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The Federal Housing Commissioner and I have reepatedly stressed in public statements and conferences with industry representatives that the minority housing market needed and must receive priority attention. There are indications, and important ones, that both the building and lending interests of the country are now devoting honest efforts to meeting the housing needs of minorities. Both the National Association of Home Builders and the Mortgage Bankers Association have recently established working committees to push the production and financing of good housing for Negroes. The Racial Relations Service of the Housing and Home Finance Agency is working closely with these new organizations to give them every possible help in the task they have undertaken.

I have been particularly impressed with the suggestion of the life-insurance representatives for the establishment of a voluntary home credit program. You will recall that the draft bill presented to your committee specifically states that one of the major purposes is “To encourage and facilitate the flow of funds for housing credit into remote areas and smaller communities where such funds are not available in adequate supply and without regard to race, creed, or color." I believe there are real possibilities of achievement in this effort, and I hope the Congress will act favorably on the proposal. Regional mortgage credit extension committees could become a significant new means for encouraging the investment of private funds in FHA and VA loans to minority families.

I should like to make a very frank statement about the problem of minority housing. There is no question that our minority citizens have been disadvantaged in ways which I consider shameful. We have every intention of so administering the new legislation, if passed, in every way which will tend to correct that situation. I am realist enough to recognize, however, that the only real test of our efforts will be a steady and substantial increase in the supply of housing available to nonwhite families. I am optimistic that this will happen. However, if after a reasonable period of time I am not satisfied with the progress being made, I want to make it perfectly plain that I would have no hesitancy in recommending to the President that he use the authorities under title III of S. 2938 to give direct, special assistance to housing for minority families. Such action should be taken only if necessary, but if other means prove inadequate FNMA support for minority housing would, in my judgment, be fully justified. Sincerely yours,

ALBERT M. COLE, Administrator. Senator FREAR. May I ask one question, while you are on that proposal: I am not quite sure what you mean by "effective housing demand."

Mr. HENDERSON. More the need and demand that exists in any given community among the different segments of the population.

Senator FREAR. In proportion to their need, these facilíties should be made available to them?

Mr. HENDERSON. That is right, sir.

The CHAIRMAN. What he means, you take the population of whites and nonwhites, and then, percentagewise in respect to the need. For example, if the whites had a lot of new houses, and the nonwhites didn't have any, then the percentage might be a little greater per capita.

Mr. HENDERSON. That is right. The actual fact of the matter is, Senator, that very little housing construction anywhere in the country is being made available to minority groups.

The CHAIRMAN. The way we handled it in Indianapolis, we simply denied commitments to people unless they built minority housing. As a result of that, we are getting a lot of minority houses built in Indianapolis, as you know.


The CHAIRMAN. So, it gets back to whether it is a good thing to write it into law, or whether it can best be handled by administration. I think it can be handled by administration, if the administrators will just make up their minds to do it.

Senator FREAR. I think that is a good point, Senator, that in many instances the local people know more about the needs of minority groups than perhaps some of these people sitting here in Washington may know.

I do think that the control in Washington should remain there, in case of any violations in the States or local communities. But if that is agreed to by the local communities, as to the need existing between groups, then I think it should be carried out, if there are no prejudices or discriminations to any great extent.

Mír. HENDERSON. That would be the case, Senator. However, the FHA works as a Federal agency, with local branches, and the FHA would make the final determination. I am sure their local branches consult with the effective leadership in the various communities where they exist, but it would be up to the FHA to do that. And of course they should do it, in consultation with community leaders.

The CHAIRMAN. Right now we will ask the chief clerk of our committee to write a letter to the FHA and ask how, under this existing proposed legislation, they intend to make certain that minority groups do get their share. (The information requested follows:)


Washington, D. C., March 23, 1954. Hon. HOMER E. CAPEHART, Chairman, Senate Committee on Banking and Currency,

Senate Office Building, Washington 25, D. C. DEAR SENATOR CAPEIIART: This is in reply to your March 15, 1954, letter in which you requested me to furnish you with a report regarding the issuance by Federal National Mortgage Association of advance commitments providing for the purchase of eligible FHA-insured section 213 cooperative housing mortgages, as authorized by Public Law 94, 83d Congress, approved June 30, 1953. It appears that Mr. Elmer W. Henderson, during the course of his testimony on S. 2938, now under consideration before your committee, expressed the opinion that the Association, in administering the commitment authority contained in Public Law 94, had not carried out the intent of the Congress as evidenced by your committee's report which stated : *** * that the FNMA in issuing commitments for cooperative housing, should take into consideration the need for low- or moderate-cost housing and should also give a preference in processing to minority housing, a field where the backlog of need is greatest.”

Public Law 94, 83d Congress, by amending Public Law 243, 82d Congress, authorized FNMA to issue commitments not to exceed $30 million outstanding at any one time if such commitments relate to mortgages with respect to which the Federal Housing Commissioner had issued prior to September 1, 1953, pursuant to section 213 of the National Housing Act, as amended, either a commitment to insure or a statement of eligibility. Not more than $3.5 million of this authorization may be available in any one State. Due to the legislative limitations on the total commitment authorization that could be outstanding at any one time, FNMA did not reserve for or allocate to any particular State any specific amount of funds since such action would, in the aggregate, have required an authorization greatly in excess of the $30 million total permitted under Public Law 243 and Public Law 94.

Under the legislation, the total $30 million commitment authorization is the maximum allowable for issuance throughout the United States, but only about $25.5 million was available for additional commitments during the period between July 1, 1953, and August 31, 1953; the remainder of the overall commitment authority was represented by commitments amounting to approximately $1.5 million outstanding under previous legislation, that is, Public Law 243.

FXMA announced on July 29, 1953, that it would begin accepting applications for advance commitments under Public Law 94. Applications for commitments aggregating $35,820,700, or almost 142 times the amount of the funds that were then available to the Association under Public Law 94, were received by FNMA for consideration by the end of August 1953. Thus by that date the dollar volume of the applications for commitments greatly exceeded the total amount of FNMA's available dollar authorization, and it was obvious that contracts could not be issued against a large number of the applications.

It did appear, however, that under a policy and procedure which provided for consideration of all applications in the order of their receipt by the Association, all of the applications relating to minority group housing (other than any that may have been excluded by the statutory $3.5 million State limitation) received by the Association through August 31, could receive coinmitments. In those circumstances and to minimize avoidable delays in the construction of housing covered by the pending applications, FNMA's Board of Directors determined to adopt that policy.

The $35,820,700 in applications received by FNMA through August 31 for cooperative housing commitments under Public Law 94 were reported as providing for 4,098 units of housing in 18 different States. These applications included $12,985,100 represented as providing for 1,791 units of housing for minority groups in 10 different States. With respect to the applications received by the Association through August 31, the Association initially approved the issuance of advance commitments amounting to $25,491,200 providing for 2,999 units of housing in 17 States, and bringing the total commitments outstanding close to the statutory limitation of $30 million. Of these commitments, $11,160,700 related to housing for minority groups for whom the approved applications were reported as providing 1,575 units of housing, or 52 percent of the total housing assisted by FNMA commitments under Public Law 94 at August 31.

Between August 31, 1953, and January 31, 1954, the Association received additional applications for cooperative housing commitments amounting to $30,998,400 and providing for approximately 3,471 additional units of housing. This increased the total volume of applications received under Public Law 94 to $66,819,100 and the number of housing units provided thereby to 7,509 units of housing in 25 different States, including applications aggregating $24,158,850 reported as providing 3,193 housing units for minority groups in 16 different States. Of the total applications submitted for consideration, $40,734,200 (approximately 60 percent) could not be approved because FNMA's available commitment funds had become exhausted before such applications could be reached for consideration. As a result of the large volume of applications submitted, some of those received on August 31 and all applications received subsequent thereto could not be considered because of the exhaustion of the available commitment authorization. The excess applications were returned to the applicants with the understanding that if and when funds for commitment purposes become available (by reason of the purchase of mortgages pursuant to outstanding commitments, or because of the expiration, cancellation, or withdrawal of existing commitments), the applications would then be considered in the order they were initially received by FNMA, taking into account the maximum amount of commitments that may be issued in any one State under the law.

Additionally to the cooperative housing commitments issued by the Association as of August 31, 1953, FNMA through January 31, 1954, approved advance commitments, including adjustments, in the net amount of $593,700 providing for a net increase of 48 units of nonminority type housing. These activities increased the total commitments issued by the Association for the purchase of cooperative housing mortgages through January 31 under Public Law 94 to $26,084,900, thereby providing for 3,047 units of housing in 18 different States. Of the total commitments issued, $11,171,200 relates to the purchase of section 213 mortgages reported as providing for 1,575 units of minority group housing in 10 different States and representing 52 percent of the total units of such housing so far assisted by FNMA commitments. The commitments issued in connection with housing for minority groups represented 46 percent of the total minority group housing applications received; the commitments issued in connection with nonminority group housing totaled 35 percent of the total such applications received.

We are pleased to have the opportunity to furnish this information for inclusion in the record of the hearings now in progress before your committee concerning the pending housing legislation. Sincerely yours,

J. S. BAUGHMAN, President. Mr. HENDERSON. Thank you, Senator. Would you ask them to reply before you do your final writing of this bill, please ?

The Chairmax. Yes. Of course, under this plan in Indianapolis that I was telling you about, we handled that out there by the State administrator simply holding up commitments until they had agreed to do it. That was under title IX, Defense Housing, which is pretty much going out, as you know.

Mr. HENDERSON. Yes, sir.

The CHAIRMAN. So, at the moment, there aren't any of these commitments, except under title IX.

Mr. HENDERSON. I understand that.

The CHAIRMAN. We have to find some way to make certain that a portion of the Government's guaranty, and a portion of these new houses, are made available to minority groups. No one should be opposed to that. I don't like to see it in legislation, because I don't consider minority groups inferior citizens, and therefore we ought not to be legislating for or against them, as such. That is one of those things that ought to be handled by administration.

Senator Frear. Mr. Chairman, I agree with what you have said, and I think the meaning that Mr. Henderson has given on this "effective housing demand" statement is, that it doesn't only mean sufficient housing for any particular minority group, but for all groups, whether they be minority or majority, as is the case in some instances that I know of, where the minority groups are not Negroes, for instance, but are of a particular foreign extraction. They want to live in a segment of housing together. I think what you have suggested and what the chairman has said would include groups of that type. Am I correct on that!

Mr. HENDERSON. Yes, sir. I am not limiting this to anyone. I am merely saying that under the present, or at least the past operations of the FHA, Negroes, as one minority group, among others, and among many segments of the population, have not gotten anything like a fair deal under the new housing that has been constructed.

The advances that have been made in housing for the minority groups have been in the taking over of old properties as other people move into the new housing that the Government is financing. We believe that is very unfair. We believe we should have at least access on a fair basis to the new housing, and the FHA can remedy that, in our judgment, to a certain extent.

We know that for this type of housing the primary responsibility lies with the housing industry. As long as the Federal Government is going to play the major and important role that it is playing under existing legislation and will play under this legislation, we believe that the Government ought to see that industry takes certain steps to see that this thing is done on a fair and just basis. That all segments of the population, if they are able to pay for it can take advantage of the housing to be constructed.

The CHAIRMAN. I said in the opening statement when we started these hearings-and I want to read it again:

Every member of this committee is also concerned with the problem of help ing to provide good and decent housing for our Negro citizens and other minority groups. Too long have these groups been on the outside of a good housing program, and before I vote for any provisions in this bill, I shall have to be satisfied that a substantial volume of better housing will be provided for them.

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That is where the need is in the country. The Federal Government doesn't need to help a man that is capable of buying a $25,000 house. He can sell his mortgage or get money to build it from a dozen different directions. He doesn't need to worry. He doesn't need a Federal housing plan to help him. We need a Federal housing plan to help the man with a limited income, where there are circumstances beyond his control. We in the past have just not been able to get this program working so that the minority groups, and particularly Negro groups, got their share.

Mr. HENDERSON. I am very gald to know your interest in it and am very glad to hear that statement.

The "CHAIRMAN. I don't like legislation that specifically says you must do this for Negoes and this for whites. I don't like that sort of thing, because we are all citizens, and one is equal to the other, as far as citizenship is concerned. But even when you write that sort of thing into legislation, you still have to have the proper type of administration.

Mr. HENDERSON. There is no doubt about that. I want to say that some segments of the building and financing industry are waking up to this. It is probably due in some degree to efforts of persons like yourself, to speeches that Mr. Cole has been making around the country, and also to the pioneering work that some enterprises, like the Mutual Insurance Co. of New York, have undertaken, and people from Memphis that have appeared before this committee.

The CHAIRMAN. One feature that would be helpful to Negroes, of course, would be repairing and rehabilitating old houses. Of course, I don't agree with you particularly that a man has to have a new house. I have never lived in a new house in my life. Frankly, I would rather take an old one, and rehabilitate it, because they are better than these cheap new ones that are being built.

Mr. HENDERSON. But you wouldn't want to be shut out of these new houses, in case you wanted to have one.

The CHAIRMAN. No, I wouldn't want to be shut out. The point is what we all want is a decent house, whether it is new or old. The minute you move into it, after you have been there 30 days it is an old house. It is just like a new automobile. After you drive it around the corner, it is a used automobile.

I think that feature of this bill will be very helpful. It should be very helpful.

Mr. HENDERSON. We don't object to that. In fact, we look upon it with great interest. I have studied it and hope its consequences are good.

The CHAIRMAN. We are talking about very long terms and very small downpayments, which is obviously attractive to your folks.


The CHAIRMAN. But they should not be shut out of new houses. I don't know how we're going to do it, but we are certainly thinking about it.

Mr. HENDERSON. I hope the FHA will reply to your letter before this bill is passed.

The CHAIRMAN. Yes. Let's write them a letter and find out how they propose, under this legislation, to take care of minority groups, if they feel we ought to do something further in respect to this legislation.

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