section 221(d) (3), because the special low interest rate makes possible lower rents than otherwise obtainable. To stimulate interest in sponsoring or investing in such projects, an amendment is suggested which would make it possible for a limited or FHA-regulated mortgagor other than a corporation to execute a section 221(d) (4) mortgage. The present statute specifically limits such private mortgagors to a limited dividend "corporation", which effectively precludes the incentive and application of depreciation benefits otherwise available under the tax laws. In other rental programs FHA has developed proper safeguards and permits limited partnerships, etc. This amendment would permit individuals, partnerships, trusts, and other types of legal entities to be mortgagors under section 221 (d) (3). SUGGESTED AMENDMENT S. 2468 is amended at page 83, line 23, by striking out "Sec. 805" and inserting in lieu thereof "Sec. 805(a)", and inserting after the last line of "Sec. 805 (a)" the following: "(b). Section 221(d)(3) of the National Housing Act is amended by striking out all of the first paragraph after the words 'or by the Commissioner' and by inserting a comma and adding the following language in lieu thereof 'or any type mortgagor approved by the Commissioner and regulated and supervised under a regulatory agreement or otherwise, as to rents, charges, and methods of operation, in such form and in such manner as in the opinion of the Commissioner will effectuate the purposes of this section-"." AMENDMENT J Public and Cooperative Mortgagors under Section 221(d) (3) EXPLANATION S. 2468 amends the FHA low- and moderate-income housing section 221 program in section 805 of the bill. The section 221 program is "designed to assist private industry" in providing such housing. Its (d)(3) rental housing is made available at a below-market interest rate in order to provide especially low rentals. The suggested amendment would correct two misdirections of the program which arise from the definition of acceptable mortgagors given in the act. First, a public body or agency, not exclusively a public housing authority, may be a mortgagor. Secondly, a sales-type cooperative may be a mortgagor. Certainly a public body or agency is not "private industry," for which the section was designed. And cooperatives should be ineligible because they are given an unfair competitive advantage over a nonprofit or limited-dividend corporation, and as yet there is no comparable below-market rate program for sales housing. Section 221(d)(3) was designed as a rental housing program and should not be a vehicle for sales-type cooperative projects. SUGGESTED AMENDMENT S. 2468 is amended at page 83 by striking "Sec. 805" and inserting in lieu thereof "Sec. 805 (a)" and inserting after the last line of "Sec. 805(a)" the following: "(b) Section 221(d)(3) of the National Housing Act is amended by striking out a public body or agency (and which certifies that it is not receiving financial assistance from the United States exclusively, pursuant to the United States Housing Act of 1937), a cooperative (including an investor-sponsor who meets such requirements as the Commissioner may impose to insure that the consumer's interest is protected) or'." AMENDMENT K Mortgage Insurance for Servicemen EXPLANATION S. 2468 amends the FHA section 222 mortgage insurance program for active duty servicemen to improve its operation. This suggested amendment adds two further amendments (1) to increase its mortgage limit to equal the new 30-944-6447 amount proposed for section 203 loans, and (2) to remove a 2-year service requirement. Also eliminated is an unnecessary and limiting reference to section 203 of the act. The mortgage amount limit was intended and should continue to be the same as under section 203. Through a legislative oversight, the act in 1961 failed to make this change. The 2-year service limit effectively prevents active duty servicemen from using FHA for 2 years because, even though they may be fully qualified creditwise (as are many doctors, lawyers, and professional or businessmen who perform military service), the FHA construes section 222 as being their exclusive means of obtaining an FHA-insured mortgage. The suggested amendment retains the exception prohibiting its use during service for training purposes only. SUGGESTED AMENDMENT S. 2468 is amended on page 84 by striking lines 5 through 14 and inserting in lieu thereof the following new section: "SEC. 806. (a) Section 222(a) of the National Housing Act is amended by "(1) striking out the words 'section 203 of' from the first sentence, and "(2) striking out the words 'and has served on active duty for more than two years'. "(b) Section 222 (b) of the National Housing Act is amended by "(1) striking out in paragraph (1) '203 (b) or 203 (i)' and inserting in lieu thereof '203 (b), 203 (i), or 221 (d) (2),'; and “(2) striking out paragraph (2) and inserting in lieu thereof the following: (2) involve a principal obligation (including such initial service charges, appraisal, inspection, and other fees as the Commissioner shall approve) in an amount not to exceed $30,000, except that in the case of a mortgage meeting the requirements of section 203 (i) or section 221(d) (2) such principal obligation shall not exceed the maximum limits prescribed for these sections"." AMENDMENT L Conversion to Low Income Rental Housing EXPLANATION Under present law it is possible to refinance an existing FHA-insured project located in an urban renewal area under section 221 (d) (3), thus making it available on a sound economic basis for rental to low-income families. Other projects of good housing, insured by FHA but located outside of an urban renewal area, cannot be converted to section 221(d)(3) housing because of this "urban renewal area" requirement. Yet in many cases such housing is exceptionally well built and located for the housing of low- and moderate-income families or those displaced from urban renewal areas, as intended by the purpose of section 221. The suggested amendment which follows would make possible such conversion of financing by eliminating the restrictive location requirement. SUGGESTED AMENDMENT S. 2468 is amended at page 84 after line 14 by inserting the following amendment and renumbering the remaining sections of title VIII of the bill: "REFINANCING OF PROJECTS "SEC. 807. Section 223 (b) of the National Housing Act is amended by striking out the words 'located in an urban renewal area.'" AMENDMENT M FHA Insurance Program Extension EXPLANATION By section 604 (c) of the Housing Act of 1961, all operations of the FHA must terminate on or before October 1, 1965. As a practical matter, past experience with periodic expiration dates under the veterans home loan guarantee program demonstrates that private lenders must schedule a slowdown or issue stop orders on the use of such a Government program where continued life depends upon congressional action, or the insurance of a mortgage may depend upon the speed of processing. The suggested amendment below, therefore, extends the life of FHA by an additional 4 years, and makes possible a continued issuance of commitments through a constant availability of insurance authority gained from cancelled commitments or paid-off loans, under language approved by the House in passing the 1961 act. SUGGESTED AMENDMENT S. 2468 is amended by adding a new section 810 after line 9 on page 91, as follows: "GENERAL MORTGAGE INSURANCE AUTHORIZATION "SEC. 810. (a) Section 2(a) of the National Housing Act is amended by striking out 'October 1965' in the first sentence and inserting in lieu thereof 'October 1969.' "(b) Section 217 of the National Housing Act is amended by "(1) striking out the words 'October 1965, except pursuant to a commitment to insure issued before that date,' and "(2) inserting in lieu thereof the following language: 'October 1969, when such loan or mortgage when added to all other loans and mortgages insured exceeds the sum of (1) the outstanding principal balances as of that date of all insured mortgages and loans (as estimated by the Commissioner based on scheduled amortization payments without taking into consideration prepayments or delinquencies), and (2) the principal amount of all outstanding commitments to insure on that date.'' AMENDMENT N Elimination of Section 810 Limit on Off-Base Military Housing EXPLANATION The off-base military housing program is a means of supplying sales and rental housing units for servicemen and essential civilians in communities near military or defense installations. No other current FHA program is limited by an express number of units to be insured. The statutory limit of 5,000 units has almost been reached by present reservations or allocations under section 810. It serves as a constant limiting factor and should be eliminated. The suggested amendment below does this. SUGGESTED AMENDMENT S. 2468 is amended on page 92 by adding a new section after line 17 as follows: "OFF-BASE MILITARY HOUSING "SEC. 906. Section 810 (i) of the National Housing Act is hereby repealed." (Mr. Willits later submitted the following letter and resolution :) NATIONAL ASSOCIATION OF HOME BUILDERS, Re supplemental statement on provisions of S. 2468. Hon. JOHN SPARKMAN, Chairman, Subcommittee on Housing, Committee on Banking and Currency, U.S. Senate, Washington, D.C. DEAR MR. CHAIRMAN: This letter supplements our testimony given to your subcommittee on February 25, 1964. Since February we have had the benefit of a thorough and complete examination of all of the technical and financing provisions in S. 2468 and other bills now before your subcommittee. This was accomplished through appointment of three special study groups composed of prominent members of this association to examine closely (a) the technical and financing amendments, (b) the urban renewal and public housing amendments, and (c) the proposals for FHAinsured land acquisition and development loans. NAHB reaffirms its support for the FHA-FNMA financing and technical amendments proposed under S. 2468 and previously endorsed by this association. We also again emphasize our support for the series of amendments proposed as part of our testimony as additional technical amendments to S. 2468. May we note that NAHB's amendment C, requesting a change in section 101 (c) of the Housing Act of 1949, is no longer necessary as a result of administrative action taken by HHFA on April 22, 1964. The HHFA ruling has changed the "workable program" requirement so that it will apply and must be in effect only at the outset of section 221(d)(3) projects when FHA officially receives an application. Formerly HHFA had ruled that a workable program certificate must be in effect at the time of FHA commitment. This created financial hardships and delays for project developers. In particular, we stress our support for an amendment this year to extend the authorization and operation of FHA beyond October 1965 and to provide a "rollover" provision to permit continued operation of the FHA insurance program beyond any termination date. A special resolution was approved unanimously by our board of directors on this point. A copy is enclosed. Also we wish to emphasize again our strong opposition to the proposal under title V of S. 2468 to establish a competing insured home loan program within the Department of Agriculture. Consideration should be given to merging the principles and operation of an insured rural housing program with those already established within the framework of the Federal Housing Administration. Both of the above principal items were approved unanimously by NAHB's Committee on Mortgage Finance and its board of directors at meetings on April 22 and April 24, 1964. You will be interested to learn also that our board of directors debated and reaffirmed again our opposition to the proposed program of FHA insurance on loans for the acquisition and development of land (sec. 201-202 of the bill). The decision was made by a narrow margin as has been the case in the past, as we mentioned in our statement last February. Should your subcommittee approve the proposed FHA program for subdivision loans, however, there is a series of amendments we believe necessary and highly desirable to make such a program practical and workable within the industry. We will be happy to supply these amendments at the appropriate time if requested by your staff. In addition to the above matters relating to financing and technical amendments, the thinking of the NAHB's study group on urban renewal and public housing may be helpful to your subcommittee. This study report was reviewed carefully by NAHB's committee on multifamily housing and urban renewal on April 22. The group recommended as follows: (a) NAHB should support section 301 of S. 2468 authorizing two or more projects to be carried out under one urban renewal contract. (Under pressure of time we opposed this provision in our testimony last February.) (b) NAHB should support section 302 of S. 2468 which would permit general neighborhood renewal plans to include areas beyond defined urban renewal projects and would shift time limits to the completion of work rather than its completion. (Under pressure of time we opposed this provision in our testimony last February.) (c) NAHB should support section 303 of S. 2468 which would eliminate a confusing distinction between depressed areas in which urban renewal work is contemplated. (Under pressure of time we opposed this provision in our testimony last February.) In other respects NAHB's testimony and support, or opposition, remain as recommended last February. On the subject of more urban renewal capital grant funds, however, our study group recommended strongly that we be recorded unequivocally in support of the $1.4 billion of requested new authorization. Sincerely, Enclosure. PERRY E. WILLITS, First Vice President, Chairman, NAHB Legislative Committee. RESOLUTION-EXTENSION OF FHA AUTHORIZATION AND POWERS Whereas the continued and uninterrupted operation of the Federal Housing Administration and its mortgage insurance programs is of utmost importance to the Nation and the homebuilding industry; and Whereas the mortgage market and the homebuilding industry would be placed in a position of insecurity and uncertainty if FHA authorization is not extended in ample time prior to its expiration date; and Whereas the authorization for FHA mortgage insurance operations expires on October 1, 1965: Now, therefore, be it Resolved, That we urge Congress this legislative year to extend from October 1, 1965, to October 1, 1969, the date for termination of authorization for FHA mortgage insurance operations and to include a provision, permitting FHA to continue to insure, beyond any state termination date, provided the total dollar amount of insurance under any section of the act shall not exceed the total dollar amount of mortgages insured and commitments issued under the respective section as of the termination date. Approved by: NATIONAL ASSOCIATION OF HOME BUILDERS, WASHINGTON, D.C., April 24, 1964. Senator WILLIAMS. We now have Mr. John H. Mulroy, county executive, Onondaga County, N.Y., who is speaking for the National Association of Counties. Senator Keating was here with you earlier, was he not? STATEMENT OF JOHN H. MULROY, COUNTY EXECUTIVE, ONONDAGA COUNTY, N.Y., ON BEHALF OF THE NATIONAL ASSOCIATION OF COUNTIES; ACCOMPANIED BY ROBERT BECKER, COMMISSIONER OF PLANNING OF ONONDAGA COUNTY, AND C. D. WARD, GENERAL COUNSEL Mr. MULROY. Yes, sir. He is in a hearing across the hall. He had to return there. Senator WILLIAMS. We are pleased to have you here with your associates. Would you like to introduce them and then proceed as you desire, Mr. Mulroy? Mr. MULROY. Mr. Chairman and members of the committee, my name is John H. Mulroy, and I am the elected county executive of Onondaga County. I am accompanied by Mr. Robert Becker, Commissioner of Planning of Onondaga County, on my right, and Mr. C. D. Ward, the general counsel, on my left. I am testifying here today on behalf of the National Association of Counties, an organization representing county government throughout the Nation. Federal housing legislation has contributed immeasurably in assisting counties to carry out their expanding governmental responsibilities. Consequently, we appreciate the opportunity of expressing our opinions on this pending legislation, and would take advantage of this situation to reiterate our enthusiasm and support of your past actions in this field. Due to the time factor, we shall limit our comments to several specific items, however, we would request the privilege of filing a supplemental statement for the record. Senator WILLIAMS. We will be glad to receive that. (The supplemental statement was not received prior to the printing of the hearing.) TITLE III-URBAN RENEWAL Mr. MULROY (reading): Increasingly, counties are being called upon to take the lead in the elimination of slums in blighted areas and relocate families displaced by the construction |