Real  Estate   Record





AND BUILDERS' GUIDE.





YoL. XXII.





NEW YOEK, SATÜRDAY, JÜLY 13, 1878.





No. 539.





PublishedtWeekly by

Wbt %ml ÖEslale Set orb l^ssonaiioii.

TERMS.
ONE YEAR, in advance....810.00.
Communications should be addressed to

C.  "AV.  S^IVEET,

Nos. 3-15 AND 347 Broadway.





REAL ESTATE REFORM.

There are alwaj-s persons in a comnmnitj' so
wedded to tbe established order of things, whose
iuterests are so bound up in that oruer, that anj-
changeor disturbance islooked upon as a personal
grievance to be appropriatelj- deplored and be-
moaned. There are o hers who are inelined to
look upon the established order as either immuta¬
ble or susceptible of jjo amelioration. Their
common remark is that things are well enough as
thej' are, or. if not -well enough, it were idle to
attempt to reform them ; and their natural dis¬
position is to bear the evils that they have, rather
than flj' to others that thej- knou- not of.

The niagnitude of the changes which have
taken place in tbe real estate market dui^ing the
past five J'ears would be startling and appalling
-were we not hnbituallj' inured to abrupt aud
sudden convulsions iu this countrj'. A course of
evil practices here nmj' be long tolerated and
patieutlj' borne, but when tbe change conies it is
apt to be swift and radical. The most fatal
Symptoms of the real estate distemper, which
raged so furiouslj' five or ton j'ears ago, were an
abiding faitb that the order hings which then
existed was unchangeable; that the practices
which then prevaiied were iron-clad nnd invul¬
nerable ; at any rate, not likely to meet with any
serions disturbance.

It must be patent to tho least interested ob-
server, however. that a coraplete metamorphosis
has passed over tbe world of real estate affairs.
Important changes audreforms have been silentlj-
but surelj' worked out. The desire for these
reforms raust have been deep-seated and wide-
spread long betöre their füll accomplishment was
determiued. TVhile desiring to claim a share in
the labor of promoting some beneficent changes,
we haveno idea of appropriating to ourselves the
entire credit. Our joiu-nal has merelj' sei-^'ed as
a moutbpioce for exprcssing wishes and cravings
which were latent and smouldering in the public
niind. AiA''e will brieflj' note what seem to us to
be the salient features of these reforms.

1. V..\x.üES.—^We are accustomed to speak of
the changes in real estate values us effects of
öhrinkage, depreciation, depression, economj-,
etc. In point of fact, befoi-e the panic, real
estate values in this city had reached a dangerous
and unparalleled altitude of artificial Inflation;
The gro%vth of the city, tha possibüity of its
becomiog the seat of prosperous business and of
populous residence alike demancled the readjust-
ment of these values, We are aware that this
change involved all the agoliies of a surgical Ope¬
ration. We are not insensible to the excruciating
hardship of the losses attendingreäl ^tate in-yest-





ments made during the past ten years. Neither
can we lament tbe change that has come over
these values. The former plane was one where
trausactions nece.ssarilj- became limited and haz-
ardous. The present plane is one which invites
trausactions, where thej- are absolved from anj'
great element of risk, and if furnishing no ground
work of a new speculative movement, it at least
presents the promise of extensive legitimate deal-
ings, beneficial alike to the citv- and the masses of
Population. The reform in land values and rental
vnluations is the most signiflcant and pregnnnt
of any that has been eft'ected during the past
three j-ears.

2.  Building Lo.vn.s.—AA^o have good reason to
believe that capitnlists and builders are becoming
more discriminating and intelligent with regard
to tho elfect of building lo.ans- The fraudulent
building loan is rapidlj' becoming a tbing of the
past. There is a inarked indisposition on the
part of even the most veuturesonie capitalists to
risk their funds in these trausactions: and build¬
ers, who have heretofore found illegitiraate
prolit in floati g these -schemes, stand in danger
of losiiig their occupation. Even the legitimate
building loan is being gauged to the Standard of
common sense and sound busine.ss dealing.
There is a promising prospect that the future
building improvements of this citj' will be con-
ducted in such a wnj' that the mechanics con¬
eerned iu them will not be defrauded of their
just dues, and that a bligbting disgrace will be
removed from an honorable and ineritorious call-
ing. Fraudulent building loans are at length at-
tracting the attention of the grand juries—the
parties to them being considercd fit subjects for
criminal indictments.

3.  MOUTGAGE LOAN-S.—The disreputable prac¬
tica which once prevaiied in fiduciary institu-
tions and among private trustees of advancing
unwarrautable sums on real estate securitj-, in
consideration of a bonus or money iuducement
temptingly offered, has passed away. Among
individuals and institutions a disposition is con-
spicuously evineed to guard the integrity of the
mortgage loan, as a sound, safe and wise Invest¬
ment, aud to keep it entirely free from all en-
tangleiuent in speculative ventures. The pro-
niotion of land speeulation bj- means of excessive
mortgages, or, in realitj-. tbe gunibling in real
estate mortgages with other people's monej-, is
a feat hardly possible of achievement at the
present time.

4.  Interest Rate.—The reduction of the in
terest rate on mortgage loans. by common con¬
sent, to 0 per cent., indicates one of the most im¬
portant reforms of the times. This change is
due, not alone to the plethora of monej-, for long
nfter monej' faüed to conmiand high rates in
open market, the rate on mortgages was maiu-
tained at 7 per cenr. To properl->- measure the
extent of this change, -we must lemember that
thö i'eduction is equal to a saving of neärlj' 15
jleir cent. of annual oiitgo tö the borrower, and a
Ib^^ bf a like share of income to the lendei'. This
difference, aa small or as great as it may seem,
repreSeÄts the reformed practice of mortgage
lenders. The high rate of interest on mortgage
loans was maintained for some time after the
psuiic, because exceraive loans continued to be
asked fbr, and lenders were temp «^d to grant





the.«e loans for thesuke of realizing the maxiraum
rate of interest. AVhen, however, thej' cume to
uuderstand tbe risk which they were running,
the likelihood of their having to become owners
of propertj- bj' foreclosure, they quicklj' ehanged
their ttictics. In order to evoke mortgages of
the highest grade of securitj-, it became neces-
sary to accept 0 per cent., or le.ss, as interest.

The six per cent. Standard is tbe most conserv-
ative tcst that can be applied to real estate valua-
!;ions. It has been the ready means of rais-
ing populär estiniation of mortgage Invest¬
ments to the highest level, just when confl-
dence was being sadlj' ^hattered iu their
desii^ableness and the dailj- press was advo-
cating their exclusion frora corporate assets,
A slight i-elief in taxation would reduce the
interest rate to a .still lower level. AA'e believe
the observance of this exceptionally severe Stand¬
ard in gauging mortgage loans will be continued
for the future, and that the practice will exert a
beneficiallj' tjuieting effect upon values—and a
wholesome oheck upon the vagaries of Investors.

f). Cou.vsEL, Fees.—The most flagrant abuses
that ever characterised anj' brauch of busi¬
ness were the extortionate and unconscionable
exactions formerlj' made under the guise of legal
fees in conveynncing. The radical reform which
has been wrought in this respect is a grateful and
acceptable one to the whole real estate Commu¬
nity. The presentation of this subject was
promptlj' responded to by two of our leading
fiduciarj- institutions, whose managers are
eutitled to the highest praise, as well as the pro-
foiuid respect of real estate dealers for initiating
a wise and salutarj-policj-in the negotiation of
mortgage loans. There can be no retrograde
movement in this matter of counsel fees. The
Steps taken by the two institutions referred to
were no doubt carefuUj' cousidered and deliber-
atelj' planned, Their tidoptiou has involved a
-vital change of organiza ion, the establishment of
a System which may not be quicklj- dispensed
with. The likelihood is that all other reputable
and conservative institutions engaged in the loan-
ing of money on mortgage—life Insurance com-
panies and savings banlts—will be compelied in
time to adopt this method of emploj'ing salaried
counsel to examine titles for loans, and to waive
all cbarges in counection with mortgage loans
except the cost of ofllcial seurches. In fact, a leg¬
islative enactment compelling all such institutions
to adopt this metbotl would be ti grc:it relief to
the borrowing public and constitute no hardship
to tbe Cümi)anies. Ün the coutrarj-, it would
establish a valuable safeguard in preventing anj-
utilawful collusion betw.eu brokcrs. borrowers
and representutives of thö lending institution.«.
This corporate example has worked n good eft'ect
upon private counsel. In everj' res[)ectable oflice
iu this citj" the cbarges for examiniug titles for
loans have been gi'eatly reduced, and in some
cases private lenders are considering the expedi-
ency of bearing legal expenses themselves in
Order to securo the most desirable loans-

6. AüCTiON S.Ü-ES.—A conspicuous reform has
been lately effected in the matter of auction sales.
"We need not levert to the nuti.ses once prnctised
in tbe auction room. Thej- are alreadj- matters
Df sufilcient public notorietj-, Their pei-petration
well nigh. destroyed the ancient and honorablt»