It remains to suggest how these various elements of depreciation may be guarded against without demanding excessive margins on mortgage loans. Errors of judgment in appraising may be largely eliminated by trusting only to experts of approved ability and by concentrating responsibility upon them, testing and examining their work by its results. In the ordinary course of a mortgage business, if loans are not properly margined, the first sign of this will be an abnormal amount of delinquent interest, followed by an increasing number of foreclosures, before any actual loss occurs. These act as a warning that the business is not being properly conducted, as in times of ordinary prosperity there should be practically no foreclosures. The effects of a general depression may be partially avoided by anticipating the depression as far ahead as possible, and either making loans for less than the usual term of years, or providing for a partial amortization through annual or semi-annual obligatory payments in reduction of the principal, so that only a small proportion of loans will be outstanding for their full amount when the panic comes. Special care should also be exercised not to rely on the selling prices of property during the period of inflation of values, which commonly precedes a depression. The effect of a general depression may also be minimized by skill in choosing the classes of property on which to loan, retail business property and single residences furnishing the most stable security during a depression, and in large cities multiple dwellings of the tenement type, followed by wholesale property, large office buildings, hotels, apartments, clubs, theatres and other special utilities in somewhat the order named.

Loss of value through changes in the structure of a city may be largely avoided by a study of the principles governing the growth of cities and by care in choosing the locations in which to loan. Business property maintains its value best when on a main axis of traffic, and residence property, when it is located in a large and homogeneous district of good social character, with good transportation facilities and an absence of neighboring nuisances. Depreciation through age, etc., should not be serious, if the cheaper classes of structures and those which, from the nature of their occupancy will have the hardest usage, are eliminated. Accumulations of delinquent interest, etc., can be reduced by bringing foreclosure suits promptly, and by avoiding those jurisdictions where the mortgage laws are exceptionally unfavorable.

Finally, the difficulty of realizing fully on property at a forced or quick sale, should always be borne in mind and allowed for, and property of a class that suffers unduly from this cause, such as suburban property or speculative holdings, should be avoided.