Market for Mortgages

Mortgages have always been hard to turn into cash. A mortgage-holder who wants to sell has to shop around among banks and real-estate brokers, often gets a poor price because of the suspicion that he badly needs cash. Harry Fromkes, president since 1949 of Manhattan's big Lawyers Mortgage & Title Co., thought there ought to be a better way. In 1952 he opened a mortgage exchange where buyers and sellers could be brought together for private negotiations, but it soon died out. Last week he tried something new: a mortgage auction.

In a rose-draped hall in Manhattan's Roosevelt Hotel, 69 mortgages went under the auctioneer's gavel at the newly formed New York Mortgagee Exchange. Fromkes had expected sales of second mortgages to predominate, but almost two-thirds of the sales were first mortgages. More than 1,400 buyers and spectators jammed the room, and, all told, mortgages with a face value of $964,200 were sold for $821,045. Banks that felt overloaded with mortgages and private holders who wanted to thaw out assets were glad to sell at discounts (but did better than by private sale). The auction went so well that Lawyers Mortgage plans a second sale early next month, may hold as many as two sales a month thereafter. As commission, the company takes 1% to 2% of the selling price, depending on the size of mortgage.

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