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Mr. NELSON. I have here telegrams from organizations such as the Southern Oak Flooring Industry.

Senator WATSON. I think that encumbers the record too much. Mr. NELSON. I imagine so.

Senator WATSON. We understand their tenor.

Mr. NELSON. These are associations of property owners.

Senator WATSON. What is the general résumé? Will you make a general statement of what they contain?

Mr. NELSON. There are in connection with 554 local real-estate boards, 120 groups of real-estate owners, in which we have 14,000 property owners enrolled, and of these 120 groups, some 40 or 50 have held meetings on this particular subject and have expressed their interest and approval of this bill.

Senator WATSON. They are for the bill, are they?

Mr. NELSON. Yes.

Senator WATSON. If you want to, you can say who they are,but do not read the telegrams.

Mr. NELSON. This first one is from the Dayton property owners division, of Dayton, Ohio. This happens to be a telegram from the Southern Oak Flooring Industry. This is from Madison, the property owners' organization there. Here is one from San Bernardino, Calif.

Senator BULKLEY. What is that Madison? Is that Madison, Wis.? Mr. NELSON. Yes. Also the Louisville Real Estate Board and the Louisville Property Owners Association to-day passed a resolution in favor of the home loan banking bill.

Massillon, Ohio, Mr. O. T. Swan, secretary of the Northern Hemlock and Hardwood Manufacturers Association, wires that they have formally acted on this matter.

George W. Pearson, president of the Real Estate Board of Memphis, states that their property owners' division represents 40 per cent of the real-estate owners of Memphis and they heartily indorse the home loan bank bill.

The property owners division of the New Orleans Real Estate Board, of the San Francisco Real Estate Board, of the Ann Arbor (Mich.) Real Estate Board; Rockford, Ill.; Springfield, Ohio; Mr. Ireland, chairman of the property owners' division of Cincinnati; Burbank, Calif. Also a resolution from the annual convention of the General Associated Contractors.

Senator WATSON. All right, Mr. Nelson. We are much obliged. Mr. F. W. Norris.

STATEMENT OF F. W. NORRIS, BOSTON, MASS.

Senator WATSON. Your name and address, Mr. Norris.
Mr. NORRIS. F. W. Norris, Boston, Mass.

Senator WATSON. What is your business, Mr. Norris?

Mr. NORRIS. Realtor, mortgage broker, and home builder and subdivider. We have different divisions in our office. We have a brokerage division, a home building and subdividing division. and then a mortgage business.

98195-32-PT 3-9

Senator WATSON. How long have you been engaged in this business?

Mr. NORRIS. Since 1904.

Senator WATSON. Are you interested at all in building and loan associations?

Mr. NORRIS. I was formerly, up until four years ago, president of a cooperative bank in Massachusetts. Our building and loan associations are known as cooperative banks. I resigned as president of that institution and also director of several commercial banks at that time, because I was taking up work that took me away so that I could not attend directors' meetings.

I represent the Boston Real Estate Board, of Boston, Mass., with about 600 members, besides a large membership of property owners. The Boston Real Estate Board called a directors' meeting, at which they invited a number of savings bank officials, at which time this bill was considered. It was gone over very carefully, and this vote was taken, which I will read to you and then file it with you:

66

FEBRUARY 15, 1932.

Vote passed by the directors of the Boston Real Estate Exchange at a special meeting held on December 22, 1931, a quorum being present and participating: Voted, that the directors of the Boston Real Estate Exchange are in favor of the establishment of a Federal home loan discount bank as outlined in bill 5090 of the House of Representatives and are in favor of giving their support to said bill including any amendments or substitutions that do not materially change its effect."

A true copy.
Attest:

CHARLES E. LEE, Secretary.

I also represent the Cape Cod Real Estate Board, of which I am a member and past president. The Cape Cod Real Estate Board has members from all over the county. They are also unanimously in favor of this bill. I haven't got an attested copy of their resolution, however.

Senator WATSON. Why are you for it? Tell us briefly and succinctly why you are for it.

Mr. NORRIS. I would just like to give one thought. I sympathize with the mortgage bankers because when this was taken up in my office the manager of our mortgage department opposed my favoring it, strictly from a personal standpoint. He felt it was going to cut into our brokerage commission business, where we were buying and selling mortgages and placing mortgages.

Senator WATSON. Do you think it will?

Mr. NORRIS. I believe it will, somewhat. It is going to make the securing of mortgages easier for the home owner. Personally, my time is almost entirely at the present time, in home development, subdivision, and building and developing work. I am strongly in favor, from past experience of 27 or 28 years in the real-estate business, in the mortgage business, of something like this. The situation is especially difficult at this time. In Boston, Cape Cod-in fact, I have an office in Springfield, Mass., also for the past eighteen months it has been practically impossible to secure a mortgage on a home.

Senator WATSON. The homes you have been helping to build in Massachusetts or near Boston, principally, have you been building them through building and loan associations?

Mr. NORRIS. On our lower priced homes we have done a great deal of business with our cooperative banks.

Senator WATSON. You call a cooperative bank a building and loan association?

Mr. NORRIS. Building and loan associations in our State are called cooperative banks.

Senator WATSON. They are synonymous?

Mr. NORRIS. They are the same thing. They are conducted on the same basis as your building and loan associations, only they are known as cooperative banks. They sell shares. They do not take deposits or do a general banking business.

I just want to give you one or two illustrations of this present situation. A young man, a man about 40 years old, had a position with one of our banks in Boston, at a good salary. He was assistant vice president. The bank was merged with another institution approximately a year ago, and he had been out of work. He owned his own home free and clear. He had a son in college and a daughter in school and his family to support. He came to us back here in September to try to secure a first mortgage on that home. He said that he had been to a number of institutions, banks, and could not get a first mortgage. His home he paid $15,000 for. It was easily worth $12,000 under the depressed conditions. He wanted to get a mortgage of $5,000. It was not a question of the size of the mortgage, but he just could not get it. He had to go to the Morris Plan Bank and secure a loan of $2,000 to tide him over and pay 1 per cent a month for it. That was one of the things that impressed me with the real need of this institution.

Senator WATSON. Is that an isolated case or is that general?

Mr. NORRIS. That is not an isolated case. I could quote you many of them. I could give you the story of a lady who was in the office within the past three weeks. She paid $14,000 for a 2-family house. She paid when she purchased it $3,000 in cash, taking a first mortgage of $9,000 from one of our commercial institutions in Boston. She paid the second mortgage of $2,000 down until there was only $300 left. She had a $1,200 deposit in a commercial institution where her first mortgage was held. That institution got into financial difficulties and was closed. The $1,200 deposit was applied to her $9,000 mortgage and a demand made for the payment of the balance. She was unable, she said, to get that, and that mortgage was sold by the institution or was being sold, she explained to us when she was in the office for her money, to a broker, who purchased it because he was buying it at a discount, for $7,000. Yet she could not find a bank that would consider that loan, because our cooperative banks at the present time and for many months have been unable to consider any loans. I think most of our cooperative banks are in good condition, but frozen. They are unable to pay out money, a good many of them. Some of them are still able to pay out money, but they are not considering mortgages of any description.

One of the serious difficulties we have had throughout Boston, and Massachusetts as a whole, has been that many of our banks there are State institutions with a saving department. They have had withdrawals in the commercial department. They have become frightened at the present conditions, so they have tried to liquidate, to get themselves in a very liquid condition, so they could advertise

to the public that they were liquid to a high degree. That has the result that many of our commercial institutions to-day are advertising 50, 60, and 70 per cent liquidity.

Our savings banks are in the same condition. In getting their statements at the first of this year, savings banks have shown from three to five times as much cash on hand and in many instances from two to four times the amount of Government bonds they usually hold, just to keep themselves in a liquid position. They are not making any loans, and they are getting payments wherever possible and demanding curtailments on their present mortgages.

I want to say this for the Massachusetts banks. They have been very fair to the borrowers. If they could not pay, they have tried to carry them along, but it has been a question of nervous tension on the part of the borrowers there.

We in our mortgage department started a campaign about three months ago, figuring there was a lot of distress property on the market for sale. We selected a large list of people who were still employed and very certain of their positions, feeling that those people ought to be ready and anxious to take up some of these properties that were on the market for sale, for homes. In many cases, in fact it was practically unanimous, they were so afraid of short-time mortgages that they did not want to take over the purchase of a home, even when they could buy it at a considerable discount at this time.

If this bill passed and our banks could take-our savings banks used to make from one to three year mortgages-reasonable term mortgages and feel safe of the opportunity of making their mortgages liquid in time of need, my opinion is that it would increase the purchasing of homes.

We have heard a lot about oversupply of homes. Three weeks ago we put our men out to make a survey, and I will give you a few figures. Boston is strictly a commercial city, very limited in its area, but made up of a large number of suburban subdivision. Boston proper has about 800,000 population, and within 10 miles of the center of Boston we have a population of nearly 2,000,000, made up of the small towns and small cities, running from 10,000 to 100,000 people, in the different communities.

We took sections where they had modern homes, and we completed surveys in these towns. We did not go into the poorer and unimproved sections. Out of 2,468 families in the town of Arlington-that town has a population of about 15,000-there were 59 vacancies, or 2.5 per cent, which does not show an overproduction. That does not take into consideration huddling or the doubling of families, of which we know there are many.

We went into the city of Cambridge, which has something over 100,000 population, and which has many apartments. There we found a different condition. Out of 5,595 family apartments or homes or single houses, there were 383 vacancies, or 6.8 per cent. But that is to a large extent in the multiple apartments, not in the single and 2-family houses.

In the town of Belmont, out of 919 homes we found only 29 vacancies, or 3.15 per cent.

In the town of Watertown, out of 2,093 homes, we found 64 vacancies, or 3.06 per cent.

We in the real-estate business consider if we do not have a 5 per cent vacancy we are not facing an over-supply, and that is not taking into consideration huddling or doubling up.

Senator WATSON. How many foreclosures have you had?

Mr. NORRIS. We have had a great many foreclosures.
Senator WATSON. A great many?

Mr. NORRIS. They are increasing and have been for the past three years. New England has been in better condition than many other sections of the country during the past two years. That was especially true up until the past six or eight months, because our shoe and leather industry and our textile industry had been through a serious depression back when the rest of the country was prosperous, and expanding, so we were not faced there with a curtailment. Our textile industry has actually improved in the past two years somewhat, and our shoe industry in the past year was better than it has been for some time. When this crisis which has been spreading through the country reached New England, through fear hoarding began, and some bank failures came on, which were to a large extent due to hoarding and not to the instability of our institutions. We had not had a great deal of trouble in the commercial banks, but in our savings banks and in our cooperative banks we had had many foreclosures, due to many things. A lot of them came on when the banks began to see this thing coming and commenced to endeavor to force payment on mortgages that the people could not take care of.

We do not have a large amount of insurance company money in Massachusetts. The Metropolitan Insurance Co. came in there, but their loans are too expensive. They do not loan themselves to the home buyer. They have limited themselves in most cases to 50 per cent.

Senator WATSON. What is your limit?

Mr. NORRIS. The savings bank loan is 60 per cent and the cooperative banks generally go to 70. They are permitted to go to 80, but I know that our own cooperative bank never figured on going over 70 per cent. There is a very small percentage of the cooperative bank mortgages that are not worth every dollar that has been loaned on them. It is just a question of their being able to keep up the payments during this period.

Senator WATSON. About what is the average loan on homes?

Mr. NORRIS. The average loan on homes in metropolitan Boston would run about, I would say, from five to eight thousand dollars. Cooperative banks do not loan over $8,000. Those people owning homes of that kind, of that size or value, are the ones that really need this help.

Here is something we are going to find, if you do not give us relief through this act and make mortgages more liquid. We are going to find that savings banks and commercial banks who have experienced the frozen character of real-estate mortgages during this period, are not going to be as free to make mortgages on real estate in days to come, and even though prosperity returns the home owner and the home buyer is going to experience difficulty in securing proper financing for his home. We all know this, that the backbone of our American public is the home owner.

Senator WATSON. You favor this bill, do you?
Mr. NORRIS. Strongly.

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