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and the normal amount of cash with which to make the initial payment on a home, either to buy or build a home?

Mr. STERN. I think so, if he can do it.

Senator MORRISON. But for credit conditions, would it not be a good time for him to do it, in your opinion?

Mr. STERN. I think that would be true, but I am convinced, Senator, that it is more true in our smaller cities than it is in our larger cities.

Senator MORRISON. Because of the difficulty of building a home at any time in a city, where land is so high, near enough to the work?

Mr. STERN. Yes.

Senator MORRISON. For that reason, they have to resort to apartment houses, and that sort of thing?

Mr. STERN. That is correct.

Senator MORRISON. But, in the average town and village of the country, and in the smaller cities, where land is not so high and where, under normal conditions, they can hope to have homes, now would be a good time, would it not?

Mr. STERN. I think it would, if there is a need for a new home. In other words, if that person could not satisfy himself that there is an existing good value

Senator MORRISON. I said, either to build or buy.
Mr. STERN. Yes.

Senator MORRISON. If there are so many of them, as many of the witnesses are claiming, it would be a good time, if he could get normal credit help, to buy a home or build one.

Mr. STERN. Yes. I want to call your attention to the fact, Senator, that the people who are in the greatest distress to-day, financially and otherwise, are located in our cities rather than in our rural sections and smaller towns. I think you will agree that the difficulty of getting a cover over your head and getting three meals a day is much harder to manager to-day in our large cities. Their funds are being so tapped for relief purposes that there is a limit to what private resources can provide. To-day in Chicago we have to secure $20,000,000 to go through the rest of this year for relief work, and we are paying $25 to $30 a month for rent to house these people—that is, the relief agencies are. The fellow in the small town in the rural section has a house. Who is going to take it away from him? They can not do anything with it if they do take it away from him. He can grow something in his back yard, or he has already put up a lot of things. There are farms nearby, and he can get enough to carry him through the winter. He needs his clothing and so forth.

I claim-and I think you will agree—that the urban centers to-day are lost sight of because there are such powerful interests there that we think they will provide for their care, but actually they are being greatly overlooked in their justified demands.

First, I hope that this bill will accomplish some definite emergency results in giving relief to the home owners. If it does that, it seems to me it is sound, if it can not be done any other way, but the point I am trying to bring out is that you should not overlook, in my estimation-and I speak for many others who have been working in this field-you should not overlook the opportunity for stimulating construction and employment on a sound economic basis in our large centers, where we can not get consideration for these groups because such projects do not have the flair of a speculative return. We can not get consideration from mortgage companies or from private investors.

From a social angle, and from the standpoint of actual need for the fellow who is living in indecent and insanitary conditions, I claim that if you do not do something about them we will have a situation in the coming elections in our cities and in our national posts in government, 5 or 10 years from now, similar to what has happened in Europe. I am not trying to scare anybody, or be a communist, but I am telling you that they are going to force government funds, as they have done in Europe, and I am strongly against seeing entirely governmental housing. I think we have to have a share of private capital and, especially, private initiative in these construction programs, but if you do not do something about it, the unemployed, and those who can control our governmental positions, are going to force our hands. I think, if we are intelligent, we will get ahead of them.

Senator MORRISON. You think the bill should be amended so as to attempt some relief in respect to the city difficulty you pointed out?

Mr. STERN. Yes.

Senator WATSON. Get your lawyer to draft what you propose, or do it yourself, and submit it to us.

Mr. STERN. I will get a lawyer to do it, and submit it.

STATEMENT OF L. T. STEVENSON, PRESIDENT NATIONAL ASSO

CIATION OF REAL ESTATE BOARDS, PITTSBURGH, PA.

Senator WATSON. Where do you live, Mr. Stevenson?
Mr. STEVENSON. I live in Pittsburgh.
Senator WATSON. What is your business?

Mr. STEVENSON. I am in the real estate business. At the present time I am president of the National Association of Real Estate Boards.

Senator WATSON. How long have you been in that business?
Mr. STEVENSON. Thirty-two years.
Senator WATSON. In Pittsburgh?
Mr. STEVENSON. About 31 years in Pittsburgh.
Senator Watson. Have you examined this bill?
Mr. STEVENSON. Yes, sir.

Senator Watson. When you say you are in the real estate business, you mean by that that you buy and sell real estate?

Mr. STEVENSON. I am more in the development business. Senator WATSON. Financing? Mr. STEVENSON. No, sir; in brokerage. I happen to be president of a building and loan association, and I am also director in a bank.

Senator WATSON. When did you organize the building and loan association ?

Mr. STEVENSON. In 1909.
Senator WATSON. How many members has it?

Mr. STEVENSON. I think there are about 800 members in that building and loan association.

Senator Watson. Have you made loans right along to home buyers and builders?

Mr. STEVENSON. Yes; up until about a year ago.
Senator WATSON. Why did you quit then?
Mr. STEVENSON. Because we could not finance them.
Senator Watson. Why couldn't you?

Mr. STEVENSON. Because we could not borrow any more money at the banks, which were our backbone. In Pennsylvania, our building and loan associations are under the supervision of the State banking commissioner. We can borrow up to 25 per cent of our mortgage loans. That is the law; but things sort of closed down, and we discovered that we owed the bank about $70,000, on some $600.000 worth of mortgages, and we naturally had to pay that off; so we have applied ourselves toward the reduction of that. Of course, you could not borrow a dime in a bank to-day in Pittsburgh for practically anything, so far as that is concerned. You can borrow, of course, from some insurance companies, but it is practically shut down as far as the banks are concerned.

Senator WATSON. How many defaults have you had in the monthly payments in your building and loan association?

Mr. STEVENSON. We have had very few, due to the district in which we operate. We operate in a district that is considerably above what would be termed the average district. If

you are familiar with Pittsburgh, it is in the South Hills district of the city of Pittsburgh, which is a very substantial middle class of people. Consequently, we have had very few defaults. We have had some in arrears, but we have had only three or four absolute defaults during this year, but those were the first we ever had in this building and lian association, so naturally we are three or four worse off than we ever were.

Senator WATSON. Have you been bothered much by withdrawals?
Mr. STEVENSON. Yes.
Senator Watson. You sell paid-up stock, do you?
Mr. STEVENSON. No, sir; we do not.
Senator WATSON. It is all on the payment plan?
Mr. STEVENSON. Yes.
Senator Watson. Everybody pays in?

Mr. STEVENSON. Everybody pays in, and when he has paid out his stock, we request him to withdraw. We do not act as a bank of deposit at all. We operate entirely

Senator WATSON. You do not have paid-up stockholders?
Mr. STEVENSON. No, sir.

Senator Watson. Then, you are not bothered much by withdrawals?

Mr. STEVENSON. Our withdrawals, as they come along, when their stock is paid up, naturally keep us busy keeping them paid and reducing our obligations in the bank.

I am very glad to answer any question you care to ask me with reference to the building and loan end. I had a few things here to which I wished to call your attention.

Senator Watson. Go right along in your own way.

Mr. STEVENSON. In our National Association of Real Estate Boards we have a survey here of some 84 cities and towns from 34 gone on.

different States, which we have completed, showing foreclosures over a period of three years. Senator TOWNSEND. Beginning when?

Mr. STEVENSON. Beginning in 1928, and up to 1931, eight months of 1931. In other words, the first eight months of 1931 are in here, showing conclusively the tremendous gain of foreclosures as time has

These, I want you to understand, are house foreclosures, or home foreclosures.

Senator WATSON. Nothing but homes?

Mr. STEVENSON. Nothing but homes and made from as accurate a survey as it is possible for us to gather. It is made out of 84 cities and towns out of 554 where we have real-estate boards, so that we feel it is very reasonably correct.

Senator TOWNSEND. How many States did you say that covers ?

Mr. STEVENSON. Thirty-four States. This year we feel that there are a great many foreclosures held back, due to the fact that banks and other financial institutions are practically taking the position that they are just about as well off to leave the man alone as they are to foreclose it, because by the foreclosures they are destroying values and tearing down the values of their mortgages that they already own.

Senator TOWNSEND. You think your company has taken the same position as the banks?

Mr. STEVENSON. No. I say that the banks are taking that position, from the survey that we have made through the National Association of Real Estate Boards.

Senator WATSON. Are your people foreclosing any yourselves?

Mr. STEVENSON. We had one foreclosure last month, and one where they gave a deed back. Both of them are small institutions. In our building and loan association we have about $600,000 on firstmortgage loans in a community where we have absolutely the pick of the mortgages. The bank of which I am a director has deposits of approximately $1,000,000. It is only a small community. So that both these institutions that I speak of are relatively small.

Last week we had a meeting in St. Louis at which we drafted a resolution. There were some 600 delegates, scatter well over the United States, from Massachusetts to California. I do not believe there was anyone from Maine. Almost all the States were represented. They passed the following resolution:

Resolved by the delegates of the National Association of Real Estate Boards assembled at its annual midwinter meeting at St. Louis, Mo., on January 22, 1932, That the Congress of the United States be urged to take immediate action in the matter of creating the Federal home loan bank system now pending in Congress.

I simply present that to you for your information.

Senator WATSON. Tell us why you favor it? Have you studied this bill?

Mr. STEVENSON. Yes.
Senator WATSON. You have studied this bill carefully?

Mr. STEVENSON. Yes, sir; I have, and I will say to you, sir, that we are absolutely for it from any angle. I feel that you can come in here and hold hearings for two years and have men coming in and changing this word, that word, and the other word, but the thing we need for the benefit of the home owners of this country is something to give them absolute relief from the foreclosure of their homes and the destroying of the value of other properties due to, that foreclosure.

Senator TOWNSEND. You think this bill will do that thing?

Mr. STEVENSON. I think it will go a long way toward correcting the evil that is now in front of us, and has been our trouble for quite some time.

Senator Watson. Do you believe in this measure as an emergency relief, or as a permanent proposition?

Mr. STEVENSON. No, sir. I believe in it as a permanent relief, Senator.

Senator Watson. Do you think it will pay?
Mr. STEVENSON. In what respect!

Senator Watson. A return on the investment, just like any other thing pays.

Mr. STEVENSON. I think it will, at least, pay in this respect. It will pay in the building of the character of our homes, and the safety and housing of our homes.

Senator WATSON. Yes; but what kind of a financial institution will it be?

Mr. STEVENSON. I think it can not be anything else but sound. The set-up of your bonds can not be anything but the very best. I think they are the soundest bonds--I am not a bond expert at all, but from what they tell me, they have about the soundest set-up of any bonds we can observe.

Senator Watsox. Do you think that after this emergency is over, and we get back to normal times, if such a blessed state ever reaches us again, that these institutions, 12 of them in the United States, could do such a business along this special line that would make each of them financially sound?

Mr. STEVENSON. I certainly do; yes, sir.
Senator WATSON. All right. Proceed with your statement.

Mr. STEVENSON. We have heard about overbuilding. Our vacancy survey shows, in 32 cities, less than 5 per cent vacancies in singlefamily homes to-day. That is taken from a survey made in 32 cities scattered throughout the United States, where they made a vacancy survey. It shows less than 5 per cent to-day in single-family homes,

thing that this bill is designed to aid. There has gone out a lot of adverse publicity and criticism, to the effect that the bill is designed to aid bad real-estate bonds. That is a very bad and misleading publicity, because this bill is not designed to aid real-estate bonds.

We are familiar with the conditions of the real estate bond market which existed primarily in apartment houses and office buildings. I think there are some $10,000,000,000 of real-estate bonds in the United States, of which one-half are in bad repute to-day, but this has nothing whatever to do with a proposition of that kind. It is not the home that has brought on that trouble. It is the unscrupulous bond houses that have financed these buildings and sold their bonds to the unsuspecting investor, and naturally they have not the sound background back

of them, which has caused tremendous losses. Senator WATSON. That was not due so much to unscrupulous handling as to the vast inflation of the country, and overcapitalization.

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