Payment of FHA Insurance Claims The Federal Housing Commissioner would be given discretionary authority under section 909 to provide for the payment of insurance claims on defaulted mortgages insured under the section 220 urban renewal housing program in cash or in debentures, and upon assignments to FHA of the mortgages in default on one- to four-family homes. Under the present law, insurance claims are payable only in debentures accompanied by a certificate of claim and small cash payments to cover odd amounts due the mortgagees. A one- to four-family home mortgage in default is not now eligible for insurance benefits until the mortgagee has foreclosed the mortgage or acquired the property in some other manner and conveyed title to the property to the Commissioner. The proposed authority to pay insurance claims in cash, and to permit assignments of defaulted home mortgages, would be used by the Commissioner in his discretion and mortgagees would be paid insurance benefits in accordance with the provisions in regulations in effect at the time the commitment to insure was issued. Under other provisions of the bill debentures could bear interest at the rate in effect on the dates of their issuances if the Commissioner so provides by regulation. These provisions would provide additional inducements to mortgagees to make and hold section 220 urban renewal housing mortgage loans without relying on FNMA special assistance. Interest Rates on FHA Debentures Section 910 would clarify the present law with respect to the date establishing the interest rate on FHA debentures. It would also permit the interest rates on debentures issued in payment of insurance claims on mortgages or loans insured under sections 220, 221 or 233 (urban renewal housing, relocation housing, home improvement loans in urban renewal areas, and experimental housing) to be at the rates in effect at the date of their issuance if the Commissioner has so provided in regulations governing the insurance of the loans or mortgages. This second amendment relates to other provisions in the bill designed to make insurance payment procedures more attractive to lenders in order to stimulate lenders to make home improvement loans for structures in urban renewal areas, and mortgage loans for urban renewal and relocation housing, and experimental housing. FHA Appraisals to Home Purchasers Conforming Provision The provision in the National Housing Act which requires FHA appraisals to be furnished to home buyers with FHA insured mortgages would be amended by section 911 to make the same requirement applicable to cases where mortgages are insured under the proposed new experimental housing and condominium mortgage insurance programs. Voluntary Termination of FHA Insurance on Multifamily Housing Mortgages and Loans Section 912 would permit voluntary termination of FHA insurance of a loan or mortgage covering multifamily housing projects. The insurance could be terminated if the borrower and the lender both make the request. The Commissioner has authority to impose termination charges in such cases. The new programs which would be authorized by the bill would be included under the provision. Under present law FHA has this authority only with respect to one- to four-family home mortgages. FHA insurance cannot now be terminated on a loan covering a multifamily structure unless the mortgage is prepaid. Prepayment generally involves refinancing and additional costs to the borrower which could be avoided with the proposed provision in section 912. Housing for Elderly - Exterior Land Improvements Section 913 would permit exterior land improvements to be excluded in determining the statutory limit on the maximum amount of an FHA section 231 mortgage on rental housing for elderly persons. FNMA Dollar Limits on Cooperative Housing Mortgages Section 914 would except cooperative housing mortgages insured by FHA under section 213, if they cover properties in urban renewal areas, from the existing statutory requirement that mortgages purchased by FNMA under its Special Assistance Functions cannot exceed $17,500 for each family residence or dwelling unit, or $20,000 if purchased under its Secondary Market Operations. FHA section 220 mortgages (urban renewal), section 803 mortgages (Armed Services), and all FHA-insured or VA-guaranteed mortgages on housing in Alaska, Guam, or Hawaii are already excepted from the dollar limit. The new exception would apply to FHA cooperative housing mortgages covering both sales type housing and multifamily management type housing in urban renewal areas. This would place cooperative housing in urban renewal areas on the same basis with respect to FNMA Special Assistance as FHA section 220 urban renewal housing. Section 915 would make clear that "initial leasing" in the definition of "urban renewal project" does not prevent subsequent leasing of property. The law now permits a local urban renewal agency to obtain noncash grant-in-aid credit for expenditures made by a college or university for acquiring land and buildings in or near an urban renewal project area if the property is to be devoted to educational uses and 69408 0-61-10 if the buildings acquired are to be either rehabilitated or cleared for redevelopment. In the latter case, the educational institution's expenditures for demolishing the buildings and for relocating the tenants are also eligible as local grants-in-aid. Expenditures made by the educational institution acting "through a private redevelopment corporation" are eligible as though made by the institution itself. Section 916 of the bill would amend these provisions in the following ways: 1. Expenditures made by the educational institution acting through a municipal or other public corporation, as well as through a private redevelopment corporation, would be made eligible as a local grant-in-aid, there being no reason for making any distinction. This is a perfecting change. 2. Similar expenditures made by a public authority which is established by the State and which acquires real property and leases it to an educational institution would be made eligible as if they had been made by the institution itself. This is a perfecting, change which would provide for equal treatment where the methods used to obtain property for an educational institution are technically different but have the identical objectives and results. 3. Existing law appears to preclude grant-in-aid credit for expenditures relating to real property acquired by an educational institution from a local public agency in all cases where the local public agency is authorized to undertake urban renewal projects. This prohibition was actually intended to prevent the credit from being given only in connection with property disposed of with Federal aid under Title I. In cases where the educational institution acquires property from the city, which is also the local urban renewal agency but which is not acting in that capacity when it sells the property, there is no reason why the expenditures by the institution should not be eligible just as though the property had been purchased from any other source. This section of the bill would therefore make it clear that the grant-in-aid credit is to be given except where the city has received an urban renewal grant in connection with its acquisition or disposition of the property being sold to the educational institution. 4. The law now permits grant-in-aid credit for the university's expenditures in relocating tenants from buildings and structures which are to be demolished. Consistent with relocation provisions applying to urban renewal generally, this provision would be changed to also cover expenditures to relocate occupants being displaced from buildings and structures which are to be rehabilitated. Passyunk Project, Philadelphia Section 917 would extend for an additional year the period during which military personnel and civilians employed in defense activities may continue to occupy the Passyunk war housing projects in Philadelphia with occupancy preferences and without regard to their incomes. Expiration of the present statutory limit on the occupancy would create hardships for the defense workers. Purchases of Publications Under section 918 the libraries in the Housing and Home Finance Agency would be permitted to purchase advance subscriptions to publications. They could also use funds for memberships in organizations to enable them to receive or purchase scientific and other publications of interest to the Agency which would otherwise not be available to the Agency without additional costs and difficulties. Home Improvement Loans by National Banks and Savings and Loan Associations Sections 919 and 920 would amend existing laws to authorize national banks and savings and loan associations to make home improvement loans which would be insured by FHA under the new programs provided in Title II of the bill. These amendments would remove any doubt that might exist with respect to their authority to make home improvement loans and thus assist to make the programs more effective. Minor Amendment Multifamily FHA-Insured Mortgages Section 921 would give FHA authority to assist mortgagors of multifamily housing projects in cases where occupancy of the projects is delayed with the result that the income from the projects is not sufficient to pay project expenses and payments on the mortgages. Under the provision the expenses which exceed project income during the first two years following final endorsement for insurance of a mortgage could be added to the amount of an insured mortgage. The provision would be applicable at the discretion of the Commissioner to a mortgage insured before or after the effective date of enactment of the bill. H. R. 5300 - LOANS FOR COLLEGE HOUSING Title IV of the Housing Act of 1950 authorizes the Housing Administrator to make loans to institutions of higher learning to provide housing and related service facilities for students and faculty, and to hospitals for intern and student nurses housing, where such assistance is not otherwise available on equally favorable terms. The loans may extend for a period of 50 years and bear interest at a rate equal to the average interest rate on the entire Treasury debt, plus 1/4 percent. For the fiscal year ending June 30, 1961, this rate is 3-1/2 percent. In practice, maximum maturities have been held to 40 years. As The revolving fund authorization for the program now totals $1,675 million with ceilings of $100 million for hospitals and $175 million for college service facilities. Through the end of March 1961, a total of 1,289 loans for $1,266 million have been approved under this program. of this date, there were 306 applications for $359 million for which funds had been reserved, bringing the total funds committed to $1,625 million. Allowing for repayments of $24 million, the uncommitted balance of the college housing revolving fund amounted on April 1 to $74 million, against which there were some 68 applications for $66 million pending. To date, funds committed under the program provide assistance for about 1,550 projects, including housing accommodations for about 380,000 students and faculty (including student nurses and interns) and also about 500 related facilities such as student unions, dining halls and health centers. There have been no defaults under the program in payment of principal and interest. Taking into account an expected increase of college enrollments from 3.6 million in 1960 to over 6 million in 1970, and assuming that about 25 percent of the increased enrollment will require college housing accommodations costing about $4,700 per student, it is estimated that total college housing needs during the coming decade will amount to about $4 billion. About 75 percent of this amount, or $3 billion, is likely to be obtained by borrowing. In his Message to the Congress on "American Education", the President recommended a five-year $250 million a year extension of the college housing program. He also recommended additional lending authority to speed action on applications on hand during fiscal year 1961. The bill, H. R. 5300, would carry out the President's program for extending the college housing program by now increasing the revolving fund by $100 million, with further increases of $250 million on July 1 of each of the years 1961 through 1965. The bill would also increase the ceilings on service facilities (defined in the Act as "other educational facilities") and on loans to hospitals by $25 million each during each of the five years. |