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secure advances on, or the unpaid purchase price of, real estate, under the laws of the State in which the real estate is located, together with the credit instruments, if any, secured thereby.

(g) The term "veteran" shall mean a person who has served in the active military or naval service of the United States at any time on or after September 16, 1940, and prior to July 26, 1947, or at any time on or after April 6, 1917, and prior to November 11, 1918, and who shall have been discharged or released therefrom under conditions other than dishonorable. The term "serviceman" shall mean a person in the active military or naval service of the United States who has served therein on or after September 16, 1940, and prior to July 26, 1947, or at any time on or after April 6, 1917, and prior to November 11, 1918.

(h) The term "going Federal rate" shall mean the annual rate of interest (or, if there shall be two or more such rates of interest, the highest thereof) speeified in the most recently issued bonds of the Federal Government having a maturity of ten years or more.

(i) "State" shall mean the several States, the District of Columbia, and the Territories, dependencies, and possessions of the United States.

(j) "Administrator" shall mean the Housing and Home Finance Administrator.


SEC. 304. Section 201 of the Government Corporation Control Act is hereby amended by striking out the words "and (4) Federal Deposit Insurance Corporation" and inserting in lieu thereof "(4) Federal Deposit Insurance Corporation, and (5) National Mortgage Corporation for Housing Cooperatives."


SEC. 305. Insofar as the provisions of any other law are inconsistent with the provisions of this Act, the provisions of this Act shall be controlling.


SEC. 306. Except as may be otherwise expressly provided in this Act, all powers and authorities conferred by this Act shall be cumulative and additional to and not in derogation of any powers and authorities otherwise existing. Notwithstanding any other evidences of the intention of Congress, it is hereby declared to be the controlling intent of Congress that if any provisions of this Act, or the application thereof to any persons or circumstances, shall be adjudged by any court of competent jurisdiction to be invalid, such judgment shall not affect, impair, or invalidate the remainder of this Act or its applications to other persons and circumstances, but shall be confined in its operation to the provisions of this Act or the application thereof to the persons and circumstances directly involved in the controversy in which such judgment shall have been rendered.

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A BILL To amend the National Housing Act, as amended, and for other purposes Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That section 2 of the National Housing Act, as amended, is hereby amended by striking out of the first sentence of subsection (a) "July 1, 1939, and prior to", and by striking out the second sentence of said subsection and inserting the following in lieu of said sentence: "In no case shall the insurance granted under this section to any such financial institution exceed the amount herein prescribed as the insurance reserve of such financial institution. Such insurance reserve shall be an amount equivalent to 10 per centum of the amount of all such loans, advances of credit, and purchases made by such financial institution on or after March 1, 1950 (according to the records of the Commissioner at the date claim for reimbursement of loss is approved for payment by the Commissioner), less the amount of all claims approved for payment by the Commissioner in connection with such loans, advances of credit, and purchases: Provided, That the amount of the insurance reserve, if any, to the credit of any such financial institution shall be adjusted on January 1, 1953, and on the first day of each semiannual period thereafter by deducting therefrom an amount equal to one-fifth of the amount of such in

surance reserve on the records of the Commissioner as of the date of such adjustment: And provided further, That no such adjustment shall be made in the insurance reserve of any financial institution until the 1st day of January or the 1st day of July next following the expiration of a period of thirty months after the issuance of a contract of insurance to such institution by the Commissioner, and no such adjustment shall be made in the insurance reserve of any financial institution after the termination of the contract of insurance issued to such institution by the Commissioner.": Provided, That this paragraph shall become effective March 1, 1950.

SEC. 2. Section 203 (a) of said Act, as amended, is hereby amended by striking out of the proviso "$6,000,000,000" and inserting in lieu thereof "$8,000,000,000" and by striking out "$6,750,000,000" and inserting in lieu thereof "$9,500,000,000".

SEC. 3. Section 207 (b) of said Act, as amended, is hereby amended by adding the following new paragraphs at the end thereof:

"The insurance of mortgages under this section is intended to facilitate par ticularly the production of rental accommodations, at reasonable rents, of de sign and size suitable for family living. The Commissioner is, therefore, author ized and directed in the administration of this section to take action, by regulation or otherwise, which will direct the benefits of mortgage insurance hereunder primarily to those projects which make adequate provision for families with children, and in which every effort has been made to achieve moderate rental charges.

"Notwithstanding any other provisions of this section, no mortgage shall be insured hereunder unless the mortgagor certifies under oath that in selecting tenants for the property covered by the mortgage he will not discriminate against any family by reason of the fact that there are children in the family, and that he will not sell the property while the insurance is in effect unless the purchaser so certifies, such certifications to be filed with the Commissioner. Violation of any such certification shall be a misdemeanor punishable by a fine of not to exceed $500."


SEC. 4. Section 207 (c) of said Act, as amended, is hereby amended— (1) By amending paragraph numbered (2) to read as follows:

"(2) not to exceed the sum of (i) 90 per centum of that portion of the estimated value of the property or project (when the proposed improvements are completed) which does not exceed $7,000 per family unit and (ii) 60 per centum of such estimated value in excess of $7,000 and not in excess of $10,000 per family unit: Provided, That except with respect to a mortgage executed by a mortgagor coming within the provisions of paragraph numbered (b) (1) of this section, such mortgage shall not exceed the amount which the Commissioner estimates will be the cost of the completed physical improvements on the property or project exclusive of public utilities and streets and organization and legal expenses: And further provided, That the above limitations in this paragraph (2) shall not apply to mortgages on housing in the Territory of Alaska, but such a mortgage may involve a principal obligation in an amount not to exceed 90 per centum of the amount which the Commissioner estimates will be the replacement cost of the property or project when the proposed improvements are completed (The value of the property or project as such term is used in this paragraph may include the land, the proposed physical improments, utilities within the boundaries of the property or project, architect's fees, taxes and interest accruing during construction, and other miscellaneous charges incident to construction and approved by the Commissioner.); and”;

(2) By amending paragraph numbered (3) to read as follows:

"(3) not to exceed $8,100 per family unit (or $7,500 per family unit if the number of rooms in such property or project does not equal or exceed four and one-half per family unit) for such part of such property or project as may be attributable to dwellnig use.";

(3) By striking out of the first sentence of the last paragraph the words ", except that with respect to mortgages insured under the provisions of the second proviso of paragraph numbered (2) of this subsection, which mortgages are hereby authorized to have a maturity not exceeding forty years from the date of insurance of the mortgage, such interest rate shall not exceed 4 per centum per annum."

SEC. 5. Section 207 (d) of said Act, as amended, is hereby amended by striking out of the proviso the words "one-half off”.


SEC. 6. Section 207 (g) of said Act, as amended, is hereby amended—

(1) By striking out of clause (C) in the second sentence the words "preservation of the property" and inserting in lieu thereof "preservation of the property and any mortgage insurance premiums paid after default"; and

(2) By striking out the proviso in the last sentence thereof and inserting the following: "Provided, That the mortgagee in the event of default under the mortgage may, at its option and in accordance with regulations of, and in a period to be determined by the Commissioner, proceed to foreclose on and obtain possession of or otherwise acquire such property from the mortgagor after default, and receive the benefits of the insurance as herein provided, upon (1) the prompt conveyance to the Commissioner of title to the property which meets the requirements of the rules and regulations of the Commissioner in force at the time the mortgage was insured and which is evidenced in the manner prescribed by such rules and regulations, and (2) the assignment to him of all claims of the mortgagee against the mortgagor or others, arising out of the mortgage transaction or foreclosure proceedings, except such claims that may have been released with the consent of the Commissioner. Upon such conveyance and assignment, the obligation of the mortgagee to pay the premium charges for insurance shall cease and the mortgagee shall be entitled to receive the benefits of the insurance as provided in this subsection, except that in such event the 1 per centum deduction, set out in (ii) hereof, shall not apply."

SEC. 7. Section 207 (h) of said Act, as amended, is hereby amended by striking out of the first sentence the words "by the Commissioner to any mortgagee upon the assignment of the mortgage to the Commissioner" and inserting in lieu thereof "under this section".

SEC. 8. Section 207 (i) of said Act, as amended, is hereby amended by striking out the first sentence and inserting the following in lieu thereof: "Debentures issued under this section shall be executed in the name of the Housing Insurance Fund as obligor, shall be signed by the Commissioner, by either his written or engraved signature, shall be negotiable, and shall be dated as of the date of default as determined in subsection (g) of this section and shall bear interest from such date."

The CHAIRMAN. The committee will be in order.

Before we proceed further I wish to state that our colleague, Paul Brown, has been confined to the hospital with a serious illness for the last week. I called up a day or two ago and asked if I might see him and they said he was unable to see visitors as yet, but he was doing very well. They hoped in a short while he would be able to see all his friends.

Mr. PATMAN. This is the first meeting of the committee that he has never been in attendance.

The CHAIRMAN. Yes, it is. And moreover, since he has been in the hospital he has missed his first roll call since he first began his service in the House in 1933. His record in this respect is unsurpassed by any previous or current Member of the House.

We have met to consider H. R. 6618 and H. R. 6742, and Mr. Foley, the Housing and Home Finance Administrator, will be the first witness.

Mr. Foley.

Mr. FOLEY. Mr. Chairman, I have prepared a written statement which would take perhaps 45 minutes or an hour. It covers both of these bills in some detail. Perhaps by reading it we would save time on questioning and with your permission I will do so, but, of course, I will be happy to stop for discussion at any time the committee wishes.

Shall I proceed on that basis, Mr. Chairman?

The CHAIRMAN. Yes, you may read your statement. You may proceed just as you please. Would you like to be uninterrupted? Mr. FOLEY. Just at the pleasure of the committee, since I go into the bill in some detail.

The CHAIRMAN. You may read your statement first and then we will interrogate you.


Mr. FOLEY. Mr. Chairman and members of the committee, I am pleased to have this opportunity to appear before your committee to discuss H. R. 6618 and H. R. 6742. The first of these is the cooperative-housing bill, which is designed to assist cooperatives and other nonprofit corporations in the production of housing for families of moderate incoine. The second contains amendments relating to Federal Housing Administration mortgage-insurance programs. One amendment would provide for a sound and workable permanent mortgage-insurance program for rental-housing construction to take the place of the emergency section 608 program. We do not believe that section 608 should be continued beyond March 1, 1950, its presently scheduled expiration date. The other amendment would place the modernization, repair, and home-improvement program of the Federal Housing Administration on a sound, permanent basis. have with me copies of brief section-by-section summaries which may be helpful to your committee.


My remarks will be addressed chiefly to the cooperative-housing bill, although I do have some general comments I wish to make on H. R. 6742. Mr. Franklin D. Richards, the Federal Housing Commissioner, is here and is prepared to discuss that bill in more detail, should your committee so desire.


As members of your committee will recall, when I testified before you during the hearings on H. R. 5631 last summer, I commented at some length on the cooperative housing title contained in that bill. That title would have established a new program of direct Federal lending to cooperative-ownership and other private nonprofit housing corporations for the construction of housing for families of middle income. I indicated to your committee at that time my firm conviction that the development of a sound and workable method for further meeting the housing needs of middle-income families would clearly be desirable and in the public interest. I mentioned the notable success which farm cooperatives have achieved through the assistance of the Federal Government. I expressed the belief that housing cooperatives offer promise as a means of similarly reducing the monthly cost of housing to the individual consumer, through the elimination of speculative profits, savings in maintenance and repair, and potential savings in construction.

Primarily because the cooperative-housing title of H. R. 5631 relied entirely on the use of direct Federal loans to accomplish its desirable objective, I suggested to your committee that there was a need for further study of alternative but practicable means of reaching the desired objective. In so stating, I had specifically in mind the provisions of the declaration of the national housing policy contained in the Housing Act of 1949-that "governmental assistance shall be utilized where feasible to enable private enterprise to serve more of the

total need." It was my belief that this policy declaration would be better implemented if it were possible to carry out the contemplated program through the investment of private capital, thus eliminating the necessity for the direct Federal loans which H. R. 5631 would have authorized.

Since last summer a great deal of careful study has been given to this matter, particularly to the question of how best to replace the proposed direct loans with private investment. Out of that study and out of the many consultations which we have had, both within and without the Government, there was developed the proposed legislation which is before you today. I think it represents a sound and workable approach and am pleased to be able to recommend it strongly to you. I am particularly pleased that I am authorized to advise you that the enactment of this legislation would be in accord with the program of the President.

This proposal is designed, in fact, to carry out the President's recommendations in his state of the Union message when he said:

To aid middle-income families, I recommend that the Congress enact new legislation authorizing a vigorous program to help cooperatives and other nonprofit groups build housing which these families can afford.

For the past several years, the Government has been concentrating much of it efforts in the housing field to stimulating greater activity on the part of private enterprise in serving the needs of the middleincome market. Today, the necessity for greater and more generally effective activity in this area is more important than ever. This results from the fact that high prices and costs of housing have tended to price many middle-income families out of new homes coming on the market while at the same time the general housing shortage has seriously limited the supply of suitable existing housing available to them at prices they can afford.

This has not affected all middle-income families equally, it is true, for many such families have been able to satisfy their housing needs. Nonetheless, some middle-income families is most areas have been priced out of the market, and many such families have run into diffiulty in high-cost areas and this will probably continue to be the case. Many have been forced to pay prices for new homes far beyond their means, or have been forced to acquire houses much too small or otherwise ill-suited for their needs.

The problem has been most acute for families who for economic or other reasons should rent rather than buy. Rental housing, to an even greater extent than sales housing, has fallen short of serving the middle-income market fully in all areas.

The provisions to perfect FHA programs which are contained in both H. R. 6070 as passed by the House and in S. 2246 as reported to the Senate are designed to increase the effectiveness of the Federal Government's aids and incentives to private enterprise to expand its operations in the middle-income-housing market. For the most part, these proposals would carry further in practice the policy, now firmly established in FHA legislation, of directing the most liberal mortgageinsurance aids to housing in the lower rent and sales brackets. The additional FHA amendments proposed by H. R. 6742-the other bill which is being considered here today-have this identical aim.

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