MORTGAGE LIMITS FOR MOBILE HOME COURTS

Section 103 of the bill would increase the maximum amount of a mortgage which may be insured per space in a mobile home court from $1,800 to $2,500 and increase the maximum mortgage amount per mobile home court project from $500,000 to $1 million. The section would also amend section 207 of the National Housing Act to redesig nate, for greater accuracy, the mortgage insurance program for "trailer courts or parks" as a program for "mobile home courts or parks." This change in nomenclature would not have a substantive effect on the program.

The increase in mortgage limits is needed to allow for substantial increases in land and construction costs, and to provide for the common facilities which are required in a modern mobile home court or park to make it economically sound. The present mortgage limitations are entirely inadequate to meet present-day costs.

Cases recently submitted for mortgage insurance under the present limitations require very substantial investment by the sponsor. The mortgage amount in cases being processed currently averages 65 percent of the estimated value, despite the fact that FHA regulations were amended recently to permit mortgages up to 90 percent of esti mated value. Other changes in regulations permit mortgage terms as long as 40 years, and increases in the per space allowance up to 45 percent in high-cost areas, permitting maximum per space limits to range from $1,800 to $2,600 per space. While these amendments to FHA regulations have stimulated increased activity for the program. actual costs require substantial investments by sponsors of 35 percent or more of the FHA estimate of value.

An increase in the project mortgage amount from $500,000 to $1 million, coupled with an increase in the per space limitation, is required to permit the inclusion of essential facilities considered necessary in a modern mobile home court or park to meet the market. Frequently, mobile home parks must be located away from town and are, therefore, inaccessible to city water and sewer systems. It is essential that adequate water and sewer facilities be provided, and this is feasible in many cases only if a substantial number of spaces are involved. Various community facilities are required for the use and convenience of residents, such as laundry facilities, meeting rooms, health service facilities, playgrounds, and swimming pools.

During the last 2 years, there has been a great increase of interest in mobile homes as a source of lower cost housing. Sales of mobile homes have increased substantially, from about 235,000 in 1967, to about 300,000 in 1968, and may total nearly 400,000 in 1969. By contrast, only about 100,000 park spaces were prepared for mobile homes

in 1968.

A recent survey conducted by the Bureau of the Census for HUD revealed that mobile homes contribute significantly to housing supply, While the production and sale of mobile homes has expanded greatly in recent years, so that an estimated 52 million people live in about 1,800,000 mobile homes in the United States, the number and quality of mobile home parks have not kept pace. There is a great deficiency of suitable mobile home park spaces, and generally the ones that exist are improperly designed and provide inadequate community facilities.

The proposed increase in mortgage limits for mobile home parks will permit the development of properly designed and properly located mobile home parks for the benefit of lower income families and the communities in which they are located.

HIGH-COST AREA MORTGAGE LIMITS FOR LOW- AND MODERATE-INCOME

HOUSING

Section 104 of the bill would eliminate present statutory limits on mortgage amounts in high-cost areas for mortgages insured under section 221 (d) (2) (sales housing for low and moderate-income families) and 235 (homeownership assistance) of the National Housing Act. In place of the present dollar amount limits, this section would authorize the Secretary to increase basic statutory limits by up to 45 percent in any high-cost area where he finds that adequate housing cannot be built within the basic mortgage limits. This discretionary authority in the Secretary to increase mortgage limits in high-cost areas is similar to that available for FHA's multifamily programs.

The basic statutory mortgage limits for these two programs have been established at low enough levels to assure on a nationwide basis that only modest homes are assisted. Exceptions for high-cost areas are necessary, but because of the wide differences in construction and land costs throughout the country, the committee believes that considerable flexibility is needed in order to treat each high-cost area on an individual basis. Experience with the new section 235 homeownership assistance program indicates that the present $2,500 increase in mortgage limits for high-cost areas is inadequate in some urban areas and that there has been little or no activity under the program in these areas. Rather than increase the dollar limits for all high-cost areas to accommodate some areas, the committee considers it preferable to give the Secretary flexible authority to increase mortgage limits on a graded basis in accordance with cost conditions in each high-cost area.

MORTGAGE INSURANCE ON CONDOMINIUM UNITS FOR SERVICEMEN

Section 105 of the bill would amend section 222 of the National Housing Act to authorize the benefits of that section for servicemen purchasing condominium units under section 234. Under existing provisions, servicemen who purchase condominium units can obtain the benefits of section 222-payment of mortgage insurance on their behalf by the Secretary of Defense or Secretary of Transportation-only when they assume an existing FHA insured mortgage covering the unit. Section 301 of the Housing and Urban Development Act of 1968 authorized the transfer of such assumed mortgages to section 222 but failed to authorize also the initial insurance under section 222 of mortgages covering condominium units.

ASSISTANCE PAYMENTS UNDER SECTION 235 FOR PURCHASER ASSUMING MORTGAGE

Section 106 of the bill would permit a lower income family to purchase a home covered by a mortgage insured under section 235 (i) of the National Housing Act and to receive homeownership assistance payments upon assumption of the existing mortgage if the previous

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owner had received assistance payments. Under present law, homeownership assistance would be terminated upon the sale of the home unless the purchaser obtained a new mortgage insured under section 235 (i). The committee feels it would be more economical to permit the existing mortgage to be assumed and assistance payments transferred to the new purchaser rather than requiring the purchaser to undergo the circuitous process of getting a new 235(i) mortgage on existing housing. If interest rates have increased since the original mortgage was entered into, requiring a new mortgage would merely increase the size of the assistance payments to be borne by the Government. Similar treatment is presently authorized with respect to the assumption of a mortgage insured under section 235 (j) (4).

AUTHORIZATION FOR ASSISTANCE PAYMENTS UNDER SECTIONS 235 AND 236

Section 107 of the bill would amend section 235 (homeownership assistance) and 236 (rental assistance) of the National Housing Act to increase, by $170 million on July 1, 1971, the aggregate amount of contracts to make periodic homeownership assistance payments under section 235 and interest reduction payments under section 236 that the Secretary may enter into.

These increased authorizations are necessary if these two programs are to continue to provide, through fiscal 1972, the desired number of assisted dwelling units in accordance wtih the 10-year housing goals enacted by the Congress in 1968. The increased authorization of $170 million for each program should be adequate to assist a total of approximately 500,000 homes and rental units for lower income families. No charge is made on the authorization of $125 million for each program becoming available on July 1, 1970.

ASSISTANCE PAYMENTS WITH RESPECT TO EXISTING DWELLINGS

UNDER SECTION 235

Section 108 of the bill would alter the percentage of contract authority for homeownership assistance payments under section 235 of the National Housing Act which could be made with respect to existing housing generally. Under present law, for fiscal 1970 only 15 percent of the contracts for assistance payments authorized by appropriation acts may be made with respect to existing housing. The percentage for fiscal 1971 is 10 percent. The percentage for fiscal year 1969 was 25 percent. This section would change the percentage figures for both fiscal years 1970 and 1971 to 30 percent.

While the section 235 program is primarily intended to stimulate the production of new or rehabilitated units, its limited application to existing housing has proven a useful supplement. The committee approved the 3-year declining eligibility of existing housing when it wrote section 235 in 1968 as a means to get immediate impact from the program and help to lower income families who lacked the means to obtain decent new or rehabilitated housing, since it would take some time to get a high volume of new construction available to lower income purchasers. Another reason for this provision was to provide some flexibility in the areas in which lower income families could find homes to purchase with assistance payments. The committee feels that

the limited eligibility of existing housing has given the 235 program flexibility at least initially and should be continued at approximately the same level for the full 3 years until more experience has developed with respect to the program. At the end of this period the committee will give further consideration to the level of eligibility of existing housing best suited to the program and whether eligibility should be made permanent.

CONVERSION OF SECTION 236 PROJECTS TO CONDOMINIUM OWNERSHIP

Section 109 of the bill would amend section 236 of the National Housing Act to permit a rental housing project covered by a mortgage insured under section 236 and receiving the benefits of interest reduction payments to be converted to condominium ownership. The individual family units would be covered by mortgages insured under a new subsection 236 (n) and the individual mortgagors would receive. the benefits of interest reduction payments in the same manner as homeowners under section 235 of the National Housing Act.

Under present law, a section 236 rental project may be converted to condominium ownership with assistance payments made on behalf of the mortgagors, but the individual mortgages would have to be insured under section 235. The committee feels that conversions to condominium ownership would be facilitated in many instances if completed under section 236. Insurance under section 236 would provide greater assurance of the availability of contract funds at any given time since the 236 contract authority previously applied toward interest reduction payments with respect to the rental project could be transferred to the individual mortgagors. In addition, since the mortgage requirements for a section 236 rental project differ in some respects from the requirements for section 235 condominium projects, some 236 projects might not qualify for conversion under 235. Finally, conversion under 235 could consume part of the limited 235 contract authority available for existing housing.

Those tenants of a 236 rental project who purchased individual family units would not again be required to satisfy the income limits which are prescribed for occupancy in the rental project. They would be treated in the same manner as tenants who remained in a rental project. To the extent their incomes have increased since their occupancy of the rental project, the interest reduction payments in their behalf would decrease or be eliminated. For purchasers of converted condominium units who were not tenants of the rental project prior to conversion, the prescribed income limits on eligibility for occupancy in rental projects would be applicable.

PREFERENCES IN SECTION 237 MORTGAGE INSURANCE PROGRAM

Section 110 of the bill would amend section 237 of the National Housing Act to broaden the category of applicants to be given a preference for mortgage insurance and counseling services under that section to families who are applying for section 235 homeownership assistance but cannot qualify for mortgage insurance under section 235 because of their credit histories. Under existing law, preference for section 237 assistance is limited to families living in public housing

units or to families eligible for public housing who have been displaced from federally assisted urban renewal areas.

Mortgage insurance and homeownership counseling under section 237 is available to prospective homeowners applying for mortgage insurance under any FHA home mortgage program who cannot meet normal credit standards. Since funds to provide counseling services are limited and the total amount of insured mortgages which can be outstanding is limited to $200 million, the committee feels that the neediest families should be given a preference for 237 assistance. Most families presently given a preference would no doubt apply for 235 assistance. This section would extend the preference to all lower income families eligible for assistance payments under section 235.

MORTGAGE INSURANCE FOR SHELTERED CARE FACILITIES

Section 111 of the bill would add a new section 243 to the National Housing Act to authorize the Secretary to provide mortgage insurance for sheltered care facilities. The purpose of the new program is to assist in the provision of facilities for the care of persons who, while not in need of nursing home care and treatment, nevertheless are unable to live fully independently and who are in need of minimum but continuous care provided by semiprofressional personnel. The general unavailability of such facilities in some cases results in serious neglect and in other cases in the occupancy of hospital and nursing home space which could be better used by those needing extensive care. The high cost and limited availability of facilities for hospital and convalescent care have given added emphasis to the desirability of the "sheltered care" concept. The need for such facilities proceeds not only downward from hospitals and convalescent homes, but also upward from the great number of persons who are without institutionalized minimum care facilities and are inadequately coping with independent living accommodations.

To be eligible for assistance the facility must be licensed or regulated by the State, or if there is no State law providing for such licensing and regulation by the State, by the municipality or other political subdivision in which the facility is located. The Secretary would be required to consult with the Secretary of Health, Education, and Welfare as to the need for and the availability of sheltered care facilities in the area in which any such facility is proposed, and with respect to any health or medical aspects of any regulations under the

program.

FLEXIBLE MORTGAGE AMOUNTS FOR SINGLE-FAMILY AND MULTIFAMILY HOUSING

Section 112 of the bill would add a new section 244 to the National Housing Act which would authorize periodic adjustments to the maximum mortgage amounts insurable under the various provisions of title II of the National Housing Act authorizing the insurance of mortgages on single-family and multifamily housing. Adjustments would be based on indexes reflecting changes in the costs of land, labor, materials, and other factors affecting the price of dwelling units. The