FHA Form. No. 12

FEDERAL HOUSING ADMINISTRATIONMEMORANDUM

DATE 5-26-36

TO: Honorable J, M. DaigerRoom 610 - Shoreham Building

SUBJECT- Washington, D# C.

Dear Daiger:

The attached is Dr. Fisher 'sreport on the Brooklyn savingsbanks situation that you spoketo me about.

Si/irerely yours,

Stewart McDonaldAdministrator

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SITUATION IN BROOKLYN AND LONG ISLAND

Cm ItdttMday and Thursday, May kQ and 21, I was inXork ana called on eoiae of UM tfflotri Qt Dc-,vlngs

and of In* bavinga B&ak Trust Coap&ny to discuus with the® thesituation in Brooklyn and Lon^ Island in winch w*s hftT« mutualinterests .

The attitude that I tooc: was til ..x, you hzQ »AlDt(l • • to:o Hew Etefe to inaicatfc to - maibl« offieam of

savings banicii aur desire to cooperate with tasa in acaievingshat we conceive to be our •ntmiil oDJ^ctivea of aaintaining asound mortgage rasrk:et and improving bousing conditions.

I particu,. liclt#d cr i t iciaas o. our pmprocedure in BrooJtlyn tnd uong I»Xaai enci the opinion of tlieaeoffici&is 10 to tha changes ifHich vould wVI^ a chaser coordina-tion Xiieieu b l t t m as .

The principal criticisri» or Qujectian& MMtMTCd &i'oundti'iree points, i.©.s

1. SaviB| Ui laroociyn aad ijoiag 1SI&.OG p< 1 orare about to pom 1 cjnsi- 1 number of proper-t ies at a coet of a«<iui#iti«o which i s hlglbsr thanthe prices at «hich n&» b0VM9 on saich we are in-suring —rt | Lag sold. TlMM ofan s are con-cerned, therefore, about tlM wraantity of new housesplaced on the Market «.t tn«se prices, ih&y ere oiler-lag, however, to make m lMMIf i na i baiieve thatthis at t i tuae on their pert e&n be ehftBf ll by carefulaegotiation*

2* Soae of these official* I In connection withisose of the - MB.t* in viiuc' -ir-iag aortgages oux1 »t«»t<rd< are sot being enforced. Some•boddjr conatraction i s being biilit &nc pwilMarabeing deceived u to the q«fclity 01 coastruction ofnouses ^hey pare 1

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air. McDonaldM&y 2$, 19>6

AHB LONG ISLilHD blTUAI'IOH — patJe ^ .

In connection ssitfc this critici&ai I strongly urged thaty submit if 111 fir cases to WM to enable xm u> sake

careful investigation tad ta&e action &ccortiingly on ourfindingiJ^^Ij.eaiphaaized tkat general statements we eoulddo ho things iiut that ra would take prompt action on anyeases that sere brought tc our attention*

3. i>ome very bittor opinions wera expressed about the activi-ties of Faderal Savings tfti Loan Asaoci&tionE in this area.In the opinion odt UXMM sdtn whoa i talked., fu&da to lendon sound f i r s t aortt;ac;ss tat9 very abundant. Therethereforef no need for tha .organisation of Federal Savingsand I»oan Associations in the area,

I t was pointed out tfcftt t i j>ci::,tioai» oper-->. te withreiati¥ely l i t t l e restr ict ion. They can ma&e loans up to75^ oi* their own appirmiamlSj whether iasur^so or not insured.They are not obliged to aftfe* any inspectiafis to insure soundconstruction on "aninsm-ed loans, and no lissiuitions arewinced opon ins ¥o um.e ox' m bttildlni; */U.eh they aay Mh>courage through their

If the unbridled coa^tstition far VOIIUM of Itmam whichin the l20 fi de'veiops in tula or other areas, the MHM unsound situa-tion will be created shich brought aboul mil i f in the 20*8,.

I t is on the method ox ooep«zmtlag in ouch & way as to preventthis unsound d©«r©iopaent that we wish to meet with the olfic&rs ofIJMM si&vings b&aks* they reply that no ioa^ at a jr'@d»raily controlledand partially Federally financed institution is creating this uncon-trolled and imrestrictsd competition for loans both u to quality andquantity they see no point la mutiny roiy efiort to cooperate in ourprogram, in other words, they uty "Let the fi'¥tm—lit i«t i t s ownhouse in order, and th«n private landing institutions will be readyto cooperate."

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Mr. McDonald• * J 2 5 , 1936

BSOO&LXXAD LOIG ISL B —

l e are ftopln • mprtlititiTt roup rill bewilling to meet at an Mtrlj oate to Giscutse wilese mutual probleas.

Mr« Daiger iMUl agreed to go alth Hie or vith anyelse whom you d««lfBat« to such a eani'erence.

Ernest iU ilshar

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