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About Medford mail tribune. (Medford, Or.) 1909-1989 | View Entire Issue (Aug. 23, 1962)
THURSDAY. AUGUST 23. 1962 MEDFORD MAIL TRIBUNE. MEDFORD. OREGON Home Foreclosures Increase, To Editor's N o t Foreclo sures of horn mortgages have climbed sharply since 1959 a period of prosper ity but government and housing industry officials see no cause for undue alarm. The reasons why are explained in the following exclusive dispatch. By EDWARD COWAN WashingtorMUPll-An aircraft factory's contract for bomb ers is not renewed and 800 men are laid off. A child is afflicted by a crippling disease and must have years of costly medical attention. A marriage goes on the rocks and the family income of two wage earners is split. Each case is different. Yet each shares somthing in com mon: An unforeseen turn of the wheel of fate that cuts deeply into a home owner's income. He falls behind in his mortgage payments. One month, two months, three months, six months. Until even the most sympathetic lender runs out of patience. The lender's money is tied up. He has his own obliga tions to meet, so he fore closes. Mortgages Foreclosed In 1061, about 200 mort gages on non-farm properties were foreclosed every day. The total of 73.074 for the year set the highest mark since 75,556 In 1940, tail end of the Great Depression. Foreclosure means simply that the lender has exercised his legal rights and takes over a property for non-payment on the loan. The borrower probably loses whatever equity he ac quired through his down pay ment and monthly payments. With the liberal terms avail able on a government-backed loan, many home buyers have little or no equity in their houses. A down payment of only $450 is needed to buy a $15, 000 house with a mortgage insured by the Federal Hous ing Administration. No down payment is necessary for an cx-servlceman with a loan guaranteed by the Veterans Administration. Low monthly payments consist mostly of interest, so that reduction of principal is slight. Hence, equity builds up slowly. These liberal terms explain the modern-day walkaways home owners who have practically nothing invested in their house. Behind in their payments, they drop the keys in the mail box or on the back steps, hire a moving van and pull out. They don't bother to sell and they don't bother to tell the lender they are abandon ing the house. They may not even cut off milk and news paper deliveries. Nobody knows exactly how many "walkaways" there were last year. But by all ac counts there were more than ever before, especially in Florida and Texas, where there is an oversupply of new houses. "Walkaways" are only one aspect of foreclosures but they are a symptom. The ba sic fact is that the number of foreclosures has risen every year since it dipped to a post war low of 18,135 in 1052. The increase was gradual until the late 1050's when it began to speed up. Last year it leaped by 22,000. A fur ther increase in 1962, per haps a smaller one than in 1961, is indicated by figures for the first few months of the year. Opinion among government officials who watch these fig ures Is that the problem has not become very serious. Spe cific causes of the recent in creases as distinguished from general economic dis tress are one reason for the lack of worry. Another is that In relation to home ownership, foreclo sures are few. They re up but still pretty darn low in relation to what we saw in the 1930's," Nat Rogg. econo mics director of the National Association of Home Build ers, told UPI. Millions Fewer In 1932-33, when there were millions fewer homes than now, foreclosures averaged 250,000 a year. What percentage that was of all homes has not been computed by the government, But it was staggering in rela tion to the 1961 rate of 36 homes foreclosed in every 10,000. In I860, however, the rate was only 27 per 10,000. Housing experts are gradu ally hopeful that the 1959-61 climb is tapering off. The lat est available report from the mortgage bankers association finds "no substantial change" in April, May and June from the preceding three months. Officials are aware, how ever, that the economy may he sliding into a recession. A business slump could wipe out the jobs of some of the 16 million home owners with mortgages and perhaps force some of them to surrender their homes. Limited Cause So far, housing and finan cial experts say, general economic distress has been only a limited cause of the rise in home foreclosures. Al lan F. Thornton, the FHA's research director, estimates that only 25 to 30 per cent of FHA foreclosures have stemmed directly from loss of income. He believes that shoddy family budgeting, marital difficulties, job and military reassignment changes and low, low down payments have figured heav ily in the upsurge. Cutting across all of these is a leveling off in prices in the past few years. The hous ing shortage days of the immediate post-war years brought with them substan tial sometimes spectacular increases in home prices. Inflation made it possible for the home owner in distress to sell his house, pay off his debt, get back his equity and have something left over. "No longer will inflation and need provide a false pro tection for the home buyers," FHA Commissioner Neal J. Hardy said. Held by FHA, VA Foreclosed property held by both the FHA and VA are bunched in certain areas. Florida and Texas bulk large on the lists of both agencies. Speculative over building, military shifts, cut backs in oil production all have contributed to the surge of foreclosures in those two states. Atlanta and Savannah, Ga., Wichita, Kan., and Ports mouth, Ohio, are other areas where foreclosures are tied to cuts in federal spending. In Detroit, where automa tion has made It possible ior fewer workers to turn out more automobiles, FHA held 1,447 properties at mid-year and VA has a whopping 3,179, more than in any other VA district. Government officials said it is this geographical bunching of foreclosures and the some times special causes of local economic distress that prove there is no general foreclosure problem. Shift In Market Contributing to the list of delinquent home owners has been a shift to a buyer's mar ket plus a surplus of home loan funds. Salesmen some times have "sold" houses to buyers who could not afford them. Lenders, eager to put idle funds to work, also have some questionable June 30. Encouraging Officials say that all of this is encouraging. It may indi cate that the rapid climb of foreclosures of the past two made loans.' Both FHA and VA have ordered their field offices and the commercial firms which make the credit investigations to be more cautious. Neither agency, however, apologizes for its liberal terms. And neither is consid ering tightening them. "The great . percentage of people are financially rcspon sible and will strive to meet their obligations," said John M. Dervan, director of VA's loan guaranty service. Pointing out that only 91,. 000 or 1.8 per cent, of the 5.8 million loans backed by VA since 1944 have gone to fore closure, Dervan argued the program should be continued for the sake of the 98 buyers in every 100 who pay on their mortgages. Benefits Great Paul E. Ferrero, deputy commissioner of FHA, con tends that "the benefits of ex pansion of home ownership arc great and far outweigh the cost of foreclosures." Evidence of a possible lev eling off in the foreclosure barometer is offered by both agencies and is supported by the mortgage bankers. FHA took title to fewer properties in May than in April. De faults at the end of June ap proximated 40,000 as against 43,000 at the end of March. VA's defaults since Febru ary have been running below the year-ago level. They dip ped from a high of 59,000 in February to 55,000 as of START ON MONDAY SWIM ON SUNDAY Healthful living and family pleasure at a price everyone can afford. Cadillac pools are constructed with fabulous fiberglass sidewalls and poured concrete bottom, in all shapes and sizes, carries a 10 year guarantee. Priced From $2,700.00 Includes: Vin-ramlc copinf Main Drain Filler Syittm Pnltr 3'-' Dta 1-Trad laddtr 2 V Walk Undcrwaltr light Excavation In ito Hallo TruiMac Conttrucllon IOW MAINTENANCE NO PAINTING mm CALL TODAY FOR FREE ESTIMATE! FINANCE PtAN AVARABLE! Up to 5 YEARS TO PAYI CADILLAC POOLS "The Ultimata in Pool Luxury" Phone 773-6858 "Gene" Burgesj ;c fy-n ill rr M 4 ment to new conditions: tapering off of inflation, lo w e r down payments and basic shifts in military spending. The abnormally low fore- years was chiefly an adjust-' closure levels of the early and middle 1950 s probaby will not return. Lenders and home builders will have to learn to do business in a buyer's mar ket, at least for a while, without making imprudent sales and loans. The buyer who figured inflation would bail him out must think again. These are the happier pos sibilities. They look like prob abilities. But they are not certainties. REPEAT BUSINESS-Rlrs. Jo Pearson seems She said it is nothing new since this was the undisturbed by the car which crashed sixth car in 10 years to come through the through the plate glass window of the glass. (UPI) flower shop she operates in Los Angeles. Priest Attempts To Aid Poverty Stricken Indians By IRWIN TALBOT United Press International Madison, Wis. - IIIHI - Fath er Daniel McLcllcn calls it "guerrilla diplomacy'' but it really boils down to direct aid fur poverty-stricken La tin Americans. Whatever it's called, Fath er McClcllen sees it as a means of combatting commu nists. Father McClcllen has been up against them in Peru. He said they are tough, hard core communists, highly trained in Prague. The Uni ted States has given Father McClcllen s:U0,000 to take thorn on. He will expand a usv the nullify to school in Lima. Peru. Lalin Americans will be trained there in setting up credit unions in Central and South America. ''The communists realize this is the kind of program they have to wipe out," the priest said. "They need mis cry to live and oppose any thing that might end it." South Americans are "sus picious of everything until they see it working," Father McClcllen said. Credit unions have worked there, he said, and he has been flooded with requests for information. Money To Work His aim is to "cot small sums of money working over a whole country." He already has set up 1175 erodi' unions Village Variety & Garden Shop Hunting & Fishing licenses Issued PAY ELECTRIC BILLS HERE "Medford' Only Independent Variety Store" Next to "Piggly Wiggly" 2 Day Photo Finishing Service POST OFFICE ALWAYS OPEN 771 Stewart Avenue 9 A.M. to 9 P.M. Weekdays - 10 to 6 Sunday 773-7002 BACK-TO-SCHOOL SUPPLIES Name Brandt All the Supplies you or your school children needl PRICED TO SEUI COMPLETE SELECTION SEWING NOTIONS If you're missing a small item you'll find it here. SIMPLICITY PATTERNS "Doienj of Delightful Frocks" KNITTING WORSTED New Shipment Beautiful Colors AVAILABLE NOW Made especially for fruit packingl PACKERS GLOVES All Sizes - Quality in Peru, where ''98 per cent of the people can't get credit" by any other means. A credit union establishes credit for its members, persons who have a common interest or live in the same community. The members pool their mon ey and become eligible for small, low interest loans. Members also receive inter est, as credit unions are non profit. Government - to - govern ment aid isn't the answer. Father McClcllen said. Not enough trickles down to those who need it. He raid South Americans want face-to-face help now, no' plans. Father McClcllen. who is the director for all Peruvian credit unions, attended the Credit Union National asso ciation (C U N A) director's meeting here recently. At that time, the V. S. Government announced a giant of $:) 10.000 to CUNA for the next two years. Father McClollan began the first errdit union seven years aeo in Punto, an Indian com munity about 13.000 feet above sea level. "The people there live in poverty," lie said. "The weather is cold and t he land over-grazed. Don't Know Difference "The Indians don't know the differences between dem ocracy and communism, they just know they're hungry and it's hard to survive." "If we don't make this foreign aid work, they are going to say, 'there's nothing else to do but go commu nis!.' '' he said. To show how effective di rect aid can he. Father Mc Clcllen told of a young In dian who became a big suc cess usmy credit union loans. The 18 year-old borrowed a mall amount of money for onion seed. He went to Lima and bought better seed for less than farmers in his area After selling the seed, the boy paid off his loan, then bor rowed more. ,010 is an ideal time to add a 1962 Cadillac to your most treasured possessions! ill i J I J P x iff, h 'y : -J. J f I ' , , ' ' - - - a . . ,. " fcj Visit Your Local Autunr'zeujj'2rc Dealer SKINNER BUICK-CADILLAC 143 SOUTH RIVERSIDE 1 - s ' 5;- ' - - t v. f"'- fe1 IMS WtM Who makes it this easy to shop for a new appliance? Brand Name appliance manufacturers' Each year, these reliable firms use many types of media (newspaper advertising is just one evamplo) to keep yon informed of the latest improvements in television sets, transistor radios, washers, dryers and other appliances. Win? 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