NUMBER OF EMPLOYEES BY DIVISIONS

Mr. WIGGLESWORTH. I think this supplementary statement which has been submitted this morning has covered a great many of the questions that I intended to ask yesterday, but there are just a few that I would like to ask now.

Could you insert for the record, when you revise your remarks, in addition to what you have furnished us this morning, the number of the personnel in each of the divisions of the Corporation, including the five subdivisions of what you call your non functional activities of the Administrative Division, and each of the other principal divisions covered by your orginal justification?

Mr. WEBB. The number of employees in those divisions? Is that what you want?

Mr. WIGGLESWORTH. Yes.

Mr. WEBB. Mr. Hodges, can you furnish that?

Mr. HODGES. Do you want that broken down between the home office and the field?

Mr. WIGGLESWORTH. Yes.

Mr. HODGES. Of course, you understand there are a number of home office departments. It is difficult to break down the functional activities, such as the general manager's office.

Mr. WIGGLESWORTH. I have in mind the various items that you give beginning on page 13 of your original justification and running through to page 33.

Mr. HODGES. Very well.

Home Owners' Loan Corporation—Personnel estimates for fiscal year 1938 by

departments

AMOUNT OF PROPERTY EXPECTED TO BE ACQUIRED

Mr. WIGGLESWORTH. I understand that you expect to have property actually acquired to the extent of $600,000,000 by the end of the fiscal year 1938, is that correct?

Mr. WEBB. That is the estimate.

Mr. WIGGLESWORTH. That is the estimate?

Mr. WEBB. Yes, sir.

Mr. WIGGLESWORTH. That would be about 20 percent in dollar value of the total loans that you have been making?

Mr. RUSSELL. The gross authorized would be 16 percent, approximately, of the loans closed.

Mr. WIGGLESWORTH. In number?

Mr. RUSSELL. In number; and it would depend upon the size of the loans whether they were average or not as to dollar value. It is true that the first loans that we have foreclosed have been the larger loans; that is, the average foreclosed loan is larger than the average loan that has been made.

Mr. WIGGLESWORTH. I have in mind your statement that you estimate that properties acquired will stand on the books of the Corporation in the amount of more than $600,000,000.

Mr. RUSSELL. Yes, sir.

Mr. WIGGLESWORTH. And the total, as I recall it, was something over $3,000,000,000.

Mr. RUSSELL. That is following the approximate experience of the Corporation's book value of foreclosed value, which is above the book value of loans. That is, we foreclose the big loans before the little

ones.

Mr. FITZPATRICK. Do you expect to get that $600,000,000 back? It is not going to be a loss?

Mr. RUSSELL. We think there will be a loss in the $600,000,000. Mr. FITZPATRICK. Yes; but perhaps only a small percentage. Mr. RUSSELL. The Corporation can absorb it if it is permitted to handle the property properly.

Mr. FITZPATRICK. If you do not sell immediately, and wait 6 months or a year, you are liable to get a greater price for your properties and not lose quite so much?

Mr. RUSSELL. That is quite true.

Mr. FITZPATRICK. Especially in the cities now, prices are advancing very rapidly.

Mr. WIGGLESWORTH. Is it possible to formulate any estimate as to the total value of properties which will be taken over eventually? Mr. RUSSELL. Mr. Jones or Mr. Lee could better answer that question, I believe.

Mr. JONES. Colonel Lee, will you hazard an estimate on that?

Mr. LEE. I would have to hazard an estimate as to the total number of properties we would ultimately have to take over. I am of the opinion that most of the properties which the Corporation will have to acquire will be acquired during the first 3 years.

We will get our worst properties first, which is occurring now, and properties that survive those three years will have paid off enough so that they are likely to hold on; and with the rising market which we contemplate will be around 15 to 20 percent this year, having in mind. the increased cost of labor and material, there will be no reason why they should let those properties come back.

And even if they default, someone else will take them over and go on, because of the amount that has been paid off. We have 16 percent at the end of 1938, and the ratio of foreclosures is going down; that is, foreclosures authorized, I should say would not in any event exceed 25 percent, and I doubt that it will ever get up to that. I should say around 20 percent.

Mr. WIGGLESWORTH. In dollar value?

Mr. LEE. Yes. If it does not exceed that amount, it would be a very creditable showing. Many institutions who undertake to make only good loans have averaged as high as 22 percent.

RECONDITIONING OF PROPERTIES

Mr. WIGGLESWORTH. What is the policy as to reconditioning? I do not recall just what the law says on that. What is the law, and what is the policy of the Corporation with regard to reconditioning?

Mr. RUSSELL. Well, there is not any express provision of law, Mr. Wigglesworth, as to the reconditioning of property that is owned by the Corporation. There is an express provision which authorizes the Corporation to make advances in connection with its loans for reconditioning, on a very broad basis. We construe the statute, however, to give the Corporation power to do anything necessary to protect itself with security. Therefore we are of the opinion that the Corporation has the power to spend any money which, in the discretion of the Corporation, it is wise to spend, upon these properties that it owns, to try to get itself out.

Mr. FITZPATRICK. The policy of the Corporation is now to recondition the property rather than to sell it in the condition in which you receive it?

Mr. WEBB. Exactly.

Mr. WIGGLESWORTH. Does not the condition of the property in the first instance enter into the making of the loan?

Mr. RUSSELL. Well, of course it was given consideration in the appraisal, and the Corporation did do a certain amount of reconditioning work before it made its loans, but in the rush of the operation many properties were not adequately put in condition.

Mr. WIGGLESWORTH. When that property is taken over, reconditioning may be necessary both from the point of view of maintenance and of resale?

Mr. RUSSELL. Yes, sir.

Mr. WIGGLESWORTH. And the expense of that reconditioning is not regarded as an administrative expense?

Mr. RUSSELL. It is not regarded as an administrative expense; no, sir. You will find in the record somewhere that there is $20,000,000 proposed to be spent on these properties in the fiscal year 1938, which is outside of administrative expense.

PUBLIC RELATIONS DIVISION-RESEARCH

AND STATISTICS DIVISION

Mr. WIGGLESWORTH. What can you tell us about the Public Relations Department or Division?

Mr. WEBB. The Public Relations Department is a very small department.

Mr. WIGGLESWORTH. About how many people are there in that department?

Mr. WEBB. They keep us posted about what is going on, in the newspapers and various circles, real-estate circles, and anything else of a public nature that would be proper information for the Board. Mr. WIGGLESWORTH. Is there a difference between the Research and Statistics, and the Public Relations Division?