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investment equal to $1,472,178,994. This figure, when taken against the total admitted assets of all of these life insurance companies which this report covers, worth fractionally over $50,000,000,000, disclosed a gross interest income of 2.93 percent.

The same factor of investment problem that holds true in the savings-banks field undoubtedly holds true in the life-insurance field, and the gross income of 2.93 percent on investments for the calendar year 1949 will undoubtedly be reduced in the same proportion as the savings banks.

This loss in reduction of income is for the same reason that high interest yield on mortgages is unobtainable through the repayment or satisfaction of existing high-interest-bearing mortgages and the replacement of these investments with mortgages carrying the standard interest rate of 4 and 412 percent.

It can readily be seen by the afore-mentioned figures that should the Government, through direct or subsidized lending at substandard interest rates, enter this field of investment it would materially reduce the amount of mortgages available for institutional investment and automatically the income of the depositor and the individual policyholder, many of whom are veterans and widows of veterans of the United States armed forces in both World War I and World War II, and it would ultimately result in lesser earnings for the institutions.

National Cooperative Housing Association financing in the proposed law will result in more deficit financing with its incumbent attack on thrift. This attempt to subsidize the so-called middle-income group, which is a definite misnomer, is entirely unnecessary, unwarranted, and uncalled for, because financing is available to all citizens within the bracket they can afford.

The Government is not expected to again create specialized housing, and the passage of these amendments would do just that for the benefit of a specific class already covered and completely taken care of by the passage in 1949 of the Federal public housing law.

The official reports of the Federal Housing Administration designated as “Fifteenth Annual Report of the Federal Housing Administration for 1948," at page 59, shows the classifications of not only income but the size of the mortgages that were involved in the year's work of that Government agency.

Before these figures are quoted, may we respectfully call to the attention of the Congress, in the opinion of the private lending field, that this agency is a most competent and cooperative organization.

Of all houses financed through FHA in 1948, more than one-half were purchased by families in the annual income group of $2,000 to $4,000.

In the case of veterans, FHA figures show that more than 76 percent of all veterans purchasing homes used the combination FHA 203 loan coupled with Veterans' Administration 505 loan, and that this group has an income as a class of less than $4,000 per annum.

Fifty-one and six-tenths percent of all FHA applications for the year 1948 showed an income on the part of the purchasing family of a sum less than $3,500 per annum.

All of these figures of the Federal Housing Administration do not include the actual results of the economy housing program, which was started in March of 1949 and which resulted in larger production of homes at lesser prices than the record of 1948 shows. None of these purchasers as a class were provided directly or indirectly with Government subsidies or special financing or tax-exempt devices not freely available to all other citizens. Yet the cooperative housing proposals as contained in H. R. 6618 specifically call for special treatment to special groups.

Seventeen percent of all Federal Housing Administration mortgages in the year 1949, based on preliminary reports, were those under title II, section 203b2B, with a maximum loan of $6,000 for a term of 30 years. Total carrying charges extended on this average-type house is $43 per month in major metropolitan areas, including real-estate taxes, interest on principal, fire insurance, and water charges. These items are broken down roughly as $30 for interest and principal, $9 for taxes, $1.10 for fire and hazard insurance, and $1.50 for water. Nonurban areas would result in a lesser real-estate tax charge and would thus reduce the total carrying charge from $40 to $38 per month. Heating and hot-water supply in northern climes would account for $9 per month by average and in the South approximately $3.50 per month.

Thus, full ownership, including total carrying charges and heat, could be obtained from $50 to $52 in the areas adjoining the metropolitan centers in the North, and from $41.50 to $43.50 in the equivalent areas in the South. This average home contains four rooms, full expansion attic for one or two bedrooms to be added as needed, on a plot of land of 5,000 to 6,000 square feet. Cash investment at the time of purchase ranges from $300 to $500 for nonveterans and zero investment for veterans.

The low-income group purported to be reached under the proposal of the national cooperative housing law-in other words, those earning $2,000 or $2,500 per year—are presently being taken care of under title I, class 3, section of the National Housing Act, wherein a 15-year loan is provided—not 30 years, and the carrying charges in the outlying sections in the metropolitan areas of New York amount to under $35 per month, which is less than the rentals charged in fully subsidized public housing projects.

The maximum loan as presently set forth in the law is $4,500.

These citizens who are availing themselves of the use of title I, class 3, have an income of $50 per week and less and find it expedient and satisfactory to purchase these homes within their income brackets without the benefit of any special subsidy by the Federal Government.

The Hoover Commission on Government Reorganization specifically went on record against direct Government lending. Since this was an impartial commission appointed by President Truman and staffed by the finest group of impartial but practical experts, it would seem that these direct and indirect lending factors in this bill as now presented, after only cursory examination and listening to the largest of pressure groups, are å repudiation by the administration of its outstanding Commission appointed by the President for impartial reporting of facts.

Rentals are, and have been, adjusted by area under title VI, section 608; and on all new applications filed, first, subsequent to July 28, and, secondly, to November 1, these rentals have been consistently lowered by the Federal Housing Administration as the basis for its consideration to insure.

The success of the entire 608 housing program since the cessation of hostilities can no longer be questioned. Apartments in all rental income groups have been made available, and the rentals have been fixed by the Federal Housing Administration in each area on the basis of the ability of the income secured from rents to properly support the amount of mortgage insurance issued by the Federal Housing Administration.

With the continued high rate of issuance of FHA commitments under title VI, section 608, it is our opinion that the rental-housing market in the rental brackets set forth by the FHA will become saturated when all of the structures for which commitments have been issued have been built. Federal, State, and municipal public housing authorities projects have also adequately covered the income groups intended to be covered by the National Cooperative Housing Act, and the veterans have formed and built limited-dividend corporation cooperative projects under 608.

We believe that the aims of this bill could be accomplished in a more satisfactory manner, without cost to the Government or any further expenditures in the form of deficit financing and loss of taxable income, and we respectfully recommend the following changes under title I, class 3, title II, section 203, and title II, section 207, to accomplish the results now desired, within the framework of existing laws which have been tried, tested, and found to be successful:

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RECOMMENDATION I

(a) Title II, section 203, to be amended under all subsections to permit 30-year loans on new construction and 25-year loans on existing construction, instead of the 30-year loans under 203 (b) 2d, and the 25- and 20-year loans under section 203b.

(6) Mandatory firm commitments to be issued to operative builders, whereby homes can be offered for rental or for sale. This was successfully proven through the operations of title VI, section 603, both during and subsequent to the war.

RECOMMENDATION II (a) Title II, section 207, to be amended so that maximum financing is equal to $8,100 per family unit.

The term of the mortgage under this section to be extended to 37 years and 7 months, instead of 32 years and 7 months, so as to further reduce the carrying charges on the property, thereby making it possible to offer the apartments for rental at a lesser sum than under the shorter-term mortgage.

RECOMMENDATION III

(a) Section 505a and section 501 of the Servicemen's Readjustment Act of 1944 to be amended to provide for mortgages for a maximum term of 30 years.

RECOMMENDATION IV (a) Section 505a is to remain unchanged until the Servicemen's Readjustment Act expires. The success of the combined FHA-VA program has undoubtedly resulted in the greatest volume of construction and the records of the Federal Housing Administration so prove that 76 percent based on 1948 reports of all veteran purchasers used this form of financing where available. The removal through repeal of section 505a would be a calamity of the first order and definite repercussions on the part of veterans and veteran organizations, who had no cash with which to purchase and still desired to purchase their own homes, would be heard in less time than the 180-day period established under this bill for the elimination of this very successful form of financing

RECOMMENDATION V That all mortgages, not only those covered by FHA law as well as Veterans' Administration, be limited to maximum terms of the economic life of a single family and multiple family occupancy as now fixed by the Underwriting Manual of the Federal Housing Administration.

RECOMMENDATION VI Title VI, section 611, should be incorporated as part of title II of Federal Housing Administration in that the provisions of this existing law provides for both rental and sale of residential accommodations- under individual occupancy of individual homes where 25 or more houses are to be built at one time.

There is the alternate provision in section 611 that any one house can be reduced on the general blanket lien and that property sold to an interested purchaser with financing then converted to title II, section 203 (b), upon approval by the Federal Housing Administration of the credit stability of the proposed purchaser.

We also further recommend that the amount of the mortgage, presently limited to $6,000 per family dwelling unit, be increased in accordance with the provisions as passed by the House of Representatives under H. R. 6070 covering title II, section 203 (b) 2b, to wit, $7,650 for each two-bedroom dwelling and $950 for each additional bedroom beyond the first two but not exceeding a total of four bedrooms in the entire structure.

All of these recommendations can be effected without any cost or expense to the Government, will provide for adequate housing under private enterprise, together with that which was provided for under the Public Housing Act of 1949, and completely eliminates the necessity for the enactment of national cooperative housing law, as proposed by H. R. 6618.

The final net result is, that there is no expense to the Government under the recommendations proposed by this association and that further deficit financing and loss of taxable income through issuance of tax-exempt securities will not be required in the housing field.

Now I would like to emphasize three points.
Mr. BUCHANAN (presiding). Very well.

Mr. EPTER. On page 7 we referred to the size of the average onefamily house being built, and on the basis of justification of that, the so-called four-room and expansion attic home, the Census Bureau average figure, for 1940, showed that the average family in the United States was comprised of 3.8 individuals.

In talking to Dr. Houser, of the Bureau of Census, he said that the 1950 ratio, based on the trend as has been shown for every decade since

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the Census Bureau has been in operation, that the average family would be about 3.6. I merely point that out because of the criticism leveled at the size of homes being built.

Mr. Talle. Is that figure based on a fairly recent sampling, do you know?

Mr. EPTER. The 1940 figure, of course, was developed by the Census. The 1950 figure is anticipated. I spoke to Dr. Houser last Wednesday, in New York, and he said that from preliminary figures, although it was not sufficient to base an honest-to-goodness statement on it, and to say that it was it, yet his information, based on general reports, was that it would show about 3.6 persons.

Here is another point I should also like to emphasize.

There is a provision in this act which calls for refinancing of a mortgage, from the period from 50 years up to 60 years. In other words, a 10-year additional term. Mr. BUCHANAN (presiding). Do you have the particular page

reference,

or section reference ? Mr. EPTER. On page 20, beginning at the end of line 6:

In the event of the refinancing of such a loan within such period as the corporation shall prescribe, the amortization period may be extended to a date not later than 60 years from the date of the original mortgage.

There is also a further provision, at line 13, which says: Provided, That such deferment shall not in the aggregate result in an extension of the maturity of the mortgage for a period of more than 3 years, nor shall such deferment result in an extension of the maturity of the mortgage beyond 3 years beyond the maturity of the mortgage otherwise authorized herein.

The thing that I would like to respectfully bring to the attention of this committee is the situation that has been solely developing in the 608 field, that Mr. Krooth testified to before, and which will probably continue to accelerate, over a period of years.

I would like to respectfully submit that the 608 law, even though it expires on March 1-I am talking in terms of stand-by legislation-be amended to permit the Federal Housing Commissioner, together with the mortgage lender involved and the owner of the property, to refinance that mortgage for a longer term than the original maturity, in order to reduce rents to the occupants or to other occupants who can pay a lesser rental.

That trend seems to have begun with the Wagner-Ellender-Taft bill, and seems to have been continued in this bill, for a provision of 3 years, but never for a provision of 10 years.

I am thinking in terms of a depression, not now. Nobody can fix that date. And I would like to see the owners of these properties have an opportunity not only under 608 but under 203—the onefamily house class—to extend the maturity of that loan on the basis of recasting its form of payment, so that they could pay a lower charge and still retain ownership.

Mr. O'HARA. Mr. Epter, you have talked about depressions and you give us the first reason why you are opposed to this legislation. This is your first reason. Reason No. 1: "Cooperative housing is the orphan of depression."

Mr. EPTER. Correct.

Mr. O'HARA. May I ask you, sir, where the mortgage bankers were in the depression of 1929 ? Was it not the fact that the American

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