We claim that the plan will not provide a workable central credit system for mortgage financing. Its stated purpose is to loan funds to building and loan associations and other institutions.

6. It is claimed that by encouraging long-term home financing, it would tend to eliminate the short-term three and five year loans which now prove so costly and dangerous to the home buyer. We submit that long-term home financing on a semiannual or monthly payment basis for periods ranging from five to sixteen years is, and has been, available for many years for home owners desiring to take advantage thereof.

7. It is claimed that if all home financing institutions became members of the system, funds for home financing would be increased by from 30 to 40 per cent. We submit that home-financing institutions that have been properly managed will not need membership in the system. Institutions that need funds can not afford to purchase membership in the regional bank under the terms specified.

8. It is claimed that enactment of such a bill would hasten the resumption of normal home building. We claim that abnormal home building during the five years prior to 1929 caused by oversupply of mortgage money must be absorbed before new building can be undertaken. There are more homes now than there is demand for.

That is the summary of the Mortgage Bankers Association.

I would like also to submit a part of the report of the Committee on Finance of the President's conference on home building and home ownership, with reference to foreclosures, if I may do that. Senator WATSON. Certainly.

(The statement referred to is as follows:)

REPORT OF THE COMMITTEE OF FINANCE OF THE PRESIDENT'S CONFERENCE ON HOME BUILDING AND HOME OWNERSHIP FORECLOSURE STATISTICS Foreclosure totals are usually by counties, and include first, second, and third mortgages; farm and city loans; vacant property; all types of improvements and all sizes of loans; executions on mechanics' liens and personal judgments; frequently, as in Portland, Oreg., all sales of personal property and collections under execution, and enforcement of liens on automobiles; often, as in Cuyahoga County, Ohio, collection of delinquent taxes and partition suits; and, in Detroit, Michigan, items reported under "Foreclosure of Land Contracts" include all landlord and tenant cases, representing 80 per cent of the total, with miscellaneous items representing another 10 per cent, leaving only 10 per cent for actual land contract foreclosures during 1931.

Foreclosure totals do not include cases of voluntary surrender by the mortgagor, or forfeiture of land contracts through a justice of the peace, as in Davenport, Iowa.

Bearing these facts in mind, we note a marked increase during 1929 and 1930 in the number of foreclosure proceedings of all types, but we are glad to observe that in 1931 the total number has increased less than 2 per cent over 1930.

For comparison, we note that the volume of city mortgages owned by 40 leading investors and amounting to $4,865,000,000 increased in the past year 2.44 per cent over the preceding year, and that the population of the United States increases at the rate of 1.35 per cent per annum.

Noting the decreases in some centers and the increases in others, we find some interesting examples, as in Washington, D. C., where the total trustees' deeds for 1931, projected to December 31, show an 18 per cent decrease from the total for 1930, which was about 2 per cent over the 1929 total. And in Cook County, Ill., which includes the city of Chicago, where the number of first mortgage foreclosures of all types, under $10,000. as compared to the

number of all first mortgage foreclosures, has declined during 1931, as follows: first quarter, 38.76 per cent; second quarter, 34 per cent, and third quarter, 27.96 per cent. In the same nine months in Cook County, the amount of first mortgage foreclosures under $10,000 represented less than 4 per cent [3.631 per cent) of the total, and only a portion of these foreclosures under $10,000 were for loans on homes as explained in the opening paragraph. An analysis of foreclosures in Cook County, Ill., in April, 1931, by the Chicago Title & Trust Co., shows that 32 per cent of the total number under $10,000 were junior mortgages, and 27 per cent of the total amount were juniors.

The Department of Commerce reports that a group of large investors owning mortgages on homes totaling several hundred million dollars on July 1, 1931, shows an investment in home properties acquired under foreclosure of 0.738 per cent of total outstanding mortgages on homes, and in process of foreclosure in investment amounting to 0.79 per cent of the total outstanding mortgages on homes, with a probability of some redemptions before the completion of pending proceedings.

These facts disclose the predominating influence of the larger bond issue foreclosures in the total figures and the danger of misleading deductions as to home foreclosures when only the total number and total amounts are considered. No one should minimize the seriousness of foreclosures. On the other hand, their significance should not be wrongfully exaggerated by the use of "lump statistics" of which no proper analysis has been made.

It would be tiresome to read all these letters. It would be just repetition. To save your time, I shall submit them, and if you care to read them, I shall be glad to put them in the record. These represent mortgage bankers, realtors, building and loan associations, and banks all through the country.

Senator COUZENS. You say building and loan associations are against this bill?

Mr. CLARK. Yes.

Senator COUZENS. How many of them?

Mr. CLARK. For example, here is the Nebraska League

Senator WATSON. I was going to suggest that you read the names of the writers, if you care to.

Mr. CLARK. S. M. Williamson (Inc.), mortgage bankers, Memphis,

Tenn.

Senator COUZENS. Is that a building and loan association?
Mr. CLARK. No. They are mortgage bankers.

Senator COUZENS. We do not care about the mortgage banks, of course. You have made a general statement covering them. I would like to have the building and loan associations.

Mr. CLARK. Nebraska League of Savings and Loan Associations. There is one from a realtor [indicating]

Senator WATSON. What is that Nebraska League, and what does it have to say?

Mr. CLARK (reading):

OMAHA, NEBR., January 23, 1932.

At the midwinter conference of the execative managers and officials of the State League of Nebraska Savings and Loan Associations held at Omaha. January 21, 1932, and representing 70 per cent of the total assets of all Nebraska associations, the following resolution was unanimously adopted: Resolved, That passage of Senate bill 2959, known as the Federal home loan bank act, or any sim lar bills that may be introduced, be emphatically opposed that the secretary of this league wire this action to United States Building and Loan League, and to each Senator and Congressman from Nebraska, with the request that their influence be used to defeat said bills or similar legislation.

NEBRASKA LEAGUE OF SAVINGS AND LOAN ASSOCIATIONS.

Senator COUZENS. They give no reasons, do they?

Senator WATSON. No.

Mr. CLARK. No. Evidently they are getting along pretty well without it, and they do not see the need of it. We have not known of that in New England at all, so that I am not familiar with their conditions.

Senator COUZENS. There seems to be a great absence of opposition from the building and loan associations.

Senator WATSON. Let him pick out the building and loan association letters, and put them in the record.

Mr. CLARK. Yes. That is all I have to submit, Mr. Chairman. (Mr. Clark later submitted the following:)

NIAGARA FALLS, N. Y., February 16, 1932. I firmly believe the proposed Federal home loan bank bill is unsound and is based on wrong assumptions, growing out of conditions in some parts of the far west.

ANN E. RAE,

Past President United States Building and Loan League. Mr. NELSON. Senator Watson, I wonder if we could ask Mr. Clark one question?

Senator WATSON. If he is willing.

Mr. CLARK. If I am able to answer it, Mr. Nelson, I shall be delighted.

Mr. NELSON. The statement has been made repeatedly that the proponents of this measure propose to build 3,000,000 homes in the next five years. I know of no such statement made by our group, or by the Building and Loan League, or anyone else. This country does not require 3,000,000 homes in the next five years. The best estimates that we have been able to get for the decade 1920 to 1930 indicated an annual requirement of about 500,000 homes. Assuming that during the next five years we will have a somewhat declining population, immigration being cut off, the Department of Commerce and ourselves have figured that 400,000 homes a year would be all that we would require, or 2,000,000 homes as a maximum. Senator COUZENS. Whom do you represent?

Mr. NELSON. The National Association of Real Estate Boards. Senator COUZENS. You do not contribute anything to these home loan discount banks, do you?

Mr. NELSON. I do not understand your question, Senator.

Senator COUZENS. I mean, you contribute no capital, under the provisions of the bill?

Mr. NELSON. No, sir; we do not.

Senator COUZENS. Is it not true that a great number of those appearing here in support of the legislation contribute no capital to the banks?

Mr. NELSON. We have a great many members who are themselves engaged in home financing. We have some 40,000 members throughout the country, and some of them are in the mortgage loaning business.

Senator COUZENS. But you represent a real estate board. There is no provision in the bill whereby any real estate boards support this organization in any manner by furnishing any of the capital.

98195-32-PT 3—11

Mr. NELSON. That is quite true. We simply see what we think is a great necessity for some such measure.

Senator WATSON. All right. Proceed, Mr. Clark.

Mr. CLARK. If I may explain that, this total number has appeared in the press throughout the country at various times, at 3,000,000. Senator BULKLEY. 300,000?

Mr. CLARK. 3,000,000 homes, an average of 600,000 a year, whereas the greatest number ever built since 1920 has been between 300,000 and 400,000, and, of course, many of those are now vacant.

Senator WATSON. This statement by the secretary says there are several witnesses from the United States Building and Loan Association who have requested permission to appear, but I think we have heard all those that we want to hear.

Senator CoUZENS. I think we have heard both sides.

Senator WATSON. I think we have done pretty well, unless there is somebody who feels a terrible urge to speak.

Mr. BODFISH. My name is Bodfish. I represent the Building and Loan League. Our second vice president, Mr. Lieber, is here from Shreveport, La., and if the committee could take the time, I would appreciate your hearing a statement from him.

Senator WATSON. So long as he is here all the way from Louisiana, we will hear him.

Mr. BODFISH. He has some suggestions to make.

STATEMENT OF PHILIP LIEBER, VICE PRESIDENT UNITED STATES BUILDING AND LOAN LEAGUE, SHREVEPORT, LA.

Senator WATSON. Where do you live, Mr. Lieber?

Mr. LIEBER. Shreveport, La.

Senator WATSON. What is your business?

Mr. LIEBER. Building and loan.

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

Mr. LIEBER. Twenty-seven years. It is the only business I have ever been in.

Senator WATSON. How large a building and loan association have you?

Mr. LIEBER. We have close to $12,000,000 at the present time. Senator WATSON. What is your office in the association?

Mr. LIEBER. I am president of the Shreveport Mutual Building Association.

Senator WATSON. How many mortgages have you at the present time?

Mr. LIEBER. About 3,500.

Senator WATSON. What is the average mortgage on the homes which you permit home builders to have?

Mr. LIEBER. The average net amount due at the present time is about $3,500.

Senator WATSON. How many defaults have you?

Mr. LIEBER. So far, we have had about 2 per cent.

Senator Watson. That is a small percentage.

Mr. LIEBER. That is very small, I am very glad to say.

Senator WATSON. If you have only 2 per cent, are you in favor

of this bill?

Mr. LIEBER. I am absolutely in favor of it.

Senator WATSON. Why do you favor it, if you have only 2 per cent in default? Is that an unusual or abnormal number?

Mr. LIEBER. For us; yes, sir. We never know what it was to own any amount of property before two years ago.

Senator WATSON. Have you been foreclosing mortgages?

Mr. LIEBER. A few; as I stated, about 2 per cent.

Senator WATSON. If this bill is not passed, and all these other measures are passed, can you not get along without this measure? Mr. LIEBER. I do not think we can.

Senator WATSON. Tell us why.

Mr. LIEBER. As I see the matter, from my experience of more than a quarter of a century, there is need for a central reserve institution to round out the home financing as practiced by the building and loan associations for the past 100 years.

I may illustrate one little thing: About three months before October, 1929, we had half a million dollars too much money. As events proved later, we foolishly called in fully-paid shares of investors away from the State of Louisiana. What would we not do now for that half million dollars! We need a central reserve system. mobilized credit, and shift it from one part of the country to another at all times. That need has been recognized in building and loan associations for about 20 years.

Senator COUZENS. I thought the insurance companies played a part in that.

Mr. LIEBER. Played a part in what?

Senator COUZENS. In distributing the money over sections of the country where there was a shortage.

Mr. LIEBER. We do not find such to be the case now, Senator.

I have just concluded a convention of the American Savings, Buildings, and Loan Institute which is the educational department of the United States Building and Loan League. I was president of that for one year, up until Saturday. I asked for the opinions of delegates from various parts of the United States, and they are absolutely of one mind and one statement, in that they say that the lifeinsurance companies are not putting money out on mortgages throughout their districts at the present time, and that there is a big demand for home financing, but that there is no credit available. Senator WATSON. Until we got into this depression, have you building and loan people ever thought of a measure of this kind? Mr. LIEBER. Yes, sir. I think there has been an act before Congress. Unfortunately, the building and loan people have never been unanimous about a measure of this kind.

May I make one statement in regard to a matter I heard this morning?

Senator WATSON. Certainly.

Mr. LIEBER. In regard to the State of Nebraska being against this proposed home loan bank. As I understand it, it is because the laws of the State of Nebraska do not permit building and loan associations. to pledge or hypothecate their mortgage loans. Nor do the laws of that State permit building and loan associations to invest in any securities other than their own mortgages.

Senator ToWNSEND. Are there not several States in the same position?