ARIZONA UTAH WASHINGTON FLORIDA OKLAHOMA NEVADA CALIFORNIA WYOMING KANSAS NEW MEXICO IDAHO LOUISIANA ARKANSAS TEXAS COLORADO NEBRASKA TENNESSEE ALABAMA MARYLAND MISSISSIPPI INDIANA GEORGIA VIRGINIA DELAWARE PENNSYLVANIA NORTH CAROLINA WEST VIRGINIA MAINE RHODE ISLAND MASSACHUSETTS SUPPLEMENT TO TESTIMONY OF R. G. HUGHES, PRESIDENT, NATIONAL ASSOCIATION OF HOME BUILDERS ON S. 2938 PROSPECTIVE FNMA OPERATIONS Charts on the following pages show the transition of the secondary mortgage market portion of FNMA from a Government-operated, Government-financed organization to a Government-operated organization using private funds. The figures used in the charts are based on the following assumptions: (1) That the Federal Treasury will furnish the original capital in the sum of $70 million; (2) That users of the facility will buy certificates in the amount of 2 percent of mortgages sold. _ Certificates to be exchanged for stock when total certificates equal $70 million Treasury stock. (3) That FNMA will pay 22 percent to the Treasury in annual dividends on original capital and 22 percent on all paid-in certificates; (4) Projected purchases, sales, average portfolio are listed by years on following pages: RESULTS, of government supervision, private capital BENEFITS 7 Private capital replaces government capital 2. Adequate, progressive secondary market established 4 Doesn't cost the taxpayer a dime SCHEDULE A SUGGESTED AMENDMENTS TO TITLES I AND II OF H. R. 7839 Suggested amendment No. 1 1. Section 104, page 3, commencing at line 22, strike the colon and the proviso that follows and insert a period. 2. Section 105, page 4, line 10, strike the colon and the proviso that follows and insert a period. 3. Section 115, page 11, line 18, strike the colon and the proviso that follows and insert a period. 4. Section 120, page 14, line 7, strike the colon and the proviso that follows down to and including the word "amount" in line 15. 5. Section 123, page 19, line 18, strike the colon and the proviso that follows down to and including the word "amount" in line 25. 6. Section 123, page 21, line 19, strike everything after the word "exceed" down to and including the word "exceed" in line 25. Suggested amendment No. 2 Amend section 104 by (1) inserting at page 3, line 18, following the figures "$8,000" the following: "And provided further that closing costs and prepaid mortgage expenses paid in cash at the time of closing shall be included in 'ap praised value' for the purpose of determining the maximum permissible mortgage under this section", and (2) striking the figures "$8,000" at page 3, lines 16 and 18 and substituting the figures "$10,000" in both places. Section 125, page 19, lines 15 and 18 should be correspondingly amended. Suggested amendment No. 3 Amend section 104, page 3, by inserting, following the word "principally" at line 12, the following: "(Whether or not it may be intended to be rented temporarily for school or other community purpose)." Suggested amendment No. 4 Section 103, commencing at page 2, line 23, insert the following: "The Commissioner shall establish under section 203 of the National Housing Act, as amended, special standards appropriate to properties with respect to which the mortgage does not exceed $6,000 and may permit a service charge with respect to such mortgages." Suggested amendment No. 5 Amend section 123, page 25, line 5, by (1) striking the word "relocating" and inserting in lieu thereof the following: "Meeting the needs of low-income families that are not and cannot be met from the existing supply of all other private financing and to provide pereference to"; and (2) striking the words "to be so displaced" at page 25, line 15; and (3) commencing at line 21, striking the words "the relocation of families to be so displaced and who would be" and inserting in lieu thereof "low income families." Suggested amendment No. 6 Amend section 123, page 26, line 18, by striking the figures "$7,000" and inserting in lieu thereof the words and figures: "$7,600 (except that such amount may be not in excess of $8,600 in any area in which the Commissioner shall determine such higher figure to be necessary, by reason of cost levels in such area, to attain the purposes of this section)." Suggested amendment No. 7 Section 201, page 42, commencing at line 18 through page 43, line 18, strike numbered clause (5). SCHEDULE B SUGGESTED AMENDMENTS TO TITLE III OF H. R. 7839 Euggested amendment No. 1 Amend section 301 (a) by inserting at the end thereof (p. 45, line 7), a comma, nd the following: "and to assist in providing an adequate and stabilized market or the financing of homes in the volume, in areas, of the kinds, and at the prices hat the market for homes from time to time may require." uggested amendment No. 2 Amend section 303 (a) by inserting at the end of such subsection (p. 48, line 6) e following: "At such time as the capital stock held by the Secretary of the reasury has been fully retired the then balance of the general surplus account nd of the reserves of the Association shall be paid to the Secretary of the reasury.” uggested amendment No. 3 Amend section 303 (b) (p. 48, commencing at line 7) so that the first sentence ereof reads as follows: "The Association shall accumulate funds for its capitalrplus account from private sources by requiring each mortgage seller to make yments of nonrefundable capital contributions equal to not more than 2 rcent of the unpaid principal amount of mortgages involved in purchases tween such seller and the Association." ggested amendment No. 4 Amend section 303 (c) by inserting, following the sentence which ends at ge 49, line 10, the following: "Such certificates shall be entitled to cumulative iden's at the same rate as determined by the Secretary of the Treasury under section (a) of this section with respect to capital stock held by him but no idends shall be paid upon such certificates if dividend payments on the capital ck held by the Secretary of the Treasury are at the time in arrears." Suggested amendment No. 5 Amend section 304 (a) (p. 52) (i) by striking the words "of such quality, type, and class as to meet generally the purchase standards imposed by private institutional mortgage investors" and substituting in lieu thereof the words "inherently sound and of a type and general class which will assist in constituting a prudent base for the issuance of debentures to private investors;" and (ii) commencing at line 14, strike the words "at or below the market price for the particular class involved, as determined by the Association" and substitute in lieu thereof the following: "at a reasonable price level, as determined by the Association, taking into consideration the market price for the particular class of mortgage involved, the reasonably foreseeable market for mortgages of the same general class, and current yields on, and reasonably foreseeable price trends of, long-term Government bonds and other forms of long-term investment." Suggested amendment No. 6 Delete all of section 303 (g) (p. 51, line 16, to and including p. 52, line 3). Suggested amendment No. 7 Amend section 304 (d) by inserting at page 56, line 1, following the word "Association," the words "(including mortgages purchased out of the portfolio of the Association which is subject to management and liquidation under section 306 hereof)." Suggested amendment No. 8 Amend section 304 (b) commencing at page 53, line 12, by striking all following the word "but" through and including the word "and" at line 16. Suggested amendment No. 9 Amend section 302 (b) commencing at page 47, line 3, by striking everything following the word "instrumentality." |