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would have a hard time getting a home if he expected to rely upon the insurance companies. These insurance companies have plenty of money available for mortgages, without takers, when they loan not over 50 per cent, and when the man has to go to some shark to get a second mortgage to take up the difference.

Senator TOWNSEND. What effect, if any, will this law, when carried into effect, have on commercial banking, permanently?

Mr. ERMON. In the case of New Orleans alone, it will release $8,000,000 instantly for banking pursuits, to the banks, which should be commercial banks. They should not be permitted to invade our field. Some banks down our way have actually gone so far as to go into the the ticket brokerage business, buying ocean tickets from steamship companies. They have gone into the insurance business, and have got their fingers burned. Real-estate loans which they have taken are the source of a lot of trouble to-day, because we can not finance them.

Senator BULKLEY. Is your business entirely inside the city of New Orleans?

Mr. ERMON. And environs. We go to Jefferson Parish and St. Bernard Parish. My particular homestead association is located in New Orleans, but under the law we can go into the adjoining parishes.

Senator BULKLEY. Your experience with lending a large percentage of the appraised value is particularly good, is it not?

Mr. ERMON. Yes, sir; and it always will be that way with mutual companies.

Senator BULKLEY. Is that due to any peculiar condition in New Orleans, or do you attribute it to the fact that it is a mutual company?

Mr. Ermon. I think it is entirely because they are mutual companies, and very well operated.

I believe we ought to have a longer period of time for amortization, and we probably will have. I think 15 years, Senator, will permit, in actual practice, a payment no greater than exists to-day, but the amount will be sufficient to take care of the taxes, insurance, and possible unemployment.

Senator Watson. How often ought there to be a reappraisal?

Mr. ERMON. We reappraise, after a fashion, every year. We reappraise critically when the loan gets behind. As long as the loan is up to date, it is not a source of trouble, of course, but when we are going on other appraisements, if we have a property in that particular neighborhood, we invariably look at all our property in that neighborhood. We suggest to the owners that they should paint their houses. In Shreveport, they are quite critical. That is one of the best associations, the largest in the South. It is run by a man who just lives and dies with the homestead and building and loan associations. He is the second vice president of the National League, and he makes it his personal business. I think perhaps he inspects them twice a year. I am sure he does once a year. There is no fixed rule for that. Each association followed its own practice.

Senator WATSON. If there are no further questions, we are very much obliged to you.

STATEMENT OF JOSEPH H. REASS, SECRETARY WHEELING

(W. VA.) SAVINGS AND LOAN ASSOCIATION

Senator WATSON. What is your business?

Mr. Reass. I am secretary of the Wheeling Savings and Loan Association, which is a building and loan association. We call them savings and loan associations.

Senator Watson. How big is it?
Mr. REASS. A million and a half.
Senator Watson. How many homes are you building?
Mr. REAss. We have over 400 loans.
Senator Watson. Have you studied this bill?
Mr. REAss. Yes, sir.
Senator WATSON. Are you in favor of it?

Mr. Reass. Yes, sir. I will say every association in the State of West Virginia is.

Senator Watson. Without change?
Mr. Reass. Yes, sir. We think it is a very good piece of work.

Senator WATSON. Do you have any trouble in financing yourselves?

Mr. Reass. We have always had that trouble.
Senator Watson. How old is your association!

Mr. Reass. Ten years. On behalf of the West Virginia association, we have gone East any number of times to the life insurance companies and mortgage companies hunting funds. We never were able to get enough to satisfy the demand. As an example of the restrictions, particularly of the life insurance companies, let us take the city of Wheeling. We have the seventh ward, which is an island. In 1884 there was a flood, and in 1913 there was a flood. It comes under the ban of the life insurance companies, and some 10,000 homes are out of the running. The same thing occurs in South Wheeling, but there has never been a home washed out in that territory. All over the State there is some excuse along that line.

Senator Watson. Have you had many defaults?

Mr. Reass. We have 120 delinquents at the present time that we are carrying

Senator Watson. How do you carry them?

Mr. Reass. Either refinance them, or reduce the payment, or get them to pay the interest—there are a hundred and one different methods. We try to help the borrower.

Senator Watson. What do you do with property when you foreclose ?

Mr. Reass. We have to take it back at the present time, and that is a thing we do not want to do.

Senator Watson. Then what do you do with it after you get it?
Mr. REAss. You have to hunt a buyer, if you can find one.
Senator Watson. If you do not, you have to carry it?
Mr. REAss. Yes, sir.
Senator WATSON. Are you carrying many now in your section?
Mr. REAss. About half a dozen.

Senator Watson. Is there anything you want to say particularly about this, in addition to what you have said?

Mr. Reass. In West Virginia, we have never had second-mortgage money. We have a usury law in West Virginia, that limits the rate to 6 per cent. If a man violates that, it makes no difference whether it is through a broker, or how, if they can trace the extra interest to the lender, the loan is a usurious loan and the courts will compel the refund of the difference. Consequently, we have no second mortgages.

Yesterday I sat here and listened to this gentleman from Ohio talk about trying to get real-estate loans. We are across the river from the Ohio section-Belmont, Jefferson, and Monroe Counties-all of which have had some bank failures. I believe, although I have not the papers before me—that in every one of those failures, there was either a director, or cashier, or somebody, who said the bank had been closed because of real-estate loans. Apparently yesterday these gentlemen were trying to make real-estate loans. It looks to me like a man trying to commit suicide.

A question was also asked here, as to whether we had any instances of builders building 25 or 50 homes, and getting into difficul. ties. That never takes place in our community. We have never had a case where they have not been able to finance it.

Senator TOWNSEND. That is, you finance the individual homes?

Mr. REAss. Yes, sir. But I can not recall a case where anybodyunless it has been a coal company—ever built 50 houses or 20 houses at any one time for sale. We are in a State that suffers from absentee ownership. Our coal mines are owned in Baltimore; our steel mills by the United States Steel Co., and the like, and our capital is continually flowing out instead of Gowing in.

Senator WATSON. Mr. A. J. Barber.

STATEMENT OF A. J. BARBER, WILKES-BARRE, PA.

Senator WATSON. Where do you live?
Mr. BARBER. Wilkes-Barre, Pa.
Senator Watson. What is your business?
Mr. BARBER. General real estate.

Senator WATSON. Buying and selling? Town and farm property?

Mr. BARBER. Every kind.
Senator WATSON. Every kind?
Mr. BARBER. Every kind.
Senator WATSON. How long have you been in the business?
Mr. BARBER. About 31 years.
Senator WATSON. Do you do an extensive business?
Mr. BARBER. We do the largest business in our part of the State.
Senator WATSON. In Wilkes-Barre?
Mr. BARBER. Yes; in the northeastern part of the State.
Senator Watson. Have you studied this bill?
Mr. BARBER. I have, sir.

Senator Watson. Have you met with other people in your industry to discuss it and talk it over?

Mr. BARBER. I have.
Senator WATSON. There has been meetings for that purposes ?
Mr. BARBER. Yes.

Senator Watson. What was your conclusion, and why did you reach the conclusion?

Mr. BARBER. Senatór, before I start to say what I have to say, which will be very brief, I want to say that I agree entirely with what has been offered here by Mr. Kingsley, and I just wanted to give you the benefit of my observation and my experience in reply to a question you asked Mr. Kingsley, as to why so many mortgages held by building and loan associations are foreclosed, as was mentioned yesterday. I desire to say in response to that that my experience, covering the period of time I have been in business, is this. I find that when there is a possibility of borrowing a large amount, the buyer oftentimes buys something at a higher price than he should, which brings great trouble to himself. That is my experience. My experience has not only covered my own part of Pennsylvania, but other parts of the State, as well as other parts of the country, because our business takes us outside of WilkesBarre.

Senator BULKLEY. You mean you agree with Mr. Kingsley's opinion that 60 per cent is the highest loan that is safe?

Mr. BARBER. I do. I will qualify that, Senator, by saying this. Occasionally, when I have found the condition of the buyer to be favorable, and he has the capacity, I have made sales on small payments, but that is the exception. We are talking of general practice. You have to bear in mind that the buyer is always at the mercy of the high-pressure salesman, who is out to make a dollar for himself, and his interest lies in more commission.

Senator WATSON. What do you do toward building a home?

Mr. BARBER. We do not do anything toward building the home, usually. I have done some of that work already, but what we usually do is to make sales of homes that are already built.

Senator WATSON. That is your business?

Mr. BARBER. That is our business. I have done some building, but I do not like that part of the business, and have kept away from it.

Senator Watson. Do you have to go to building and loan associations to get funds?

Mr. BARBER. No, sir.

Senator WATSON. You do not have to go to the building and loan association at all. To whom do you go?

Mr. BARBER. I was just going to go into that. Before I do that, I want to say this. The passage of

this sort of a bill, to my mind, is going to cause a great deal of trouble. There is nothing to stop inviting every group in the United States to come in and ask this Government to form banks for themselves, including the shoemakers. I think this is a matter of private enterprise and should be worked out by the people themselves, notwithstanding I am in the realestate business, and am a member of the National Real Estate Exchange, which has proposed this bill. I am opposing it from that particular standpoint. The great trouble to-day is not in getting the first mortgage money. The great trouble to-day is in getting the second-mortgage money. By the passage of this bill, you are going to make a condition that it will be impossible to meet, and that is providing second-mortgage money. They will be back here asking this Government to form a bank for second-mortgage purposes. That is the great evil to-day. The fellow who has to get a second mortgage, usually has to pay all sorts of bonuses, up to 10, 15, or 20 per cent.

I desire to submit further for your consideration, that the buyer of a home is better off to-day borrowing his money from a private individual or a local building and loan association or a local bank, for the reason that when he does get into distress, he is always able to go there and get time to work out his situation, which will not be the case here, because the individual will not be recognized, and will not be known. That is the case so far as the home buyer is concerned under present conditions.

Again, there is also this feature. The mortgage investor is better off to-day buying the mortgage direct, than he will be under the passage of this bill, where the only thing he can do is to buy the mortgage bond. The advantage of a mortgage, to my mind, has always been the fact, from the investor's standpoint, that it is not so liquid, which means that he can not easily sell it and go and buy any darn fool thing that comes along. That is his safety. His mortgage, so long as the interest is being paid, is always worth par. Under the passage of this act, that mortgage investor will, perforce, have to buy these bonds. These bonds will be more readily saleable, which is not so good for him, and at the same time he will not be able to get par for his bonds always.

Senator WATSON. What do you propose to do with all these homes that are mortgaged to building and loan associations, where there are defaults, and they can not pay, and the building and loan associations can not go anywhere to get the money? What are you going to do with them?

Mr. BARBER. I think that is a problem for those people to work out for themselves. I do not think that is a governmental problem. I do not think we should take everything to our Government. I think it is a sad indictment of the people when they can not work out their own problems without constantly looking to this Government, where we already have enough trouble.

I want to say that, so far as our particular city of Wilkes-Barre is concerned, we are the county seat of Luzerne County, and we have 444,000 people there. There is loaned at this time in Luzerne County, $50,000,000 on mortgages. Those $50,000,000 are owned by the trust department of 37 banks, having $11,800,000, the banks directly owning $5,500,000; the building and loan associations about two or three million, and the balance is held by private investors, mortgage investors, who desire these mortgages, which, in the last analysis, are the finest investment it is humanly possible to make for the individual.

Senator Watson. Of that $50,000,000 how much is loaned on homes, how much on apartments, and how much on business buildings, and how much on farm property?

Mr. BARBER. It is impossible to get that information. That involves everything.

Senator WATSON. Mines?

Mr. BARBER. No; not mines. That covers business property, factories, farms, and dwelling houses.

When I left Wilkes-Barre, I made a tour of the trust departments of our banks, and I found in one bank $100,000 available for mort. gages, but no applications. The other banks said they did not have

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