allowances properly reflect the 80-percent mortgage under section 207 and the 90-percent mortgage under section 213 and section 220. On the other hand, for projects consisting of smaller apartments, the maximum mortgage per dwelling unit under section 220 is limited to $7,200 for walkup construction and $7,500 for elevator construction, the same dollar limits as under section 207 and comparing with $8,100 and $8,400 under section 213. Obviously these limits under section 220 should be raised to $8,100 and $8,400 to maintain comparability with section 207 and section 213.

To correct this discrepancy, we recommend the following amendment : On page 20, line 16, strike out "$7,200" and insert "$8,100"; in line 22, strik› out "$7,200" and insert "$8,100", ; and in line 23, strike out "$7,500" and insert "$8.400".

Specific reference to redevelopment. Since section 220 is intended to cover new construction in urban renewal areas as well as rehabilitation, the language of subsection (d) requiring “a specific plan of rehabilitation and conservation" appears too narrow and the word "redevelopment" should be added.

We therefore recommend the following amendment:

On page 17, lines 19 and 20, strike out the words "rehabilitation, and conservation" and insert "rehabilitation, conservation, or redevelopment."

Eligibility of present title I redevelopment projects for section 220 mortgage Insurance. We assume that it is the intent of the Housing Act of 1954 that slums and blighted areas already being prepared for redevelopment under title I of the Housing Act of 1949 may qualify for mortgage insurance under section 220. If this were not so, then there would presumably be a delay of at least 2 years before the benefits of section 220 could become effective in stimulating private rebuilding, taking into account the time required to plan and initiate new projects subsequent to the enactment of the Housing Act of 1954, and to prepare sites for rehabilitation or redevelopment. In order to remove any doubt as to the eligibility of existing redevelopment areas for financing under section 220, we recommend that your committee adopt an appropriate amendment clarifying this intent. FNMA support for section 220 mortgages.-We endorse the provisions of section 301 (b) and section 305 of the Housing Act of 1954 authorizing Federal support through the Federal National Mortgage Association of mortgages financing special housing programs in the public interest. We assume that it would be the Government's policy to utilize this authority, if necessary to assure ready financing for projects in urban renewal areas. We are in agreement with the objective that insured mortgages on redevelopment projects as well as on other housing developments should command a ready private market without further Federal support. However, we believe it is essential that a federally supported secondary mortgage market be available in reserve for qualified undertakings in the public interest, such as redevelopment projects, in the event that normal private financing channels for such undertakings are temporarily blocked. Section 213

We are in agreement with the proposed changes in the mortgage allowances for cooperative housing projects insured under this section and believe that such projects are in many cases well suited for the redevelopment of blighted areas. However, we would like to direct your attention to a provision in S. 23 which would change the method for determination of the maximum mortgage in a management type cooperative housing project and would, in our opinion, greatly impede the development of such projects either in redevelopment areas or else where. Under the existing statute, the Congress established the maximum mertgage for management type cooperatives at 90 percent of the estimated replacement cost of the project or 95 percent of estimated replacement cost in the case of projects in which at least 65 percent of the membership consists of veterans Under S. 2938, the maximum mortgage would be based 90 or 95 percent of the "estimated value" of the project. Under FHA underwriting practice, this would mean in most cases that its valuation would be less than replacement cost and that projects could be financed, if at all, only through substantially larger down payments by the individual members of the cooperative than are contemplated by the statute.

In the New York City metropolitan area, the section 213 program has resulted in a substantial volume of good housing at monthly carrying charges for the individual members of the cooperatives substantially less than the rents required for new rental housing of comparable cost and quality. Since this program has been operating to the benefit of the housing consumer, we feel it would be extremely unwise to change one of its basic provisions in a manner that would seriously impede the future progress of the cooperative-housing program.

We therefore recommend the following amendment:

On page 13, lines 10 and 19, strike out the word "value" and insert "replacement cost."

We would also like to recommend a further change in the provisions of section 213 which we believe would greatly improve the workability of this program. This would take the form of authorizing the issuance of an 80 percent mortgage commitment under section 207 for the construction financing of a project, with the developer being extended the option of transferring this commitment to a section 213 mortgage upon the completion of the project and the sale of its dwelling units to qualified members of a cooperative corporation in accordance with FHA regulations. This would eliminate the necessity under present regulations of selling at least 90 percent of the dwelling units in a section 213 project before the start of construction, which has represented one of the principle marketing problems in connection with this worthwhile program. Since such an arrangement presumably would require legislative authorization, we recommend your consideration of including such authorization in the Housing Act of 1954.

Transfer of existing FHA insurance commitments to the provisions of the Housing Act of 1954.-In the interest of expediting progress on redevelopment projects already being processed by the FHA, we recommend that appropriate steps be taken to permit the transfer of commitments issued under the existing provisions of section 207 and 213 to the more favorable basis authorized by the Housing Act of 1954, in the event of final passage of that legislation. In New York City, there are several projects at or near the point of commitment and it vould clearly expedite the development of those projects, if their sponsors could be assured of equitable participation in the more realistic terms provided by the ending legislation.

Sincerely,

FRED TRUMP, President.

Senator BENNETT. We will now hear from Mr. Wallace J. Campell, of the Cooperative League.

TATEMENT OF WALLACE J. CAMPBELL, DIRECTOR, WASHINGTON OFFICE, COOPERATIVE LEAGUE OF THE UNITED STATES OF AMERICA

Mr. CAMPBELL. Mr. Chairman and members of the committee, it is pleasure to bring to this committee the views of the Cooperative eague of the United States of America on the Housing Act of 1954 hich is now before you.

My name is Wallace J. Campbell. I am director of the Washington ffice of the Cooperative League of the United States of America. Our organization is a federation of consumer, purchasing, and service operatives serving a dues-paying membership of 2 million families, nd in addition, having associated with it 9 million families which are embers of rural-electric cooperatives through membership in the Naonal Rural Electric Cooperative Association, and in credit unions rough the Credit Union National Association.

We have worked very closely with the Federal Housing Adminisation, Housing and Home Finance Agency, and Public Housing dministration on housing problems as they affect the housing needs our general membership. We also have very specific interests in e Cooperative Housing Section of FHA which was created under e Housing Act of 1950.

We feel strongly that at this point in history, with two world wars it of the way, and the war in Korea completed, one of the major jobs this Nation should be to catch up with the backlog of housing needs. resident Eisenhower, in his statement of policy on housing, declared:

The development of conditions under which every American family can obtain od housing is a major objective of national policy.

It is our opinion that the Housing Act now before you, although it has many commendable features, is inadequate to meet the tremendous job which remains to be done.

There is an abundance of testimony as to the tremendous need which remains before us. Fortune magazine, in a very careful study, points to an annual minimum requirement of 1,400,000 units for the years 1955-59, with a new boom coming in the 1960's when war and postwar babies reach marrying age.

It must be remembered that the Fortune estimate is on the housing market, rather than on the housing need, which we feel is even more substantial. In other words, our biggest housing year, with nearly 11⁄2 million units as a record achievement of new housing, should be looked upon as the normal minimum.

The National Association of Home Builders is equally positive about the need and opportunity for a high level of housing construction.

The American Federation of Labor, in the testimony you have just had presented to you, and the Congress of Industrial Organizations, have pointed to a housing need for 2 million new units per year, while the National Housing Conference, in a well-documented study by Dr. William L. C. Wheaton, points to a housing need for between 2 million and 2.4 million units per year.

At the risk of repetition, but perhaps in the interest of reemphasis I would like to repeat the National Housing Conference's statement which showed that the 1950 census reveals that we have 15 million substandard homes, and that even if we build 2 million units a year and rehabilitate 400,000 additional units each year, 5 million American families will still be using homes which were substandard in 1950, when 1970 arrives.

I would like to devote most of my testimony today to cooperative housing, but would like to say before turning specifically to that subject, that the Cooperative League would be happy to endorse reestab lishing the goals set by the Housing Act of 1949, which calls for building 135,000 units of low-rent public housing units per year as part of an overall housing program. This should provide about ore tenth of a national housing program with public housing designed to help those in greatest need. This goal, set by the late Senator Robert A. Taft, is a reasonable and achievable goal, and is part of the law of the land.

I would like now to direct your attention for a few minutes to the cooperative section, generally known as section 213, which is treated in the bill before you in section 119.

The cooperative housing program of FHA might well be referred to as the stepchild of the Federal Government's housing program. Perhaps the simile of the ugly duckling would be even more appropriate. The legislation was adopted as a compromise following the campangn to secure adoption of a middle-income housing program in 1950.

It was expected that the cooperative housing program, as adopted in this compromise, would eventually provide for something in the neighborhood of $50 million worth of cooperative housing. The response to the program surprised both the Federal Government's housing officials and the original sponsors of the program. As of February 28, 1954, the FHA had insured mortgages on 164 projects with a total

number of family units providing housing for 26,930 families. The dollar volume of these mortgages insured to date in less than 3 years totaled $255,015,883.

The commitments, statements of eligibility, and applications in process, all classified as active case workload, brings the number of projects to 493, the units to 56,000, and the dollar volume to $520 million. A table containing these statistics will be submitted for the record.

For purposes of comparison with other parts of the Government's overall housing program, it should be of interest to this committee to know that in the years 1951, 1952, and 1953 the number of units processed by the Rental Housing Division of FHA under section 207 totaled 18,108 housing units, for a mortgage amount of $128,883,000. In contrast, the cooperative housing section-213-processed 25,633 units, for insured mortgage value of $242,192,000.

It is difficult to compare these with the public housing program of the same period, but during those 3 years PHA built, or arranged for the building of, 126,718 low-rent public housing units. A year-by-year tabulation of these figures is in this table.

Senator BENNETT. Without objection, it will be made a part of the record.

(The table referred to follows:)

Sec. 231. Cooperative housing-Status as of Feb. 28, 1954

Mr. CAMPBELL. During the last year, the mortgage market for cooperative housing has been particularly tight, and even as the market. has eased somewhat, the available capital for cooperative projects has been hampered sharply by some unfortunate experiences on the financing of some builder-sponsored projects in New York City which have prejudiced some lending institutions against any of the section

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213 projects, whether builder-sponsored or those initiated by consumer or public interest groups. At similar hearings held by the House Banking and Currency Committee, Harry Held, vice president of the Bowery Savings Bank, who has testified this morning before you said very pointedly that the purpose of the present act should be toencourage true cooperatives *** not merely to enable promoters whose motive is profit, to capitalize on such development in the guise of helping the eventua cooperative owners.

The Bowery Savings Bank has had a long history of very successfu and satisfactory financing of cooperative housing projects. Mr. Held is rightly proud of his bank's record in that field.

In spite of the shortage of mortgage money, the Cooperative Section of FHA has completed commitments on mortgage insurance for new projects since January 1, 1954. These totaled 877 units, with a total mortgage value of in the neighborhood of $8 million. The projects were in New York, New Jersey, Louisiana, Oklahoma, Arizona, and Nevada.

There has been a great deal of criticism of the role of the buildersponsor in the FHA section 213 cooperative-housing program. I would like to take a moment or two to try to clarify this situation. The Cooperative League is not here to justify or defend the buildersponsored cooperative projects, but we should point out that ar energetic and aggressive builder, meeting the legal requirements of the cooperative section of FHA, has just as much right to build cooperative housing projects as do the consumed-sponsored organ

zations.

While there are shortcomings to such sponsorship, it has proved to be almost universally true that the product created by these buildersponsors has been as good or better than the average FHA-insured project. The downpayments to consumers have been lower on the average, and because of the financing arrangements, the monthly payments have been lower than for any other part of the FHA program. In other words, even though these are not consumer-sponsored, they have turned out to be a better buy for the consumer than other forms of housing. The two most important factors responsible for this result in the builder-sponsored co-op have been the comparatively low interest rate from 4.25 percent on management-type projects and 4.5 percent on sales-type-and 40-year amortization of mortgage which is considerably higher than any other part of the FHA mortgage program. Actually, in the consumer interest, the ownership by the people who live in the project is even more important than these two factors in financing.

The impression has been given quite generally that there are no genuine consumer-sponsored projects under the 213 program. The percentage has been comparatively small, and those of us in public interest organizations cannot be proud of our accomplishment to date. but I think some of our organizations are beginning to take advantage of the financing available under section 213.

Let me give you a few illustrations: In Oklahoma, the Americar Legion took the initiative in sponsoring 12 cooperative housing proj ects under which more than 350 individual, free-standing homes have been built in sections where cooperative housing had been unknown before. Another Legion post in New York City, FDR Post 1284.