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family living, and the production of such accommodations within the means of families of moderate income. To assist in meeting these objectives, the amendments would provide special mortgage insurance benefits for rental units of lower cost and of adequate size for families with children.

Mr. Walter Greene, the Acting Federal Housing Commissioner, is here and is prepared to explain these amendments in more detail and to discuss with you the FHA operations under them.

I strongly recommend these proposed amendments, and I have been authorized by the Director of the Bureau of the Budget to advise that their enactment would be in accord with the program of the President.

Before concluding my testimony, I would like to bring to your attention one further legislative proposal relating generally to the housing programs of the Federal Government under existing and additional legislation. In connection with proposals affecting particular housing programs, questions have been raised as to whether statutory maximum amounts for the housing loans authorized to be made or guaranteed by the Federal Government may not prove to be too high in the event of changed economic conditions. It has been suggested that the legislation affecting these programs require lower maximum amounts under prescribed conditions. The objectives of these suggestions are desirable.

I believe that the housing credit aids provided by the Federal Government, which affect such a large portion of our national economy, should be closely geared to changes in economic conditions and to the Government's general economic and fiscal policies. It seems clear that legislation designed to accomplish this purpose through the curtailment of housing credit would be very ineffective, however, if it is applicable only to a portion of the housing programs of the Government.

As administrative decisions under such legislation would necessarily require individual judgment and the weighing of various economic factors, it is essential, for the purposes of uniformity, that one official be made responsible for all such decisions. Since not all of the Government's housing programs are administered by one agency, it would appear most logical to place any such control of housing credit in the President. This is also desirable because the exercise of such control involves judgment and decisions on over-all fiscal and economic policies beyond the scope of the functions of the agencies administering housing programs. Of course, the President would have the benefit of the advice and assistance of various agencies of the Government having an interest in such decisions.

I therefore recommend for your consideration legislation which would authorize the President to reduce at any time the maximum authorized amounts or maximum maturities of any type of loans for housing which may be made, insured, or guaranteed by any agency of the United States. This action should be authorized upon the President's determination that it is necessary or desirable in order to coordinate the housing functions and activities of the Federal Government with its general economic and fiscal policies, taking into consideration the effect it would have on conditions in the building industry and upon the national economy.

I have a draft of a proposed amendment to S. 2246, for consideration by your subcommittee, which would give this proposed authority to the President. I have been authorized by the Director of the Bureau of the Budget to advise that the enactment of this recommended amendment would be in accord with the program of the President.

(The amendment referred to follows:)

AMENDMENT TO S. 2246

1. Insert after line 23 on page 100 the following new section:

"SEC. 604. The President may, at any time or times, reduce, for such period as he shall specify, the maximum authorized principal amounts, ratios of loan to value or cost, or maximum maturities of any type or types of loans for housing which may be made, insured, or guaranteed by any department, independent establishment or agency in the executive branch, or by any wholly owned Government corporation or by any mixed-ownership Government corporation as defined in the Government Corporation Control Act, upon a determination, after taking into consideration the effect thereof upon conditions in the building industry and upon the national economy, that such action is necessary or desirable to coordinate the housing functions and activities of the Federal Government with its general economic and fiscal policies.

2. Change "604” in line 24 on page 100 to "605”, and “605” in line 3 on page 101 to "606.”

I have also been authorized by the Director of the Bureau of the Budget to advise that there is no objection to the presentation of this statement for consideration by your subcommittee.

Mr. Chairman, before I request that you permit Mr. Greene to present his statement, may I take this occasion to thank the chairman and the committee for the splendid cooperation that the Agency has always had from its staff in the attempt to work out these various problems, and for the treatment that I, as a rather frequent witness before this committee, have always had.

Senator SPARKMAN. Thank you, Mr. Foley.

You will stay here until Mr. Greene finishes with his statement; will you not?

Mr. FOLEY. Yes.
(The tables referred to by Mr. Foley follow:)

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Distribution by total money income level for families of 2 or more persons, 1948

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[graphic]

Nonfarm

Families

Total

White

Nonwhite

Number
Percent
Under $500.
$500 to $999.
$1,000 to $1,499.
$1,500 to $1,999.
$2,000 to $2,499.
$1,500 to $2,999-
$3,000 to $3,499
$3,500 to $3,999
$4,000 to $4,499.
$4,500 to $4,999
$5,000 to $5,999
$6,000 to $9,999
$10,000 and over.
Median income.
Lowest third (below).
Middle Third

31,817,000

100.0

3.1
4. 2
5.8
6.7
10.3
10.4
12. 2
9.9
8.5
6.0
9.1
10.9

3.0
$3, 388
$2,654
$2,654-
$4, 247
$4, 247

29, 266, 000

100.0

2.7
3.6
5.0
6.1
9.8
10.4
12.6
10.3
8.9
6.3
9.5
11.6

3.2
$3, 493
$2,793
$2,793-
$4, 348
$4, 348

2, 551, 000

100.0

8.0
11.3
15.3
12.6
15.7
10.0
8.4
5.4
4, 2
2.1
3.9
2.6

0.6
$2, 088
$1,458
$1,458-
$2,690
$2,690

Upper third (above).

Source: Bureau of Census, Department of Commerce, Jan. 9, 1950.

Comparison of estimated gross monthly rental on an $8,000, 442-room unit financed

under proposals for nonprofit and cooperative housing for families of moderate income and with a 90-percent mortgage insured by FHA under sec. 608 for a privately owned for profit) project

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1 Vacancy reserve of 3 percent used in view of cooperative feature and low rental rate. 2 Vacancy allowance of 7 percent.

3 Operating expenses including all utilities and a reserve for replacement-of $24.40 per unit per month assuming same experience as on PHA low-rent housing assisted under USHA Act.

4 These figures for estimated operating expenses represent actual operating experience on large-scale rental housing projects insured by the FHA, adjusted to reflect what in the opinion of FHA represents a national average operating cost on a well-run project—including utilities used by the tenants.

5 Real-estate taxes at 1.6 percent annually on total cost. * Loan at $8,000 for 50 years on a level annuity basis.

? Includes principal and interest payments on a $7,200 mortgage at 4 percent for 32 years, 7 months, on a level annuity basis.

8 Mortgage insurance premium of 42 of 1 percent of the outstanding balance. • Contingency reserve of 3 percent of taxes, operating expenses, and debt service. 10 Funds available for income tax, reserves, and dividends. Source: Housing and Home Finance Agency-Office of the Administrator, Economics and Statistics Branch.

Estimated monthly gross and shelter rent and debt service for a nonprofit organization

on a $7,000, $8,000, and $9,000 472-room dwelling unit with 100 percent financing, assuming project operating expenses as on PHA projects

3 percent for 50 years

342 percent for 50 years

344 percent for 50 years

Monthly Monthly Monthly Monthly Monthly Monthly Monthly Monthly Monthly

gross shelter debt gross shelter debt
rent 1

gross shelter
rent 2
service 3

debt
rent 1
rent 2
service 3
rent 1
rent 2

service 3

Unit of:

$7,000 $8,000. $9,000

$59. 81
64. 67
69. 51

$51.32
56. 18
61.01

$22. 60
25. 83
29.06

$62. 14
67. 32
72. 51

$53. 65
58. 82
64. 01

$24. 79
28. 33

$60. 97
65.98
70.99

$52. 47
57. 48
62. 49

$23. 69
27.07
30. 45

31. 88

1 Estimated on the basis of a special review of operating expenses in higher cost urban areas: Operating expenses--including all utilities and a reserve for replacement--of $24.40 per unit per month assuming same experience as on PHA low-rent public housing assisted under USHA Act; real estate taxes at 1.6 percent annually on total cost; contingency reserve of 3 percent of expenses; vacancy reserve, 3 percent; debt service as indicated.

Excluding all utilities—gas, electricity, water, fuel, and pay roll for heating. Estimates assume same experience on operating expenses as on PHA low-rent public housing assisted under USHA Act-operating expenses $24.40 per unit per month less $8 for afore-mentioned utilities.

3 Includes only interest and principal on level annuity basis. Source: Housing and Home Finance Agency, Office of the Administrator, Economics and Statistics Branch.

Senator SPARKMAN. Come around, Mr. Greene, please.
Proceed, please. We are happy to have you with us today.

STATEMENT OF WALTER L. GREENE, FIRST ASSISTANT COMMIS

SIONER, FEDERAL HOUSING ADMINISTRATION Mr. GREENE. Mr. Chairman and members of the committee, I am Walter L. Greene, First Assistant Commissioner of the Federal Housing Administration. I am grateful for the opportunity to appear before this committee on behalf of Commissioner Richards, who is absent from the city. I assume the committee would like me to limit my remarks to the amendments to S. 2246 which affect the operation of the FHA. These remarks will be made in the order in which amendments to the National Housing Act are presented in the bill.

Section 101 of S. 2246 proposes amending the National Housing Act by removing the expiration date for the insurance of loans under title İ. This title, which authorizes the Commissioner to insure qualified lending institutions against loss on small loans made to finance the alteration, repair, improvement, or conversion of existing structures, expires March 1, 1950. Since the approval of the original National Housing Act of 1934 the authority to insure these repair loans has been extended or renewed 13 times. On each occasion there was considerable inconvenience and delay caused home owners as well as disruption in the operating procedure of insured lending institutions, local dealers, wholesalers, and suppliers.

Our experience of last summer, when title I expired on June 30, was renewed for 60 days, renewed a second time on September 1 for another 60 days, then again nearly expired on November 1, but was extended at the last minute to March 1 of this year, brought a plea from members of industry as well as the lending institutions in the interest of the consumer to place future operations on a permanent basis.

In establishing title I on a permanent basis, it is desirable that a provision be made whereby the insured lending institutions are not credited with excessive protection against loss. This is accomplished in the proposed amendment by authorizing the Commissioner to cut back the accumulated insurance protection by 20 percent each 6 months.

S. 2246, as presently written, provides for the establishment of a $5,000,000 insurance fund for the new low-cost single-family mortgageinsurance program under section 8 of title I. Further study has led us to the conclusion that a fund of $1,000,000 would be ample at this time for this purpose, and we recommend the proposed change.

The amendments to S. 2246 include an increase in the title II revolving-fund authorization from $6,750,000,000 to 9.5 billion dollars. One and one-quarter billion dollars of this increase would be made available directly to FHA upon passage of this bill, and the remainder of 1.5 billion dollars would be subject to the approval of the President. This proposed increase is expected to be ample for anticipated insurance operations under title II until the end of the fiscal year 1951. The authorization of $6,750,000,000 now available will be exhausted by late February-about 6 weeks hence.

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