Mr. FOLEY. Giving the actual break-down of the statistics, we can do so very readily.

(See pp. 34 and 35.)

Mr. HAYS. I believe you referred to the experience in New York State of the cooperative plan. Were there other communities in which you made a detailed study?

Mr. FOLEY. I don't know all of the factors that entered into the tabulation, since I couldn't sit in on all of the meetings, Congressman. The chief projects, from which it was possible to draw information relating particularly, for instance, to the costs of operation and to the necessary allowance for a vacancy reserve, were in New York. They involved the Amalgamated projects there.

Mr. HAYS. It is such a new idea to those who live in the mid-South, for example, that I want to ask a few elementary questions. It is relatively a new idea in America, isn't it, in the field of housing?

Mr. FOLEY. In the field of housing it is relatively new. It is not quite so new as this more recent, intensive discussion of it. Various publications on the subject go into a number of projects. The Department of Labor, I think, has issued two bulletins, one of them revised only last year, which gives the history of a considerable number of such projects, and we would be glad to furnish that for the use of the committee. There is other literature on the subject.

There have been a number of cooperative housing projects in this country. It is rather difficult to get a record of all of them. Also, as I indicated in my statement, Congressman, because of the difficulties in finance and the difficulties in getting technical advice and organization and so on, a very large number of those projects have been only in part cooperatives. They have been a cooperative, for instance, to obtain the land, or to get the houses built, or for various phases of development, and have not gone all through as cooperatives, such as are contemplated in this bill. Under the bill the projects remain fully on a cooperative basis. I will be glad, as I say, to furnish to the committee copies of such literature as we have on those subjects.

Mr. HAYS. When I was in Denmark 2 or 3 years ago, I observed that they had a number of successful cooperative apartment projects. Denmark inaugurated the cooperative idea in the field of rural work and farm ownership, but it seems they have also done significant work in housing. Have we duplicated that or come close to it anywhere in America that you know of?

Mr. FOLEY. I don't know that I could say we have duplicated it in the sense that you may have in mind, Congressman. Of course, the cooperative sale of apartment houses on a cooperative basis has been a much more active undertaking in several cities of this country recently, but I don't believe that is a paralleling of what you have in mind.

We have not had very much of that sort of thing. Amalgamated, again, I think, is the best time-tested case we have of large size.

Mr. HAYS. My attention was just called to a provision in the bill on page 2:

* * * will encourage and assist (1) families of moderate income in acquiring (subject to the right of the cooperative to repurchase) ownership of their individual dwellings where such dwellings are free standing. *

That, of course, I gather, receives your approval and emphasis? Mr. FOLEY. I pointed out in my statement-and I am glad you have mentioned that particular language, Congressman, because in some places there may be some misunderstanding of what is meant by "ownership," as set forth there. It is not and could not be, if the cooperative is to be a true cooperative continuing until the mortgage debt is fully paid. The case of each cooperator having title in the usual sense, but he does have the ownership in the sense of continued occupancy and the right thereto, which is transferrable priority for first buying it existing in the cooperative association, itself. In other words, among the other things that a cooperator in such an organization as here envisioned would do, would be to surrender any right to speculative sale of his ownership but he does have ownership in the sense that I have outlined.

Mr. HAYS. Loans are not limited, though, to this type of a dwelling. You are going to build cooperatives that will build apartment houses. That is shown on page 2?

Mr. FOLEY. Oh, yes.

Mr. HAYS. Which will have the greatest significance? Will it be significant chiefly in multidwelling, or in the detached house? Which do you think would have greater significance?

Mr. FOLEY. It is very hard for me to have a judgment on that at this time, Congressman. I think it will vary under different conditions in different parts of the country. In the larger cities, where the desire may be to build on what would be more expensive land, it would probably be easier and a readier achievement to go to the multifamily type. In smaller communities, where it is possible to get lower-cost land, usually adapting itself to a more open type of housing, you will probably find a greater tendency toward the detached house. I doubt that there is any basis on which we could at this time have a judgment as to the ultimate outcome, as to the distribution between multistory or garden-type apartments and single-family-detached or twin-house construction.

Mr. GAMBLE. The greater percentage to date is in the multifamily, is it not, sir, under the cooperatives?

Mr. FOLEY. I don't have, Congressman, sufficient exact information on all of these many varieties and types of cooperative movement in housing. I would say that there is a rather wide distribution and without having the actual statistics before me I am still under the impression from the many projects I have read about that free-standing houses are quite characteristic of the operation today.

Mr. GAMBLE. I am thinking along the New York line, where most of the cooperatives are on a multifamily arrangement.

Mr. FOLEY. Yet in Pennsylvania there are some developments with the other characteristics, but not as great size.

to.

Mr. HAYS. I want this Department of Labor study that you referred

Mr. FOLEY. Yes; I will see it is furnished.

The CHAIRMAN. What is the average rate of interest on real-estate loans, generally?

Mr. FOLEY. I am sorry, Congressman; I didn't get your question. The CHAIRMAN. I say, what is the present average interest rate on real-estate loans?

Mr. FOLEY. You mean residential loans?

The CHAIRMAN. Residential loans.

Mr. FOLEY. Are you referring now to those that carry Government insurance or guaranty or to the whole field?

The CHAIRMAN. Generally.

Mr. FOLEY. Generally, I would think that it would range between 412 and 5 percent if you take all types, privately made and what are called conventional unguaranteed loans.

The CHAIRMAN. Under this bill the cooperatives could receive a loan at 3 percent?

Mr. FOLEY. The bill does not state a rate. We have in my statement, attempted to analyze what the rate probably would be and in our statement we assume that the present going rate, and with certain assumptions as to costs of operations, the reserve as set up in the bill, the rate would be approximately 3 percent. We have, however, furnished you with tabulations showing possible rental rates at 3, 34, and 312.

The CHAIRMAN. That would be for the period of amortization? It would be a great stimulation to the nonprofit organizations and cooperatives under H. R. 6618, wouldn't it?

Mr. FOLEY. Under this bill that would be one of the factors offered as an incentive to bring about the development of housing through nonprofit and cooperative organizations, Congressman. It is an incentive that would help to bring into play the other savings that apparently can result only from this type of operation, such as the savings in maintenance cost that I have outlined in my statement. It may bring into play a situation in which it would be possible to effect savings in construction costs, but you will not that in our statement we did not enter them as a factor in probably current savings, but rather as a potential of later development.

The CHAIRMAN. On these long-term loans the payment of interest in the aggregate is much greater than the payment of the principal, isn't that true?

Mr. FOLEY. The longer the period of amortization, of course, the greater the total of interest paid.

The CHAIRMAN. The primary objective is that it would be a great stimulation to these people to construct housing units under the provisions of this bill?

Mr. FOLEY. That is right, because it would reduce the amount of monthly charge comparable to rent or actually rent and bring the housing within their current means.

Mr. KILBURN. Mr. Chairman, on that line, I would like to ask you a question, as well as Mr. Foley.

Are these loans-can they be purchased by any private lending institution?

Mr. MULTER. The mortgage?

Mr. KILBURN. Yes.

Mr. FOLEY. Does your question contemplate their purchasing them from the

Mr. KILBURN. These rates of 3 and 312, can they be bought by a private lending institution by them?

Mr. FOLEY. Could a private lending institution purchase them from the mortgage corporation. I don't believe that the bill specifically

contemplates that, although does it prohibit. If the financing situation in the country reaches a point where they become attractive, I presume such sales could be made with according reduction of the outstanding debentures guaranteed as against such loans. There would be many factors, I think, factors that would have to be explored, such as, for example, the selling of the best seasoned loans, and thereby increasing the average risk. I certainly could not say it was a policy that should be encouraged but I would say that the bill does not prohibit it.

Mr. KILBURN. You contemplate that all the money will be furnished by the Government and not through any private loans?

Mr. FOLEY. Oh, no, no, no! I was apparently discussing a point different than you had in mind. The bill contemplates that the funds, outside of the initial capital of $100,000,000 be furnished by the Government shall come entirely from private investors through the sale of debentures. Also, as you will recall, my statement about the bill indicates that substitution of private investment capital by the borrowers from this mortgage corporation through their purchase of stock and with a system whereby their purchase of stock, as it accumulates, will retire the initial investment in stock by the Government. The initial capital of $100,000,000 supplied initially by the Government would be replaced by $150,000,000 of privately subscribed share capital.

Assuming that this program went onto the full two billion dollars that is authorized by the bill, the great bulk of that money that would be loaned on those mortages would come from private investors buying the debentures issued by the mortgage corporation.

Mr. KILBURN. Just on this point-I didn't mean to interrupt you, but what I am getting at is of course if the interest rate is down 3 percent, why, that isn't going to attract many private investors.

Mr. FOLEY. The debentures, you will recall, Congressman, are issued against the portfolio of stock and reserves of the corporation and are guaranteed. Such securities in the market will probably receive a rate of about equal to that of the average term of regular Government issues. We have checked on that with many authorities in that field and they indicate to us that the funds to be obtained by this mortgage corporation, through the sale privately of its debentures, will come into market at less than, or around, 22 percent. That would be attractive to investors.

Mr. GAMBLE. Mr. Chairman, may I ask a question there, following Mr. Kilburn?

The CHAIRMAN. Yes.

Mr. GAMBLE. Is there any provision here for the sale, which Mr. Kilburn is speaking of, the sale of the mortgage outright or otherwise? How about the sale of that mortgage to Fannie May under the provisions of the FHA bill?

Mr. FOLEY. There is no provision in this bill to sell to the Federal Mortgage Association; I will check with counsel. There is not. In the nature of things it shouldn't be necessary to contemplate it in the nature of this bill.

Mr. GAMBLE. It should not be necessary?

Mr. FOLEY. No. It should not.

Mr. GAMBLE. I would think that it would be in too great volume for Fannie May to stand up under it.

Mr. FOLEY. In any case, you have raised a point which I wouldn't want to take your time to discuss now, but you have raised one of the points of concern in this whole situation anyway, as to the extent to which you want to use a publicly financed national mortgage association.

Had I answered your question, Congressman Kilburn?

Mr. KILBURN. Yes.

Mr. TALLE. The housing situation, Mr. Foley, impresses me as a very difficult and complex thing. Do you agree with that?

Mr. FOLEY. I am unable to reach any other conclusion after 15 years, Congressman.

Mr. TALLE. I have had an opportunity this month and last month to look at some of the Government housing on the ground where it is laocted and I find several kinds of permanent housing, several kinds of temporary housing, and I must confess I am rather bewildered.

Mr. FOLEY. You were looking into the permanent and temporary housing problem which should be obtaining in addition to the usual complexities, the added complexities created which war pressures.

Mr. TALLE. That is right. I wonder if you have in your statistics department a summary of the total investment of the Federal Government in the various kinds of housing?

Mr. FOLEY. Are you speaking now, Congressman, of the Lanham Act housing or the whole field?

Mr. TALLE. I have in mind the entire investment of public money in housing.

Mr. FOLEY. I think we could prepare for you what would be substantially correct or at least a revealing figure. If you wish me to, I will try to do so.

Mr. TALLE. That would represent in a sense a mortgage held by all of the people against various kinds of public housing, wouldn't it? Mr. FOLEY. You are speaking now of, for instance, the insured mortgage operations?

Mr. TALLE. I have in mind any housing which in a tight economic situation, might become the property of the Federal Government.

Mr. FOLEY. Such a statement can be given you. It would involve giving actual investment on the one hand and continuing interest liability on the other. We can prepare it in such a way, if you wish.

Mr. TALLE. It is possible, is it not, in view of historical facts that Uncle Sam may become a large home owner? We have had a good many depressions and at times people find it difficult to pay the mortgages on their lands, so Uncle Sam might find himself the owner of a tremendous lot of housing, in spite of the fact that some people have some equity in it now.

Mr. FOLEY. He could, of course, and we could have a depression so serious and so long continued that that would result. However, I might respectfully point out to you, Congressman, that it was that very sort of experience, leading to the debacle in residential real estate in the early thirties, that gave rise to the types of mortgage guaranty and mortgage rents and the types of mortgages, themselves. We did not have at that time the long-term amortized mortgage, but the careful study as to the relationship of sale price to value, mort