OF CASES THOUSANDS habitation. Otherwise they cannot compete with properties in the immediate neighborhood and the Corporation loses revenue both in rentals and in sales. The following chart gives a survey of the reconditioning activities of the Home Owners' Loan Corporation from the beginning of operations to June 30, 1939: From the beginning of operations to the close of June 1939, the Corporation has completed 729,809 cases of reconditioning, with a total expenditure of $139,349,472. Through this reconditioning, more than 500,000 small homes have been protected against undue deterioration, and between 13 and 14 million days of work have been provided directly for masons, carpenters, plumbers, painters, and others in the building trades.14 In addition to these reconditioning cases handled by the Reconditioning Division of the Corporation, certain other expenditures are made by contract management brokers who have authority to provide for small maintenance repairs on properties under their manage ment. During the fiscal year 1939, the number of reconditioning contracts completed was 117,698, in the amount of $26,590,243, as compared 14 This estimate is based on the generally accepted assumption that $1,000 of expenditure for repairs represents 100 days of labor. with 118,540 contracts, amounting to $23,146,876, in the preceding fiscal-year period. Detailed information on the various types of reconditioning cases completed during the fiscal year 1939 and since the beginning of operations is presented in Exhibit 56. Despite the mass character of its reconditioning operations, the Corporation, through its regional and local offices, considers the reconditioning need of each property individually and applies, where necessary, all the customary construction technique of plans, specifications, contracts, and supervision. The Corporation's experience has proved that through the expenditure of a reasonable amount, the marketability for properties on hand has been greatly enhanced regardless of the age of the property or its condition upon acquisition. The results of systematic reconditioning are evidenced by the large volume of sales of reconditioned properties which, in many sections of the country, must compete with new houses offered to the buying public at attractive terms. APPRAISALS During the fiscal year 1939, the Appraisal Section of the Corporation has completed 101,118 appraisals, or an average of 8,426 per month. This compares with 90,310 appraisals completed in the preceding fiscal year. In the early period of operations, appraisals were needed primarily to arrive at a valuation of each of the more than one million homes refinanced and thus to determine the limit to which the Corporation. should make loans on these properties. In subsequent years, appraisal activities have been concentrated on valuations for the determination of sales prices or rents of acquired properties, appraisals for foreclosures and deeds in lieu of foreclosure, tax assessments, partial releases, substitution of security, and insurance and disaster losses. Furthermore, appraisals are supplied in litigation cases affecting property values and in cases involving damage to the Corporation's liens through floods, earthquakes, earth slides, blight, and other conditions. Finally, the decisions of the Corporation to improve, recondition, or demolish owned properties are based on careful appraisals of such properties. As the physical condition of properties, general economic conditions, and real-estate values change, appraisals made in previous years become obsolete, and reappraisals or supplemental reviews are necessitated to an increasing extent. From the beginning of operations through June 30, 1939, appraisals completed totaled 4,926,892. In addition to its work for the HOLC, the Appraisal Section also renders services to the other agencies under the Federal Home Loan Bank Board, for which the Corporation is reimbursed. Also, under a cooperative arrangement with the Procurement Division of the United States Treasury Department, the Appraisal Section assists that Department in the appraisal of various types of properties throughout the country, particularly old post-office and customhouse structures which are no longer needed for Government use. The Treasury Department reimburses the Corporation for all expenses incurred in connection with this work. INVESTMENTS OF THE CORPORATION In addition to its immediate objective to bring relief to distressed home owners, the Home Owners' Loan Act, as amended, included measures to place the home-financing industry on a more stable basis. With this in view, the Act authorized the Home Owners' Loan Corporation to invest up to $300,000,000 in savings and loan associations, either Federal or State-chartered, provided they are member institutions of the Federal Home Loan Bank System or insured by the Federal Savings and Loan Insurance Corporation, and to subscribe for the capital stock of the Federal Savings and Loan Insurance Corporation in the amount of $100,000,000. On June 30, 1939, investments of the Home Owners' Loan Corporation in savings and loan associations totaled $216,458,810, as compared to $211,726,610 at the end of the preceding fiscal-year period. The following table gives a summary of HOLC investments in savings and loan associations for the fiscal year 1939: Investments of the Home Owners' Loan Corporation in savings and loan associations A detailed statement of HOLC investments in savings and loan associations, by States, is presented in Exhibit 57. During the fiscal year 1939 the Home Owners' Loan Corporation received $7,457,939 as dividends on its investments in savings and loan associations, as against $6,134,331 in the preceding fiscal-year period. This represents a return of approximately 3.5 percent on the average amount of HOLC investments during the year-a return well above the cost of money to the Corporation. FINANCIAL OPERATIONS Exhibit 58 presents a statement of condition of the Home Owners' Loan Corporation as of June 30, 1939. During the fiscal year 1939, principal changes on the asset side of the balance sheet were characterized by a decrease of original mortgage loans and advances from $2,214,064,318 to $1,928,212,237, by an increase of vendee instruments and advances from $50,610,692 to $151,896,337, and by an increase of property owned and in process of acquisition from $516,206,401 to $549,441,184. The bond retirement fund rose from $91,366,431 to $149,217,560, and investments from $311,726,610 to $316,458,810. On the other side of the balance sheet, the bonded indebtedness decreased from $2,952,993,850 to $2,949,305,025, and accrued liabilities, including mainly accrued interest on bonded indebtedness, declined from $16,431,521 to $7,832,281. The reserve for losses shows a reduction from $99,977,654 to $89,488,388, and the deficit an increase from $40,893,292 to $59,562,029. Detailed statements of income and expense for the fiscal year ended June 30, 1939, and from the beginning of operations to June 30, 1939, as well as an analysis of changes in deficit for the fiscal year 1939, are given in Exhibits 59, 60, and 61, respectively. During the fiscal year 1939 the distribution of income as well as of expenses showed marked changes. Such changes are summarized in the following table which gives a condensed comparative statement of income and expenses for the fiscal years 1938 and 1939, together with provisions for losses and the net deficit in each year. Condensed income and expense statement for the fiscal years 1938 and 1939 Net income before losses in the liquidation of assets and provision for losses.. Losses in liquidation of assets and provisions for losses. Deficit for period. 38,051, 800 34.921, 055 18, 517, 548 Consists primarily of interest on purchase money mortgages and advances and on sales contracts and advances. Because of the decrease in the number of loans outstanding and the reduction in the borrowers' indebtedness, income from interest on original mortgage loans and advances decreased by $15,330,641, or almost 13 percent. This, however, was approximately offset by an increase in property income of $10,193,421, by an increase of interest earned on vendee accounts of $3,897,693, and by an increase of dividends received on share investments in savings and loan associations of $1,323,608. On the expense side, administrative and general expenses were reduced sharply by $4,130,836, or 13 percent. Interest paid on HOLC bonds likewise decreased by $3,569,114 because of interest |