"(f) As used in this section, the term 'urban area' means any area which is urban in character, including those surrounding areas which, in the judgment of the Administrator, form an economic and socially related region, taking into consideration such factors as present and future population trends and patterns of urban growth; location of transportation, water, and sewerage facilities and systems; and distribution of industrial, commercial, residential, governmental, institutional, and other activities."

AMENDMENTS TO EXISTING LOAN AUTHORITY

SEC. 202. (a) Section 102 (c) of the Housing Act of 1949 is amended(1) by adding ", or to section 113," after "hereof", and

(2) by adding "or other public body" after "local public agency" in two places.

(b) Section 102(e) of such Act is amended by adding "for urban renewal projects" after "at any one time" in the first sentence.

POSSIBLE AMENDMENTS TO H.R. 6028

(THE HOUSING ACT OF 1961), FOR CONSIDERATION BY THE SUBCOMMITTEE ON HOUSING

PART I

SUMMARY OF AMENDMENTS

[Note: Asterisks following the discussion of any amendment indicate that a similar amendment was contained in H.R. 12603, 86th Congress, as reported by the House Committee on Banking and Currency]

FHA MORTGAGE INSURANCE

1. Liberalization of Section 203

(a) Present law requires downpayments of 3 percent of value up to $13,500, plus 10 percent of the next $4,500, plus 30 percent of any amount over $18,000. This amendment would liberalize the downpayment schedule to require 3 percent on the first $15,000 of value, plus 10 percent of the next $5,000, plus 25 percent of any amount over $20,000.

(b) The maximum mortgage amount for a single-family home would be raised from the present $22,500 of value to $30,000.

(c) The mortgage maturity would be extended from its present 30-year limit to 40 years.

2. Reduction of FHA Insurance Premium

This amendment would permit the FHA Commissioner, in his discretion, to reduce the annual mortgage insurance premium by lowering the minimum from its present one-half of 1 percent to one-fourth of 1 percent.**

3. Liberalization of Section 221

(a) H.R. 6028 would increase the ceiling on section 221 singlefamily mortgages by $3,000 (from $12,000 to $15,000) in the case of "high cost areas" but would leave the ceiling in normal cost areas at the present $9,000 level. This amendment would raise the ceiling for normal cost areas to $11,000.

(b) H.R. 6028 provides for FNMA financing of low-rent section 221(d)(3) projects at interest rates below the current FHA maximum but not less than the current yield on all outstanding marketable Treasury securities (currently 3% percent). This amendment would set a ceiling on the interest rates for these projects at 4 percent, and would impose a par purchase requirement for mortgages covering these projects.

(e) This amendment provides that where a community wishes to offer tax exemption to low-rent section 221(d)(3) projects in order to reduce rents, the value of this tax exemption could be credited toward the community's one-third share of urban renewal project costs.**

4. Nursing Home Mortgages

Two years ago, section 232 was added to the National Housing Act to provide FHA mortgage insurance for nursing homes. Because his was a new program, the loan-to-value ratio was limited to a

maximum of 75 percent. It is proposed that this ratio be raised to 90 percent.

5. Mortgage Moratorium

This amendment would give the FHA Commissioner authority to assume a homeowner's monthy mortgage payments if he should lose his job through no fault of his own and lives in an area where unemployment equals 6 percent or more of the labor force. These payments could be made for as long as 1 year and would be repayable at the end of the regular mortgage term (or sooner if the borrower so wishes).. 6. Prepayment Without Penalty

At present the FHA requires a mortgagor to make an "adjusted premium payment" of 1 percent of the original principal amount if a mortgage is paid off before maturity. This amendment would eliminate this prepayment penalty on any 1- to 4-family mortgage which has been in existence for 5 years or more. **

7. FHA Land Insurance

This amendment would authorize a new program of mortgage insurance for loans for site development. These loans would be limited to 75 percent of either the estimated value of the property at the completion of the development or the cost of the land, plus the cost of such development. The maximum maturity would be 3 years.

**

8. Cooperative Housing

(a) This amendment would provide that the sole test of whether the construction of a cooperative housing project is economically feasible shall be whether purchasers are available who can afford the housing at the charges which will be imposed under the project's continued use as a cooperative and not whether there is a market in the community for conventional rental housing accommodations at higher monthly charges even though the mortgagor is of the investorsponsor type.

**

(b) Under this amendment, the FHA insurance fund for cooperative housing under section 213 would be placed on a mutual basis as is now the case for section 203.**

(c) This amendment would permit the Federal National Mortgage Association to reserve funds for a section 213 project where a statement of feasibility has been issued by FHA.**

(d) This amendment would authorize FHA to insure supplementary financing to consumer cooperatives to provide necessary improvement or repairs or additional community facilities, or to enable cooperatives to purchase memberships from members who move and resell them to new members with reasonable downpayments.

(e) This amendment would permit FHA to give first preference in selling a defaulted FHA project to a consumer cooperative or public agency which makes a request to purchase the project.

FEDERAL NATIONAL MORTGAGE ASSOCIATION

9. FNMA Lending Authority

This amendment would authorize the Federal National Mortgage Association to make short-term loans on the security of mortgages to enable it to perform more of a true central mortgage banking func

tion. These loans could not exceed 90 percent of the unpaid balance of the pledged mortgages and would be limited to no more than 12 months maturity.**

10. FNMA Capital Stock

There is evidence that the FNMA secondary mortgage program will reach the limit of its buying authority within 2 years. Therefore it is proposed to authorize the Treasury to purchase an additional $50 million of FNMA capital stock when necessary.

11. Service Charge on Small Loans

The FHA permits lenders to assess an extra one-half of 1 percent service charge on loans of $9,000 or less. Thus the borrower, in effect, must pay a 61⁄2 percent financing rate currently (51⁄2 percent interest, plus 1⁄2 percent mortgage insurance premium, plus 1⁄2 percent service charge). This amendment would prohibit this additional service charge on any mortgage purchased by FNMA under its special assistance program. (A similar amendment was contained in H.R. 10213 as reported by the committee in the 86th Cong.)

HOUSING FOR THE ELDERLY

12. Additional Authorization

H.R. 6028 would increase the authorization for the program of direct loans for housing for the elderly from its present $50 million to $100 million. It is proposed that the additional authorization should be increased by another $50 million, making a total authorization of $150 million.

13. Elimination of Equity Requirement

Existing law requires that the sponsor of a housing project financed through the direct loan program (sec. 202 of the Housing Act of 1959) invest at least 2 percent of the total development cost. This amendment would eliminate this requirement so that the direct loan could cover the full amount of development costs. **

14. Cooperative Housing for the Elderly

This amendment would make it clear that consumer cooperatives will be eligible under the program of direct loans for housing for the elderly.

URBAN RENEWAL

15. Increased Federal Aid for Small Communities

Existing legislation authorizes Federal grants to cover two-thirds. of the net cost of urban renewal projects. This amendment would authorize an increase in the Federal share to 75 percent for projects in small and medium-sized communities (up to 100,000 population). 16. Hospitals in Urban Renewal Areas

Section 112 of the Housing Act of 1949 offers special advantages to urban renewal projects involving universities, such as waiving the predominantly residential requirement and recognizing certain university expenditures as part of the community's one-third share of the cost. This amendment would make hospitals eligible for the same inducements.**

17. Relocation Payments

(a) In recognition of the inequity which sometimes results from the $3,000 ceiling on relocation payments for business firms displaced by urban renewal projects, H.R. 6028 would permit relocation expenses above that amount to be included in project costs. As a result the Federal Government would pay 100 percent of relocation expenses up to $3,000 for any single firm but only two-thirds of any amount above that. This amendment would authorize the Federal Government to pay the full amount of the relocation expenses.

**

(b) Existing law authorizes relocation payments of up to $200 for displaced families. This amendment would increase that ceiling to $300.**

(c) This amendment would provide that where a local public urban renewal agency has a full-time officer dealing exclusively with the relocation of displaced families and business concerns, such officer's salary (up to $12,000 a year) may be paid by the Federal Government in the same manner as relocation payments are now made.**

18. Small Business Loans

In order to help displaced small business firms to get started in new locations, this amendment would authorize the Small Business Administration to make loans on a liberal basis to these firms. Such loans would carry an interest rate of not more than 3 percent and would have terms up to 15 years. The sum of $25 million would be authorized for these loans.**

19. Historical Sites

This amendment would authorize local redevelopment agencies to donate up to 1 acre of land in an urban renewal project area to a public or private nonprofit organization if such land is determined to be of historical significance, is to be maintained on a nonprofit basis, and is consistent with the urban renewal plan for the project.** 20. Low-Rent Public Housing in Urban Renewal Project Areas

The Housing Act of 1959 facilitated the use of land in urban renewal projects for low-rent public housing by providing that the local tax exemption for the housing project shall be accepted as a local grant-in-aid under the urban renewal program. That provision was so worded that only land acquired subsequent to the passage of the Housing Act of 1959 was eligible. This amendment would make land acquired earlier eligible (but not land already used for public housing projects).**

21. Rental Limits

LOW-RENT PUBLIC HOUSING

Existing law requires that the rent for admission to a project must be at least 20 percent below the lowest rent at which decent privately owned housing is available in the locality. An exception is made in the case of families displayed by urban renewal or other Government activity, in which case the gap need by only 5 percent. It is proposed that the gap requirement be reduced from the present 20 percent to 10 percent in regular cases and eliminated for displaced families and for elderly families.

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