Message to Congress Recommending Legislation to Guarantee Principal on Home Owners Loan Bonds.

To the Congress:

On January 10th I recommended to the Congress the passage of legislation guaranteeing the principal as well as the interest of the $2,000,000,000 of bonds authorized for the refinancing of agricultural indebtedness.

I now recommend that the Home Owners Loan Act be similarly amended. The purpose of such legislation, as in the case of farm financing, will be to assure the continued progress on a self-sustaining basis of the making of loans for the purpose of refinancing home mortgages without interruption. There is the same reason for acknowledging publicly what already amounts to a moral obligation in respect to these bonds as there was in the case of bonds authorized to be issued through the Farm Credit Administration.

By making provision for an exchange of the new type of bonds guaranteed as to principal as well as interest for those already issued, those mortgagees who have shown their willingness to cooperate with the Government's program by accepting the original bonds will be placed on an equal footing with mortgagees who will hereafter obtain the fully guaranteed obligations proposed by this legislation.

Out of the funds which may be made available as a result of the proposed guarantee of principal of these bonds, the Home Owners Loan Corporation should be enabled to extend further assistance for the modernization of homes as well as for the making of repairs. Authority should also be given to the Home Owners Loan Corporation to purchase bonds of the Federal Home Loan Banks, thus enabling the Corporation to make funds available to those banks and to Building and Loan Associations which are in need of financing in order to encourage private building.