-1937- ----------------16
New loans made by savings and loan associations- -----------------25
Chart VII, 1936-1938----------------------------------------25
Exhibit 7, June 30, 1938-------------------------------------105
Purpose of, Exhibit 8, June 30, 1938---------------------------105
16
Table, 1937--------------------------------------------------Trendsin----------------------------------------------------10
Uniform real estate mortgage and foreclosure law, proposed ----------11
HOME OWNERS' LOAN CORPORATION ------------------, 69-97
Achievements-------------------------------------------------70
Amortization period, proposed extension of------------------94
Applications, received and closed- ---------------------------69
Appraisal technique
-----------------------------------71
Bonds--------------------------------------------------------93-94
Outstanding, Exhibit 43, June 30, 1938-----------------149
Borrowers' accounts-----------------------------------------72-75
Defaulted
------------------------------------------------73
Table, 1936-1938-----------------------------------------74
Terminated, Table, 1937 and 1938------------------------------73
Collections, trend of--------------------------------------------73
Default, methods of dealing with- ------------------------------74
Number of accounts in--------------------------------------73
Table, 1936-1938
-------------------------------------74
7
75-----------------------Tax
Direct-reduction loan plan, use of------------------------7-------71
Federal savings and loan associations, investments in
90
State breakdown, Exhibit 39, June 30, 1938 --------------------145
Total, Exhibit 38, 1937 and 1938------------------------------144
Financial statements:
Balance sheet, June 30, 1938----------------------------------91
148
Deficit, analysis of, Exhibit 42, June 30, 1938- -----------------Income and expenses----- -------------------------------90-91
Cumulative statement, Exhibit 41, June 30, 1938---------------147
Deficit, analysis of, Exhibit 42, June 30, 1938------------------148
146
Fiscal year 1938, Exhibit 40---------------------------------Operations-See Exhibits 40, 41, and 42.
---------------------------------------------- 76-81
Foreclosures_
80
Cost of, by States, map- ------------------------------------78
Methods of_-----------------------------------------------8
Studies of----..
.8---------------------------------------------Summary of, Exhibit 34, 1934-1938--------------------------142
79
Time required, by States, map --------------------------------77
Trend of, graph--------------------------------------------71
Interest rates-----------------------------------------------94
Reduction of, proposed----- --------------------------------
INDEX
159
Page
HOME OWNERS' LOAN CORPORATION-Continued.
Investments in savings and loan associations -------------------90
Dividends received on----------------------------------------90
State breakdown, Exhibit 39, June 30, 1938------------------145
Total, Exhibit 38, 1937 and 1938------------------------------144
Legislation, proposed----------------------------------------94-96
Interest rates, reduction of ----------------------95
Loan term, extension of -------------------------------------95
Moratorium on principal payments ------------------96
Liquidation, progress in --------------------------------------72
Realization on loans, Table, 1937 and 1938 ---------------------72
Loan service stations----------------------------------------89
Mortgage loans---- ------------------69-72
6-----------------Repayment of principal -----------------------------------72
Table, 1937 and 1938-------------------------------------73
Moratorium, optional, 1933-1934----------------------------70
Moratorium, recently proposed-- ---------------------------96
Servicing of-----------------------75-76
Tax defaults------------------------75
Terminated, Table, 1937 and 1938-----------------------------73
Terms------------------------------------------------------71
Liberalization of, demand for ----------------------------94-96
Origin and purpose ------------------------------------------69
Personnel -----------------------------------------------89
Exhibit 37, July 1, 1938---------------------------------------144
Property Management Division (See also Real estate) -------------- 81-83
Real estate:
Acquired_----------------------------------------------78-81
Graph, Chart XIV, 1936-1938------------------------------77
Summary, Table, 1936-1938--------------------------------81
Foreclosure summary, Exhibit 34, 1934-1938------------------142
By HOLC Regions, Exhibit 35, June 30, 1938----------------143
Value of--------------------------------------------------82
Rental of--------------------------------------------------84-85
Average rent per unit, Chart XVII, 1936-1938- ----------------85
Exhibit 36, 1936-1938----------------------------------143
Delinquencies, Chart XVI, 1936-1938 ------------------------84
Exhibit 36, 1936-1938----------------------------------143
Vacancies, Chart XVI, 1936-1938-------------------------84
Exhibit 36, 1936-1938----------------------------------143
Sale of------------------------------------------------------- 81-83
Chart XV, 1936-1938-------------------------------------83
Reconditioning-- ---------------------------------------85-89
Contracts completed------ ---------------------------------86
Cost of-----------------------------------------------------87
Expenditures, distribution of, Chart XVIII ---------------------88
Types of cases, Table, 1937 and 1938---------------------------86
Volume of-------------------------------------------85-87
160
REPORT OF FEDERAL HOME LOAN BANK BOARD,
193 8
HOME OWNERS' LOAN CORPORATION-Continued.
Page
Regional offices:
Location of ------------------------------------------.
89
Personnel of, Table ----------------------------------------89
Subdivisions ---------------------------------------------89
Homestead tax exemption9
9-----------------------Housing (See also Construction)
3----------------------------Demand- ---------------------5
5-----------------------Index of residential construction, Chart I, 1926-19384
4---------------Outlook for----------------------------------------------18
"Overhang" of repossessed properties ------------------------5-6
Exhibit 1, 1929 and 1937------------------------------------100
11
Public and private, compared -----------------------------Real estate, institutionally held --------------------------------5-6
Exhibit 1, 1929 and 1937-------------------------------------100
Shortage5
5-----------------------Trends in-------------------------------------------------10-11
Vacancies-----------------------------------------------12-13
Income and expenses-See Financial statements.
Industrial production, index of, Chart I, 1926-1938 ------------------4
Insurance of accounts-See FEDERAL SAVINGS AND LOAN IN
SURANCE CORPORATION.
Interest rates ----------------------------------------------------- 16-17
Federal Home Loan Banks -----------------------------------33
Exhibit 18, June 30, 1938------------------------------------116
Federal savings and loan associations-- ------------------------17, 55
71
Home Owners' Loan Corporation -------------------------------95
Reduction of, proposed----------------------------------------Trends of------------------------------------------------16-17
55
------Variable-------------------------------------------Labor------------------------------------------------------7-8
8
8-----------------------Cooperative agreements suggestedCosts of, in construction, indices of:
7
Chart III, 1936-1938----------------------------------------100
Exhibit 2, 1936-1938 --------------------------------------7
Jurisdictional disputes-----------------------------------------9
Land title registration, reform of-----------------------------------Legislation:
52
Federal savings and loan associations, state enabling ---------------8
'
Foreclosure, uniform mortgage and, proposed ---------------------Home Owners' Loan Corporation, proposed-----------------------94-96
95
Interest rate, reduction of- ----------------------------------95
Loan term, extension of --------------------------------------96
Moratorium on principal payments ----------------------------8
8-------------------Mortgage, uniform, and foreclosure, proposed------41
Savings and Loan Act, uniform, proposed------------------Lending activity-See Home mortgage finance.
III
Letter of Transmittal- _------------------------------------------
INDEX
161
Page
Maps:
20
Federal Home Loan Bank Districts -----------------------------Federal savings and loan associations, areas served by, Exhibit 23-- Facing 128
80
Foreclosure cost map------- ------------------------------79
Foreclosure time map ------------------------------------------Mortgage loans-See Home mortgage finance.
62
National Association of State Building and Loan Supervisors-----------National Bank System, comparison with Federal Savings and Loan Sys
tem------_-----------------------------------------64
---Operations-See Financial statements or agency concerned.
Organization chart of agencies of Federal Home Loan Bank Board-- Facing 1
"Overhang" of repossessed properties ----------------------------5-6
Exhibit 1, 1929 and 1937------------------------------------ -100
Personnel:
Federal Home Loan Bank Bard- ---------------------------37
Federal Savings and Loan Insurance Corporation- ---------------66
Home Owners' Loan Corporation ---------------------------89
Exhibit 37, July 1, 1938-------------------------------------144
Property Management Division, Home Owners' Loan Corporation-See
HOME OWNERS' LOAN CORPORATION.
Real estate:
Foreclosures-See Foreclosures.
Institutionally held --------------------------------------5-6
Exhibit 1, 1929 and 1937------------------------------------100
8-9
Laws, inadequacy of ----------------------------------------Market, recent trends in--------------------------------12
Sales, trend of
----------------------------------------------13
Taxes, discussion of-------------------------------------------9
Reconditioning (See also HOME OWNERS' LOAN CORPORATION)_
11
Estimated expenditure for, Table, 1922-1938----------------------11
Home Owners' Loan Corporation, expenditure for- -----------------11
Rentals:
6
Index of market, Chart II, 1926-1938-----------------------------Relation to building costs-----------------------6
6----------Indices of residential, Chart V, 1926-1938
------------------12
Trends in
----------------------------------------------6, 12-13
Residential construction, trends in (See also Construction and Housing)-__ 10-11
Rules and Regulations:
Federal Home Loan Banks, revision of----------------------------37
Federal savings and loan associations, revision of-------------------54
Federal Savings and Loan Insurance Corporation, violations of-------62
Savings, individual long-term -------------------------------17-18
Amount in Federal savings and loan associations, Tables, 1936-1938--- 48-49
Exhibit 5, 1935-1937----------------------------------------103
162
REPORT OF FEDERAL HOME LOAN BANK BOARD,
1938
Savings and loan associations (See also FEDERAL HOME LOAN BANK
SYSTEM):
Conversion from State to Federal charter--------------------------Federal-See FEDERAL SAVINGS AND LOAN ASSOCIATIONS.
Insured associations of Federal Savings and Loan Insurance Corpora
tion-See FEDERAL SAVINGS AND LOAN INSURANCE
CORPORATION.
Interest rates_
---------------------------Investments in:
Home Owners' Loan Corporation, by -----------------State breakdown, Exhibit 39, June 30, 1938-----------------Total, Exhibit 38, 1937 and 1938----------------------------Private, Exhibit 5, 1935-1937------------------------------------------------------------------------Investors, insured, in
Number of, Exhibit 30, June 30, 1938--------------------------Lending activity:
Loans made--------------------------------------------------Amount by purpose, Table, 1937 ---------------------------Chart VII, 1936-1938---------------------------------------Purpose, Exhibit 8, 1937 and 1938----------------------------Table, 1937--------------------------------------------Volume, 1934-1938, Table----------------------------------Volume, 1937 and 1938, Exhibit 7---------------------------Loans outstanding, by type of loan, Table, 1934-1937 -------------Members of Federal Home Loan Bank System-See FEDERAL HOME
LOAN BANK SYSTEM.
Real estate owned -------------------------------------------Exhibit 1, 1929 and 1937------------------------------------Savings and Loan Division-_ --------------------------Savings and Loan Promotion Fund, receipts and disbursements:
Exhibit 29, June 30, 1938----------------------------------Termination of----------------------------------------------Taxes, real estate, discussion of
Tax exemption, homestead
Transmittal, Letter of---------------------------------------------Uniform real estate mortgage and foreclosure law--------------.---Uniform Savings and Loan Act-------------------------------------United States Building and Loan League ------------------------United States Treasury, investments of:
Federal Home Loan Banks, Table, 1937 and 1938- -----------------Federal savings and loan associations, Exhibit 25, 1937 and 1938-----Vacancies-_ ----------------------------------------------------------------------------- -----------------Zoning ordinances
O
Page
48
17
90
145
144
103
57-58
138
21, 33
16
25
105
16
15
105
16
5, 6
100
52
137
52
9
9-------------------9
9-------------------III
11
41
53, 62
31
132
12-13
9
@FedFRASER