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AVERAGE YIELD ON N. S. TREASURY TAXABLE BONDS WITH 16 OR MORE YEARS REMAINING MATURITY ROUNDED TO WEAREST 1/8 PEACENT, U PLUS 2 PERCENTAGE POINTS AND SAME AVERAGE BOND YIELD PLUS 25 PERCENTAGE POINTS, AND MAXIMUM INTEREST RATES

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ON FNA-INSURED SECTION 203 LOANS, MONTHLY 10344 - JANUARY 1084

PERCENT
PER ANNUN

6.00

5.50

AVERAGE YIELD ON BONDS, ROUNDED TO NEAREST 1/8 PERCENT, PLUS 24 PERCENTAGE POINTS

5.00

MAXIMUN INTEREST
RATE ON FNA-INSURED
SECTION 203 LOANS

3.50

80000000

9000008
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1.00

AVERAGE YIELD ON BONDS
ROUNDED TO NEAREST 1/8
PERCENT, PLUS 2 PERCENTAGE
POINTS

3.50

3.00

2.50

2.00

1.50

WJJAJOID

308 DJINANJJASON DJFNANJ 1944 I 1945 1 1948

1 1997

1948 1999 1 1950 1 1851 1 1952

1953 Average from January is through March 1962 based on the men of daily closing old and asked price of all Treasury bondo molther duo nor callable for you: Nor II 1952 through January 1950, bondo neither dus nor collable for 2 years (average propadly diffors from .o to . sercont from serie yield for bondo with 15 sore your realning turity): February 1950 through Janpory 1954, everage lord sed on Pondo with is or more years of raining wtority, logloving with rigore shown are for January 1954.

har ll 1953. yl.leloved on closing id quotations. Yoldi computed to first coli ir Dondo wlling abovo por: to wturity is Dondo wlling below bor. Latest

for February 1953 through January 19. Source: Annual Repor... Secretary of the Treasury and Travel Bulletins for January ini through January 19681 enoublions over computer by u. 9. Tresory hour tout

Mr. KENNEDY. Senator, our objections, if I might use that term, are confined mainly to two points. One is on the question of the method of fixing the rate of interest which the bill provides, under section 201. That is the point which would give the President the authority to fix the interest rate at approximately 21/2 percent above the average yield for Government long-term bonds, and I would like to call your attention to our objections to that provision.

We feel that there should not be any change in the present law which gives the Administrator of Veterans Affairs, and the Secretary of the Treasury, the right to fix the interest rate at 412 percent, pursuant to legislation which was enacted last summer.

Secondly, we feel that the maintenance of a separate housing program for veterans under the sole jurisdiction of the Veterans Administration should be maintained. In other words, continue the present policy.

We believe that the power to regulate interest rates should remain in the Congress itself.

The CHAIRMAN. You are recommending that the Congress state what the interest rate ought to be in the law, and give the President, and no one else, any right to change it.

Mr. KENNEDY. That is right. We would prefer the Congress to do that, sir, just the same as you did in this public law which was enacted last summer. I have the number of it here.

The CHAIRMAN. In other words, you want us to write into the law what we think the interest rate ought to be, and only Congress can change it?

Mr. KENNEDY. Yes, sir; we object to this provision which would give a fluctuating rate, for reasons that a glance at this chart here will show how that rate goes up and down. Our feeling is--take, for instance, what the chart shows for the year 1953. It is a little over 5.50. Now, if you add 21/2 percent to that, assuming, of course, that the maximum authorized under the bill were exercised by the President, or whoever you gentlemen of the Congress see fit to give that authority to, you can see that rate is going to be very, very high. We feel, as we say in our statement, that 41/2 percent is fair and reasonable, and we would like to see it maintained at that level.

In other words, if you would see fit, we would like to see the law remain the same on that score.

The CHAIRMAN. I believe the Mortgage Bankers Association objected to the bill, also, in that respect, except that they want the bill to specify a committee which, in turn, wil have the right to fix the interest rate from day to day, and month to month. They don't want the Congress to write any maximum in whatsoever.

Mr. KENNEDY. With due respect to all our officials and committees, we still have more faith in Congress to handle these things. Our experience shows—and I am not trying to be a bit facetious

The CHAIRMAN. The mortgage bankers, yesterday, recommended that the bill say nothing about what the interest rate ought to be, but a committee be appointed to fix the rate from day to day or month to month or period to period.

You think we ought to specifically write into the law X amount, and no one should have the right to change it.

Mr. KENNEDY. That is right, sir; only the Congress, or leave the present law as it is now, 41/2 percent.

The CHAIRMAN. Yes. Well, I think you have that point very clear.

Mr. KENNEDY. We give in detail, on pages 3 and 4, Senator, some other reasons.

The CHAIRMAN. Your other point here was, you said you don't want the veterans and the FHA to do what?

Mr. KENNEDY. We don't want any powers that are now exercised by the Veterans' Administration transferred from the Veterans' Administration to any other agency of Government, whether or not it be the FHA, which, of course, would have to do with housing. We appreciate the fact

The CHAIRMAN. There is nothing in this bill that does that. I presume you are thinking the reorganization may well do that.

Mr. KENNEDY. I am talking about the FHA

The CHAIRMAN. Don't you think it might be a good thing to merge the appraisals of the two together, so we can get a uniformity of ap: praisal of properties? I have given considerable thought to that, and I have checked into it, and it seems to me that as it is now, VA appraises their own property and so does FHA, and the two are different.

Mr. KENNEDY. Our position on that, Senator Capehart, is, and we have given considerable study to it, the best answer I could give you, is that I would like to have permission to file a copy of a letter our national commander sent to President Eisenhower recently, the President's reply, and a second letter which Commander Connell sent to the President, and also Mr. Higley, the Administrator of the VA, giving our reasons on that very subject. I don't have such copies here, but it I could have leave to file them by 4 o'clock this afternoon,

The CHAIRMAN. Yes; without objection, you may file it. (The letters referred to follow :)

THE AMERICAN LEGION,

January 30, 1954. The PRESIDENT,

The White House, Washington, D. O. DEAR MR. PRESIDENT: The American Legion is vitally concerned over the recent recommendations of the Presidential Advisory Committee on Government Housing Policy and Programs to transfer functions of the Loan Guaranty Section of the Veterans Administration to another agency. As national commander, and in accordance with national mandates of the American Legion, I wish to voice our vigorous opposition to such a move.

The Servicemen's Readjustment Act (GI bill) which place all veterans programs, including the GI home loan program, under the jurisdiction of the Veterans' Administration was sponsored by the American Legion in the belief that all veterans programs should be handled in a single Government agency. We have continuously adhered to that position. For your information I am enclosing two resolutions adopted by the national economic commission of the American Legion which opposed previous attempts to remove the Loan Guaranty Section from the Veterans' Administration.

We are aware of the need for improvement in the handling of GI loans, and we feel an effort to work out a clear and simplified method should be made to recommend to the Administrator of Veterans' Affairs, Harvey Higley. To accomplish this we have scheduled a conference of lenders, builders, representatives of realestate boards, of the Veterans' Administration and of the Housing and Home Finance Agency, with Legion officials, under the direction of the chairman of our national housing committee, to be held on March 1 and 2, 1954, here in our Washington office. At the end of this 2-day conference we will meet with Mr. Higley and lay before him our findings. These recommendations will also be presented to you, and we sincerely hope you will give them your most earnest consideration. Sincerely,

ARTHUR J. CONNELI,

National Commander.

THE WHITE HOUSE,

Washington, February 16, 1954. Mr. ARTHUR J. CONNELL, National Commander, the American Legion,

Washington, D. C. DEAR MR. CONNELL: We appreciate having the views in your letter of January 30, 1954, to the President, and the resolutions of the national economic commission of the American Legion.

You refer to a recent recommendation of the Advisory Committee on Government Housing Policies and Programs supporting the transfer of Veterans' Administration loan guaranty functions. The committee was concerned by the duplication of certain technical operations in the processing of applications under the Government's loan guaranty programs. However, it is our understanding that the committee did not advocate the transfer of any of the statutory responsibilities of the Veterans' Administration or the abandonment of the concept of a single agency for veterans' affairs. Instead, the committee proposed that the Administrator of Veterans' Affairs and the Housing and Home Finance Administrator work out an agreement under which the FHA would perform certain technical functions for the VA on a contract basis.

The President has not yet determined what measures are required to produce efficient, coordinated administration of the home loan guaranty programs. Nevertheless, an attempt to reach an agreement along the lines suggested by the Advisory Committee appears to be in the interest of all home buyers and the public in general.

It is gratifying to note that the American Legion recognizes the need for improvement in the handling of GI loans. We shall look forward to any specific suggestions for bringing about that improvement which may come out of the conferences which you are holding early in March. Sincerely,

SHERMAN ADAMS.

THE AMERICAN LEGION,

Washington, D. C., March 8, 1954. The PRESIDENT,

The White House, Washington, D.O. DEAR MR. PRESIDENT: In accordance with my letter of January 30, 1954, I am enclosing a copy of a letter written to the Honorable Harvey V. Higley, Administrator of Veterans' Affairs, together with the recommendations of the American Legion for improvement in the administration of the GI loan program.

A meeting was conducted for 2 days with representatives of the Veterans' Administration, Housing and Home Finance Administration, Federal Housing Administration, lenders, builders, real-estate boards and others interested in this program.

I am sure that this meeting was of much value and produced sound, constructive ideas, which we are happy to submit to the Administrator for consideration. We are deeply grateful for your interest in this matter. Sincerely yours,

ARTHUR J. CONNELL,

National Commander.

The Honorable HARVEY V. HIGLEY,
Administrator of Veterans' Affairs,

Veterans' Administration, Washington, D. C.
DEAR MR. HIGLEY: This letter is written to you in accordance with National
Commander Connell's letter to President Eisenhower of January 30, 1954.

The undersigned committee constituted by a mandate of the 1953 national convention of the American Legion, has met on March 1 and 2, in Washington, D. C. It has considered the comments and testimony of interested industry, and Government groups on methods for expediting the handling of GI loans under the statute.

It seems that there are two particularly vexing problems in connection with the present GI loan procedures according to the testimony which was heard. The first of these indicates that builders, lenders, and veterans themselves are experiencing extreme delays in the processing procedure. We would not pretend that a study of this nature would supply a satisfactory answer to such a prohlem, but we suggest that more efficient results could be achieved by certain administrative corrections.

Another problem arises from the nature of the GI loan program. Builders and lenders testified that the volume of directives from the Loan Guaranty Section is such that it is impossible for even the larger organizations to keep abreast of them. The Loan Guaranty Section is aware of this situation and received some constructive suggestions, which indicates that this obstacle can be over

come.

The committee considered the proposal of the President's Advisory Committee that the Administrator of Veterans' Affairs be directed to enter into an agree ment with the Commissioner of the Federal Housing Administration under which agreement certain so-called technical functions of the Home Loan Guaranty Section of the VA would be performed by FHA. It is our understanding that this proposal was intended to achieve certain administrative economies, in addi. tion to possible savings to veteran purchasers. While the committee believes in Government economy and supports methods of possible savings to veterans, we find no convincing evidence that this will be substantially realized by any such arrangement.

We did not find that there exists any serious duplication of effort between the VA and FHA, and we are fearful that a loss of identity of the GI home loan program might result. Our primary concern is the welfare of the veteran and we feel that the tradition of the VA-a single agency for veterans' affairs is the most desirable and efficient protection to the veteran. We consider the loan guaranty program an integral and essential part of veterans' affairs. However, the American Legion will continue its policy of critical but fair appraisal of any proposal which is designed to enhance or further the welfare of the American veteran.

We attach hereto a list of specific recommendations which we believe will aid in simplifying and expediting the processing of loan applications. Very truly yours,

SPECIAL COMMITTEE ON VA Loan PROCEDURES.
By THOMAS W. Moses.

WILLIAM E. SMITH.
J. D. SAWYER.
JOHN O. NEWBERRY.

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SPECIFIC RECOMMENDATIONS FOR IMPROVING PROCEDURES OF THE HOME GUARANTY

SECTION OF THE VETERANS' ADMINISTRATION 1. Revise lenders handbook annually for purposes of simplification,

2. Publish technical bulletins of the loan program in separate colors according to subject matter.

3. Provide checklist for lenders to test regulation compliance.

4. Consider the delegation of more authority to regional offices to meet local conditions.

5. Consider flat-rate closing costs rather than by actual breakdown. 6. Simplify open-end mortgage procedure.

7. Implement the proposed practice of assigning appraisals and reporting evaluations by telephone rather than to await detailed completions by mail.

8. (Continue fee-appraisal system.

9. Consider developing simplified procedures for small builders as contrasted to project builders.

10. Assign full-time attorney to Loan Guaranty Section,

Mr. KENNEDY. We would like to have something done to avoid duplicate charges, because we feel it is the veteran or the mortgagor who is going to bear these so-called duplicate expenses, and they land on his shoulders right down the line. We have no objections to corrective measures being taken.

The CHAIRMAN. I would think if we had some uniformity in the methods of appraising, arriving at many conclusions on the part of both so that they would be uniform, they would be the same, we would be better off.

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