3 1 property held by, a State or municipality or instrumentali2 ties thereof; and (3) the Association may not purchase any 3 mortgage, except a mortgage insured under section 220 or 4 title VIII, or insured under section 213 and covering prop5 erty located in an urban renewal area, or a mortgage cover6 ing property located in Alaska, Guam, or Hawaii, if the 7 original principal obligation thereof exceeds or exceeded 8 $17,500 for each family residence or dwelling unit covered 9 by the mortgage. 10 "For the purposes of this title, the term 'mortgages' 11 shall be inclusive of any mortgages or other loans insured 12 under any of the provisions of the National Housing Act." 13 SEC. 2. Section 304 (d) of the Federal National Mort 14 gage Association Charter Act is hereby repealed. B-149270. COMPTROLLER GENERAL OF THE UNITED STATES, Hon. A. WILLIS ROBERTSON, Chairman, Committee on Banking and Currency, U.S. Senate. DEAR MR. CHAIRMAN: Reference is made to your letter of September 12, 1963, requesting our comments on S. 2130 which would authorize the Federal National Mortgage Association to deal in conventional mortgages and provide otherwise for its further development as a secondary market facility. Enactment of the bill would not directly affect the functions of the General Accounting Office and since the purpose thereof appears to be a policy matter for the Congress to consider, we offer no comments concerning the merits of the bill. However, the Congress may wish to give consideration to the following aspects of the bill. The bill would revise section 302 (b) of the Federal National Mortgage Association Charter Act to authorize the association, under its secondary market operations to purchase, lend on the security of, and otherwise deal in certain conventional (uninsured) mortgages which do not exceed 80 percent of the appraised value of the security, and in similar mortgages when the loan-to-value ratio exceeds 80 percent if the excess is covered by suitable mortgage insurance. The bill, however, is silent as to who shall make the required appraisal, whether it be the association's appraisal of the property value, or a value certified to by the seller. Congress may wish to consider including provisions in the bill which will require that such appraisals be made under the control and direction of the association. Sincerely yours, JOSEPH CAMPBELL, Comptroller General of the United States. Hon. A. WILLIS ROBERTSON, FEDERAL DEPOSIT INSURANCE CORPORATION, Chairman, Committee on Banking and Currency, DEAR MR. CHAIRMAN: You have requested the views of this Corporation on S. 2130, a bill to empower the Federal National Mortgage Association to deal in conventional mortgages and to provide otherwise for its further development as a secondary market facility. The creation of a stronger secondary market for conventional home mortgage loans would be desirable from the standpoint of increasing the liquidity of mortgage investment as well as increasing the funds available in the mortgage market. However, in view of the limited time which has been available to study S. 2130, this Corporation is not prepared, at this time, to offer any final comment thereon. It is suggested that the legislation proposed by S. 2130 be considered together with S. 810 and S. 811, which bills have been previously introduced on the subject of secondary market facilities, and that further comprehensive study be made of the necessity for supplemental Federal legislation in the field of home mortgage financing. We have been advised by the Bureau of the Budget that it has no objection from the standpoint of the administration's program to the submission of this letter. Sincerely yours, JESSE P. WOLCOTT, Director. Hon. A. WILLIS ROBERTSON, FEDERAL HOME LOAN BANK Board, Chairman, Committee on Banking and Currency, DEAR MR. CHAIRMAN: The Federal Home Loan Bank Board has received your request for a report of S. 2130 of the present Congress, which would amend the provisions of the National Housing Act relating to the Federal National Mortgage Association. Under the bill, the authority of FNMA to deal with FHA insured and VA insured or guaranteed mortgages would be broadened so that it would also have authority to purchase, lend on the security of, service, sell, or otherwise deal in any mortgages insured under a contract of insurance and by an insurer gen 30-944 0-64-18 erally acceptable to private institutional mortgage investors, as determined by FNMA, or which, though neither insured nor guaranteed, are of a quality generally acceptable to such investors and otherwise meet generally the standards of the Association under section 304 of that act, the so-called secondary market section. In addition, the bill would repeal subsection (d) of section 304, which provides that the Association may not purchase participations in its operations under that section. The purpose of the bill, as indicated by its title, is to empower the Federal National Mortgage Association "to deal in conventional mortgages and to provide otherwise for its further development as a secondary market facility." The implication is that the amendments which would be made would be designed to provide in some measure a secondary market facility for the conventional mortgages (including those insured otherwise than by FHA or VA) which would be covered by the bill. As has been noted in its report to you on S. 810 of the present Congress, the Federal Home Loan Bank Board has for a long time been interested in the question of the need for a secondary market for so-called conventional mortgages and the problem of what type of vehicle could successfully be established or used for that purpose. The Board is of the opinion that at the present time no adequate evidence of the need for this sort of mechanism for a secondary market in conventional mortgages has been presented. As is set forth in its reports on S. 810 and S. 811, the Board feels that, as a minimum, there should be a thorough and careful feasibility study before a determination is made to proceed with legislation intended to provide for such a market. For these reasons the Board does not favor the enactment of legislation such as S. 2130 at the present time. Informal advice has been received from the Bureau of the Budget that there is no objection to the transmittal of this report from the standpoint of the administration's program. Sincerely yours, JOSEPH P. MCMURRAY, Chairman. Re S. 2130, 88th Congress. Hon. A. WILLIS ROBERTSON, SECURITIES AND EXCHANGE COMMISSION, Washington, D.C., September 20, 1963. Chairman, Committee on Banking and Currency, U.S. Senate, Washington, D.C. DEAR MR. CHAIRMAN: This is in response to your letter of September 12, 1963, requesting a report on S. 2130. We have examined the bill, and since it does not seem to have any effect on matters within the Commission's jurisdiction, we have no comment on the bill. Sincerely yours, Hon. A. WILLIS ROBERTSON, WILLIAM L. CARY, Chairman. TREASURY DEPARTMENT, Washington, D.C., September 19, 1963. Chairman, Committee on Banking and Currency, Washington, D.C. DEAR MR. CHAIRMAN: Reference is made to your request for the views of this Department on S. 2130, to empower the Federal National Mortgage Association to deal in conventional mortgages and to provide otherwise for its further development as a secondary market facility. In a report submitted to your committee on September 16, 1963, on S. 810 and S. 811, the Department stated in effect that further study was necessary in order to determine the most effective means of making progress in improving the market for home mortgage loans. The Department raised as one of the problems that should be included in such a study the question of whether it would be more appropriate to provide a secondary market for conventional mortgages by chartering new organizations or by relying on existing Federal agencies. Consideration of S. 2130 would provide a suitable occasion to study the latter aspect of the matter along with the related features of the other proposed legislation. The Department has been advised by the Bureau of the Budget that there is no objection from the standpoint of the administration's program to the submission of this report to your committee. Sincerely yours, G. D'ANDELOT BELIN, General Counsel. 88TH CONGRESS 18T SESSION S. 2226 IN THE SENATE OF THE UNITED STATES OCTOBER 9 (legislative day, OCTOBER 3), 1963 Mr. JAVITS introduced the following bill; which was read twice and referred to the Committee on Banking and Currency A BILL To authorize the Federal Housing Commissioner to make expenditures to correct substantial defects in one- to fourfamily dwellings covered by mortgages insured under the National Housing Act, or to compensate homeowners for such defects. 1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 3 That title V of the National Housing Act is amended by 4 adding at the end thereof the following new section: 5 "EXPENDITURES TO CORRECT OR COMPENSATE FOR SUB 6 7 STANTIAL DEFECTS IN CERTAIN MORTGAGED PROPERTIES "SEC. 517. (a) The Commissioner is authorized, with 8 respect to any property improved by a one- to four-family 2 1 dwelling heretofore or hereafter covered by a mortgage in2 sured under the provisions of this Act which he finds to have 8 substantial defects, to make expenditures for (1) correcting 4 such defects; (2) paying the claims of the owner of such 5 property arising from such defects; or (3) acquiring title 6 to such property. 7 "(b) The Commissioner shall by regulations prescribe 8 the terms and conditions under which expenditures and pay9 ments may be made under the provisions of this section, and 10 his decisions regarding such expenditures or payments, and 11 the conditions under which the same are approved or dis12 approved, shall be final and conclusive and shall not be sub13 ject to judicial review." |