Real  Estate  Record





AND BUILDERS' GUIDE.





Vol. XVIII.





NEW YORK, SATURDAY, OCTOBER 28, 1876.





No. 450





Published Weekly by

Cfje §leal Estate ^etorlr S^ssomtmn;.

TERMS.
ONE YEAR, in advance.. ..$10.00.
Communications should be addressed to

C.  W.  SWEET,

Nos. 345 AND 347 Broadway.





THE MORTGAGE LOAN MAEKET.
This market presents peculiar and inter¬
esting features at the present time, and re¬
flects with singular accuracy the condition
of the real estate market, of which, indeed, it
is the true mh-ror.    Among some of our
readers it may excite surprise that there is
any money at all offering for loans on bond
and mortgage, in view of the recent heavy
defaidts in existing mortgages, the incessant
foreclosures and the unvarying results of
referees sales, namely: that the mortgagees
are compelled, in the absence of other pur¬
chasers, to buy in the property.   It may sur¬
prise such persons stUl more to learn that the
amount of  money   offering  on  mortgage
loans exceeds any within the whole range of
our experience, and that the situation in this
particu^lar market is fairly expressed when
vs^e say there is more difficulty in finding ac¬
ceptable applications than in finding acces¬
sible funds.   An examination of the list of
foreclosure suits will develope the fact that
very few of the conservative and sound lend¬
ers of money figure as plaintiffs in these
actions of foreclosure.   On the contrary, the
experience is widespread and almost univer¬
sal, among this class of lenders, that not only
the interest on existing loans but the princi¬
pal sums of the same, as they have matured
during the present re"vulsion, have been met
with  most  satisfactory promptness.    The
healthy financial condition of the great mass
of borrowers on bond and mortgage has been
tested in many instances which have come
to our personal knowledge, where mortgages
have been reduced in amount upon requi¬
sition, and others have been paid off entirely.
The defaulting mortgages wUl be found to
appertain chiefly to speculative, unproductive
property, which had been enormously infla¬
ted, and to that class of speculative improved
property where the improvements were made
almost wholly out of the mortgage loans.
We recur to this subject with increasing sat¬
isfaction, and take pride in reiterating the
statement that the well-selected mortgage
loans which were made during the past ten
years have borne the brunt of the present
re"vulsion with a strength that seems almost
invulnerable, and which entitles them to
rank among the highest classes of invest¬
ments, as, indeed, they have always been re¬
garded by our ablest fina^piers.





In the absence of any current demand for
real estate, whereby  its values  might be
plainly defined and articulated, the matter
of the determination of real values has de¬
volved almost entirely upon the lenders on
mortgage.   Accordingly, we find  that  in
their hands real estate values are to-day un¬
dergoing a process of sifting and winnowing
which wiU prepare the way for a re-estab¬
lishment of stable and reliable prices.    It
may seem strange, where only the fractional
amount of the supposed value is to be loaned
upon property, that the lenders should be
exacting and circumspect with reference to
those values.   At a superficial glance, "we
would naturaUy suppose that the smallest
discount from eixisting values would furnish
sufficient margin for  a  lender's   security.
The margin usuaUy expected varies from
thirty to sixty per cent., and this precaution
on their part is readUy accounted for when
we remember that they proclaim themselves
at the start as satisfied with the bare rate of
interest agreed upon, and participate in none
of the speculative results growing out of the
transaction.   When we consider that in this
margin, which they demand, allowance is
made for aU further possible downward fluc¬
tuations, as weU as for the probable arrears
of interest, taxes, assessments and the costs
of foreclosure, we vi'iU readUy recognize its
propriety and necessity.   With the question
of market values left exclusively in the hands
of lenders, thus constituting them the sole
umpires of standard rates, it is interesting to
study the various opinions entertained by
them with respect to the present and pro¬
spective values of city property as expressed
in the various loans which are made from
week to week, and duly recorded in our col¬
umns.   We propose to review this market
from the several standpoints thus presented.
The EXTREME RIGHT WING of the market is
occupied by a class of lenders w^ho are pri¬
marily intent upon security for their capital.
The question of income concerns them less
than to know that the amount they invest is
safe beyond all peradventure or doubt.   Ob¬
viously such parties have long since aban¬
doned aU hope of deriving seven per cent.,
with adequate security, from their invest¬
ments.   They would be weU contented with
a return of six per cent., if at such a rate
they could secure loans that would conform
to their  arbitrary and  difficult  standard.
These men are probably pessimists by nature,
and think they foresee National Bank panics.
Life  Insurance and  Savings Bank-panics
with -widespread mercantUe disaster, aU fol¬
lowing in the wake of the threatened and
fast approaching resumption of specie pay-
ineiits.  The objectiy^e poiijt, which they hold





in view, is to tide over these possible catas¬
trophes without paying tribute out of their
capital. Since these gentlemen fail to he
suited with current six per cent, obligations,
we can only tender them this honest advice:
to offer their funds at five per cent., and thus
evoke a class of loans such as exist in our
city and may be called in technical phrase
" double gilt edge.." These loans would rep¬
resent about twenty-five or thirty per cent,
of the arbitrary values of to-day, and may be
regarded as thoroughly bomb-proof to all
disasters. We are aware, from our acquaint¬
ance with this market, that there is a class of
borrowers ready to conform in all respects to
the standard of requirements thus set forth,
but they expect as an equivalent to pay no
more than five per cent, for their loans.

We leave these two fastidious classes to
adjust their mutual relations, and commend
them each to the other, as weU deserving of
mutual consideration.

The EXTREME LEFT WING of the market em¬
braces that class of lenders whose motto is
"Seven per cent., first, last and forever."
In other words, there is a class existing in
this city of hidebound and benighted indi¬
viduals who regard seven per cent, as the
minimum value of money under aU circum-.
stances, and resent the suggestion of any
lower rate as an insult to capital and a men¬
ace and oppression to the monied classes.
Many of these individuals have held their
funds on deposit in Trust Companies, draw¬
ing 'from one to two per cent, interest per
annum, waiting for the return of those hal¬
cyon days, which they devoutly pray for,
when money commanded not only seven per
cent., but in addition thereto a tempting,
though illegal, bonus. The task of stUting
the mortgage loan market, undertaken by
this set of financiers, has been an onerous
and costly one, having already resulted in a
hea-vy loss of interest, as it wiU doubtless
continue to do, judging from present appear¬
ances. Among this class, we regret to say,
are embraced aU the leading Savings Banks
and Life Insurance Companies of our citj'.
In fact, it is an open secret in the market
that nearly the whole of these institutions
have combined to resist any abatement of
interest from seven per cent., on the ground
that such reduction would seriously cripple
their incpme and resources, reverse the order
of their business, and leave them' in an utter¬
ly impoverished condition. When applica¬
tion is made to them by parties whose mort¬
gages they now hold at seven per cent, for a
reduction of tfie rate, the answer is prompt
and ready, that if'one-half of the existing
loan is paid off, the rate of interest on the
balance will then be reduced.   In the majors