Real  Estate  Record





AND BUILDERS' GUIDE.





Vol. XVIII.





NEW YORK, SATURDAY, SEPTEMBER 16, 1876.





No. 444





U





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Published Weekly by

C. W. SWEET............President and Tbeasdbeb.

PRESTON L SWEET..............Sechetary.

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

C.  W.  SWEET,
Nos. 345 AND 347 Broadway.





IMORTGAGE LOANS AS SECURITIES.
In the midst of the prevailing consterna¬
tion, almost amounting to panic, -which be¬
sets our capitalists of high and lo-w degree,
-when stocks and bonds of no mean repute
have suddenly become as -waste paper, Vv'^hen
whole lines of -what, till recently, were re¬
garded as prime investment securities have
been riddled and laid low as by an enemy's
mittraUleuse; when government bonds yield
but four per cent., and "call loans," those
once favorite resting places of capital, yield
but one or two per cent, per annum; in the
midst, we say, of aU this disaster and con¬
fusion^ we feel an intense satisfaction and
strong professional delight in pointing to
one security allied to om- special interest,
against which no default of interest has been
yet recorded, and whose par value knows no
shrinkage but is easily negotiable in our best
money centers.   We refer to the moderate
mortgage loan,  called in the slang of the
sti-eet " gilt-edged."   Such, we mean, as may
be found by the million in the assets of our
most conservative monied  institutions,  as
weU as in the safes of many private capital¬
ists.   Such, in fact, as are being offered in
limited quantities by our most respectable
brokers in mortgage loans, and which bear
interest from five to six per cent.

To a large class of our capitalists, we are
well aware, no word need be said in favor of
the weU selected mortgage loan. In these
caskets of value, their treasures have been
handed down from generation to generation
and from family to family without knowing
loss, abatement of value, or failure of inter¬
est.

The class we would particularly address on
this occasion, is thajt which, for the past
fifteen or twenty years, has especiaUy
affected investments in what they consider
first-class railroad stocks and bonds. We re¬
fer to the events of the past two years and
notably of the past two weeks, in no spirit
of vaunting or exultation, but desire to em¬
phasize, in the light of these events, our ad¬
vocacy of one of the most important factors
of our representative interests.
We are well aware of the cloud of objec





a term of years. That the titles are cumber¬
some, intricate and subject to legal opinions.
That the collection of the mortgage involves
tedious litigation. That default of interest
carries with it no s-wift penalty. That the
foreclosure of the mortgage converts the
holder of a personal security into a real-estate
owner. That multitudes of mortgages are
now being foreclosed, and that property is
not worth the mortgage placed upon it. To
one and all a comprehensive answer is at
hand. Well selected mortgages are abso¬
lutely invulnerable to every such objection.

By the selection of mortgages we mean
the exercise of a sound, clear, conservative
judgment, backed by a sufllcient knowledge
of real estate values. The titles to property
in New York have been searched and re¬
searched so often, that all the knots and
snarls are unravelled, and in the active por¬
tion of our city, scarcely a title exists but
has received the professional guaranty of
half a dozen of our best counsel. When the
mortgage represents a small fraction of the
total value of the property mortgaged, say
fifty per cent or under, the question of the
payment of interest becomes a perfectly safe
one. No owner of property ha-ving a clear
equity of fifty per cent, -would place the same
in jeopardy by a failure to pay interest.
This equity of fifty per cent, is a good basis
for credit at the bank or among friends, so
that he can readily raise the sum necessary
to discharge the interest, when temporarily
embarrassed.

The same may be said of the final payment
of the principal sum. The equity of redemp¬
tion of the o-wner, over and above the mort¬
gage, ensures the punctual and faithful per¬
formance of all the covenants which he
assures. The ultioaate repayment of the loan
is also assured by the further consideration
that well selected mortgages can always be
replaced or negotiated at short notice.

Looking at the matter in its worst light,
we wiU suppose the holder of one of these
"gUt edge" selected mortgages to be driven to
foreclosure in order to secure his rights. The
instrument which he holds is recognized in
the courts as all but an absolute conveyance,
qualified only by the conditions of punctual
payment of interest and repayment of the
principal sum loaned. In default of these
pro-visions, the steps necessary to perfect the
mortgagee's title to the property are simple,
well defined and easily taken. After their
consummation, the mortgagee is placed in
possession of property avowedly worth twice
the amount which he" has paid for it. It is
proper to say, that in the case of the care¬
fully selected mortgages, the opportunity to





tionsusually. raised.against mortgage loans.

!fhat the rate of interest is low and fi?s:ed foy 1 become the owner of property, seldom, if





ever, occurs. We can point to lines upon
lines of mortgages on property in this city,
held by individuals and institutions, that
have suffered no default of interest through
all the panic and disaster of the past three
years; their face value to day is just as re¬
liable as when they were first executed, and
then- negotiability is of such an order, that
the same face value could be realized without
discount or abatement in less than twenty-
four hours.

One single objection remains to be con¬
sidered—^the rate of interest is comparatively
low and defiintely fixed for a term of years.
We   must   remember,   as   Blackstone   has
taught us, that high interest involves heavy
risks, and as the rate of interest declines the
secutity usually increases.   This is preemin¬
ently true in regard to mortgages.   In good
mortgages there is no speculation. The lender
secures his principal sum beyond aH perad-
venture or doubt; and the rate of interest
afforded by these secm-ities, though less than
he may hope to derive   from   speculative
ventures and from risks in business, is never¬
theless to-day as it has been for the past two
years and as in all human foresight, it is
Ukely to continue for five or ten years to
come, gjeatly in excess of the interest that
can be  derived  from  government  bonds,
from railroad bonds, from business paper, or
from call loans.    We assume, that we are
addressing a class, who have tasted suflB.-
ciently of the exciting risks gro-wing out of
the most approved investments in railroad
and mining stocks and bonds, and who now
seek, above aU things, in the investment of
their remaining fortune, security for  the
principal sum.   It is on this ground mainly
that we recommend the adoption of this
form of investment.   It is the one security
in all reasonable probability that wiU under¬
go no change or shrinkage during the agony of
resimiing specie payment.   We therefore ad¬
monish and advise the trustees of institutions
and estates, guardians of chUdren, and such
capitalists as seek entire imunity from the
airxiety of investments to place their funds in
the best selected mortgages which they can
find.

An objection is sometimes made by New
York lenders that they are Uable to suffer
a diminution of interest by the taxation of
personal estate in our city. In answer to
this suggestion we would say that the
present tax commissioners are known to be
averse to the taxation of mortgages, and are
disposed to deal very leniently with the
holders of those securities. They beUeve that
in so doing they are conserving the best
interest of our city, and that real estate once
taxed should not suffer the burden of another