Loan office

“ In most cases he will have to get it by borrowing on mortgage. And if the government is not prepared to always keep open a loan office for every incoming tenant to the end of time, a loan society or company must be his resort. ”

“ It is within the knowledge of every gentleman, that a very considerable part of our domestic loan-office debt arose in this manner. It is well known that loan-office certificates were issued as a kind of circulating medium, when the United States were in such straits for cash, that they could not raise the necessary supplies in any other way. ”

“ All remittances for advance, instalments, premiums, monthly instalments, fines and penalties, interest and premiums, and all other payments shall be made to the secretary of the association at the home office, and in registered letter, express or money order, or drafts. Individual checks shall not be received.
The other sections of the article provide for the manner in which the loan shall be made, upon what security, interest and premium, and covenants, the manner of payment and prepayment, and the enforcement of payment, and when shares may be canceled and forfeited. ”

“ A PRIVATE GENTLEMAN, with a few thousands at his command, is desirous of negotiating loans of small amounts, - say from five pounds to twenty-five, - with persons of integrity who are temporarily embarrassed. Tradesmen, clerks, and others must be prepared to furnish credentials as to their respectability, as the system of inquiry adopted by the principals of ordinary loan-offices is dispensed with. ”

“ The greater the banking capital in any section, the easier it will be for the people of that section to carry on and enlarge their business.
The Loan Department is not only the most important, but it is the money-making end of the bank. If it makes no loans it will pay no dividends. If, on the other hand, it makes bad loans, it will go out of existence.
It can be understood readily that the successful bank officer, whose duty it is to accept or reject loans, must be a person of large experience and wide knowledge of men and affairs. He must be an excellent judge of human nature. ”

“ Loans shall be made only for the purposes which promise to result in a saving or a profit to the borrower. Each applicant for a loan must state the object for which he desires to borrow, in order that the credit committee, which passes on all loans, may rigidly exclude thriftless and improvident borrowing. ”

“ That if it shall become necessary at any time for a local association to take possession of real estate upon which a loan has been made and sell the same, the profit or loss thereon shall be shared by the several institutions in the same proportion as the capital is held by them; that is, the National Land Credit Bank shall share one-half of the profit or loss, the State institution making the loan shall share one-quarter of the profit or loss, and the local association recommending the loan shall share one-quarter of the profit or loss. ”

“ Every bank has a number of customers who expect to be taken care of in the loan department. But, if all the bank's patrons are borrowers, it soon will have loaned out all of its funds. The bank must have depositors also. While some depositors do not ask for loans, experience has shown that the proportion of a customer's balance to his loans must be sustained in order to keep the bank adjusted. In New York the banks generally require a regular customer to keep an average balance of not less than twenty per cent. of the loans made him. Most interior banks consider ten per cent. ”

“ In fact, every banking association is assumed to be a corporation of money lenders. Under ordinary circumstances this corporation is able to loan to individuals whose credit is good all of its capital not otherwise employed in the machinery of the bank, a considerable portion of deposits from its customers, and to a certain extent its own credit in the commercial world. In the case of a national bank a portion of capital is loaned to the government in the purchase of bonds, which are the basis of its circulating notes. ”

“ Their charter is perpetual, so the care of the loans will not be thrown upon the investor, as it would be in case of the death, change of business or location of an individual or firm negotiating the same. They combine the loan, tax, legal, and insurance departments, making this an exclusive business; personally investigating every application and guaranteeing every loan, thereby protecting the investor by a double security.
M.V.B. BULL & CO.,
TWEDDLE BUILDING, ALBANY, N.Y.
Financial Agents WESTERN FARM MORTGAGE CO., of Lawrence, Kansas. ”

“ They may make loans only on first mortgage real estate notes and can neither carry on a banking business nor received deposits [6] Their reserves must equal 10% of liabilities to their members and the associations' surplus is limited to 5% of assets. [7] Earnings above the permitted reserves and surplus must be paid to members currently and at stated periods. The Congress authorized the organization of federal savings and loan associations in 1933 in the Home Owners' .loan Act, 48 Stat. ”

“ It is usual for each association to be restricted to a particular area of operations within which every proprietor, whether noble or peasant, may obtain a loan if he can offer sufficient security. There is always a minimum limit either to loans or to the value of property on which loans will be given. ”

“ From the services which the bank renders those from whom it borrows, we may turn briefly to the more obvious services, rendered to those to whom it loans. Bank-loans are, in form, time-loans for a definite period of days or months, and call-loans, upon which instant payment may be demanded at will. Either form of loan may be made on the personal credit of the borrower, though this is not considered good banking, and can be safely done only in cases of persons of unexceptionable standing. Loans are made, as a rule, upon mercantile paper and upon collateral. ”

“ The broker's business grows legitimately out of the need of ready transfer of claims, for the sake of larger use of the floating capital of the country, and readiness of investment in more fixed forms. It adds, however, to the dangers of extended credit by making more easy the gratification of present wants through expectation of future ability. The broker makes his gain, without reference to the final settlement, by taking a commission upon the loan. ”

“ If we sum up all the points made by the majority of the Committee, they appear to maintain that the Bank ought to lend the public deposits liberally, and draw them in promptly, when needed, in order to pay the public debt, yet refuse no accommodation (especially to any one who was embarrassed) , not sell its public stocks, not increase its circulation, not draw in its loans, not part with its specie, not draw on the debtor branches in the West, not press the debtor local banks, and not contract any temporary loan. ”

“ Upon applying for a loan, the applicant 'shall subscribe for shares of stock in such farm loan association to an amount equal to 5 per centum of the face of the desired loan,' the subscription at his election to be paid out of the proceeds, and the stock to be held by the association as collateral security. 'Said capital stock shall be paid off at par and retired upon full payment of said loan.' Id. ”

“ No person, firm, or corporation, or any agent thereof, other than a national bank or a bank or trust company duly incorporated under the laws of this state, or a pawnbroker, as provided in chapter 235 of the Public Acts of 1905, shall, directly or indirectly, loan money to any person, and directly or indirectly charge, demand, accept, or make an agreement to receive therefor interest at a greater rate than 15 per centum per annum. ”

“ Loans were to be secured by bills and notes with two or more sureties, or by mortgage, and not to be made for more than one year. No loan might be renewed unless interest was paid in advance, and not more than one-tenth of any loan might be called in when it was due, without sixty days' notice. In case of default, judgment and execution were to follow. The bank was not to owe over $1 million before the next session. Within twenty days after it was ready to start, an agent to make the loans was to be appointed in each county. ”

“ Sam is a human firebrand, a dash of tabasco, a rough comedian and catch-as-catch-can joker. Years have not tamed him, but they have brought him into prominence as a consulting specialist in real estate and investments. Those who should know tell that Sam Totten can park his itching feet under an office desk and keep them there long enough to swing a big deal, but I prefer to think of him as the rather florid young man who insists on joining the hired orchestra and playing snare-drum solos during the country-club dances, much to the discomfiture of the gentleman who owns the drum. ”

“ Other efficient, but somewhat more costly, agencies for bringing together the owners of loanable capital and men wishing to use capital are savings-banks, building and loan associations, insurance companies issuing endowment policies, and mortgage-investment companies of many kinds. While on the one side of the bidding are thousands of lenders offering to exchange ready money for assured incomes, on the other are thousand of borrowers offering to exchange the promise of assured incomes for ready money. ”

“ The State was entitled to a loan of $200,000, and each stockholder was entitled to a credit equal to one-half his shares for twenty-five years; that is, four per cent. to be paid annually on the principal, the notes being renewed annually. There were to be seven branches; two-thirds of the capital was to be lent on real estate, one-third on promissory notes; borrowers on mortgage were to pay one-eighth annually on their notes. The four last years of the charter period were to be employed in winding up the bank. ”

“ But on the other hand, if 4 per cent, bonds are selling at par and he chooses a 4 per cent, loan, he gets his $1,000 in cash for his Pfandbrief and pays $40 per year interest and gives his mortgage and note for $1,000. It is always regarded as the best policy for the borrower to choose the class of bonds selling nearest par, unless they are selling above par, in which case the farmer securing the loan gets a premium over and above the amount of his liability and it is to his advantage to take such loans. ”

“ Loans are made on written applications which are required to designate the purpose for which the loan is to be used, and the borrower is required to agree that the loan shall be used for those purposes. ”

“ In making loans it should be recognized that character and industry are the basis of credit, and a loan may be made to a member who has not adequate security to pledge for it, provided he can obtain the guaranty of one or more other members, but no member is obliged to guarantee the loan of another member unless he desires to do so. ”

“ Last year the number of loans made at this parent bank was one hundred thousand in round numbers, and the aggregate of the amounts loaned, one million six hundred thousand dollars, or an average of sixteen dollars to each loan. The number of loans seldom falls below two hundred in a day, and often reaches two thousand. Of all the articles deposited in the bank as security for loans, about two thirds are ultimately redeemed. The bank, in any event, never loses. If after all precautions, an article is found to have been stolen before being pawned, the owner must repay the amount loaned. ”

“ Some societies demand an entrance fee of a few cents, which goes to the reserve. This reserve will be dealt with below.
The societies in general, having no share capital, do not lend their own funds. The candidate for a loan asks that debentures may be issued against a mortgage of his [Pg 257] property. This is then examined. If the security is approved the candidate executes a mortgage deed to the society, which thereupon issues debentures which are placed on the market and, being sold, provide the funds for the loan. ”

“ Careful precautions are taken against the Mont-de-Piété being made a receptacle for stolen goods. The applicant for a loan must be known and have a permanent residence, or be vouched for by some one fulfilling these requirements; a married woman must bring the authorization of her husband, and no loans are made to minors. If the employés have any reason to suspect the integrity of the applicant, his loan is refused until he furnishes more satisfactory guarantees. ”

“ The aspiring homeowner no longer depends on the willingness of the local commercial bank or savings and loan association to hold his or her mortgage. Similarly, the sources of credit available to purchasers of cars and users of credit cards have expanded widely beyond local credit institutions. ”

“ The majority declare that the Bank ought to use its capital as a permanent fund and loan the public deposits on time, so that they would be repaid near the time when they would be required by government for the debt payment. ”

“ A law authorizing the government to guarantee a certain percentage of any loss which may be suffered by any private bank, insurance company or any other credit institution, on account of loans it may grant to private individuals for home construction, the amount of each loan not to exceed P10,000 for each individual borrower, and fixing the aggregate amount of the loans for which such guarantee may be given. ”