DESIGN STANDARDS

The conference urges that cost limits and the provisions in all programs be authorized and administered so as to permit federally aided or FHA-insured housing to meet the best design standards in any locality and to achieve economy in cost and operation over the life of the project.

METROPOLITAN COORDINATION OF FEDERAL PROGRAMS

The HHFA should establish a system of metropolitan field offices for the following purposes: To coordinate HHFA programs in the metropolitan area; to provide a means for coordinating information about other Federal programs; and convening their representatives for coordinating purposes; to convene coordinating conferences of local governments where no metropolitan agencies exist, so as to assist them in guiding programs toward common ends; and where official metropolitan planning agencies exist and have established plans and policies, to assure that Federal plans serve agreed-upon local planning objectives and policies.

RESEARCH AND TRAINING

For more than a decade, the National Housing Conference has urged the establishment of a Federal-aid program for the training of competent professional personnel in the broad field of community development and for the launching of effective research in the complex problems of this massive field to place private enterprise and local communities in a better position to deal with community development in the years ahead. Consequently we support the administration's proposal for matching grants to States for these purposes. While we consider this proposal as an important opening step toward solutions urgently needed by the Nation, we recommend that the funds authorized be increased to $50 million per year for 5 years. We further urge that at least half of these funds be channeled to the Housing and Home Finance Agency for direct staff or contract research in order to provide for nationwide and industrywide research and training.

EQUAL OPPORTUNITY FOR HOUSING

The National Housing Conference reaffirms its resolution adopted in 1962. It is committed to equal opportunity for all American families to secure good housing in good neighborhoods. This opportunity is denied to millions of American families throughout every section of the land because of their race, color, creed, or national origin, or because of the myths which exist as to their desire, or ability to pay for and maintain good homes. To overcome this denial of opportunity and to dissipate these myths are great challenges facing the Nation.

We recognize that sufficient new private and public housing to assure an adequate supply for all is essential to a correction of these conditions.

In the course of production of sufficient new housing to meet the needs of all people, full opportunity must be provided uniformly to purchase, finance, rent, build, and occupy good homes on an equal basis. Wherever Federal, State, or local government aids (including loans, grants, insurance, guarantees, tax abatements or other public powers) are utilized, the resulting housing should be made available solely on the basis of need and ability to pay.

The private housing industry has a major responsibility in assuring an opportunity to all persons to bargain for shelter in a free market. Both in publicly aided private housing and in the substantial quantity of housing produced without public aid, a decisive role is played by homebuilders, lending institutions, real estate interests, community officials, and local public opinion. All these elements must work toward the provision of adequate and equal housing opportunities for all people.

Senator CLARK. Senator Ernest Gruening of Alaska was here earlier this morning and had to leave for another important committee. I would ask that his testimony be placed in the record at this point, and I would ask to have it printed in the same type as though he had delivered it personally, because he was willing to stay here to do that. I assured him I would get it printed in the record so it could be read.

STATEMENT OF ERNEST GRUENING, U.S. SENATOR FROM THE STATE OF ALASKA

Senator GRUENING. Mr. Chairman, I am pleased to have this opportunity to appear before the Senate Banking and Currency Subcommittee on Housing to endorse S. 2468, the Housing and Community Development Act of 1964, introduced by the distinguished chairman of this subcommittee.

President Johnson has proposed housing and community development which will cost this nation an estimated $1,650 million during the next 4 years. I support this program.

The President's housing message, much of which has been incorporated in S. 2468, includes the recommendation that authority be provided for the Federal Housing Administration and the Veterans' Administration to finance the correction of substantial home deficien

cies.

In plain language, it puts meaning into the words "FHA insured" and gives the same assurance to the holder of a VA mortgage.

This is what the President said in his housing message and I am more than happy to have the endorsement of our great leader:

I intend to encourage-through legislative proposals, where necessary-even more effective cooperation between Government and industry for the joint benefit of homeowners, tenants, and the industry itself. To this end, I am proposing a number of modifications in the statutes governing our self-supporting mortgage insurance and marketing programs which will improve their efficiency and usefulness. Among these will be the following proposals:

(1) To provide relief in those isolated cases in which, despite the care exercised by builders and the Federal Housing Administration and the Veterans' Administration, substantial defects develop in new construction they have approved, I recommend that authority be provided for the FHA and the VA to finance the correction of substantial deficiencies.

(2) To make certain that no legislative barriers exist to discourage or prevent mortgage lenders and the Federal Housing Administration from cooperating to help delinquent mortgagers in deserving cases, I recommend that FHA's claim and forbearance authorities be amended to encourage the temporary withholding of foreclosures against homeowners who default on their mortgages due to circumstances beyond their control.

(3) To expand our concerted effort to substitute private credit for Federal loans, I recommend provision of legislative authority for the pooling of mortgages held by the Federal National Mortgage Association and the Administrator of Veterans' Affairs, and the sale of participations in such pools.

The members of this subcommittee have received testimony from many witnesses attesting to the need and desirability of this proposed language. Two days of hearings were held October 17 and 18, 1963, on S. 1200 and S. 2226, bills which although slightly different in approach had the same purpose-that of restoring the consumer's faith in his government.

I first introduced a bill to put meaning into the words "FHA insured" in the 87th Congress. The bill number was S. 3460.

Last March 28 I again introduced an identical bill to be considered in this Congress, so it is with a great deal of satisfaction that I am here today to speak specifically about the proposed amendment to section 204, title V of the National Housing Act.

This new proposed section 517 entitled "Expenditures To Correct or Compensate for Substantial Defects in Mortgaged Homes" repre

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sents a wonderful victory. It truly brings hope to millions of consumers who are or will be homeowners.

The hearings of last fall have been printed and within their 157 pages are found the reasons for this proposed amendment.

Some 50 homeowners who live in Eagle River Heights, near Anchorage, Alaska, are particularly pleased with this legislative proposal, for these men and women had major defects as well as minor defects in their FHA-approved dwellings. Their plight-unsought, unnecessary, and unneeded-called vividly to my attention the need to correct the present deficiency in the law.

The members of the subcommittee have heard me describe in detail the tragic defects of the Eagle River homes which ranged from buckling wall paneling to faulty heating facilities. The homeowners of Eagle River were fortunate. They have had their homes repairedthanks to the positive action of FHA officials which followed my insistence for relief.

The proposed legislation has been endorsed by the Veterans' Administration and the Housing and Home Finance Agency. This legislation is desirable and long overdue.

Perhaps the need for this amending legislation was best described by a consulting engineer, Mr. Arthur Tauscher of Rockville Center, N.Y., who last fall came down to testify at his own expense on behalf of S. 1200. When he returned home, Mr. Tauscher, a professional engineer, wrote that he had been pleased to endorse the bill becauseit is a law that is needed to help and protect the homebuyer who is entering into the largest single investment of his lifetime.

A lifetime ought to be a generally pleasant experience.

The bill before this subcommittee can help make this so. We need authorization for additional public housing units. We need planning which is proper.

I have read the address given by the mayor of St. Louis, Mo., at the annual banquet of the National Housing Conference held in Washington, D.C., this week. Mayor Raymond R. Tucker is president of the U.S. Conference of Mayors. Particularly encouraging are his following words:

More than anything else, urban renewal has dramatized our inability to provide decent housing for our low- and middle-income families.

The search for needed relocation housing, which must be available to enable renewal to continue, has exposed the two fundamental weaknesses of our housing resources: (1) Our apparent inability to come up with a viable program of new housing for low- and middle-income groups; and (2) as I have already mentioned, our failure to come up with the means to carry out a continuing largescale program of rehabilitation of our old housing.

It is time we took the initiative on both these problems. It is time we tried new methods, new approaches. It is time to make a decision to solve the problem with action and not talk.

Senator CLARK. Our next witness is Mr. Carey Winston, president of the Mortgage Bankers Association.

Mr. Winston, we are happy to have you with us. I note you have a statement which runs some 16 pages. I will ask to have that printed in the record and we will try to deal with you more gently than we did with Mr. Keith.

I would ask you, if you would, to attempt to summarize it and give us the benefit of your summary.

STATEMENT OF CAREY WINSTON, PRESIDENT, MORTGAGE BANKERS ASSOCIATION OF AMERICA; ACCOMPANIED BY SAMUEL E. NEEL, GENERAL COUNSEL, AND GRAHAM T. NORTHUP, DIRECTOR OF GOVERNMENTAL RELATIONS

Mr. WINSTON. Well, Mr. Chairman and Senator, we are, of course, very pleased to be here. I have with me Mr. Samuel Neel, general counsel, and Graham T. Northup, director of governmental relations. Senator CLARK. We are glad to have you here, particularly our old friend, Mr. Neal.

Mr. WINSTON. Of course, asking us to summarize 75 finely printed pages is a difficult job. We have studied this bill in detail.

Senator CLARK. I will just say this to you, Mr. Winston. I am sure you will agree most of this analytical work has to be done by eye later, and it is rather the same sort of thing that I am sure Mr. Neel is perhaps familiar with. The appellate court gives you 15 minutes to state the major points of your brief.

Mr. WINSTON. May we have 15 minutes?

Senator CLARK. Surely.

Mr. WINSTON. Well, of the 16 pages to which you refer, the first 8 pages approximately, or exactly, as a matter of fact, cover the provisions of the bill which we favor. I suppose, following good old American tradition, we should not particularly comment on that but go immediately to that portion of the bill which we do differ on. Senator CLARK. Go right ahead.

Mr. WINSTON. I would like to make only one comment with respect to a portion of the first 8 pages.

On page 4 I would like particularly to urge the committee to consider the proposed increase in the FHA insuring limits, and we would like to see these increased to $35,000 for one-family homes, $37,500 for two- and three-family homes, and $42,500 for four-family homes. Senator CLARK. Why?

Mr. WINSTON. Well, basically to take care of the increased cost that has happened since the original limits were set. This will provide a wider market, more employment.

Senator CLARK. The argument the other way is that the great need is for cheaper housing for lower income families, and when we get up to $35,000 houses and give a Government guarantee for mortgage, perhaps we are getting out of the area where governmental assistance to reach the objective of a decent home for every American is needed. Perhaps you would rebut that.

Mr. WINSTON. This does not in any way, of course, dilute the provisions for the low-cost housing which we support. This does provide a means for trading up as family size increases, starting from twobedroom housing on up.

Senator CLARK. You do not think conventional financing could handle this problem without FHA assistance?

Mr. WINSTON. To a degree, but I think FHA insurance would permit housing where conventional financing denies housing to people because of large downpayments and often use of expensive secondary financing.

So if we will pass directly to page 8, if I may, I will comment specifically with respect to sections 201 and 202.

One of the programs proposed by S. 2468 is that which would establish a new title X under the National Housing Act for land development insurance. After consideration, our board has come to the conclusion that it would be undesirable for the Federal Government to embark upon this program. In our minds, there is a lack of proven necessity for such a program; we consider it would overstimulate activity and increase land prices; it contains an unnecessary extension of Federal Government controls.

Senator CLARK. Did you have a chance to read Mr. Weaver's testimony in support of that section?

Mr. WINSTON. Yes, sir.

Senator CLARK. You find it not persuasive?

Mr. WINSTON. Yes, sir.

Section 204 would enable the FHA to guarantee home purchasers against structural and other major defects in homes approved for insurance prior to the commencement of construction. Attached to our statement is a letter from the General Counsel of the Treasury Department to Senator Robertson with respect to some previously proposed legislation, specifically S. 1200 and S. 2226. The comments contained therein have great validity. This proposal has been reconsidered, since the original legislation was proposed, and despite the fact that certain objectionable features of the previous legislation have been omitted, we still consider it would be unwise for FHA to undertake this type of warranty.

Senator CLARK. Why?

Mr. WINSTON. We go on to say in the next paragraph some of the reasons why.

Senator CLARK. Only a few cases, I noticed.

Mr. WINSTON. That is one reason. There are very few cases. We are certain that once it becomes known that FHA has such authority there would be a large volume of claims presented to the Agency for compensation.

Senator CLARK. We have been into this in the committee for several years now. We have had a lot of testimony both ways. And I think it is interesting to get the position of your association, and I do not know that we need to go any further on it.

Mr. WINSTON. All right, sir.

Senator JAVITS. I just wish to add, Mr. Chairman, that in this particular case it seems to me I always hear these fears expressed that agencies will be inundated, that claims will be phony, and so on, and I do not think that, frankly, that is any reason for denying justice. Because experience has shown us, for example, in the FEPC in New York State, that the fear was expressed that FEPC was going to run every business in New York State out of the State, that it was going to cause all kinds of crazy people to complain about not getting jobs. As a matter of fact, it has not worked out that way at all. There have been relatively few complaints and relatively few court proceedings. We are very well on top of it. It has worked out very well.

While I respect fully what you have said, I certainly think that this line of argument certainly does not, it seems to me, really raise any major objection. It depends on administration. And it depends on the hardheadedness with which the job is done.