Word: ls
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...Authority for the FHLBB to make additional loans, up to $4 billion, to savings and loan associations at interest rates below the going market level. The S and Ls can then lend the money to home buyers...
...that interest rates would skyrocket. Since then, rates have continued to climb to record levels; last week major banks lifted their prime rate on business loans by a quarter-point, to a dizzying 11¼%. As a result, there has been an accelerating flight of funds from S and Ls and other sources of mortgage money...
...interest rates, the chief sources of most mortgage money dry up. Depositors in savings and loan associations and savings banks withdraw their funds and put them into better-paying investments such as Treasury bills. According to experts in the Federal Home Loan Bank Board system, which supervises S and Ls, the process has already begun. Result: the housing industry, which was beginning to show signs of an upturn-1.8 million starts in February v. 1.4 million in December-could well be hammered down again...
...wild cards, sold to savers who will keep at least $1,000 on deposit for at least four years, yield interest at whatever rate the issuer chooses to pay; Manhattan's First National City Bank last week was offering CDs yielding 9.59% for this quarter. S and Ls can and do sell wild cards, but their ability to do so is severely limited by a rule specifying that the total amount of wild cards an institution offers cannot equal more than 5% of its reserves. Commercial banks, which have much larger reserves than S and Ls, are offering...
Closing the Window. Meanwhile, some S and Ls, strapped for funds, have stopped making new mortgage loans altogether. They include Sun Federal in Portland, Maine's largest, and First Federal in Chicago, the biggest in Illinois. Others are keeping their mortgage windows open a mere crack by granting loans only to long-time depositors, and in some cases actually demanding that a home buyer maintain a savings-account balance equal to the size of the mortgage loan he seeks. The market is tightest in states like New York and Illinois, where usury laws keep mortgage-interest rates below...