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percent of the purchase price, whatever it might be, and perhaps an additional cash contribution on the part of the veteran, up to the purchase price.

Mr. TALLE. What has been your experience on this point? Do the borrowers take all they can get, or do they make as large a down payment as they can afford and then ask for the rest in the form of a loan?

Mr. KING. Mr. Congressman, it is not a question of what the borrowers want, it is a question of what the lenders are willing to give them. With that as the underlying statement, we find, in our section 501 program-and up to a year ago, as high as 96 percent of our loan volume was in the 501 program-the straight loan which did not involve the combination of the section 505 (a) loan-in that program, over the period from May 1947 through February 1948, there was an average down payment, on GI loans, 601 loans, of 13.3 percent. There were down payments in the great majority of loans. The figure I gave you, sir, on the purchase of new homes, the down payment averaged 12.5 percent over the same period.

Mr. TALLE. Do you have a tabulation of data that you would like to put into the record on this point?

Mr. KING. I would be pleased to put this in the record, sir.
Mr. TALLE. It is not a long statement, is it?

Mr. KING. It is a two-page statement summarizing various statistics which obtained in our program for the period from May 1947 through February 1948.

Mr. TALLE. I think I would like to have that in the record.

The CHAIRMAN. It might be helpful. Without objection, it will be inserted in the record at this point.

(The tabulation referred to is as follows:)

Characteristics of home loans reported closed, 9 months' period, May 1947 through

January 1948

A. PURPOSE OF LOAN, PRIMARY (501) HOME LOANS ONLY

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Characteristics of home loans reported closed, 9 months' period, May 1947 through

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D. DOWN PAYMENT REQUIREMENTS, PRIMARY (501) HOME LOANS ONLY

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The CHAIRMAN. Mr. Kelsey or Mr. King, what is the total volume. of veterans' loans for homes?

Mr. KING. As of today, Mr. Chairman, they run approximately $7,000,000,000. That is the aggregate dollar volume of loans guaranteed or insured.

The CHAIRMAN. And up to what time can you continue to make these loans?

Mr. KING. We can continue to guarantee these loans up to July 25, 1957.

The CHAIRMAN. There is a $4,000 limitation on the amount of the loan which the veteran may have guaranteed; is that correct?

Mr. KING. Yes, sir, as to realty loans, the Veterans' Administration can guarantee 50 percent of the loan, up to a maximum of $4,000. If the loan exceeds $8,000, our guarantee limit stops at $4,000.

The CHAIRMAN. What limitation is made upon a veteran's local loan; is that $4,000?

Mr. KING. There is no limit imposed by the statute as to the amount of the loan, Congressman.

The CHAIRMAN. Let us put it this way: He has a line of credit. How much credit may he have? If he makes a business loan, a housing loan, and so forth, what is the ceiling on these loans?

Mr. KING. There is no ceiling on the total dollar aggregate of loans which can be guaranteed. The maximum will only be developed by our experience. Our estimates-and they are very crude estimates, necessarily, as it is like gazing into a crystal ball-are that perhaps 25 to 30 billion dollars in home in home loans are likely to be written under this act over the course of 10 years, on which the obligation of the Government would be likely to run up to $12,000,000,000. The contingent obligation of the Government.

The CHAIRMAN. I may not have made my question clear, but here is what I mean: Under the GI bill of rights, a veteran may have a loan guaranteed for several different purposes. In the aggregate, is there any limitation upon what that limitation is? Say, he goes to a bank and says, "I would like to secure a loan for the establishment of a business," then he comes to the Veterans' Administration and gets a loan guaranteed for the purpose of buying a home. Also other loans for other purposes. Is there any ceiling as to the amount of loan he can have outstanding?

Mr. KING. Yes, sir, he can only use this guarantee once, Congressman. It is not a repetitive right. In practical application, the limitation is imposed by the lender. The guarantee is, in effect, collateral, and he can only get such credit as is warranted in the eyes of the lender by, in the case of real estate, a $4,000 collateral item, or, in the case of nonreal estate loans, a $2,000 collateral item.

Mr. KELSEY. Mr. Chairman, I might use an example to answer your question.

First of all, we talk about $4,000 as the maximum guarantee entitlement of the veteran. That involves real estate. If personality should be involved, the maximum is $2,000.

If a veteran, for example, purchased an $8,000 house with a $4,000 guarantee, his guarantee entitlement under the law would have been exhausted. If, on the other hand, he bought a $4,000 truck, and used $2,000 personality guarantee, his entitlement would have been exhausted.

To give an example which I think would answer your question a little more clearly, let us say that a veteran bought a $6,000 house, and because of the limitation that the guarantee may not exceed 50 percent of the amount of the purchase price, he would use $3,000 of his guarantee entitlement, and still have a thousand dollars left for real estate. Let us say that he wanted to buy a truck then for $1,000. He would have remaining a $1,000 guarantee entitlement for realty, but in proportion he would only have $500 guarantee entitlement for personalty. So that he would have $500 guarantee remaining to use for the purchase of this truck. If that transaction was concluded, he would have exhausted his entitlement and there would be no further loan available for guarantee. Does that answer your question, sir?

The CHAIRMAN. I believe it does. The limit on his personal loans is $2,000.

Mr. KELSEY. That is correct.

The CHAIRMAN. He cannot get half of the purchase price of a house guaranteed on top of that?

Mr. KELSEY. That is right, sir.

The CHAIRMAN. But if he has a $3,000 guarantee on a home, he can still use the balance of that?

Mr. KELSEY. $500 on personality, or if later on he should desire to expand his home, he could get a further real estate loan and a further guarantee of a thousand dollars.

The CHAIRMAN. So that the aggregate would not be more than $4,000.

Mr. KELSEY. That is right.

The CHAIRMAN. As he retired that loan, I suppose again he could build it up to $4,000?

Mr. KELSEY. No, sir, his entitlement has been exhausted once and for all under the law, sir.

Mr. BANTA. Does any provision of the law limit his entitlement?

Mr. KELSEY. There is no limitation in the law as to the use of the guarantee one time as such, but probably, to answer your question better, the limitation of the guarantee is $4,000. So once he reaches that limit

Mr. BANTA. But suppose he gets a guaranty of $4,000, buys an $8,000 home, and because of change of residence, or change of job, taking him to another city, he sells that home, recovers all the money, pays the loan, and finds himself in a city a hundred miles away and in need of a loan with which to purchase.

Mr. KING. Congressman, that is covered by section 500 (a) of Public Law 268, Seventy-ninth Congress, which states, as a proviso: Provided, That the aggregate amount guaranteed shall not exceed $2,000 in the case of non-real-estate loans, nor $4,000 in the case of real estate loans. Upon that very clear intent, we have predicated the rule to which Mr. Kelsey referred, to the effect that there cannot be any further use of a guarantee privilege once the right has been originally exercised.

Mr. BANTA. It seems to me that it might lend itself to a different construction. I would think of it as being the aggregate amount outstanding at any one time.

Mr. KING. I cheerfully concede, Congressman, that that is a very lawyerlike interpretation of what that language might mean, but

the intent of the Congress was so clear in the course of hearings that there never has been any dispute that I know of as to the application we have given to that language.

Mr. BANTA. Of course, I do not know what hearings to which you refer whereby you get the intent of Congress. I suppose it would be up to the courts whether there is any ambiguity in the statute itself to find out what the intent was. Perhaps you have something in the report, or some statements made in debate or in the hearings upon which to base that opinion, but the language of the law itself, it would seem to me, would be subject to an interpretation such as I have indicated it might have. If you deny credit to a veteran who finds it necessary to move from one place to another, after he has entirely satisfied the first lender and finds it necessary to obtain another loan in an entirely different location, I think he could still do that, without exceeding the aggregate amount of the loan.

Mr. KELSEY. Mr. Congressman, I believe that an interpretation such as you have given might carry the purposes of the act well beyond what we believe, without having specific hearings here before us, was the intent. In other words, it would permit a veteran to purchase a house and gain this benefit of the Servicemen's Readjustment Act, which includes in each case a gratuity payment of 4 percent, to be credited to the loan account for the veteran in respect to the amount guaranteed, so that on a $4.000 guaranty there would be a gratuity payment of $160 by the Veterans' Administration to be applied on the loan account of the credit of the veteran. If we were to carry forward on your theory, as I see it, sir, the veteran could, within the last few years, possibly have bought a house and sold it, and received this benefit, then again purchased another one, again received the benefit, and, because of the very title of the act itself, and the purpose of it, to assist veterans in readjustment to civilian life, it appears that this first adjustment and the benefit which comes from it was what was intended. Of course, even in the sale, there is some benefit to the veteran because of the fact that there has been a loan made at a first interest rate not to exceed 4 percent per annum, and a veteran has certainly received an advantage in his readjustment to civilian life through that assistance. It seemed to us, with the background of information we had, the hearings and the intent, that that was clearly intended.

Mr. BANTA. You are referring to the first year's interest?

Mr. KELSEY. Under the amendment to the act, it is not tied up with the first year's interest. It is simply 4 percent of the amount of the guaranty.

Mr. BANTA. Five percent of the amount guaranteed?

Mr. KELSEY. That is right.

Mr. BANTA. Which, of course, is actually equal to the first year's interest. No, it would be equal to half the first year's interest.

Mr. KING. Assuming an $8,000 loan, that would be correct, Congressman.

Mr. BANTA. It would be 4 percent of the amount guaranteed? Mr. KING. Yes, assuming an $8,000 loan and a $4,000 guaranty, that would be a correct statement.

Mr. BUCHANAN. Mr. Chairman.

Mr. BANTA. May I ask one more question first?

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