than they would otherwise by this proposed program. If they are processed as Mr. Hardy has suggested, I think that this risk can be minimized.

Mr. MCDONOUGH. This is up to a maximum of $15,000 as I understand it.

Mr. WEAVER. Yes.

Mr. MCDONOUGH. A $15,000 house, depending on where it is built in the United States-does the $15,000 include land and building? Mr. HARDY. That is correct.

Mr. MCDONOUGH. It will not be very much square foot area according to our present costs. It would be a rather small house.

Mr. WEAVER. About 1,000 to 1,100 feet, I think.

Mr. MCDONOUGH. Well, now presuming that a young man just starting out, as you say, enters into one of these propositions and gets into the house, what is to prevent him from renting out a couple of rooms to pay the rent on the house?

Mr. WEAVER. Mr. Hardy.

Mr. HARDY. I assume, sir, that this would be true of any case where people buy houses. We would expect in processing the credit applications to determine that this is an honest purchase of a home, that it is intended as a homeownership program.

Mr. WEAVER. There might be greater danger if there were a downpayment that he had to borrow.

Mr. MCDONOUGH. I think that amortization table that you read or referred to should be part of the record.

Mr. HARDY. I will be glad to supply it.

Mr. MCDONOUGH. Would you insert it at this point?

Mr. RAINS. It may be inserted at the end of the testimony. Mr. MCDONOUGH. What is to prevent an individual who qualifies for the purchase of one of these houses acquiring more than one and thereby speculating on this kind of deal?

Mr. HARDY. This would be a matter of administrative regulation, sir. We would not permit this if we had any evidence that this was happening.

Mr. MCDONOUGH. There is no administrative regulation now, of course, and you anticipate setting up a certain status, the man's salary, his income at the time of the purchase.

Now, if he becomes more eligible to buy a better house and still lives in it and wants to dispose of it, can it only be disposed of to one who is in the same status as he who bought it in the first place?

Mr. HARDY. No; he would be free to sell it as he chose.

Mr. MCDONOUGH. Then one of these houses could be purchased by one who was not originally eligible after the original purchaser wanted to dispose of it?

Mr. HARDY. In the 40-year, no-downpayment sales program, sir, we are putting the mortgage interest rate at the prevailing market interest rate, and there is no attempt in this particular program to impose price or other type controls as to the purchase of the property except of course where the house is planned for displaced families. Mr. WEAVER. I think I might inject here that the VA has had a no-downpayment, 30-year program very similar to this, except for the term, for some time. I don't think there have been problems of this nature that have been particularly glaring, if they have occurred at all in that program.

Mr. MCDONOUGH. To get to another subject, on the open land section of your testimony, Dr. Weaver, you recommend that cities buy this additional land surrounding them in order to prevent the accumulation of slums and the improper use of this land for a period of years?

Mr. WEAVER. Well, this could be cities, or it could be other public agencies. It would not necessarily have to be cities, and they would not necessarily have to buy. They could option, or they could in some other way maintain control over the land for whatever purposes they desired.

Mr. MCDONOUGH. Do you mean cities or private interests?

Mr. WEAVER. No, it would have to be a public agency. It would not necessarily be a city. It would be very desirable if we had something larger than a city, a county in some instances, if it were contiguous with a metropolitan area.

Mr. MCDONOUGH. Do you anticipate condemnation procedures?

Mr. WEAVER. I think this would depend on whatever authority the city had. I am not a lawyer. I know in my own State of New York there would be no question about the authority of a city to acquire land. There may be other States where there may be a question about it. Mr. MCDONOUGH. No question about what?

Mr. WEAVER. About the legality of their using condemnation proceedings where they had to.

Mr. MCDONOUGH. For an undetermined use?

Mr. WEAVER. No. This is the way a State park is acquired andMr. MCDONOUGH. A park is one thing. That is in perpetuity, usually, it is stated it will be used for a park.

This would be acquiring land around a city for a variety of uses, certainly not for promiscuous use which may bring about slums. How can you determine what it is going to be used for?

Mr. WEAVER. Well, there are two parts of the bill that have to be distinguished. The first part is where the land is being acquired for a public use, park, recreation, and so forth. That is a matter of grants made to the States and the local governing bodies.

There they would acquire it whatever way they usually acquire land. The second part of the bill authorizes loans to communities to acquire land for future public or private development purposes. That is what it really amounts to.

This would have to be in conformity with some long-range planning for community development. As to what method they will use in acquiring the land, that would be determined by local law.

Mr. MCDONOUGH. This would be with Federal aid?
Mr. WEAVER. With Federal loans.

Mr. MCDONOUGH. Wouldn't it be much simpler for the city or county to annex the area with the understanding that it will be used for— Mr. WEAVER. Well, 15 years ago we all thought it was going to be very simple, but it has turned out to be the most complex and disappointing aspect of urban development. It is just the most difficult thing in the world to do.

Mr. MCDONOUGH. Mr. Hardy, in your statement on the last page, the last line of the next to last paragraph, you stated that in protecting the individual who may be delinquent in his mortgage, those who are temporarily unemployed, but others who are having temporary problems that may be worked

Now, what are the temporary problems that an individual might have that would require this?

Mr. HARDY. There are all kinds of problem cases. It might be a case of temporary illness. He might technically be unemployed but might be on leave without pay. We are thinking of that kind of thing.

Mr. MCDONOUGH. Well, that would be a thousand and one things. Mr. HARDY. This is simply a provision of the present law. It provides that mortgagors who are delinquent through no fault of their own may be assisted through this provision of the law.

Unquestionably, the major case which would meet the definitions of current law would be involuntary unemployment.

Mr. MCDONOUGH. OK.

Mr. RAINS. Mrs. Sullivan.

Mrs. SULLIVAN. I have a few questions, Mr. Chairman.

Mr. Hardy, or Dr. Weaver, I am very anxious to make it possible for people of low income or modest income to become homeowners if they wish, but would it not be better if some very careful planning and thought would be given to the idea for the family who wants a home and wishes to buy one to be given the assistance through lowrate interest loans repayable over this long period of time that has been discussed to modernize and repair an old home of good construction, rather than attempt to build a cheaper home at the prices they might be able to pay?

Mr. WEAVER. I think the difficulty here is one of how do you prevent a capitalization of the low interest rates in a sale of the house, such as has been referred to. For example, he gets the low interest rates, the property is repaired, and then he sells the property and makes a windfall on it. At the same time, if he is going to have homeownership can you say it should be restricted.

If a man is owning in a cooperative, you can say there are certain rules as to how this is to be transferred, but once you give a man a title to a piece of property, in our society it is difficult to put limitations on the transferability. I think that is the problem here.

Mrs. SULLIVAN. Then if it couldn't be met with a low interest rate, couldn't it be met with I think a little more careful and detailed planning to rehabilitate these older homes that are of good construction? Mr. WEAVER. Well, I think we are providing this in the bill.

Mrs. SULLIVAN. I realize that, but we see so many of the cheaper houses being built today to meet the price that people can afford to pay. With the high rate of interest that is being charged and then carrying on with that interest for over 40 years, the purchaser is not going to get much of a house for the price they can afford to pay.

Mr. WEAVER. I think philosophically, we are in complete agreement. We feel that the existing supply of housing is terribly important. After all, the existing supply is about 97 percent of all housing that there is, so obviously this is a great source of supply.

This presents some very difficult problems of financing. There is no question but that an older house requires a much larger downpayment than a new house, and very often the monthly payments are appreciably higher because the term of the loan is shorter. This is one of these areas where there is a long-term problem. It would require more research and more thought than was possible in the period

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when this bill was being prepared. We haven't shut the door to the problem, but we haven't the type of opening for the door that we think we are ready to present.

Mr. RAINS. If you will excuse me a minute, Mrs. Sullivan. As a matter of fact, Doctor, you have now the right to rehabilitate a house under the 221 program, and in addition to that this 20-year rehabilitation program that he mentioned as a brand new situation inside this ought to be able to help do some of the things you are talking about, about rehabilitating an older house. What interest rate would that 20-year mortgage carry?

Mr. WEAVER. It is up to 25 years and no higher than 6 percent interest. That is the way it is set up.

Mrs. SULLIVAN. I just felt that in our cities where there is little chance to build new housing because we have no new ground on which to build, we have to tear down existing houses and rebuild. With the proper encouragement and strict supervision many old houses can be rehabilitated.

Mr. WEAVER. I think the record should show as far as we are concerned we are cognizant of this problem. We don't think we have the answer to it. We think we are moving in that direction. We are taking the first steps.

Mrs. SULLIVAN. That is what I hope, that good careful thought and planning would be given to encourage that.

On page 7 there is a referral to housing for the elderly. Can you tell us, Dr. Weaver, how the program is working for loans to nonprofit organizations to build housing for the elderly?

Mr. WEAVER. Well, this is the program to which I alluded, which is in the central office, and which is a direct loan program. It has been crawling along until this time. Certain changes have been made administratively. For example, I discovered that one of the requirements was that no project should be more than 50 units.

Well, this is almost necessarily an impediment, because in many of these projects you have to have certain facilities and if you have only 50 units to spread them over, you price yourself out of a real market. Secondly, from the point of view of design, management and architecture, and so forth, a 50-unit limitation is most undesirable. So we have reviewed all of the regulations, we are changing them, and we are trying to really steam this program up.

Now, let me say that one of the great difficulties here, of course, is the fact that so many of the agencies that come in which are nonprofit don't have the business sophistication that a private developer might have. So it is going to be more time consuming and we are going to have to give a great deal more assistance to help these people if we want to get this program going. This we are prepared to do.

Mrs. SULLIVAN. Well, have the applications come in for this type building?

Mr. WEAVER. A large volume of applications have come in. Not too many have come in that are ready to go.

Mrs. SULLIVAN. I didn't realize when you were talking about the housing for the elderly that you were referring to this nonprofitorganization housing, because I knew this was a rather new feature and we were all very much interested in it.

Mr. Slayton, I would like to ask one question of you. I see the administration bill would make the whole amount of $21 billion for capital grants available at once. In the past we have usually set some limit on the amount which would be used each year.

Would it hamper your operations if this $22 billion was made available in, say, four annual payments?

Mr. SLAYTON. Well, I believe it would, in this respect: We figure we will have an annual rate of about $600 million a year for this program, annual rate of approvable applications, but we find also from past experience that the fluctuation between years is considerable. For instance, this current year we will have a fair backlog of applications, a good sized backlog of applications that will be ready to be approved if the money is authorized, so that we would anticipate in the initial year a much heavier application rate than $600 million.

We find also that when there is a limitation on a yearly basis, come June 30 we have a big pileup of applications of communities wanting to get in at the last minute, and the third reason is that we hope we can program these activities with the cities so that they can count upon a more orderly development of their program, and we would expect we could gear our capital-grant reservations to their capitalimprovement program, to their program for urban renewal, so that they would not have to do this on a stop-start basis.

Mrs. SULLIVAN. In other words, this could be planned up to the use of the $212 billion within the 4-year period?

Mr. SLAYTON. Within the 4-year period, and of course always with an "on the performance of the city."

Mrs. SULLIVAN. I have one question of Dr. Weaver and Mrs. McGuire.

I am glad to see that the administration is recommending an additional 100,000 low-rent housing units. However, I am concerned if this is adequate, particularly if we are to meet the needs of older families.

I understand there are already some 30,000 units in applications on hand, which would come out of this 100,000, and that would just leave 70.000 for future needs.

The bill doubles the grants for urban renewal, and I am sure there will be attempts made to speed up the program, but don't you think this demonstrates a need?

Mr. WEAVER. We feel that we have to look again at our activities in public housing and to try some new approaches, give more flexibility to local communities, and so forth.

We feel as this goes on we will have a better idea of what we want to do and what type of absorption we will get. We feel this figure will carry us over the immediate future. It is certainly not a terminal figure. But before we come back with a figure which would have more application for a longer period, we would like to have tried some of the new approaches to be sure that we are doing a better job than we are doing at the present time.

Mrs. SULLIVAN. All right.

Mr. WEAVER. Do you want to add to that Mrs. McGuire?

Mrs. MCGUIRE. Yes; I think I can subscribe to that. The Congresswoman is correct. There has been a tremendous increase in the publichousing program, particularly for the elderly, as well as for those displaced by urban renewal, highway construction, or other public im