Metropolitan's Policies on Forbearance and Foreclosure

When a borrower fails to make the required payments on a mortgage loan, it had been the policy of the company to avoid foreclosure if possible. If the property owner was cooperative, and there appeared to be good prospects, the com­pany tried to let him work himself out of his difficulties. The Mortgage Division, under the direction of the comptroller, William S. Norton, attempted to maintain a nice balance between being reasonably lenient to a conscientious property owner and not being lax to a point detrimental to the interest of policyholders.

Since most of the owners were cooperative, it was possible to make various arrange­ments for them. In some cases, during periods of economic adversity, reductions in interest rates were made. This pro­cedure often resulted in removing the default and saving the property from foreclosure. These cases were carefully supervised to insure that income from properties was correctly applied, in keeping with the forbearance program.

If subsequent review of the case indicated that foreclosure could not be avoided and that further leniency would not be to the best interest of the policyholders, foreclosure was then made. Whenever properties were thus acquired, the company made necessary repairs and modernized the buildings, in order to dispose of them as quickly and as profitably as was possible. During the period of the depression, foreclosed properties were placed under the management of highly qualified real estate organizations working under the supervision of the Comp­trollers Division.

Offices were established at strategic points throughout the country, manned by personnel familiar with their respective territories and qualified to supervise the work necessary to put the acquired real estate into good condition. Well-rounded sales forces were organized and local contacts were established to assist in the rental and sale of these properties. As a result of these efforts, 88 percent of all the properties owned or acquired during the decade 1932, to 1941 were sold. During the depression the Metropolitan rendered an important public service by assisting other lending institu­tions.

In the decade following 1932 the company came to the aid of building and loan associations, savings banks, and trust and title companies, when they needed cash, by making properly secured loans of more than $35,000,000. The Metropolitan also aided in the liquidation of title com­panies and other institutions through cooperation with the New York State Mortgage Commission, the New York State Insurance Department, and the New York State Banking Department. In the years 1937 and 1938 the company purchased 15 loans at the invitation of the Reconstruction Finance Corporation.