APPROPRIATION BILL FOR 1939 HEARINGS BEFORE THE SUBCOMMITTEE OF THE UNITED STATES SENATE SEVENTY-FIFTH CONGRESS THIRD SESSION ON H. R. 8837 A BILL MAKING APPROPRIATIONS FOR THE EXECUTIVE 39547 Printed for the use of the Committee on Appropriations UNITED STATES WASHINGTON: 1938 INDEPENDENT OFFICES APPROPRIATION BILL, 1939 SATURDAY, JANUARY 15, 1938. UNITED STATES SENATE, SUBCOMMITTEE OF THE COMMITTEE ON APPROPRIATIONS, Washington, D. C. The subcommittee met, pursuant to call, at 10:30 a. m., in the committee room, Capitol, Hon. Carter Glass (chairman) presiding. Present: Senators Glass (chairman), McKellar, Byrnes, Russell, Adams, McCarran, McAdoo, Truman, Hale, Steiwer, and Townsend. HOME OWNERS' LOAN CORPORATION STATEMENTS OF JOHN H. FAHEY, CHAIRMAN, AND HORACE RUSSELL, GENERAL COUNSEL The CHAIRMAN. Mr. Fahey, the committee has before it the independent offices appropriation bill for 1939. I understand I understand you wanted to be heard on some provisions of it. Senator HALE. Mr. Chairman, I asked that Mr. Fahey come up today and tell us about the situation with regard to the Home Owners' Loan Corporation. It seems to me that in view of the fact that no new loans have been made since June 1936, and that the Corporation is practically in liquidation, that some saving could be made in this matter, and I would like very much to hear from Mr. Fahey about that. Mr. FAHEY. Well, as to that, Senator, the Corporation stopped making loans in June of 1936. At the peak of its operations its budget was about $36,500,000 for administrative expenses. The contemplated budget for 1939 is $28,000,000. Senator TOWNSEND. $8,000,000 less than at the peak? Mr. FAHEY. That is right. It was down to $30,000,000 for the fiscal year ending June 30, 1938. Senator HALE. $36,000,000 was the peak? Mr. FAHEY. $36,000,000 was the peak. Senator HALE. And at that time you were making loans? Mr. FAHEY. We were just finishing the making of loans, Senator. Senator TOWNSEND. What was the amount of loans in 1936? Mr. FAHEY. Well, at the end, the total amount of loans was $3,148,169,556. The total of repayments to October 31, principal repaid is $327,611,732. Senator TOWNSEND. The total of what? I did not get that. 1 Mr. FAHEY. The total of principal repayments; repayments of principal was $327,611,732. Senator MCCARRAN. Have you got the interest there? Mr. FAHEY. Of interest repaid? Senator MCCARRAN. Yes; interest up to that point; how much interest did you receive? Mr. FAHEY. As of October 31 the total of principal and interest due the Corporation was $859,687,517. Of this amount $744,616,012 had been paid. The percentage of payments to maturities being 86.6 percent. Senator MCCARRAN. That scarcely answers my question, however, Can you break it down so as to show the amount of interest that was paid or received by the Corporation to October? Mr. FAHEY. We could subtract these two figures here and we would get it. Mr. TRUMAN. What was that grand total? Mr. FAHEY. The grand total was $859,687,512. That represents the total amount due the Corporation of principal and interest and, they have paid back 86.6 percent, the amount in dollars being $744,616,012. Now, of that amount, $327,611,732 was principal. So that the Mr. FAHEY. That is right. So, you see, a little more than $415,000,000 roughly was interest. Senator TRUMAN. Was interest? Mr. FAHEY. That is right. Senator HALE. Mr. Fahey, do those figures take into consideration foreclosures you have made, or would such foreclosures be outside? Mr. FAHEY. This is only principal and interest payments. Senator HALE. Yes. I think there have been a lot of foreclosures made, because the owners were shy on their payments and interest. Mr. FAHEY. Oh, yes. Senator HALE. Are those included, or are those separate? Mr. FAHEY. This is just the actual collection of the total amounts due, the actual cash received. Senator HALE. Yes; but when you take the total amount due, does it include what is due from the properties that were foreclosed? Mr. FAHEY. Well, I cannot tell offhand about that. Do you happen to know, Mr. Russell? Mr. RUSSELL. No, sir. Mr. FAHEY. Of course, after the propetry comes into our possession it would not, because then that delinquency is at an end to the amount of our investment in the property. Senator HALE. But I take it all of the time there are foreclosures; every month you are foreclosing? Mr. FAHEY. Exactly. I think that figure means such accumulations up to the time of foreclosures. Mr. RUSSELL. I think so. Senator HALE. Up to the time of foreclosures? Mr. RUSSELL. Yes. Mr. FAHEY. Exactly. Now, from the time of foreclosure, the property is carried at the amount of our investment, including all of the accumulations up to the time of acquisition. Senator TOWNSEND. Mr. Fahey, I would like to ask you the Mr. FAHEY. While we are on that, Senator, I would like to say something further. Senator TOWNSEND. All right. Mr. FAHEY. If that statement is inaccurate, I would like to supply the data later. Senator MCCARRAN. I would like to know the percentage of foreclosures. Mr. FAHEY. It is about 11 percent. Senator MCCARRAN. About 11 percent? Mr. FAHEY. I can give that percentage. There is full information in the record on that point, Senator. Senator TOWNSEND. Mr. Fahey, I started to ask you about this. You said at your peak you had $3,116,000,000, in round numbers. Mr. FAHEY. That is right. Senator TOWNSEND. What is the amount now, at the present time? Mr. FAHEY. The amount, the total of loans and advances, and sales instruments at present is $2,446,921,000 as of October 31, 1937. Senator HALE. Mr. Fahey, I think the records of the House hearings show that you made about 1,000,000 loans; did you not? Mr. FAHEY. Just short of 1,100,000. Senator HALE. A little over 1,000,000 loans? Mr. FAHEY. Yes. Senator HALE. And the foreclosures are somewhere between 50,000 and 60,000? Mr. FAHEY. The total number of authorized foreclosures as of November 30, not October 30, but right up to the first day of this last month was 125,487. Of that number 9,699 had been withdrawn. The net number was 115,788. Senator HALE. That is authorized? Mr. FAHEY. That is right. Senator HALE. And the actual foreclosures have been between 50,000 and 60,000? Mr. FAHEY. The actual number of properties which we had obtained possession of as of November 30 was 67,027. Senator HALE. Yes. The CHAIRMAN. Why were any foreclosures withdrawn? Mr. FAHEY. Because, as not infrequently happens, Senator, some of these borrowers put us off until we actually take steps to foreclose and then they will come in and pay. The CHAIRMAN. You only withdraw the foreclosures when they pay? Mr. FAHEY. When they make a satisfactory settlement. Senator HALE. Not a settlement in full, but some satisfactory settlement? Mr. FAHEY. Entirely satisfactory. They do not have to settle in full, but if they make a satisfactory settlement. Senator TOWNSEND. What are you doing with the property you have in your possession, Mr. Fahey? Mr. FAHEY. We rent them, and we sell them. We have a record on both rental and sales which is most encouraging. So far as sales are concerned, the demand has been increasing steadily for a year. Nearly every month shows a stronger demand. The rentals have been rising. |