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1 Vol.4 No. 1 NPPr FEDERAL HOME LOAN BANK REVIEW OCTOBER 1937 ISSUED BY FEDERAL HOME LOAN BANK BOARD WASHINGTON D.C. FEDERAL HOME LOAN BANK REVIEW Issued Monthly by the Federal Home Loan Bank Board JOHN H. FAHEY, Chairman WILLIAM F. STEVENSON • • T. D. WEBB, Vice Chairman F. W. CATLETT W. H. HUSBAND Federal Home Loan Bank System Federal Savings and Loan Associations Federal Savings and Loan Insurance Corporation Home Owners9 Loan Corporation SUBSCRIPTION PRICE OF REVIEW The FEDERAL HOME LOAN BANK REVIEW is the Board's medium of communication with member institutions of the Federal Home Loan Bank System and is the only official organ or periodical publication of the Board. The REVIEW will be sent to all member institutions without charge. To others the annual subscription price, which covers the cost of paper and printing, is $1. Single copies will be sold at 10 cents. Outside of the United States, Canada, Mexico, and the insular possessions, subscription price is $1.40; single copies, 15 cents. Subscriptions should be sent to and copies ordered from Superintendent of Documents, Government Printing Office, Washington, D. G. APPROVED BY T H E BUREAU OF T H E BUDGET Federal Home Loan Bank Review TABLE OF CONTENTS Page The Little Rock public relations program 1 Design value in low-cost housing 4 Homestead tax exemption 6 Reconditioning real estate 11 An example of coordinating technical research in home building 15 The Appraisal Forum 16 State legislation and the insurance program 17 Residential construction and home-financing activity 18 Indexes of small-house building costs 19 Monthly lending activity of savings and loan associations 20 Federal Savings and Loan System 21 Federal Home Loan Bank System 22 Federal Savings and Loan Insurance Corporation 23 Statistical tables 23 Nos. 1, 2: Number and estimated cost of new family dwelling units 23 No. 3: Indexes of small-house building costs 25 Nos. 4, 5, 6: Estimated lending activity of all savings and loan associations 28 No. 7: Monthly lending activity of reporting savings and loan associations 30 No. 8: Index of wholesale price of building materials 31 No. 9: Institutions insured by the Federal Savings and Loan Insurance Corporation. 32 No. 10: Monthly operations of State-chartered insured associations 32 No. 11: Monthly operations of Federal savings and loan associations 33 Nos. 12, 13: Federal Home Loan Bank System 33 Nos. 14, 15, 16: Home Owners' Loan Corporation 34 Counsel's opinion and Board resolutions 36 Directory of member, Federal, and insured institutions added during August-September.. 37 OCTOBER 1937 The Little Rock Public Relations Program B ETWEEN June 15 and September 15 three public relations representatives of the Federal Home Loan Bank of Little Rock visited 229 insured savings and loan or homestead associations located in the five States over which that Bank has jurisdiction. They were sent to help association managers clarify their relations with the public; to help associations establish adequate advertising budgets; and to advise the public, through its leading citizens and civic clubs and printed media, as to the meaning and function of the local savings and loan associations, the Federal Home Loan Bank System, the Federal Savings and Loan Insurance Corporation, and the Federal Savings and Loan System. The results which have been tabulated show that this unique experiment of direct contact with local conditions and needs has met with a very favorable response. That there was need for such services is apparent when only 61 out of the total of 229 associations visited could show adequate existing advertising programs. The campaign revealed the important fact that the general public was not at all well acquainted with the Federal agencies concerned with home financing nor even with the activities of their local savings and loan associations. This program followed a series of group conferences held throughout the Little Rock District during April and May to bring together managers of member associations and representatives of the Little Rock Bank, mentioned in the July REVIEW. At these conferences many problems of interest to both groups were discussed. Introducing this second step, the president of the Bank wrote to the local association managers and to the editors of local papers announcing the representative and stating the date of his arrival in their town. Consequently, his visit was anticipated and he was assured of a good hearing. In the offices of each association the representative conferred on how a local program in regard to advertising, news stories, service club work, and civic club activities should be carried out. October 1937 He met with the manager and discussed specific problems of the association and, if necessary, an afternoon meeting of the board of directors of the association was arranged for him. In the meantime, he visited local newspapers and discussed savings and loan news releases and advertising, and interviewed bankers, the postmaster, lumbermen, and real-estate agents. With these individuals he left a little booklet explaining in questionand-answer form the agencies under the Board. He was frequently called upon to speak before local clubs. Then, when he met the directors of the association later in the same day, he was in a position to outline his observations of the public attitude toward the association and to suggest a program to meet the local situation. He tried in every case to secure formal approval of a budget program for publicity in keeping with the size and potentialities of the association. And, upon leaving, he gave the manager a brochure of "Public Relations Policies Suggested by the Federal Home Loan Bank of Little Rock." This brochure gave detailed suggestions for public relations operations on the premise that the subject has these two principal phases: "The indirect promotion of the association through the individual who manages it, along with the board of directors, and advertising and publicity more specifically about the association itself." In it is the insistence that releases given to newspapers should have definite news value. "Puff" publicity, as such, can have none but an unfortunate effect on the relations between the association and the local editor. Examples of the types of releases which have news value were included, such as the Bank is sending out regularly to 160 daily and 160 weekly papers. One problem which admits no definite solution is the amount which should be spent for advertising. The brochure suggests, with reservations, one-fourth of 1 percent of assets as an average annual expenditure, and lists the purposes for which it might be spent. The obvious rule is, however, to find where it will produce the greatest returns. 1 RESULTS OF PROGRAM As THE representatives state in their report, the real results of this public relations program cannot be fully measured. There exist a better understanding between the Bank and its members, an increased knowledge of home-financing institutions on the part of "key" citizens, and improvement in Government Designed and Supervised HOME LOANS O M mortgage carries straight Geared to J unchanging monthly payments retire the loan. Special Features Created by the Federal Government particularly to help home FAVORABLE TO THE Made on home properties In Fort Smith and suburbs by these Fort Smith-owned institutions with your savings up to (5,000 insured by an agency of the United States gorem- HOME-OWNER These Insured Savings and Loan Associations invite you to investigate the convenient, low cost plans whereby you may buy or build a borne, repair, remodel or refinance your present home. Insured Savings and Loan Associations of Fort Smith, Arkansas STANDARD FEDERAL SAVINGS & LOAN ASS'N UNITED BUILDING & LOAN ASSOCIATION PEOPLES FEDERAL SAVINGS & LOAN ASS'N I North Sixth Street South Ninth and D Streets SOS Garrison FIRST FEDERAL SAVINGS & LOAN ASS'N SUPERIOR FEDERAL SAVINGS & LOAN ASS'N the relations between the institution and the local editorial offices and news agencies. Nevertheless, a cross section of the reaction to the program can be given. For example, of the 168 associations with inadequate public relations programs, 50 2 adopted advertising budgets, 58 increased their budgets, while 43 would not immediately commit themselves to the program, and 17 could not be interested in participation. In meeting public officials, the results of the interviews were somewhat as follows: Of interviews with postmasters, 72 percent were satisfactory; with bankers, the proportion was 86 percent; with representatives of chambers of commerce, 86 percent; and with editors, 90 percent. During a part of the time the program was in effect (June 1 to September 1), 621 newspaper stories were published and six cities published special sections on savings and loan activity. COOPERATIVE ADVERTISING ONE trend, which was exemplified particularly by "Insured Savings Week" in New Orleans, is that towards cooperative activity. Associations which are parallel in structure and operations will benefit by pooling their advertising resources in a common effort. In Fort Smith, Arkansas, five associations, with the assistance of the Bank, combined to carry on a cooperative program for three months preceding and following their June 30 declaration of dividends. This was possible because (1) they had identical lending plans, (2) they declared identical dividends, and (3) they were all insured. Also, 10 Federal savings and loan associations located within a radius of 100 miles of San Antonio, Texas, have covered the preliminary work in organizing a joint radio program. And in Little Rock, a group of associations is sponsoring a movement among all associations in the southwest to use uniform advertising so that they may achieve unity in the minds of the people by saying the same thing well and simultaneously in all sections. The illustrations on these pages are samples of the type of cooperative newspaper advertising which was undertaken. All these developments point to a healthy cooperation among all operators. It is by means of such cooperation that the best practices may be preserved and, at the same time, presented to a public whose confidence is increased in direct proportion to its understanding. Federal Home Loan Bank Review The 'FEDERAL' docks Wednesday loaded with 4% dividend checks for many thrifty A r k a n s a s people You, too, may be one of the many who, having been investing their savings in Federal Share Accounts, will find their semi-annual dividend checks ready for them Wednesday, June 30. You may have been investing only a dollar or two at a time; but whatever the amount, it has been working for you, earning at the rate of 4 per cent annually. More than that, your savings in a Federal Share Account is safe—insured up t6 $5,000 by an authorized agency of the United States Government . . . The next dividend will be paid December 3 1 . So, if you are not a Federal shareholder—if you would like to invest safely and profitably for the future—open your Federal Share Account now. FEDERAL SAVINGS & LOAN ASSOCIATIONS OF LITTLE ROCK , FIRST FEDERAL PULASKI FEDERAL STATE FEDERAL SAVINGS Cr LOAN ASS'N The Boyle Building SAVINGS Cr LOAN ASS'N 219 West Second Street SAVINGS Cr LOAN ASS'N 203 West Capitol GUARANTY FEDERAL SAVINGS Cr LOAN ASS'N Commercial Natl Bank Bid*. October 1937 COMMONWEALTH FEDERAL SAVINGS Cr LOAN ASS'N 212 Louisiana Street Design Value in Low-Cost Housing I N LARGE buildings the design is usually selfevident. The types of materials, the shape and style of the cornice, the form of the columns and pilasters all point to the guiding hand of a designer. But in single-family homes such design is not always evident to the uninitiated. The spectator may stop to admire but he will seldom be conscious of the house as a work of art. Cheaper materials for one thing and simplicity and lack of pretension for another do not attract the attention to the less obvious quality of the building. Consequently, whereas it would be patently silly to suggest that a 40-story office building be built without architectural supervision, few people are concerned whether their prospective home is well designed or not. Nevertheless, competent architectural services are essential to the maximum of usefulness and beauty in the small house. Not only will such services insure a plan which will fit the needs of its occupants with the greatest economy but they will give the house proportion and design. In the house shown on the opposite page, the design is a natural development of the plan. First, taste and careful planning have determined the proportions, fenestration, and selection of materials. Second, well proportioned plain surfaces have been used without ornamentation. This is particularly important in the small house. If, for example, the architect had used heavy round columns in place of the delicate latticework on the porch, this one incongruous element would have completely destroyed the character of the design. The simplicity of structural lines and carefully studied details of Mr. Evans' design is in marked contrast to the all too frequent attempts to imitate a traditional style by means of applying architectural details for effect. But the architect's efforts to strip all needless elements from his design serves another purpose. Simplicity of structural form and design assures a 4 minimum of depreciation and low maintenance costs—important considerations for both the small-home owner and the mortgage-lending institution which has a long-term equity in the property. The plan of this house is simple and direct. The sleeping area is separated from the living and dining area, insuring privacy and yet retaining convenience. The rooms are arranged so the flow of traffic will cause a minimum of friction. With properly arranged furniture there should be no necessity for walking around anything to get from one part of the house to another. The entrance in the corner formed by the house proper and the garage serves a dual purpose. I t is conveniently located for kitchen service and forms a protected passage to the garage. This makes an inside communicating door, which would complicate the design, unnecessary. The closet which faces the front door forms one side of a hall which prevents a too abrupt entrance into the living room. Although it is sometimes supposed that halls are waste space, a hall such as this is indispensable in cold or wet climates. Unfortunately, designs such as this are not very common. And that is because efforts in the direction of small-house design have too frequently been sporadic and individualistic. If the small house is to keep pace with changing needs and technical progress it must be subject to continual change. At present, results of research in this field have not been easily available and have not been widely adopted. But through the Federal Home Building Service Plan it should be possible to marshal the important elements in the smallhouse construction industry, having as a principal objective continued improvement of plan, design, and construction technique. NOTE: Information concerning working drawings of the plan shown on the opposite page may be procured by writing to the Editor of the REVIEW. Federal Home Loan Bank Review ONE STORY HOUSE D E S I G N E D BY RANDOLPH EVANS, A. I. Architect, New York City October i937 A. fiisT nooi Pin Homestead Tax Exemption E IGHT years ago the exemption of homesteads from taxation was virtually unknown. The laws of only one State, Vermont, provided for exemption, and Kansas was the only other State which had considered such a law. Today, 14 States have passed laws providing for exemption or for a reduced tax rate on homesteads, 2 States have passed constitutional amendments making such laws possible, and in 3 States constitutional amendments are awaiting approval of the people (see chart beginning on next page). During the past five years 30 different States have had bills for homestead tax exemption before their legislatures. Such widespread growth makes homestead tax exemption the concern of everyone. It brings up the problems of who shall be exempt, how this exemption will affect other forms of taxes, and how it will burden other groups of taxpayers. It is certainly the concern of home-financing institutions because of its probable effect on real-estate conditions and home ownership. The dictionary gives the legal definition of the homestead as "the land and building thereon occupied by the owner as a home for himself and his family, if any, and more or less protected by law from the claims of creditors." Although a majority of the States concur in general to this definition, each State has its own variations. For example, five States limit the property to 160 acres in area, while Texas limits it to 200 acres of rural land and in a town or city to a property valued at not more than $5,000, used as a home or for business purposes. Neither is there any uniformity in the type of taxes from which the property is exempt. In some cases the exemption applies only to State property taxes, and in other cases to all forms of ad valorem or general property taxation, including taxation by municipalities and special taxing jurisdictions. In all States having exemption laws except Arkansas and Oklahoma, the homesteads are not exempt from taxation for pre-existing bonded indebtedness. As has been mentioned, Vermont was the pioneer in the homestead tax exemption movement, even 6 though its law is quite different from those enacted later by most of the other States. The law of this State, adopted in 1917, provided for local option—permitting cities and towns to exempt new dwelling houses for a limited period of time. This law remained in effect until 1929 when it was amended to give cities and towns power to exempt all dwelling houses from taxation for five years. The new law was extremely liberal, not restricting the exemption to owner-occupied dwelling houses, and exempting up to $5,000. A direct statement of the exemption is given in the accompanying table. In the same year that Vermont amended her exemption law, the Kansas legislature considered such a law but it was defeated. But after that, the movement grew by leaps and bounds. In 1933, eight States considered homestead tax exemption laws and the States of Texas and West Virginia adopted such laws through constitutional amendment. During the following years, bills for adoption were brought before State legislatures in quick succession: in 1934, three States; in 1935, thirteen States; in 1936, five States; and in 1937, eighteen States. OPINIONS CONCERNING EXEMPTION as to the justification for homestead tax exemption has been widely divided. Advocates of it cite the handicap that taxation places on home ownership and argue that exemption would have several beneficial effects. These effects have been well summarized as follows by the Committee on Home Taxation in recommending such exemption to the 1934 Convention of the United States Building and Loan League. OPINION First, and most obvious, will be a rise in home values. Following it, no doubt, there will be a period of new construction by those people who have been deterred from building their own homes because of the tax load which they have considered as being too great. That this is true is shown in the case of the State of Ohio where the decrease in taxation through limitation has been an important factor in the rise of real property values. Financing of homes will be easier, because the uncertainty of risk which makes up a part of the financing charge will be clari(Continued on p. 14) Federal Home Loan Bank Review HOMESTEAD TAX EXEMPTION LAWS IN EFFECT ON JULY 23, 1937 Laws making specific exemption of homesteads Property exempt Taxes to which exemption applies Not to exceed $2,000 in assessed value. "Homestead" as defined at date of enactment by constitution and laws of State, not to exceed 160 acres in area. All State ad valorem taxes. Constitution of Arkansas Article XVI, Section 8, Constitutional Amendment No. 23, Laws of 1936. (Adopted at election November 3, 1936.) Put in force by Act No. 247, Laws of 1937, approved March 17, 1937. $1,000. (Legislature empowered to fix amount b e t w e e n $1,000 and $2,500.) Homesteads of residents, married or unmarried, male or female. See definition in Act No. 247, Laws of 1937. All State taxes referred to in Section 8 of Article XVI of Constitution of Arkansas, i.e., General property taxes. Georgia H.B. No. 26, Laws of 1937 (Regular Session). Approved March 30, 1937. Constitutional amendment adopted at election June 8, 1937. Now fixed at $2,000. (Subject to reduction by General Assembly to not less than $1,250 as the fiscal conditions of the State, counties, or schools may warrant.) Homesteads while occupied by owners as a residence, etc. All ad valorem taxation for State, county and school purposes, with exception of taxation to pay interest on and retire bonded indebtedness. Louisiana Constitution Article X, Section 4 as amended at general election November 3, 1936. See Acts of Louisiana, Regular Session 1936, page 888. To value of $2,000. Bona fide homestead, consisting of lands not exceeding 160 acres, buildings and appurtenances, rural or urban, owned and occupied by head of family or person having a mother or father or a person or persons dependent on him or her for support. State, parish and special taxes: E x e m p t i o n does not extend to municipal or city taxes, except in Orleans Parish. Applicable in Orleans Parish to State, general, city and school, levee, and levee board taxes. Not exempt from taxes to an amount greater than the^ necessary funds available in the Property Tax Relief Fund to make the reimbursement provided for. First $4,000 of full and Real estate used as a homestead, except that true value. Precontaining iron ore. ferred reduced assessment valuation on the first $4,000 for homesteads where they do not fall within the total exemption provisions as follows: Platted homesteads to be valued and assessed at 25 percent, unplatted at 20 percent of full value. All taxation for State purposes except that the first $4,000 remains subject to taxation for the purpose of raising funds for the discharge of State indebtedness incurred prior to and existing on July 23, 1937. State Reference Amount Alabama General and Local Acts Alabama Extra Session 1936-1937, No. 107, page 113. Approved February 20, 1937. Arkansas V Minnesota... Mason's Minnesota Statutes 1927, Section 1993 as amended; (last amendment approved July 23, 1937). October 1937 17783—37 1 2 Laws making specific exemption of homesteads—Continued State Reference Amount Property exempt Taxes to which exemption applies Mississippi... Laws of Mississippi, Extra Session, 1935, pages 136-43. Approved November 14, 1935. To extent of $2,500 of assessed value. Homestead of resident head of a family. Not over 160 acres. See Section 2 of Act for definition of h o m e stead. All State ad valorem taxes. Oklahoma H. B. No. 3, Laws 1937, To extent of $1,000 of First Special Session. assessed valuation. Approved January 8, ' 1937. Actual residence of natural person, citizen of State, owner residing and domiciled thereon. Not over 160 acres and improvements if rural; urban to include lot or lots or unplatted tract, with dwelling, garage, barn and other outbuildings necessary to family use, etc. All forms of ad valorem taxation. Except that all assessments, levies, encumbrances, and other contract obligations incurred or made prior to the taking effect of the act shall not be affected by it. South Dakota H. B. No. 230, Laws 1937, Regular Session. Approved March 11,1937. To extent of homestead. Homestead of every family resident of State, consisting of one or more contiguous lots not over one acre in town or 160 acres if not in town plat and one dwelling house and buildings appurtenant thereto. See Code 1929, Vol. I, Sections 449469. Any tax imposed by legislature to defray expenses of State or pay any deficiency thereof. Not to exempt from county, township, city, town, or school taxes. Texas C o n s t i t u t i o n , Article VIII, Section 1-a. $3,000 of assessed taxable value. Homestead of a family, not in town or city, consisting of not over 200 acres, in one or more parcels, with improvements. City or town homestead consisting of lot or lots not valued over $5,000 at time of designation as homestead, with no reference to value of improvements thereon; provided it is used as a home or for business or calling of head of family. Temporary rental does not change character if no other homestead is acquired. See Vernon's Annotated Texas Statutes (Civil), | Vol. 12, Title 57, Article 3833. All taxation for all State purposes; provided this exemption shall not apply to a portion of State ad valorem taxes levied for State purposes r e m i t t e d within those counties or other political subdivisions now receiving any remission of State taxes until the remission has ceased, etc. 8 Federal Home Loan Bank Review Laws making specific exemption State of homesteads—Continued Amount Public Laws, Chapter XXXIII, Section 596 and Section 601. Not to exceed $5,000. Buildings erected after All taxation except State taxes on dwelling June 1, 1922 used and houses erected after occupied exclusively as April 1, 1929. a home and dwelling houses erected after April 1, 1929 whether for sale or rent and appraised, etc., exclusive of land at not over $5,000, may be exempted for period of not over 5 years if town where buildings, etc., are located so votes. Also applies where person purchases for home and occupies and improves land unoccupied and neglected or pasturage for 2 years prior to purchase, if town so votes to exempt for 5 years. $500 of assessed valuation. Homestead real property of all persons occupying same as a home in State of Wyoming. Wyoming.... S. B. No. 2, Regular Session. Chapter 140, page 290, Laws 1937. Approved March 3, 1937. Laws preferring Property exempt Taxes to which exemption applies Reference All general taxation. homesteads Reference Amount Property exempt Taxes to which exemption applies S. B. No. 184, Laws 1937 (Regular Session). Approved March 20,1937. Not to exceed $2,500 credit on total assessed valuation. Homestead as defined in Sections 19-20. Total tax exclusive of special assessments. S. B. No. 184, Section 4 creates Homestead Credit. Fund to give a credit against the assessed value of each eligible homestead. A credit to and not exemption from taxation is provided. West Virginia. Acts of West Virginia Legislature, Extraordinary Session 1932,page 17. Amending Section 1 of Article 10 of the Constitution. Adopted by the people November 8, 1932. Homesteads taxed at not over 1 percent of assessed value which is a preferred rate over non-homestead property. Property used, owned and occupied exclusively for residence by owner and farms occupied and cultivated by owners or bona fide tenants. State and all local taxes. State Iowa October 1937 9 Constitutional State amendment not self-executing Constitutional State Florida the legislature has not acted Amount Property exempt Taxes to which exemption applies Not exceeding $1,000 in value, at the discretion of legislature. Property held and used as a place of residence by the owner. All State and local taxation. Laws of Utah 1935, page Not to exceed $2,000. 257. Constitutional Amendment adopted at general election, November 3, 1936. Up to $2,000 value of all homesteads at the discretion of the legislature. > The State and all local taxes. Reference North Carolina. Constitution of North Carolina, Section 5 of Article 5 as amended by Laws 1935, Chapter 444, page 745. Adopted at general election November 3, 1936. Utah upon which amendments submitted Reference by the legislature Amount Laws of Florida Permanent Up to valuation of Supplement Vol. I, 897 $5,000. (2) (3) S. J. R. No. 21, Laws 1937 (Regular Session). Approved June 9, 1937. Constitutional Amendment for approval by the people. Pennsylvania... H. B. No. 1, Laws 1937 Regular Session. To amend Article IX, Section 1 of Constitution. Filed with Secretary of State March 17,1937 and subject to approval by the people. General Assembly may by general laws exempt from taxation a uniform value in money of the taxable value of homesteads. Rhode Island... H. B. No. 522-X, First Special Session, Laws 1936, approved December 8, 1936. Constitutional amendment for approval by the people. To value of $3,000. but requiring approval by the people Property exempt Taxes to which exemption applies Homestead as defined in Article X of Constitution of Florida. S. J. R. No. 21 increases property exempt and legislature to prescribe laws regulating establishment of exemption, etc. All taxation other than special assessments for benefits. Real estate owned and occupied by head of family, citizen and resident, as a home. All taxation other than special assessments for benefits. CHANGE IN MEMBERSHIP OF THE FEDERAL HOME LOAN BANK BOARD O N OCTOBER 1, Dr. Henry E. Hoagland resigned as a member of the Federal Home Loan Bank Board to return to his post as Professor of Business Finance and Organization at the Ohio State University. He was on a leave of absence from the university while serving as a Board member. 10 President Roosevelt has appointed Dr. William H. Husband to fill Dr. Hoagland's unexpired term of three years. Dr. Husband has been associated with the Bank Board for more than a year. He was formerly Professor of Economics and Business Administration and advisor to the Investment Committee at Ohio Wesleyan University. Federal Home Loan Bank Review Reconditioning Real Estate k LTHOUGH depression experiences in the savr \ ings and loan business have been generally unpleasant, the knowledge gained in certain fields of operation should not be forgotten. Instead, as an aid to future activities, savings and loan operators should store their experiences of those years when foreclosure proceedings dominated the activities of the association and the big problem was handling real estate. The psychologist studies the extremes of human conduct to have a better knowledge of normal behavior because in the extremes cause and effect are more easily discernible. A similar procedure is also applicable to savings and loan operation. For the purpose of studying the "case histories" of associations which have been faced with large real-estate holdings and have successfully handled their holdings with profit, information has been requested from several large associations in different sections of the country. The original request was for data only on reconditioning real estate held by the association, but replies indicated that the subject could be much broader. The reports which were submitted reflect, of course, the wide experience of those who wrote them. In reconditioning as well as in nearly every other savings and loan operation personal judgment and experience are dominating factors. For convenience in discussing the activities of these savings and loan associations, they will be referred to as associations A, B, and C. Essentially, the handling of real estate is a transient problem and not a permanent one. Savings and loan associations are thrift and homefinancing institutions and not real-estate agencies, but that does not mean that property acquired through foreclosure should be immediately disposed of. When there is no demand for property, or when there is a falling market, it is usually considered better to rent the property until conditions change. This may not be for a period of years, so a large association owning many properties is forced to set up departments for handling rentals and sales as well as reconditioning. It may in all probability find it economical to have its own reconditioning crews and warehouses. October 1937 Although a successful solution of the problem of disposing of acquired property depends on the personal judgment of the managing head of the association, there is no reason why he should handicap his decision by an inadequacy of information. According to the report from association A, the well ordered savings and loan association does not wait until it owns a property to be well acquainted with its characteristics. Rather, it makes periodic inspections and appraisals of all the real estate on which it has placed loans, which form a valuable history of the property in the event of foreclosure. This history is the foundation on which decisions as to disposal are made. In addition, all the associations from which reports have been received emphasized the value of immediate inspections at the time of foreclosure. Association B requires a detailed inspection report in written form with a picture attached immediately upon transfer of the asset to the real-estate account. The report states: "This inspection should include the following items: "Lot size, building size, interior layout, structure, garage and driveway, location, neighborhood trend, estimated present rental, estimated ability to sell as is, estimated items for present rental, estimated items for rehabilitation and approximate cost and probable sale price if rehabilitated. . . . "A sufficiently experienced real-estate personnel should constitute the real-estate department, so that this inspection report has a definite meaning. It has been the policy . . . that the inspection itself be attended by the managing officer of the company, and if he is unable in some instances to be present at that inspection, to immediately discuss it with the property inspectors. In this manner the asset is at once placed in an operating position and very often prevents serious damage and loss in and about the property; particularly is this true if the property is vacant. If the weather is freezing or likely to be of freezing temperature, immediate steps must be taken to safeguard plumbing. 11 "The above procedure, in my judgment, constitutes one of the fundamental rules involved in real-estate operation." WHOLESALE RECONDITIONING OPERATIONS BUT such inspections, important as they are, constitute only one step in the Operation of the association handling a foreclosed property. Association C, the third savings and loan association reporting, supplied an outline of the actual procedure followed in connection with its large reconditioning operations. This procedure is as follows: " 1 . The foreclosure action or the taking of deeds to satisfy mortgage obligations begins its operations in the loan supervisor's office. The foreclosure order issued by the supervisor of loans is forwarded to the attorney's office and a letter is written by the attorney to the defaulting mortgagee. This procedure has made possible the negotiation of deeds for many properties. If no satisfactory response is forthcoming, then action is started in court. In the search for information regarding the parties to the title the supervisor is of great assistance in reducing the elapsed time of foreclosure. In Indiana, the time required for completing foreclosure varies from 14 to 18 months. The present law provides for sheriff's sale of property about a year from the date the suit is filed. "2. With the completion of the sheriff's sale the title passes to the association. At this point, notices are filed with the supervisor of loans to clear his records and the property is transferred to the rental manager in the real estate division and recorded by the auditor in the 'property owned' account. The house is immediately inspected. If owner-occupied, notice of ownership is served and rent rate determined. If rented, the house is usually in fairly good general repair and the tenant is permitted to remain if the rent payment record of the receiver has been satisfactory. "When the real-estate market is on the upward trend, the houses most likely to sell are ordered vacated on 30 days' notice. "As rapidly as the houses are vacated, the rental department notifies the inspection department. It is the duty of this department to coop12 erate with the head of the real-estate division in the inspection and disposition of the property. Again a series of decisions are made. The house is either wrecked and the lot cleared or major repair and remodeling may be called for in order to put the house on the market. In the case of minor repairs, such as furnace repair, new roof, tinwork, painting, decorating, we use our 'shinola' crew. If major repairs are scheduled the preparation for bids is performed by a trained architect who prepares plans and specifications, and obtains bids for the work subject to the approval of the manager of the real estate division. If minor repairs are ordered the matter of preparing for bids is based on a brief specification and bid sheet for each job. These bid sheets and specifications are then submitted to carefully selected contractors for bids. The low bidder is awarded the work and the usual protective building insurance carefully checked. "When the work is completed on a property, the inspection department certifies as to payment of all bills and at the same time protects the association against the acceptance of improper workmanship and shoddy materials. All bills are easily audited by the assistant auditor assigned to the operations of the real-estate division." CLASSIFICATION OF PROPERTY As HAS been mentioned, when the property is acquired the responsible officials of the association must make an office analysis of the property so that it may be classified according to its physical value, income value, market value, and future possibilities. The decision must then be made whether the association will rent the property as is, repair it at a minimum cost for renting, rehabilitate it for renting or for sale, or sell it without improvement. To facilitate this decision property may be arbitrarily classified under three heads: salvage properties, average properties, and high-grade properties. Salvage properties: Because of their obsolescence or because they are located in a deteriorating neighborhood, the association is not willing to invest further in them. Consequently, they are sold immediately for cash or are rented with a minimum of maintenance. Federal Home Loan Bank Review Properties with average values: This type will probably benefit by reconditioning. According to association A: "The manager of the real-estate department and one or more of the officers make a thorough personal examination to verify the conclusions of the field appraisers. These conclusions being verified, estimates of cost of reconditioning or rehabilitation and modernization are made. If the expenditure is judged to produce a compensatory value to reestablish or improve the rental value of the property and the market value of the property, invitations to contractors are sent out. The contractors' bids are then classified and the work awarded. Upon completion of the work, a final inspection and appraisal are made." High-grade properties: This type may need conditioning but such work as is done must necessarily be individual and the work authorized must be justified by the particular circumstances. The report from association A states further: "The problems arising out of possession of real estate, classified within the above three broad groups, necessarily depend on the previous owner or occupant. Just as some people keep their clothes well brushed and pressed, while others are indifferent and still others absolutely negligent, so may be the condition of the property which has constituted their shelter. It is of course elementary to require that the field inspections and appraisal reports shall have brought to light any defects in the structural soundness, and the proper drainage of the property; as well as its conformity to local building codes and zoning regulations. Equally important is past neglect of painting which may have caused an appearance of abnormal obsolescence. Another problem is the adequacy and condition of plumbing and heating facilities. Still another extremely important problem is that of modernity in comparison with more recent construction in the same locality. In the older type of house, frequently a serious problem has arisen because of penetration of insects, such as termites." In regard to making the decision about the property the correspondent from association B says: "In arriving at a decision as to which course should be pursued, I think that this should not be delegated, but should be actually made by the October 1937 managing officer of the company. It is not necessarily true that by spending money on a property, a recovery can be made which will justify the expense, either out of operation or from sale. However, in the majority of instances it has been our experience that rehabilitation more readily produces a market, and in many instances a sale price which justifies the rehabilitation cost." TYPES OF RECONDITIONING WORK T H E types of reconditioning work may be classified under the following five genered heads as suggested by association A: 1. Structural alterations, roof replacements, and drainage repairs to offset natural depreciation and to restore structural soundness. 2. Painting and decorating to make property attractive. 3. Repairing, renewing, or replacing plumbing and heating systems to make property as comfortable as neighborhood conditions demand. 4. Eliminating and preventing noxious and pest penetration. 5. Installing modern conveniences to meet competitive conditions, including maintenance or installation of garage when land area permits. If the property is to be rehabilitated, it should be handled under the authority of the managing head of the real estate department, according to association B. The report states: "I think that rehabilitation is one of the most difficult problems in the handling of real estate. In many instances it is necessary to entirely change the character of the structure, and this requires both experience and technical knowledge in marketing, as well as handling men and current information on costs. If a rehabilitation job is indicated, its estimated cost should be fairly accurate; otherwise, when the actual work is let it might prove impracticable. We have obtained the best results by doing all major rehabilitation jobs under contract. A control is kept on costs by issuing a purchase order, one copy of which goes to the contractor, which includes the specifications, one copy is retained in the real-estate department and one copy is sent to the accounting department. As work progresses the managing head of the realestate department follows with daily inspection. We have also found that it is good business to meet all payments for material and labor promptly when billing is presented. This means that 13 inspection must closely follow the work in order to determine whether or not invoices are proper. Of course, in all closed construction, the inspector must be there before the work is closed in. We have no hesitancy in requiring the tearing out of work if it does not conform to specification. "The purpose of the triplicate purchase order is to permit the accounting department to furnish figures to the managing official of the company at all times indicating the outstanding expense accruing; and further, to check against approval when the head of the real-estate department has made his inspection and matched the invoice for work or labor with the copy of the purchase order in his files. We then forward that approved purchase order to the accounting department, which in turn matches it with the original purchase order forwarded to it. This furnishes a good check-up against altered invoices. "If the work is of substantial character we also follow a division of contract to see that the general contractor on the job stays within his limits, and we can then disburse with the general contractor and the subcontractor jointly by voucher to prevent liens. On rehabilitation of a less extensive character, we handle material and labor bills direct. We have found considerable saving by quantity purchase in some types of material. We have been buying paint in 5-ton lots and have obtained a very favorable price. In doing this we require the seller of the paint to warehouse it for us to withdraw on purchase order; although we have previously paid for the entire shipment. Inventory from time to time guards against shrinkage and prevents the delivery of more paint to a job than the job should require. We have found it more practicable to make all selections as to colors of paint, types of wallpaper, methods of refinishing interiors, etc. If you permit the tenant to make these selections you will soon find that they are often not satisfied with their selections and that upon vacating the premises the entire work must be redone due to the fact that the tastes of the tenant were probably unique." In carrying out these detailed and difficult operations it is important that the association not lose sight of the essential purpose of all reconditioning work. This purpose is well expressed in the report from association C which explains, in 14 addition, the value of maintaining high standards in all reconditioning work done by the association. The report reads as follows: "The whole rehabilitation problem is for one end, that of assuring the easy sale of the property. The whole process of reconditioning should at all times be based on reasonable standards acceptable to the respective neighborhoods in which the houses are located. Too much money invested is a waste of money; but it is important to establish standards in performance of rehabilitation work in order that a definite idea of the assured quality of the repairs may be built up in the mind of our buying public that reconditioned houses reconditioned by our association are well and properly equipped for their use. To have attained such a reputation is priceless and it is one which should be carefully protected at all times. It will mean relatively easy and ready sales of the completed property." Tax Exemption (Continued from p. 6) fied. Lenders will be more willing to extend credit, and at higher ratios, since they will be assured that their first mortgage is in reality a first lien and not one subject to prior lien indefinite in amount. Since the cost of the money is also one of the factors making up the price of property, a tax reduction will result in substantial improvement in the home realty market. The final effect of such a homestead exemption will then transfer a large mass of individuals who are now in the tenant class to the home owning group, where previously the confiscatory nature of taxation on homes was the chief reason for their not undertaking home ownership. On the other hand, the Twentieth Century Fund's recent study called "Facing the Tax Problem" denounces homestead tax exemptions. It says: From the point of view of a just distribution of the tax burden we can see no merit in the homestead exemptions recently adopted in Florida and several other States. The most obvious injustice in such exemptions is that they discriminate against the tenant, who must bear in his rent at least part of the real estate tax burden on his dwelling, and favor the person who happens to be able and willing to own his home. It argues, furthermore, that the families which benefit from homestead exemption are usually forced to pay an equal amount through some other form of taxation. Federal Home Loan Bank Review An Example of Coordinating Technical Research in Home Building T HE industrial units that have made the most spectacular progress during the past few decades are those which have conducted scientific and technical research on a comprehensive scale. The home-building industry has had no agency large enough to conduct scientific research on the wide variety of materials and methods of construction used in the production of our homes. It is frequently charged, therefore, that there has been comparatively little technical progress in the home-building business. The home-financing institution realizes that it is desirable to keep in touch with the changes that are constantly being made in the use of building materials and equipment. The mortgage lender is always uncertain which will prove to be sound security. The lender cannot afford to accept new departures until he is assured of their soundness. On the other hand, he should help prospective home owners to take advantage of every constructive economy which progressive practice makes possible, Such economy and progress depend, to a large extent, on two things: reform of the building and safety codes of our cities, and the coordination of the research conducted by various trade associations representing their particular aspects of the industry. An example of effective work in this field is that of the National Bureau of Standards of the Department of Commerce. This Bureau is the Federal agency that is doing the most to promote such progress, by coordinating its technical studies with building code reform and trade association research. With an appropriation granted it during the last session of Congress, it is now planning to expand its research in the technical aspects of low-cost housing. Its findings will be available for the guidance of the builder, and the protection of the home owner and his financing institution. Normally, the Bureau of Standards conducts research at the request of Federal departments and other tax-supported agencies. It does not conduct tests desired by private citizens in comOctober 1937 17783—87 petition with private research laboratories. The results of its studies, however, are made available to the general public in various ways. Among other publications the Bureau issues bulletins bearing the general title of "Technical Information on Building Materials". These bulletins, the TIBM series, discuss briefly conclusions drawn from scientific laboratory tests and practical experience on the use of various types of materials. One bulletin, for example, discusses "Wall Plaster Mixing and Application"; another deals with "Varnish and Lacquer". The bulletins are sent, upon request, to interested parties, such as architects, builders, home-financing institutions, or technical departments of universities. Another service of the Bureau is to answer specific requests for information, especially from local governments and the building trades. It furnishes whatever data are available and cites the proper sources of further information. This service is particularly valuable because of its correlation with the work of the Bureau on building codes, simplified practice, and trade standards. The Bureau cooperates with States and municipalities in the development of building code requirements to provide adequate safety without excessive cost. It works with industry to develop recommendations for simplified practice, by agreement on schedules of sizes and varieties of products, such as brick, tile, and lumber. At the request of business and consumer groups directly concerned, the Bureau helps establish nationally recognized specifications and commercial standards for manufactured products. To encourage private business to take advantage of its research, the Bureau permits trade associations to assign scientific workers to its plant, giving them the privilege of using its equipment, as well as working with its technicians. By cooperating with scientists who are working for organized groups of manufacturers, the Bureau can direct its research to the most practical aspects of the problems involved. It can also make sure that inventions or discoveries will be used for the 15 3 benefit of the public, since it requires that any discoveries made, or information collected, by these research associates must be made freely available, and not patented. Working with an appropriation of $75,000, the Bureau conducted investigations, throughout 1936 and the first half of 1937, on the durability of building materials used in low-cost houses. The materials studied for durability were brick and masonry; plaster, stucco, and wallboard; floor coverings and finishes; thermal insulating materials; plumbing pipes and joints; and metals used in dwelling construction. Interior partitions and roofing materials were studied for both durability and fire resistance. By the Appropriation Act for 1938, the Bureau was granted $200,000 to expand its studies on lowcost housing. It will give particular emphasis to the free standing house of comparatively low cost. The outline of its research includes studies of foundations, bearing walls and partitions, floors, roofs, heating and ventilating equipment, and plumbing. Particular attention will be given to the study of walls and partitions, to determine their qualities of strength and stiffness, fire resistance, thermal insulation, sound insulation, and durability. In carrying out this research, the Bureau will have the benefit of the advice of technicians of the Federal Home Loan Bank Board and other Federal agencies concerned with housing. The Bureau does not expect, in carrying out its new program, to prepare new house plans, but will study building materials as assembled in the structural elements of houses. Entirely new materials and methods of building, as well as those already in use, will be included. Its research is intended to have a profound effect on residential construction. I t should provide the technical information necessary to determine minimum standards which will insure safety of construction and reasonable durability. It should indicate numerous possible economies in design, and improvements in materials and methods. These findings, when put into effect along with the necessary building code reforms, should be of great value to the home owner and the financing institution with which he deals. 16 The Appraisal Forum T HE date on which the national Appraisal Forum will hold its first convention has been set finally for November 19 and 20, and the place will be Washington, D. C. This meeting of 30 major organizations in the country concerned with real-estate appraisal is sponsored by the Joint Committee on Appraisal and Mortgage Analysis, a permanent group consisting of equal representation from Federal and nongovernmental agencies. As was mentioned in the May REVIEW, the Forum will be concerned with a discussion of sources of appraisal information and will not attempt to interpret the material collected. The Joint Committee will present the results of the two major projects it has undertaken: (1) the compilation of a bibliography concerning all phases of appraisal, under the direction of one of the foremost bibliographers in the country, and (2) the classification of urban and rural appraisal data which, because of its general character, can be utilized repeatedly in many valuations. The information for these projects has been collected from scientific bodies, societies, associations, universities, and governmental agencies. In addition to the presentation of this information, speeches will be made by authorities in the field of property valuation, commenting on such subjects as the general aspects of the appraisal data problem and the usefulness and inadequacies of the available data. With the growing realization of the importance of applying substantiating data to methods of appraising as a safeguard to the mortgage lender, the results of these discussions should eventually be of great assistance to the individual appraiser. At present, the plans are to distribute copies of the bibliography and the appraisal classification only to those who have been invited to attend the Forum. But it is expected that this valuable information will eventually be made public. Any inquiries for information regarding the Forum should be directed to Henry E. Price, Secretary, Joint Committee on Appraisal and Mortgage Analysis, North Interior Building, Washington, D. C. Federal Home Loan Bank Review State Legislation and the Insurance Program S TATE-CHARTERED associations, whether or not members of the Federal Home Loan Bank System, were offered the benefits of share account insurance by the Federal Savings and Loan Insurance Corporation under Title IV of the National Housing Act. Their response was prompt, and the number of State-chartered institutions granted insurance since the end of 1935 has been greater than that of Federal associations chartered and insured during the same period. But many associations find it difficult to obtain insurance of accounts for their members because of various features in their respective State laws. A number of recent State statutes may be cited as typical of those which facilitate the insurance of share accounts. These statutes, it is significant to note, have not all been enacted with that aim in view, even incidentally, since some of them were passed before the Federal Savings and Loan Insurance Corporation was created by Congress. They are, therefore, examples of the way in which the most progressive savings and loan practices are adaptable to the program of the agencies under the direction of the Federal Home Loan Bank Board. Let us examine several such typical statutes, and see how they benefit savings and loan investors by promoting at once more modern savings and loan practice and the insurance of share accounts. During the recent depression the assets of many associations became frozen, withdrawal and repurchase payments were delayed, and the investing public in some instances may still be uncertain whether losses will be suffered. To promote public confidence, it was desirable for State legislation to outline methods of reorganization of savings and loan associations, so that insured shares can be issued against those assets which are currently earning, and certificates of participation against frozen assets. Such provisions were contained in, for example, an Ohio statute which facilitated reorganizations in that State before the Federal Savings and Loan Insurance Corporation began to insure share October 1937 accounts, and thus removed in advance one of the worst difficulties to obtaining share account insurance. This statute, Ohio Code 693-1, became effective on June 29, 1934. To maintain protection against losses, it is of course advisable for a savings and loan association to set up a reserve account for the sole purpose of absorbing them. In a number of States, however, the statutory provisions requiring the establishment of reserves are not adequate. Some of them permit associations to charge extraordinary expenses of various kinds out to the reserve fund. A reserve account of this kind clearly does not give the most complete protection to share investors, since it may be used for purposes other than that of meeting losses of the contingency type. Furthermore, it does not comply with the requirements for share account insurance, since it would permit certain associations in a mutual system of insurance to avoid their share of the responsibility by maintaining less protection against their losses than do other associations. An example of recent State legislation which clearly required that savings and loan associations maintain a reserve account that complies with the regulations for share account insurance is a Nebraska statute, approved on April 19,1937. This statute requires associations to use their reserve fund only to meet losses. The procedure required by statute for liquidating a savings and loan association is of direct concern to all shareholders. If an institution is insured, the Federal Savings and Loan Insurance Corporation has an obvious interest in the liquidation, for the insurance contract provides that upon liquidation being ordered the insurance of accounts must be settled. To protect the interests of the shareholders and the Insurance Corporation, a Kansas statute, enacted on March 11, 1937, contains splendid provisions. First, it provides that the Federal Savings and Loan Insurance Corporation shall be notified before the State supervisory authority (Continued on p . 35) 17 Residential Construction and HomeFinancing Activity ENERAL residential building conditions improved somewhat in August compared to July. The seasonally adjusted index of construction for cities of 10,000 and more population increased 5 percent; foreclosures fell to new low levels; market rentals rose one unit; and manufacturing payrolls increased 3 percent. The Federal Home Loan Bank Board's index of building costs showed signs of leveling off in a majority of reporting cities in all parts of the country. The increase of residential construction in cities of 10,000 population and over was due entirely to private building; the number of units provided by Government financed low-cost projects dropped from 116 units in July to zero in August. G RESIDENTIAL BUILDING ACTIVITY AND But the slight increase in building between July and August, as reflected in the index and in the number of units provided, is not indicative of a uniform upturn in residential construction. For building in the larger cities increased more substantially during August than in smaller cities. The number of 1- and 2-family units constructed in cities of 10,000 population and over increased 5 percent while the estimated cost increased 1 percent in August from July. But in communities from 2,500 to 10,000 population the construction of this type of dwelling declined between these two months: the number of units decreased 3 percent and the cost 7 percent. It is interesting to note that in the smallest group, SELECTED INFLUENCING FACTORS 1926 = 100 Source:- I. Federal Home Loan Bank Board (County Reports) 2. U. S. Dept. of Labor (Converted to 1926 Base) 3. Federal Home Loan Bank Board (U. S. Dept, of Labor Records) 18 Federal Home Loan Bank Review the towns with populations between 2,500 and 5,000, the number of units increased 4 percent and the cost decreased 0.8 percent. This was contrary to the reduction in the other small city groups. And it must be remembered that 1and 2-family dwellings constitute the bulk of residences in these smaller cities. Because of this decline, the total building of 1- and 2-family dwelling units in all cities of 2,500 and over increased 2 percent while costs declined 2 percent as may be seen in the chart on page 21. The percent change between July and August in the number and cost of 1- and 2-family dwelling units authorized for construction in cities of various sizes is as follows: Population 2,500-5,000 5,000-10,000 10,000-25,000 25,000-50,000 50,000-100,000 100,000 and over Percent change Number Cost +4. 0 - 0 . 8 - 9 . 6 -12. 8 +0.1 -7. 3 +10. 6 +9.1 +4. 7 +2. 6 +5. 4 +3. 6 There were 12,601 dwelling units authorized by building permits issued in all cities of 10,000 population or over in August. The estimated cost of these units was $49,364,700. This was 7.2 percent more than the number authorized in July but 20.3 percent less than in August 1936. Seventy-five percent of the total were for single-family dwellings as compared to 60 percent in August 1936 (see table 1). For the first eight months of 1937 building permits were issued for 119,891 dwelling units at a total cost of $480,418,600. In spite of the recession during recent months this was 16 percent more units than were authorized during the same period of 1936. The volume of public residential building through August of this year is only a third of that constructed during the January-August period last year. In fact, no public low-cost projects were reported from cities of 10,000 population or over during August even though an additional appropriation of $10,500 was granted the T. V. A. project in Nashville, Tennessee. Breaking down the number of units by States, we find that 2,093 units were authorized in California and 1,748 units in New York. In no other States were over 1,000 units authorized. October 1937 RATE OF BUILDING this volume of building is translated into the rate of building, i. e., the number of family dwelling units authorized per 100,000 population, the Twelfth Bank District, in which California is located, leads with 50.3 units per 100,000 population, while the New York District has a rate of only 14.4 units (see chart on page 27). WHEN [1926=100] Residential construction 1 ... Rentals (NICB) Building material p r i c e s . . . . Manufacturing p a y r o l l s . . . . 1 Aug. 1937 July 1937 23 176 87 96 100 22 214 86 96 97 Adjusted for seasonal variation. Percent change Aug. 1936 Percent change +5 29 259 78 87 81 -21 -32 +12 +10 +23 -18 +1 0 +3 There were no major fluctuations in the rate of building between July and August, but the change was favorable enough to increase the United States total from 18.8 to 20.2 units. The largest increase took place in the Winston-Salem District which rose from 30.3 units in July to 39.6 units in August. Several factors affecting residential construction improved in August. Building materials prices declined 1 percent while rentals, as measured by the National Industrial Conference Board, increased 1 percent. Manufacturing payrolls reached 100 from the July index of 97—a normal seasonal change. But most arresting of all was a decline in the index of foreclosures from 214 in July to 176 in August, a new low for the recovery period which brings the index down to the 1928 average. A seasonal increase of 2 percent in foreclosures is usual for August but declines were reported from all sections of the country. The August index was 32 percent below the August 1936 index of 259. INDEXES O F SMALL-HOUSE BUILDING COSTS [TABLE 3] costs during September as reported for a group of 26 cities were changed very slightly from June compared to the rapid increases reported by this same group of cities earlier in the year. This tendency for costs to level off was evident in the reports for July and August from the two other groups of cities on which costs are estimated for the Federal Home Loan Bank Board index. BUILDING 19 For September as compared with June the cost of building the standard house on which the index is based changed less than 1 percent in 14 of the 26 reporting cities, and in 4 cities costs decreased more than 1 percent. In the remaining cities costs increased, but less drastically than in earlier reporting periods. The tendency during the June-September period was for labor costs to level off but for materials costs to fluctuate slightly. In 17 of the 26 cities labor costs did not change, in 2 they decreased, and in 7 they increased; while materials costs rose in 16 cities, dropped in 9 cities, and remained unchanged in 1 city. The greatest rise was 4.5 percent, reported for Atlanta, Georgia. Atlanta is, however, not one of the high-cost cities. A cost of 23.6 cents a cubic foot there compares very favorably with costs in other southern cities, particularly in Florida and Alabama. But it is higher than cities in comparable areas such as Salisbury, North Carolina, with 20.2 cents per cubic foot—a 2.3 percent rise over June—and Columbia, South Carolina, with 20.4 cents a cubic foot. The greatest decrease was reported for Roanoke, Virginia, where costs dropped 3 percent. More ESTIMATED interesting, however, is the leveling off of costs in such cities as Birmingham, Alabama, and Washington, D. C. In these cities costs have risen 20.0 percent and 22.0 percent respectively during the past year—increases of more than $1,000 in each city. After such steady rises, the tendency to level off is a healthy change. In spite of a drop of 1.1 percent, the cost of $7,178 in Chicago is still higher than in any other city on which costs are reported. This slight decrease was due to a drop in materials costs which was counteracted somewhat by an increase in labor costs. Next to it in this group of cities is Milwaukee with a cost of $6,840 and then Peoria, Illinois, with a cost of $6,780. All these cities are in the Chicago District. MONTHLY LENDING ACTIVITY OF SAVINGS AND LOAN ASSOCIATIONS [TABLES 4, 5, 6, AND 7] THE estimated total volume of mortgage loans made by all savings and loan associations declined for the second consecutive month from $72,057,000 in July to $68,539,000 in August. These estimates are based on reports to the Federal NUMBER AND COST OF FAMILY DWELLING UNITS PROVIDED IN ALL CITIES OF 1 0 , 0 0 0 OR MORE POPULATION (Source: federal Home Loan Bank Board. Compile/) from residential building permits reported to U. S. Dept. of Labor) NUMBER OF UNITS PROVIDED COST OF UNITS PROVIDED 100 00 90 Z 19 J£ [^^0 Y i 50 40 A >3/-3 5 AV R Y >. 1V " .-- / ^ . . . •*-. -*»«; 20 10 20 Federal Home Loan Bank Review Home Loan Bank Board from 2,503 associations. Of the total loans made in August, 28 percent went for new construction, 34 percent for home purchase, 22 percent for refinancing, 7 percent for reconditioning, and 9 percent for other purposes. Each of these categories represented a smaller volume of lending than in July. Breaking down the estimated total by type of institution we find that Federal savings and loan associations and State-chartered members of the Federal Home Loan Bank System were responsible for the July to August decline. Nonmember institutions increased their lending 4.4 percent. As a consequence, this last type of lending institution was again responsible for 15 percent of total loans made, after dropping to 14 percent in July. As may be seen in the chart below, the drop in the volume of loans for new construction by all savings and loan associations was accompanied by a drop in home-building activity in all cities of 2,500 or more population from $62,700,000 to $61,700,000. This reduction is principally due to a slackening of activity in the small cities, as cities of over 10,000 population showed appreciable gains in August over July. FEDERAL SAVINGS AND LOAN SYSTEM [TABLE 11] THE 1,168 Federal savings and loan associations reporting their activities for both July and August loaned 5.7 percent less on home mortgages in the latter month than in the former but showed a favorable increase during August in loans outstanding of 2 percent or $14,575,400. This fallingoff in lending activity was similar to that reported for July and August of both 1935 and 1936. Every category listed contributed to the drop except loans for home purchase which remained almost stationary. In August loans for this purpose represented 32.2 percent of total lending as compared to 30.2 percent in July. More funds were advanced for new construction than for any other purpose. This class, together with reconditioning, represented 40.9 percent of total mortgage loans. Progress in number and assets of Federal savings and loan associations Number HOME CONSTRUCTION LOANS MADE BY ALL SAVINGS AND LOAN ASSOCIATIONS COMPARED WITH HOME BUILDING ACTIVITY ,20i July 31, Aug. 31, 1937 1937 1120 New Total 1 F M A M J U A S O N O 1937 © Estimated for all cities of 2J500 or more population based on building permits for I 8 2 family dwellings reported to U.S. Department of Labor. <D Estimated for all active associations by Federal Home Loan Bank Board October 1937 Approximate assets July 31, 1937 Aug. 31, 1937 648 645 1647 649 $222,481,875 767,932,165 $222,576,383 772,437,901 1,293 1,296 990,414,040 995,014,284 Reduction due to cancelation of charters. In August private share investments amounted to $13,059,900 while repurchases were $9,061,200. In consequence, there was an increase in the total share liability at the end of August of 1 percent. The large volume of investment and repurchase activity in July normally follows the semiannual dividend period. Consequently, the slowingdown in August was expected. The steady growth of these Federal associations is shown by the increase of 1.5 percent in their combined assets to $950,505,300. As of August 31, 1937, advances outstanding from the 12 District Federal Home Loan Banks to them amounted to $78,156,300 or 4.3 percent more than at the end of July. Advances from other sources decreased 1.3 percent during the month, amounting to slightly over two million dollars. 21 At the end of August there were 1,296 chartered Federal savings and loan associations: a net increase of three during the month. Of the total, 647 were newly organized associations and 649 were Federals converted from State institutions. This is the first month in the history of the Federal System that the number of converted associations has exceeded the number of new associations. Up to the end of August the Banks had advanced a cumulative total of $362,270,000, almost all of which has gone to member institutions. And as total repayments by borrowers to the Banks have amounted to $186,663,000, the balance outstanding on August 31, 1937 was $175,607,000. The growth in the activities of the Banks is shown in the accompanying chart. The balance of advances outstanding has increased, with only one slight reduction, since March 1935—the month-by-month fluctuations in advances and repayments reflecting the seasonal needs of local lending institutions for this type of credit reserve. In June of this year $17,769,000 was advanced. This was the largest amount advanced in any one month during the five years of operation of the System. In July the volume dropped to $10,221,000 but rose slightly in August, when $11,116,000 was advanced and $5,080,000 was repaid. The accompanying chart shows that repayments have exceeded advances in only three periods during the history of the System. FEDERAL HOME LOAN BANK SYSTEM [TABLES 12 AND 13] years ago, in October 1932, the Federal Home Loan Bank System was organized to bring a longneeded credit reserve to home-financing institutions. Since that time it has grown steadily until in August of this year 3,919 mortgage-lending institutions were members of the System. These associations had combined assets of approximately $3,900,000,000 and could borrow a potential sum of over $1,000,000,000 from the District Banks. FIVE FEDERAL HOME LOAN BANK SYSTEM ADVANCES OUTSTANDING, ADVANCES, AND REPAYMENTS (BY MONTHS) 1 \ 1 1i 1i t S io ADVA NCES 1i 1 i f i 1 1 I i , ! »- 1 i i 1 i i f f f f OUTSTANDING tiaht Hand Saute) \c \ y i i ADVANCES 7 \ \\ \\ \ 1 I 'HV v' Cz. r T V i I^A^L J 1933 22 _ L ^ _ —J uK. 7 L_ i J 1934 i i i t i _J J 1935 l\ . -ri i*t ' ' it I ^ . i i i i i *. * i » i 1 1 -1t \f § -v- 1 1 11 1 1 1 1 1 1 1 I i»» 1 1 t > t 1 1 1 1 1 1 1-1I 1 11 5/ // 1 / |\ ' u t 4 \ J' A f\ 0 1 t f 40 REPAYMENTS a. V L_ _ l — L _ .,1 , 1 _ ] 1— ._..! 1 J 1936 1 L_ i t 1 1 1 i i • i J 1937 Federal Home Loan Bank Review FEDERAL SAVINGS AND LOAN INSURANCE CORPORATION PROGRESS OF FEDERAL SAVINGS AND LOAN INSURANCE CORPORATION — L E G E N O — NEW FEOEftAL I N S T I T U T I O N S . t CONVERTEO FEOERAL I N S T I T U T I O N S . E STATE CHARTEREO I N S T I T U T I O N S . I [TABLES 9 AND 10] AT THE end of August there were 1,803 institutions insured by the Federal Savings and Loan Insurance Corporation: the result of almost three years of steady growth. As may be seen on the accompanying chart, 29.0 percent of this number were State-chartered institutions, 35.3 percent were Federals converted from State charter, and 35.7 percent were newly organized Federals. The assets of this last group represented a much smaller proportion of the combined assets of all insured associations, as the bar at the extreme right shows. This chart illustrates the rapidity with which the Insurance Corporation has been accepted as an integral part of the Nation's homefinancing structure. It is interesting to note that although the number of Federal associations has begun to level off, the number of insured State institutions has been increasing steadily. In June 1935 only 5.4 percent of all insured institutions operated under State charters. In June 1936 this proportion had increased to 17.7 percent, and in June 1937 it was 27.7 percent. The volume of mortgage lending by reporting State-chartered insured associations continued to fall off sharply from previous levels. The 304 identical associations reporting for both July and August loaned 10.6 percent less during the latter month than during the former. This drop probably results from the general slackening of building activity—evidenced in a drop of 17.1 percent in loans for new construction and of 17.9 percent in loans for reconditioning. (Continued on p . 35) Table I.—Number and estimated cost of new family dwelling units provided 109000 population or over, in the United States x in all cities of [Source: Federal Home Loan Bank Board. Compiled from residental building permits reported to U. S. Department of Labor.] Number of family units provided Type of structure or agency 1-family dwellings 3- and more-family dwellings. . Monthly totals Total cost of units (thousands of dollars) January-August totals Monthly totals August 1937 July 1937 9,426 678 95 2,402 9,060 632 67 1,993 9,425 668 86 5,632 12,601 11,752 15,811 119,891 103,310 49,364.7 48,795.5 12,601 0 11,636 116 12,133 3,678 116,282 3,609 92,010 11,300 49,354.2 M0.5 48,190.4 605.1 August 1936 1937 78,566 6,556 741 34,028 1936 August 1937 July 1937 January-July totals August 1936 1937 1936 $343,931.8 18,035.2 2,738.9 115,712.7 $267,356.2 13,228.9 1,769.5 134,935.6 65,645.5 480,418.6 417,290.2 46,732.2 18,913.3 464,084.3 16,334.3 355,671.6 61,618.6 61,520 $38,717.0 $38,507.0 $39,031.1 4,794 1,747.1 1,743.1 1,866.6 265.2 256.5 488 408.1 8,276.2 24,614.8 36,508 8,373.0 1 2 Estimate is based on reports from communities having approximately 95 percent of the population of all cities with population of 10,000 or over. Includes 1- and 2-family dwellings with business property attached. * Includes only Government-financed low-cost housing project units as reported by U. S. Department of Labor. Additional appropriation for Government project in Nashville, Tennessee. No more family units provided. 4 October 1937 23 Table 2.—Number and estimated cost of new family dwelling units provided in all cities of lOftOO population or over, in August 1937, by Federal Home Loan Bank Districts and by States [Source: Federal Home Loan Bank Board. Compiled from residential building permits reported to U. S. Department of Labor] [Amounts are shown in thousands of dollars] All residential dwellings Number of famFederal Home Loan Bank Districts ily dwelling units and States August 1936 12,601 15,811 $49, 364. 7 $65,645.5 No. 1—Boston Connecticut M aine Massachusetts New Hampshire Rhode Island N o 2—New York N o 3—Pittsburgh Pennsylvania West Virginia No 4—Winston-Salem Alabama District of Columbia Florida Maryland North Carolina South Carolina Virginia No. 6—Indianapolis Indiana 1 1 No. 7—Chicago Wisconsin No. 8—Des Moines Iowa Minnesota Missouri North Dakota South Dakota 24 Estimated cost August 1937 U N I T E D STATES No. 5—Cincinnati Kentucky Ohio Tennessee All 1- and 2-family dwellings 1 Number of family dwelling units August 1936 August 1937 Estimated cost August 1937 August 1936 10,199 10,179 $40,991.7 $41, 030. 7 August 1937 August 1936 684 965 3,298.2 4, 493.1 666 643 3, 257. 3 177 43 325 31 95 13 434 62 346 30 90 3 836.3 147. 1 1, 741. 4 87.4 430.2 55.8 1, 911. 3 147.1 1, 984. 2 81.2 355.3 14.0 174 40 313 31 147 51 | 330 22 90 3 827. 8 744.6 137. 1 118.5 1, 719. 0 1 1, 934. 6 56.1 87.4 355. 3 430.2 55.8 14.0 1,954 3,853 788 3,065 9, 701. 2 1, 296. 2 8, 432. 0 18,117. 2 4,113.8 14, 003. 4 1,113 202 911 1,279 206 1,748 261 1,018 5, 243. 8 1, 236. 2 4, 007. 6 691 1 541 149 831 16 743 72 3, 616. 6 13.0 3, 039. 2 564.4 4, 560. 4 78.4 4, 220.1 261.9 585 1 498 86 537 16 453 68 3, 213. 0 13.0 2, 884.1 315.9 2, 872. 6 1,998 2,048 106 583 466 142 123 201 298 129 5, 841. 1 232.0 2, 002.1 1,145. 8 344.7 546.2 1, 009. 7 176.8 383.8 7, 025. 8 173.7 2,163. 4 1, 326. 9 415.8 526.7 535. 0 1, 362. 0 522.3 1,126 101 112 313 160 125 166 64 85 1,326 3, 901. 2 113 739 382 160 144 301 68 91 101 189 398 126 119 193 82 118 221.6 784.1 1, 015. 2 344.7 526.2 470.3 170.3 368.8 4, 599. 2 148.7 1,198. 4 1, 170.0 298.6 518.7 520.7 238.6 505.5 911 144 624 143 1,808 111 479 1,218 3, 872. 6 469.1 3, 001. 4 402.1 8, 282. 8 386.5 2, 557. 1 5, 339. 2 821 129 549 143 667 95 436 136 3. 602. 9 437.7 2, 773. 6 391.6 3, 092. 6 349.5 2, 419.1 324.0 994 798 167 631 4, 169. 9 1, 077. 3 3, 092. 6 3, 867. 7 983 308 675 785 167 618 4, 136. 3 3, 844. 2 1, 064. 8 3, 071. 5 669. 7 3, 174. 5 583 340 243 642 2, 923. 2 2, 993. 4 1, 804. 4 1 1, 667. 0 1, 118. 8 1, 326. 4 583 340 243 579 2, 923. 2 1, 804. 4 1,118.8 2, 843. 9 600 673 | 148 206 237 32 50 2, 213. 5 2, 183. 6 590 476. 9 814. 0 772. 1 71.9 138 216 185 14 37 649 134 206 227 32 50 2, 197. 0 486. 2 878. 0 722. 9 54.0 72.4 2,132.6 430.9 814. 0 767.1 71.9 48.7 314 680 138 216 192 17 37 305 337 669. 7 | 3,198. 0 [ 1 48.7 95 1 13 291 288 486. 2 1 878.0 711.9 48.5 72.4 3, 223.1 5, 622. 3 I, 483. 4 4. 138. 9 78.4 2, 544. 3 249.9 1, 603. 5 1, 240. 4 Federal Home Loan Bank Review Table 2.—Number and estimated cost of new family dwelling units provided in all cities of 109000 population or over, in August 1937\ by Federal Home Loan Bank Districts and by Sta tes—Continued [Amounts are shown in thousands of dollars] All residential dwellings Federal Home Loan Bank Districts and States No. 9—Little Rock Louisiana Mississippi New Mexico Texas No. 10—Topeka Colorado Kansas Nebraska Oklahoma No. 11—Portland Idaho Montana Oregon Utah Washington Wyoming No. 12—Los Angeles Arizona California Nevada Number of family dwelling units All 1- and 2-family dwellings Number of family dwelling units Estimated cost Estimated cost August 1937 August 1936 August 1937 August 1936 August 1937 August 1936 August 1937 1,153 1,189 $2, 893. 8 $3, 097. 0 1,087 1,097 $2, 740. 8 $2, 949. 8 55 111 99 37 851 46 144 68 51 880 145.6 335.3 190.5 101.0 2,121. 4 114.8 517.4 156.4 117.4 2,191. 0 48 99 90 34 816 46 144 68 48 791 137.1 297.6 165.7 94.0 2, 046. 4 114.8 517.4 156.4 111.4 2, 049. 8 453 434 1, 332. 0 1, 409. 2 393 407 1. 244. 7 1, 351. 7 108 119 62 164 102 116 56 160 308.2 292.9 206.4 524.5 435.8 373.2 187.3 412.9 72 103 54 164 94 107 56 150 260.2 269.6 190. 4 524.5 415.8 355. 7 187.3 392.9 430 414 1, 323. 6 1, 278. 1 414 379 1, 302. 6 1, 213. 2 9 67 96 66 177 15 47 63 84 50 159 11 30.9 135.5 376.1 215.8 511.4 53.9 149.0 132.6 305.6 156.0 489.0 45.9 9 55 96 62 177 15 34 50 84 50 150 11 30.9 116.5 376.1 213.8 511.4 53.9 116.0 113.1 305.6 156.0 476.6 45.9 2,150 2,156 8,179. 0 8, 337. 2 1,838 1,831 7, 228. 9 7, 285. 5 44 2,093 13 42 2,101 13 156. 4 7, 972. 6 50.0 194.6 8, 076. 2 ! 66.4 41 1,784 13 42 1,776 13 146.4 7, 032. 5 50.0 194.6 7, 024. 5 66.4 August 1936 1 Table 3.—Cost of building the same standard house in representative cities in specific months * NOTE.—These figures are subject to correction [Source: Federal Home Loan Bank Board] Total building cost Cubic-foot cost Federal Home Loan Bank Districts, States, and cities No. 1—Boston: Connecticut: Hartford New Haven Maine: Portland Massachusetts: Boston See footnote at end of table. October 1937 Sept. 1937 $0. 265 .247 .241 .275 Sept. 1936 Sept. 1937 June 1937 Mar. 1937 Dec. 1936 Sept. 1936 June 1936 Mar. 1936 Dec. 1935 $0. 233 $6, 355 $6, 365 $6,131 $5, 768 $5, 589 $5, 657 $5, 647 $5, 655 .228 5,933 5,933 5,753 5,636 5,468 5,544 5,509 .219 5,792 5,916 5,252 5,252 5,245 5,132 5,124 5,103 .245 6,596 6.487 6.275 5.781 5.876 5. 773 5.780 5.699 25 Table 3.—Cost of building the same standard house in representative months—Continued cities in specific [Source; Federal Home Loan Bank Board] Total building cost Cubic-foot cost Federal Home Loan Bank Districts, States, and cities No. 1—Boston—Continued. New Hampshire: Manchester Rhode Island: Providence Vermont: Rutland No. 4—Winston-Salem: Alabama: Birmingham District of Columbia: Washington Florida: Tampa West Palm Beach Georgia: Atlanta Maryland: Baltimore Cumberland North Carolina: Asheville Raleigh Salisbury South Carolina: Columbia Virginia: Richmond Roanoke No. 7—Chicago: Illinois: Chicago Peoria Springfield Wisconsin: Milwaukee Oshkosh No. 10—Topeka: Colorado: Denver Kansas: Wichita Nebraska: Omaha Oklahoma: Oklahoma City Sept. 1937 $0. 246 Sept. 1936 Sept. 1937 June 1937 Mar. 1937 Dec. 1936 Sept. 1936 June 1936 Mar. 1936 Dec. 1935 $0. 228 $5, 904 $5, 888 $5, 641 $5, 545 $5, 467 $5,462 $5, 416 $5, 467 .247 .232 5,933 5,932 5,768 5,633 5,577 5,496 5,531 5,574 .238 .221 5,714 5,710 5,696 5,305 5,305 5,329 5,329 5,337 .254 .211 6,089 6,077 5,073 5,013 5,059 5,002 .262 .215 6,286 6,234 5,906 5,569 5,150 4,973 4,918 4,850 .239 .267 .228 .249 5,728 6,405 5,716 6,411 5,619 6,367 5,500 6,038 5,483 5,974 5,360 5,911 5,379 5,889 5,894 .236 .204 5,653 5,410 5,228 5,150 4,897 4,889 4,854 4,849 .229 .237 .204 .228 5,495 5,696 5,402 5,711 5,388 5,659 5,401 5,491 4,899 5,482 4,909 5,424 4,427 5,419 4,543 5,358 .236 .202 . 2ii 5,656 4,855 4,968 5,580 4,746 5,443 4,762 5,197 5,148 4,768 5,060 4,778 5,070 4,791 4,967 .205 .196 4,932 4,886 4,674 4,804 4,697 4,712 4,634 4,505 .217 .218 .209 .198 5,203 5,228 5,248 5,391 5,207 5,331 4,870 5,014 5,026 4,760 5,026 4,843 4,964 4,544 5,062 4,491 .299 .282 .281 .264 7,178 6,760 7,260 6,833 6,980 7,081 6,585 6,908 6,825 6,312 6,625 6,745 6,331 6,459 6,639 6,420 6,459 6,608 6,212 6,459 6,498 6,451 .285 .245 .243 .236 6,840 5,872 6,780 5,760 6,701 5,576 6,081 5,555 5,838 5,658 5,540 5,612 5,386 5,502 .283 .256 6,786 6,606 6,250 6,105 6,133 6,047 6,098 5,927 5,794 5,290 5,192 5,164 5,164 5,200 .216 5, 357 .255 .233 6,116 5,969 6,008 5,601 5,578 5,582 5,582 5,554 .243 .227 5,838 5,823 5,816 5,486 5,449 5,561 5,282 5,214 1 The house on which costs are reported is a detached 6-room home of 24,000 cubic feet volume. Living room, dining room, kitchen, and lavatory on first floor; 3 bedrooms and bath on second floor. Exterior is wide-board siding with brick and stucco as features of design. Best quality mato-ials and workmanship are used throughout. The house is not completed ready for occupancy. I t includes all fundamental structural elements, an attached 1-car garage, an unfinished cellar, an unfinished attic, a fireplace, essential heating, plumbing, and electric wiring equipment, and complete insulation. It does not include wall-paper nor other wall nor ceiling finish on interior plastered surface, lighting fixtures, refrigerators, water heaters, ranges, screens, weather stripping, nor window shades. Reported costs include, in addition to material and labor costs, compensation insurance, an allowance for contractor's overhead and transportation of materials, plus 10 percent for builder's profit. Reported costs do not include the cost of land nor of surveying the land, the cost of planting the lot, nor of providing walks and driveways; they do not include architect's fee, cost of building permit, financing charges, nor sales costs. In figuring costs, current prices on the same building materials list are obtained every 3 months from the same dealers, and current wage rates are obtained from the same reputable contractors and operative builders. 26 Federal Home Loan Bank Review RATE OF RESIDENTIAL BUILDING IN ALL CITIES OF 10.000 OR MORE POPULATION Roprtunts th« estimated number of faraiiy (hailing unit* provided per 100.000 population. [Source: Federal Homo Loon Bank Board. DISTRICT I- CompiM from Building Permit* reported to U.S. Department of 1 FEDERAL HOME LOAN BANK' DISTRICTS DISTRICT 2-NEW YORK OISTRICT 3-PITTSBURGH BOSTON a rtffl fiBEf \KA rS^ OISTRICT 4-WINSTON SALEM FV-TL W f t » - J I 5 AV6. /•I93I-39 AVG ~-^t -u I g1I sI * S3S 1 DISTRICT DISTRICT 8-OES MOINES OISTRICT 7-CHICAGO DISTRICT 6-INDIANAPOLIS S-CINCINNATI ^9J7 1 1 1 I/7*** 1937^ j I fly RJ *7 < ^ ^ | — | ~l_J • DISTRICT 9 - L I T T L E ROCK <*>*} L —t_J ^/93l-33 AV& l ~l % i i.i i n % % g § § DISTRICT 12-LOS ANGELES ...i~"—"H-J L_,. jk ^ a e < E > - z - i -/93t-35 < » a . AV6 H > L/4r"' fl937 J i /SJ/-J5 4K« ""* 1 DISTRICT II-PORTLAND DISTRICT 10-TOPEKA PT H_ Lr—J1^^" n../; r •1931-35 AV6 L—_J 1 , , SI93I-35 AV& W= <i ! M I 4I I i I I u i ^ a j s a s u t u o u j u . 2 « 2 ^ - > < « > O z o UNITED STATES r^ Lr^ tf 2 i a 3 w 1930 October 1937 c c J*" i i i * I i i 1 1931 1932 i % § 1933 § 5 S * i 1934 a 8 o S I 1 S i 1935 i _n n 1 s g i 1 s l [V j[ ^ ^ 1936 1937 27 Table 4.—Estimated volume of new loans by all savings according to purpose and loan associations, classified [Thousands of dollars] Mortgage loans on homes Month Home purchase Construction 1936 January February March April May June Julv August 1937 January February March April May June July August $188, 637 9,298 9,680 11, 920 15, 296 16, 736 17, 396 17, 975 17, 577 $155, 463 7,089 7,027 9,725 11, 251 12, 811 13, 853 14, 857 15, 485 12,170 13, 275 17, 938 22, 512 21, 210 22, 225 20, 584 19, 473 Table 5.—Estimated volume 14, 16, 22, 27, 29, 29, 25, 23, 859 648 323 849 243 325 244 584 Refinancing Reconditioning $152,067 10, 265 10, 845 12, 842 15, 728 12, 961 13, 462 12, 008 12, 262 10, 11, 15, 16, 15, 16, 15, 14, 641 611 768 398 547 403 104 746 Loans for all Total loans, all other purposes purposes $50, 618 2,691 3,229 3,677 4,703 5,207 4,334 4,601 4,333 $80, 838 5,995 5,686 8,474 6,413 7,668 8,357 7,414 6,477 2,585 2,727 3,959 5,070 4,934 5,176 4,599 4,507 5,018 5,601 6,582 7,548 7,147 7,381 6,526 6,229 of new loans by all savings and according to type of association $627, 623 35, 338 36,467 46, 638 53, 391 55, 383 57, 402 56, 855 56,134 45, 49, 66, 79, 78, 80, 72, 68, loan associations, 273 862 570 377 081 510 057 539 classified [Amounts are shown in thousands of dollars] Volume of loans Total January February March April May June July August January February March April May June July August 1936 $627, 623 35, 338 36, 467 46, 638 53, 391 55, 383 57, 402 56, 855 56, 134 Federal $228, 896 11, 764 12,105 15, 310 17, 740 18, 965 21, 247 21, 491 21, 571 Percent of total State members 25, 26, 24, 23, 113 033 874 871 $122, 755 7,138 9,156 11, 552 10, 154 11, 305 10,122 10, 490 10, 692 19, 22, 28, 34, 35, 36, 32, 30, 311 068 401 644 785 520 662 692 8,200 8,214 10, 022 11, 432 10, 808 11, 869 10,182 10, 627 $275, 972 16, 436 15, 206 19, 776 25, 497 1937 28 45, 49, 66, 79, 78, 80, 72, 68, 273 862 570 377 081 510 057 539 17, 762 19, 580 28, 147 33, 301 31, 488 32,121 29, 213 27, 220 Nonmembers Federal State members Nonmembers 36 33 33 33 33 34 37 38 38 44 47 42 42 48 45 45 44 43 20 20 25 25 19 21 18 18 19 39 39 42 42 40 40 41 40 43 44 43 44 46 45 45 45 18 17 15 14 14 15 14 15 Federal Home Loan Bank Review Table 6.—Estimated volume of new lending activity of savings and loan associations, by District and type of association classified [Amounts are shown in thousands of dollars] New loans August 1937 United States: District 1: District 2: District 3: District 4: District 5: District 6: District 7: District 8: District 9: Total Federal State member Nonmember Total Federal State member Nonmember Total Federal State member Nonmember Total Federal State member Nonmember Total Federal State member Nonmember Total Federal State member Nonmember Total Federal State member Nonmember Total Federal State member Nonmember Total Federal State member Nonmember Total Federal State member District 10 : Total Federal State member Nonmember District 11 : Total Federal State member Nonmember District 12 : Total Federal State member Nonmember 1 Less than 0.5 percent. October 1937 ! | 1 $68, 539 27, 220 30, 692 10, 627 6, 578 1, 910 3,156 1,512 5,023 1,734 1,591 1,698 3, 834 1,085 1,671 1,078 9,435 3,626 4,439 1,370 10, 765 5,120 5,351 294 4,046 1,675 1,867 504 7,534 2,582 4,336 616 4,844 2,090 1,385 1,369 3,704 1,354 2,195 155 4,063 1,791 1, 088 1,184 2,986 1, 583 1,168 235 5,727 2, 670 2,445 612 Percent increase, Aug. 1937 over July 1937 July 1937 $72, 057 29, 213 32, 662 10,182 8,273 2,510 3,963 1,800 6,005 2,014 1,600 2,391 3, 764 1,253 1,479 1,032 9,393 3,886 4,408 1,099 11, 475 5,356 5,779 340 3,762 1,684 1,852 226 7,780 2,471 4,535 774 4,911 2,325 1,592 994 4,003 1,568 2,268 167 3,830 1,665 1,103 1,062 3,253 1,701 1,331 1 221 1 5,608 2,780 2,752 76 1 -5 -7 -6 +4 -20 -24 -20 -16 -16 -14 -1 -29 + 2 -13 + 13 +4 <l) -7 + 1 +25 -6 -4 -7 -14 + 8 -1 + 1 + 123 -3 +4 -4 -20 -1 -10 -13 +38 -7 -14 -3 -7 + 6 +8 -1 + 11 -8 -12 i +62 + -4 -11 + 705 New loans, August 1936 $56,134 21, 571 23, 871 10, 692 5,753 781 3,062 1,910 4,692 1,963 1,185 1,544 2,589 741 1,041 807 8,246 3,025 3,727 1,495 7,731 3,940 3,370 421 3,045 1,164 1,514 367 5,430 1,947 2,809 674 4,310 1,796 1,256 1,257 3,486 1,147 1,790 550 3,706 1,219 1, 055 1, 432 2, 632 1, 593 952 88 4, 515 2, 256 1 2, 111 i 60 Percent increase, Aug. 1937 over Aug. 1936 + 22 + 26 + 29 —1 + 14 + 145 + 3 — 21 + 7 + 12 + 34 + 10 +48 +46 + 61 + 34 + 14 +20 + 19 —8 + 39 + 30 + 59 — 30 + 33 +44 + 23 +37 + 39 + 33 + 54 -9 + 12 + 16 + 10 + 9 + 6 + 18 + 23 -72 + 10 +47 + 3 -17 + 13 -1 + 23 + 167 +27 +18 +16 + 920 Table 7.—Monthly lending activity and total assets as reported associations in August 1937 by 2,503 savings and loan [Sourse: Monthly reports from savings and loan associations to the Federal Home Loan Bank Board] [Amounts are shown in thousands of dollars] Loans made in August according to purpose Number of associations Federal Home Loan Bank Districts and States Federal State member. Mortgage loans on 1- to 4-family nonfarm hornet Construction Home purchases l Loans for all other purposes Refinancing and reconditioning * Sub- Reporting mitting loans reports made Num- Amount Num- Amount Number ber ber Total loans, all purposes Amount Refi- Reconnancing ditioning Num- Amount Number ber Total assets Aug. 31, 1937* Amount 2,503 2,140 4,290 $14,012.9 6,208 $15,567.2 6,855 $9,690.2 $2,808.7 2,794 $3,954.1 20,147 $46,033.1 $2,496,028.4 1,174 935 394 1,081 2,624 800 1,401 259 265 8,824.6 3,251 4,515.2 2,495 673.1 462 8,153.2 3,541 4,941.0 1,478.3 1,189 1,872.3 10,605 25,269.4 956,319.1 6,382.7] 2,764 4,228.01 1,098.8 1,241 1,670.4 7,901 17,895.1 1,275,727.3 521.2 231.6 364 1,031.3 550 411.4 1,641 2,868.6 263,982.0 145 133 250 978.2 511 1,584.9 579 809.2 284.9 222 283.2 1,562 3,940.4 303,083.8 23 19 85 10 4 4 20 15 81 10 3 4 60 151 135 10 261 4j 224.6 24.5 602.9 17.8 102.9 5.5 36 30 335 35 63 12 103.2 66.0 1,113.7 67.8 190.3 43.9 39 51 388 38 53 10 88.1 65.6 515.1 44.8 88.0 7.6 7.5 12.5 232.2 13.6 13.8 5.3 10 11 153 20 19 9 145 10.4 107 12.4 147.8 1,011 103 38.1 161 39.1 35 35.4 433.8 181.0 2,611.7 182.1 434.1 97.7 16,852.6 12,232.8 233,925.4 11,276.9 26,035.5 2,760.6 273 190 326 1,199.2 328 1,052.9 309 549.6 178.2 142 313.3 1,105 3,293.2 351,133— New York 143 130 73 117 23 303 89.1 1,110.1 75 253 202.9 850.0 47 262 47.9 501.7 27.1 151.1 19 123 38.9 274.4 164 941 405.9 2,887.3 132,120.2 219,013.7 No. 3—Pittsburgh 214 141 127 316.2 303 750.2 217 313.0 81.7 63 70.0 710 1,531.1 95,649.2 West Virginia.... 7 184 23 6 115 20 6 68 53 16.7 206.2 93.3 13 249 41 44.8 605.1 100.3 4 153 60 6.3 236.4 70.3 2.3 54.2 25.2 11 39 13 8.2 45.8 16.0 34 509 167 78.3 1,147.7 305.1 6,235.4 77,422.3 11,991.5 No. 4—Winston-Salem 274 246 648 2,339.5 642 1,592.0 967 2,046.1 312.5 337 534.5 2,594 6,824.6 231,932.8 15 13 18 30.3 25 38.6 26 27.2 7.9 13 12.3 82 116.3 4,649.3 North Carolina... South Carolina.. . Virginia 12 48 47 46 42 36 28 12 42 42 39 38 34 26 67 136 113 43 124 68 79 548.9 607.3 259.5 258.2 267.8 144.3 223.2 57 58 77 189 88 43 105 253.0 168.8 147.2 502.7 161.8 78.1 241.8 358 1,372.4 140.0 92 123.2 119 57.3 34 97.2 155 86.0 84 142.8 99 66.0 42.9 36.2 14.5 82.3 30.1 32.6 55 42 37 51 67 14 58 49.1 144.1 42.8 115.4 79.0 21.1 70.7 537 328 346 317 434 209 341 2,289.4 1,103.1 608.9 948.1 688.1 359.6 711.1 96,446.6 25,721.2 16,775.0 29,069.2 27,023.9 10,837.3 21,410.3 No. 5—Cincinnati.... 352 312 612 2,011.0 1,405 3,763.2 1,228 1,633.6 493.8 484 658.4 3,729 8,560.0 501,210.7 55 263 34 47 236 29 73 452 87 214.4 186 1,617.0 1,169 179.6 50 516.8 3,152.0 94.4 184.0 173 962 1,320.5 93 129.1 84.8 389.7 19.3 88 373 23 520 97.6 503.3 2,956 253 57.5 1,097.6 6,982.5 479.9 49,433.0 437,436.1 14,341.6 179 173 322 891.0 560 1,023.1 608 460.9 244.0 311 313.6 1,801 2,932.6 193,168.6 125 54 123 50 179 143 398.4 492.6 421 139 726.5 296.6 450 158 281.0 179.9 175.5 68.5 159 152 156.1 1,209 592 157.5 1,737.5 1,195.1 107,297.5 85,871.1 246 212 262 927.3 541 1,496.8 682 974.9 398.0 225 337.8 1,710 ~47l34T8 182,298.9 182 64 153 59 137 125 578.1 349.2 395 146 1,026.3 470.5 581 101 843.3 131.6 330.7 67.3 167 58 254.9 1,280 430 82.9 3,033.3 1,101.5 131,444.6 50,854.3 162 143 202 600.4 327 831.9 471 699.7 156.0 116 165.5 1,116 2,453.5 97,793.9 41 43 58 12 8 36 37 55 9 6 37 83 65 7 10 106.0 285.1 188.5 8.6 12.2 65 161 85 1 12 4 128.2 457.8 210.9 24.0 11.0 122 186 137l 142.2 301.8 237.3 | 4.7 1 13.7 ! 437.5 1 1,176.1 735.8 62.0 42.1 15,216.7 32,379.8 42,577.9 4,643.1 2,976.4 Maine Massachusetts New Hampshire.. Rhode I s l a n d . . . . Vermont No. 2—New York District of Columbia Florida Georgia Ohio No. 6—Indianapolis... Indiana Illinois No. 8—Des Moines... Iowa Missouri North Dakota South D a k o t a . . . . *15 49.7 60.3 31.1 10.3 4.6 16 46 45 61 3 11.4 1 71.1 68.0 14.4 0.6 240 476 332 36 32 1 Loans for home purchase include all those involving both a change of mortgagor and a new investment by the reporting institution on a property already built, whether new or old. * Because many refinancing loans also involve reconditioning it has been found necessary to combine the number of such loans, though amounts are shown separately. Amounts shown under refinancing include solely new money invested by each reporting institution and exclude that part of all recast loans involving no additional investment by the reporting institution. » Assets are reported principally as of Aug. 31, 1937. 30 Federal Home Loan Bank Review Table 7.—Monthly lending activity and total assets as reported by 2,503 savings and associations in August 1937—Continued loan [Amounts are shown in thousands of dollars] Loans made in August according to purpose Number of associations Mortgage loans on 1- to 4-family nonfarm homes Federal Home Loan Bank Districts and States Home purchase Construction Sub- Reporting mitting loans reports made Num- Amount Num- Amount Number ber ber 408 $1,107.4 73 146 58 16 230 52.2 172.8 40.0 10.6 189.9 25.4 101.8 24.4 9.6 83.6 47 88 16 2 99 991.3 488 1,057.6 401 460.3 140.2 109.7 154.4 198.1 529.1 88 113 101 186 188.9 242.1 190.7 435.9 63 102 114 122 81.3 112.6 98.4 168.0 18.3 39.2 39.3 43.4 334 811.0 282 546.5 430 464.1 36 38 89 33 124 12 2 81.8 97.9 222.4 96.7 258.3 39.4 14.5 25 33 64 17 133 10 0 44.1 65.4 102.8 40.3 266.6 27.3 0.0 31 23 104 16 233 21 2 43.1 10.6 138.7 31.0 210.7 26.0 4.0 103 495 1,840.4 314 787.7 440 2 99 1 1 11 480 2 2 24.2 1,800.0 10.6 5.6 2 305 0 7 19.9 738.7 0.0 29.1 6 430 2 2 108.5 292.1 53.6 36.1 617.1 No. 10—Topeka 185 159 304 Kansas 34 72 32 47 28 59 26 46 36 64 62 142 No. 11—Portland 110 105 9 12 25 7 47 9 1 9 11 22 7 47 8 1 109 2 105 1 1 Oregon Utah Alaska No. 12—Los Angeles.. Arizona Nevada $465.5 $244.8 523 38 100 29 16 225 Idaho Num- Amount Number ber 92.4 500.0 31.3 24.5 432.2 37 60 25 8 93 Texas ReconRefinancing ditioning 63 198 18 11 217 223 39 68 25 10 112 Table 8.—Index of wholesale Total loans, all purposes Amount 507 $1,080.4 254 No. 9—Little Rock. . . Loans for all other purposes Refinancing and reconditioning Total assets Aug. 31, 1937 Amount $345.0 1,690 $3,243.1 $157,245.8 252 221 532 121 45 771 319.2 1,204.2 164.4 88.2 1,467.1 10,459.9 81,517.6 4,396.6 2,571.2 58,300.5 285 309.0 1,478 2,958.4 147,793.5 29 51 116 89 27.7 57.0 115.1 109.2 216 330 393 539 425.9 605.3 641.6 1,285.6 18,784.0 38,559.8 40,482.0 49,967.7 171.1 154 265.8 1,200 10.8 14.7 33.8 2.1 98.1 11.6 0.0 9 12 23 12 93 5 0 813.3 103.5 4.2 808.1 1.0 0.0 5.2 96.5 0.7 1.1 price of building materials 40.7 137.5 15.1 7.4 144.3 2,258.5 90,568.4 101 106 280 78 583 48 4 191.6 228.6 527.6 190.6 992.5 109.1 18.5 6,043.5 10,225.9 22,297.0 8,023.8 41,868.0 2,018.9 91.3 203 358.0 1,452 3,902.9 144,148.9 0 198 0 5 0.0 19 353.0 1,413 0.0 4 5.0 16 53.5 3,796.3 12.3 40.8 1,349.5 140,532.4 681.5 1,585.5 11.8 40.0 29.9 20.5 158.8 4.8 0.0 in the United States [1926=100] [Source: U. S. Department of Labor] All building materials August 1936 January February March April May June July August 1937 Change: Aug. 1937-July 1937.. Aug. 1937-Aug. 1936. October 1937 Brick and Cement tile Lumber Paint and paint materials Plumbing Structural steel and heating Other 86.9 89.1 95.5 83.8 81.0 76.5 97.1 90.3 91.3 93.3 95.9 96.7 97.2 96.9 96.7 96.3 89.7 91.0 91.8 94.9 95.0 95.0 95.4 95.5 95.5 95.5 95.5 95.5 95.5 95.5 95.5 95.5 93.0 99.0 102.1 103.0 103.0 102.2 101.3 99.5 83.7 83.4 83.9 82.9 83.7 83.6 83.9 84.1 77.1 77.4 77.6 78.7 78.7 78.7 78.7 78.8 104.7 104.7 112.9 114.9 114.9 114.9 114.9 114.9 93.9 95.0 98.9 99.9 101.3 101.1 101.0 101.0 -0.4% + 10.8% +0.1% +7. 2% 0.0% 0.0% -1.8% + 18.7% +0. 2% + 3. 8% +0.1%; +3.0% 0.0% 0.0% + 18.3% + 11.8% 31 Table 9.—Institutions insured Number of shareholders Cumulative number at specified dates Dec. 31, Dec. 31, Dec. 31, July 31, Aug. 31, Aug. 31, 1937 1934 1937 1937 1936 1935 State-chartered associations. Converted F. S. and L. A.. NewF. S. andL. A Total Corporation1 by the Federal Savings and Loan Insurance 4 108 339 136 406 572 382 560 634 507 631 643 451 1,114 1,576 1,781 522 637 644 Assets Share and creditor liabilities Aug. 31, 1937 Aug. 31, 1937 $589,148, 246 709, 579, 354 165, 860, 933 $513, 604, 992 648, 871, 250 155, 488, 090 1,803 1, 526, 919 1, 464, 588, 533 1, 317, 964, 332 737, 529 656, 356 133, 034 1 Beginning Dec. 31,1936,figureson number of associations insured include only those associations which have remitted premiums. Earlierfiguresinclude all associations approved by the Board for insurance. Number of shareholders, assets, and share and creditor liabilities of insured associations are as of latest obtainable date and will be brought up to date after June 30 and December 31 each year. Table 10.—Monthly operations associations of 304 identical insured State-chartered reporting during July and August 1937 July Share liability at end of month: Private share accounts (number).... Paid on private subscriptions H. O. L. C. subscriptions Total Private share investments during month.. Repurchases during month Mortgage loans made during month: a. New construction b. Purchase of homes c. Refinancing d. Reconditioning e. Other purposes Total Mortgage loans outstanding end of month Borrowed money as of end of month: From Federal Home Loan Banks From other sources Total Total assets, end of month 32 438, 361 savings and August 438,198 $311, 795,100 $310, 343, 100 22, 340, 000 21, 409, 200 333, 204, 300 332, 683,100 loan Change July to August Percent 0.0 -0.5 +4.3 -0.2 10, 342,100 10, 212, 800 5, 416, 400 6, 613, 300 -47.6 -35.2 2, 023, 400 2, 953, 600 1, 325, 700 504, 800 753,100 1, 676, 800 2, 748, 300 1,190, 000 414, 500 732, 800 -17.1 -7.0 -10.2 -17.9 -2.7 7, 560, 600 285,183, 300 6, 762, 400 287, 398, 800 -10.6 +0.8 16, 362,100 2, 335,100 16, 792, 200 2, 395, 600 + 2.6 + 2.6 18, 697, 200 19,187, 800 +2.6 419, 503, 300 418, 776, 500 -0.2 Federal Home Loan Bank Review Table 11.—Monthly operations of 1,168 identical Federal savings reporting during July and August 1937 and loan August July 768, 063 Percent + 1.1 $568, 805, 400 193,286,700 $572, 517, 000 196, 857, 500 +0.7 + 1.8 762. 092, 100 769, 374, 500 + 1.0 23,165, 500 15. 108. 500 13, 059, 900 9.061,200 -43.6 -40.0 9, 437, 300 8, 059, 100 5, 498, 000 1, 541, 300 2, 122, 600 8, 796, 600 8, 084, 300 4, 916, 400 1, 471, 100 1, 867, 400 -6.8 +0.3 -10.6 -4.6 -12.0 26, 658, 300 718, 927, 300 25, 135, 800 733, 502. 700 — 5.7 + 2.0 74, 966, 200 2, 201, 200 78,156, 300 2,172, 500 +4.3 -1.3 77, 167, 400 80, 328, 800 +4.1 936, 913, 500 950, 505, 300 + 1.5 Total Private share investments during month Repurchases during month Mortgage loans made during month: a. New construction b. Purchase of homes c. Refinancing d. Reconditioning e. Other purposes Total Mortgage loans outstanding end of month Borrowed money as of end of month: From Federal Home Loan Banks From other sources Total Total assets, end of month Table 12.—Federal Home Loan Bank advances to member institutions by Districts Change July to August 759, 578 Share liability at end of month: Private share accounts (number) Paid on private subscriptions Treasury and H. 0. L. C. subscriptions associations Table 13.—Lending operations of the Home Loan Banks Federal [Thousands of dollars] Federal Home Loan Bank No. No. No. No. No. No. No. No. No. No. No. Advances made during Aug. 1937 1—Boston $322, 000. 00 2—New York 393, 000. 00 3—Pittsburgh 993, 558. 62 4—Winston-Salem.. 1, 625, 650. 00 1, 267, 400. 00 6—Indianapolis. . . . 1, 537, 863. 75 1,163,175. 36 7—Chicago 8—Des Moines 1, 029, 550. 00 9—Little Rock 721, 300. 00 10—Topeka 525, 400. 00 794, 400. 00 11—Portland....... 743,121. 29 12—Los Angeles Total October 1937 Advances made during July 1937 $509, 000. 00 793, 700. 00 713, 275. 00 2, 379, 335. 48 850, 600. 00 517, 425. 00 723, 906. 86 1, 040, 887. 50 532,100. 00 490, 400. 00 959, 200. 00 711, 600. 00 11,116, 419. 02 10, 221, 429. 84 Month Loans advanced monthly Repayments monthly Balance outstanding at end of month December 1935 June 1936 December 1936 $8, 414 11, 560 13, 473 $2, 708 3,895 5,333 $102, 795 118, 587 145, 401 1937 January February March April May June July August 6,570 4,260 8,591 9,640 12,170 17, 769 10, 221 11,116 8,225 6,800 143, 745 141,205 142, 719 146, 146 153, 491 167, 057 169, 571 175, 607 7,077 6,214 4,825 4.203 7,707 5,080 33 Table 14.—H. O. L. C. subscriptions to shares of savings and loan and subscriptions 1 Uninsured State-chartered members of the F. H. L. B. System Insured State-chartered associations associations—Requests Federal savings and loan associations Total Number Number Number Number Amount Amount Amount Amount (cumu(cumu- (cumulative) (cumu- (cumulative) (cumu- (cumulative) lative) lative) lative) (cumulative) lative) Requests: Dec. 31, 1935 Dec. 31, 1936 June 30, 1937 July 31, 1937 Aug. 31, 1937 Subscriptions: Dec. 31, 1935 Dec. 31, 1936 June 30, 1937 July 31, 1937 Aug. 31, 1937 1 27 89 125 125 126 $1,131, 700 3, 845, 710 5, 400, 710 5, 655, 210 6, 007, 210 33 279 473 515 586 $2, 480, 000 21, 016, 900 32, 873, 600 35, 410,100 39, 633, 420 553 2,617 3,669 3,838 4,088 $21,139, 000 108, 591, 900 159, 298, 600 166, 884,100 177, 603, 700 613 2,985 4,267 4,478 4,800 $24, 750, 700 133, 454, 510 197, 572, 910 207, 949, 410 223, 244, 330 2 45 63 52 48 100, 000 1, 688, 000 2, 381, 000 1, 934, 000 1, 926, 000 24 262 440 465 492 1, 980, 000 19, 455, 900 30, 283, 600 31,176, 600 32, 950, 600 474 2,538 3,509 3,647 3,742 17, 766, 500 104,477, 400 150, 368, 400 155, 917, 000 159, 511, 500 500 2,845 4,012 4,164 4,282 19, 846, 500 125, 621, 300 183, 033, 000 189, 027, 600 194, 388,100 Refers to number of separate investments, not to number of associations in which investments are made. Table 15.—Properties acquired by H. O. L. C. through foreclosure and voluntary deed * Period Prior to 1935 1935: Jan. 1 through June July 1 through Dec. 1936: Jan. 1 through June July 1 through Dec. 1937: January February March April May June July August Number 30 31 30 31 Grand total to Aug. 31, 1937 9 114 983 4,449 15, 646 3,059 3,290 4,143 3,887 4,472 4,608 4,476 4,298 53, 434 1 Does not include 22,051 properties bought in by H. 0. L. C. at foreclosures sale but awaiting expiration of the redemption period before title in absolute fee can be obtained. In addition to the 53,434 completed cases, 301 properties were sold at foreclosure sale to parties other than the H. O. L. C. and 6,807 cases have been withdrawn due to payment of delinquencies by borrowers after foreclosure proceedings were authorized. 34 Table 16.—Reconditioning Division—Summary of all reconditioning operations of H. O. L. C. through Sept. 15, 1937 * June 1, 1934 through Aug. 15, 1937 Cases received 2 . . . Contracts awarded: Number 826,115 Aug. 16, 1937 through Sept. 15, 1937 11,188 Cumulative through Sept. 15, 1937 837, 303 466, 940 8,415 475, 355 $88, 609, 415 $1, 842, 713 $90, 452,128 Jobs completed: 456, 605 8,078 464, 683 $85, 275, 411 $1, 489, 979 $86, 765, 390 1 All figures are subject to adjustment. Figures do not include 52,269 reconditioning jobs, amounting to approximately $6,800,000, completed by the Corporation prior to the organization of the Reconditioning Division on June 1, 21934. Includes all property management, advance, insurance, and loan cases referred to the Reconditioning Division which were not withdrawn prior to preliminary inspection or cost estimate. Federal Home Loan Bank Review State Legislation and Share Insurance (Continue from p. 17) takes over an insured institution for liquidation. The Corporation is authorized to take certain steps to restore defaulting institutions to normal operations. It is of course in a better position to help an association out of its difficulties if it is enabled to cooperate with State supervisory authorities whenever liquidation is contemplated. Second, it provides that the Federal Savings and Loan Insurance Corporation, if it wishes, may serve as co-liquidator of State-chartered institutions which have been taken over by the State supervisory authority for liquidation. This provision enables the Insurance Corporation to have access to the books and records of the association, and thus to keep in touch with the progress of liquidation. As co-liquidator the Insurance Corporation is in the position of trustee, and its requests for advice on questions involving the trust would be welcomed by courts of equity. It could appear in equity at any time to restrain actions which might dissipate the association's assets, or to compel action to protect them. It is therefore in a better position to protect the interests of insured members. Third, the statute gives the Federal Savings and Loan Insurance Corporation first option to purchase the assets of the institution which is being liquidated, and thereby to assure that fair value is obtained in the sale of assets. Although a savings and loan association, under the theory of implied powers of corporations, does not need statutory permission to obtain insurance, in some cases a specific law authorizing insurance of share accounts is beneficial. Occasionally a State may wish to clarify by legislation the right of an association to insure its accounts. An example is the State of New Jersey, in which no October 1937 association had insured its accounts up to April 1937. A statute enacted in New Jersey on April 27,1937, gave associations the right to insure their accounts, and 20 New Jersey associations have obtained such insurance since that date. The Federal Savings and Loan Insurance Corporation offers the benefits of a national system of share account insurance to State-chartered institutions and to Federal savings and loan associations. The success of its program in any State depends to a great extent on the willingness of that State to cooperate by passing laws favorable to insurance of accounts and to progressive homefinancing practices. Insurance Corporation (Continued from p. 23) Loans for home purchase decreased 7.0 percent, loans for refinancing 10.2 percent, and loans for other purposes 2.7 percent. Nevertheless, these associations kept a favorable balance of loans outstanding with a slight increase of 0.8 percent. In August the amount loaned for home purchase represented 40.7 percent of the total. Construction and reconditioning loans made up 30.9 percent, refinancing 17.6 percent, and other purposes 10.8 percent. Overshadowed by the usual semiannual flurry of share investment and repurchase in July, August exhibits a calming down of such activity. About half as much was invested in these associations during August as during July, while 35.2 percent less was repurchased. The smaller reduction in repurchases caused a slight net decrease in their private share liability. At the end of August $310,343,100 had been paid in on private share subscriptions to these 304 associations, and they had $22,340,000 of H. O. L. C. subscriptions. The total share liability amounted to 80 percent of their $418,776,500 of assets. 35 Counsel's Opinion and Board Resolution DIGEST OF A-B-C BOOK OPINION In requesting cop> of digests, their A - B - C Book reference number and date should be cited. SHARE ACCOUNTS—Retention of dividends on shares repurchased. Fed. Charter E, Sec. 10; Fed. Charter K, Sec. 6. Section 6 of Charter K requires the association to continue to treat repurchased shares issued while the association was operating under Charter E in accordance with the provisions regarding retention of dividends of Charter E until such shares are exchanged for investment or savings share accounts. ( A - B - C Book, C-011, June 21, 1937) RESOLUTION OF THE BOARD T H E Federal Home Loan Bank Board, on September 16, adopted the following resolution amending Form 1, application for membership in the Bank System: Whereas, certain changes have been recommended by the Regulations Committee in that part of Form 1, as revised February 5, 1937, entitled "Miscellaneous Data" and in Schedule 20 of Form I, to clarify certain provisions and to require additional information; Be it resolved. That Ttem 11 of that part of Form 1 entitled "Miscellaneous Data" is hereby amended to read as follows: "11. (a) What are the usual initial charges in connection with the making of a loan, particularly as to: (1) Cost of title examination $ (2) Appraisal $ (3) Credit reports $ (4) Survey $ (5) Drawing of papers $ (6) Closing of loan $ (7) Miscellaneous $ (b) What additional charges, if any does: (1) The association make against borrowers for services in connection with loans? (2) Your counsel, solicitor or title company make against borrowers for services in connection with loans? (c) Does the borrower pay any or all of the charges in 11 (a) and 11 (b) directly to the persons rendering the services or are such charges collected by the association from the borrower and disbursed by it to the persons rendering the services? (d) If any of such charges (or any part thereof) are paid directly or indirectly to an officer or director, explain fully." Be it further resolved, That Items 27, 28. and 29 be added to that part of Form 1 entitled "Miscellaneous Data", at the end thereof, to read, respectively, as follows: "27. Give complete information as to the largest loan you have outstanding, showing date of loan, original amount, present balance, advances, unpaid taxes, delinquent interest, delinquent dues, type of property and appraisal." "28. State in what name bank account is kept." "29. Does your association occupy office quarters which are also occupied by one or more other financial institu- 36 tions or mortgage companies which are not insured by the Federal Deposit Insurance Corporation or the Federal Savings and Loan Insurance Corporation? If so, explain fully and in detail the relationships between such joint occupants and your association." The Topeka Bank Polls Its Insured Associations 4 SSOCIATIONS contemplating share insurJ L \ _ ance often ask: "Are there any concrete examples of the experience of associations operating under insurance?" To answer this question the Federal Home Loan Bank of Topeka in a questionnaire asked all insured associations in its District if the advantages of share insurance justified the cost. Replies were received from 94 associations. The most persistent note sounded by the answers was that insurance creates confidence in the institution. The following excerpts reflect this attitude: Insurance of accounts has inspired a feeling of security, and the mere mention of such a protection produces confidence. In my judgment, it is worth all it costs in quieting the spoken or unspoken questions in the minds of shareholders and prospective shareholders concerning the security of their investment. This is especially true of elderly investors and, also, of women who are not accustomed to handling money. During the short time since we obtained Insurance of Shares, we have found it very beneficial and helpful in restoring confidence. It is our experience that the investors are looking for safety more than a large return. . . A few of the associations expected more of an increase in the volume of money flowing into the association after insurance. They stated that although insurance was enthusiastically received by the public, money had been slow in coming in. Most of them blamed economic and climatic conditions, as the following excerpt shows: While we have not gotten a great deal of new money, we have had several who say they will buy our shares when the crop is harvested or their CD's at the Bank mature. The relief of the withdrawal situation is worth the cost. One enthusiastic association writes: We regard the date of our Federal Charter and consequent Insurance of Shares as the turning point in the affairs of this Association. Since that date, November 18, 1936, our assets have increased 30.6 percent, our old membership is apparently much better satisfied and we have many more inquiries from prospective investors. In this part of the country, at least, we feel that Insurance of Shares is essential to the future welfare of the business. Federal Home Loan Bank Review Directory of Member, Federal, and Insured Institutions Added during August-September I.—INSTITUTIONS ADMITTED TO MEMBERSHIP IN THE FEDERAL HOME LOAN BANK SYSTEM BETWEEN AUGUST 16, 1937, AND SEPTEMBER 15, 1937 i WITHDRAWALS FROM THE FEDERAL HOME LOAN BANK SYSTEM BETWEEN AUGUST 16, 1937, AND SEPTEMBER 15, 1937 INDIANA: St. Bernice: St. Bernice Building, Loan & Savings Association (voluntary). KENTUCKY: (Listed by Federal H o m e Loan B a n k Districts, States, and cities) DISTRICT NO. 1 MASSACHUSETTS : Boston: Hoslindale Co-operative Bank of Boston, M a s s . , 3 Corinth Street. N o r t h Eastern: N o r t h Easton Co-operative B a n k . Winchester: Winchester Co-operative Bank, 77 Central Street. DISTRICT NO. 2 NEW Covington: Covington Building Association, 728 Madison A v e n u e (merged with General Building Association of Covington, Covington, K e n t u c k y ) . N E W JERSEY: Collingswood: K n i g h t Park Building & Loan Association of Collingswood, N e w Jersey, 608 H a d d o n A v e n u e (voluntary). Westville: Old Buck Building & Loan Association (voluntary). W E S T VIRGINIA: Fairmont: E a s t Side Building & Loan Association, Corner Merchant & Market Streets (voluntary). JERSEY: Bogota: Bogata Building & Loan Association, 8 F o r t Lee R o a d . E a s t Orange: Lackawanna Building & Loan Association, 62 Heddon Place. NEW YORK: Buffalo: Aetna Permanent Savings & Loan Association, 7 7 - 7 9 Seventeenth Street. DISTRICT NO. 3 PENNSYLVANIA : Monessen: Mouessen H o m e Building & Loan Association, 100 Sixth Street. N e w Brighton: H o m e Protective Savings & Loan Association, 1036 Fifth Avenue. Rockledge: Rockledge Building & Loan Association, 32 Robbins Avenue. II—FEDERAL SAVINGS AND LOAN ASSOCIATIONS CHARTERED BETWEEN AUGUST 16, 1937, AND SEPTEMBER 15,1937 DISTRICT NO. 3 PENNSYLVANIA: Monaca: M o n a c a Federal Savings & Loan Association, Monaca National Bank Building (converted from Phillipsburgh Building & Loan Association of Beaver C o u n t y ) . Pittsburgh: Foster Federal Savings & Loan Association, 3509 Butler Street (converted from Foster Building & Loan Association). DISTRICT NO. 4 NORTH CAROLINA: Raleigh: First Federal Savings & Loan Association of Raleigh, 201 South Salisbury Street. VIRGINIA: DISTRICT NO. 4 NORTH CAROLINA: Greensboro: Gate C i t y Life Insurance Company, 301 South E l m Street. Lynchburg: Lynchburg Federal Savings & Loan Association, 616 Church Street (converted from Pilot Building & Loan Association, Incorporated). SOUTH CAROLINA: Greenville: Southeastern Life Insurance Company. DISTRICT NO. 5 KENTUCKY: Frankfort: Greater Frankfort Building & Loan Association, 205 St. Clair Street. DISTRICT NO. 5 OHIO: Columbus: Ohio Federal Savings & Loan Association of Columbus, 24 E a s t Gay Street (converted from Ohio Building & Loan Company). DISTRICT NO. 6 MICHIGAN: OHIO: Sebring: B u c k e y e Building & Loan Company, 291 N o r t h Fifteenth Street. Port Huron: Citizens Federal Savings & L o a n Association of Port Huron, 409 Peoples Bank Building. D I S T R I C T NO. 6 INDIANA: DISTRICT NO. 7 ILLINOIS: Connersville: Union Savings & Loan Association. DISTRICT NO. 9 LOUISIANA: N e w Orleans: Pan American Life Insurance Company, Whitney Building. D I S T R I C T N O . 10 Abingdon: Abingdon Federal Savings & Loan Association (converted from Abingdon Building & Loan Association). Chicago: M a r q u e t t e Federal Savings & Loan Association, 111 W e s t Washington Street. Southwest Federal Savings & Loan Association of Chicago, 6239 South Ashland Avenue (converted from Arnoldsville Building & Loan Association). NEBRASKA: Fremont: Equitable Building & Loan Association of Fremont, Nebraska. McCook: McCook Co-operative Building & Savings Association, 103 West C Street. Omaha: v 1 nited Benefit Life Insurance Company, Faidley Building. 1 During this period 2 Federal savings and loan associations were admitted to membership in the System. October 1937 DISTRICT NO. 8 SOUTH DAKOTA: Sioux Falls: First Federal Savings & Loan Association of Sioux Falls, Corner T e n t h Street & M a i n Avenue. DISTRICT NO. 9 MISSISSIPPI: Bay St. Louis: Peoples Federal Savings & Loan Association, 121 Street. Main 37 D I S T R I C T N O . 12 CALIFORNIA: Glendale: Fidelity Federal Savings & Loan Association of Glendale, 1550 Golf Club D r i v e . CANCELATIONS OF FEDERAL SAVINGS AND LOAN ASSOCIATION CHARTERS BETWEEN AUGUST 16, 1937, AND SEPTEMBER 15, 1937 KANSAS: Augusta: First Federal Savings & Loan Association of Butler County, 512 S t a t e Street (merged with Mid-Kansas Federal Savings & Loan Association of Wichita, Wichita, K a n s a s ) . Hays: H a y s Federal Savings & Loan Association, 1012 M a i n Street (dissolved and assets transferred t o H a y s Building & Loan Association, H a y s , K a n s a s ) . DISTRICT NO. 7 WISCONSIN: Milwaukee: Pyramid Building & Loan Association, 2423 W e s t Avenue. North DISTRICT NO. 8 IOWA: M t . Pleasant: Insurance Plan Savings & Loan Association, 130 N o r t h M a i n Street. DISTRICT NO. 9 TEXAS: Houston: Liberty Loan & Building Association, 803 Bankers M o r t g a g e Building. D I S T R I C T N O . 10 COLORADO: MINNESOTA: M o o r head: Moorhead Federal Savings & Loan Association (merged with First Federal Savings & Loan Association of Fargo, Fargo, North Dakota). III.—INSTITUTIONS INSURED BY THE FEDERAL SAVINGS AND LOAN INSURANCE CORPORATION BETWEEN AUGUST 16, 1937, AND SEPTEMBER 15, 1937 * Trinidad: Century Building & L o a n Association, Turner Building. KANSAS: Iola: Security Building & Loan Association, 20 N o r t h Washington Street. NEBRASKA: Chadron: Chadron Building & L o a n Association. D I S T R I C T N O . 11 DISTRICT NO. 5 OHIO: Ada: H o m e Savings & Loan Company, 107 N o r t h M a i n Street. Coshocton: Citizens Building & Loan Association, 413V& Main Street. Lynchburg: H o m e Builders Association, Farmers Exchange B a n k Building. 38 MONTANA: Missoula: Western M o n t a n a Building & L o a n Association, Corner H i g gins & B r o a d w a y . 1 During this period 7 Federal savings and loan associations were insured. Federal Home Loan Bank Review U. S. GOVERNMENT PRINTING OFFICE: 1937 OFFICERS OF FEDERAL HOME LOAN BANKS BOSTON B. J. ROTHWELL, Chairman; £ . H. WEEKS, Vice Chairman; W. H. NEAVES, President; H. N. FAULKNER, Vice President; FREDERICK WINANT, JR., Treasurer; L. E. DONOVAN, Secretary. N E W YORK GEORGE MACDONALD, Chairman; F. V. D . LLOYD, Vice Chairman; G. L. BLISS, President; F. G. STICKEL, JR., Vice President-General Counsel; ROBERT G. CLABKSON, Vice President-Secretary; DENTON C. LYON, Treasurer. CHICAGO H. G. ZANDER, Chairman; MORTON BODFISH, Vice Chairman; A. R. GARDNER, President; JOHN BARD WICK, JR., Vice President; E. H. BURGESS, Treasurer; CONSTANCE M. WRIGHT, Secretary. DES MOINES C. B. BOBBINS, Chairman; E. J. RUSSELL, Vice Chairman; R. J. RICHARDSON, President-Secretary; W. H. LOHMAN, Vice PresidentTreasurer; J. M. MARTIN, Assistant Secretary; A. E. MUELLER, Assistant Treasurer. PITTSBURGH LITTLE ROCK E. T. TRIGG, Chairman; C. S. TIPPETTS, Vice Chairman; R. H. RICHARDS, President; G. R. PARKER, Vice President; H. H. GARBER, Secretary-Treasurer. J. GILBERT LEIGH, Chairman; W. C. JONES, JR., Vice Chairman; B. H. WOOTEN, President; H. D . WALLACE, Vice President; W. F. TARVIN, Treasurer; J. C. CONWAY, Secretary. WINSTON-SALEM TOPEKA G. W. WEST, Chairman; E. C. BALTZ, Vice Chairman; O. K. LAROQUE; President-Secretary; G. E. WALSTON, Vice President-Treasurer; Jos. W. HOLT, Assistant Secretary. W. R. McWILLIAMS, Chairman; G. E. MCKIN^NIS, Vice Chairman; C. A. STERLING, President-Secretary; R. H. BURTON, Vice PresidentTreasurer. PORTLAND CINCINNATI T. H. TANGEMAN, Chairman; W. D . SHULTZ, President; W. E. JULIUSJ Vice President: A. L. MADDOX, Treasurer; DWIGHT WERB, JR.^ Secretary. F. S. Mc WILLIAMS, Chairman; B. H. HAZEN, Vice Chairman; IRVING BOGARDUS, Vice President-Treasurer; Mrs. E. M. SOOYSMITH, Assistant Secretary. Los ANGELES INDIANAPOLIS F. S. CANNON, Chairman-Vice President; S. R. LIGHT, Vice Chairman; FRED T. GREENE, President; B. F. BURTLESS, Secretary-Treasurer. C. H. WADE, Chairman; D . G. DAVIS, Vice Chairman; M. M. HURFORD, President; C. E. BERRY, Vice President; F. C. NOON, Secre* tary-Treasurer.
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