many of them are now paying for inadequate quarters. Such privatehousing developments should increasingly free and make available to enlisted personnel and junior officers the existing public quarters on military installations.

TITLE II AND TITLE VI MORTGAGE INSURANCE AUTHORIZATION

Section 6 of the bill, added by your committee, would increase by $500,000,000 the total mortgage insurance authorization for title II of the National Housing Act. Of this sum $300,000,000 would be available immediately, and $200,000,000 additional would be available with the approval of the President. This title provides for the regular, permanent mortgage insurance program of the FHA for both sales and rental housing. As the authorization is now almost exhausted, it is essential that an increase be granted promptly in order that needed housing construction will not be delayed. The increase contained in section 6 of the bill is not intended to provide the full amount needed, but will prevent delay in mortgage insurance operations under title II until your committee has had an opportunity to examine fully a request for a larger amount.

Subsection (b) of section 6 of the bill would continue the mortgage insurance authorization under section 608 of title VI from June 30, 1949, until August 31, 1949. In view of the fact that nearly all of the multiple unit rental insurance under the FHA program is done under this section and in view of the continuing need for rental accommodations throughout the country, the committee deems it necessary to provide for this interim extension until it has an opportunity to consider the bills before it dealing with amendments to the National Housing Act in general.

SECTION-BY-SECTION ANALYSIS OF THE BILL AS AMENDED

Section 1

This section would add a new title VIII to the National Housing Act, as amended. This new title VIII providing for military housing insurance would be comprised of eight sections numbered 801 to 808 inclusive.

The terms used in this new title VIII would be defined in section 801. The definitions are similar to those in other titles of the National Housing Act except that a definition of the term "military" is added to make it clear that the term includes the Army, Navy, Marine Corps, and Air Force.

A military housing insurance fund of $10,000,000 would be created by section 802 for use by the Federal Housing Commissioner as a revolving fund for the purposes of title VIII, including general operating expenses. Pending such appropriation, the Commissioner would be directed to transfer temporarily $1,000,000 from the war housing insurance fund established under title VI of the National Housing Act. As housing is insured under title VIII, the fund would, of course, be augmented by deposits of fees and insurance premiums authorized to be collected under the bill, and, except in the event of unusual losses, the fund should be self-sustaining.

Section 803 (a) would authorize the Federal Housing Commissioner to insure eligible mortgages under this new title VIII in an aggregate

H. Repts., 81-1, vol. 467

that if during the time the mortgage is insured and before the mortgagee has received the benefits of insurance, the United States acquires, or commences eminent domain proceedings to acquire the mortgaged property for the use of the National Military Establishment, the mortgagee may, at its election receive the benefits of the insurance as provided notwithstanding the fact that the mortgage may not be in default.

Representatives of the three branches of the National Military Establishment, appearing before your committee, strongly urged the enactment of this measure. They stressed, in terms of the efficiency of the armed services, the urgent need for adequate housing facilities to serve families of their personnel. They made it abundantly clear that, to attract and hold the highly trained, experienced, and technical personnel now required by the Departments of the Army, the Navy, and the Air Force, it is essential that this personnel be afforded an opportunity to live comfortable and normal lives, insofar as military duty permits, on a reasonable parity in terms of housing, with the average American citizen. The fact that most of them do not now have this privilege is a major contributing factor to the existence of a morale problem that bears on the effectiveness of our armed forces, to the difficulties in recruiting able men, and to the large percentage of trained men who are failing to reenlist at the expiration of their enlistment terms.

Adequately training men to maintain and operate our present-day intricate war machines is an extensive and costly undertaking. Whenever a trained man fails to reenlist, the investment of the Government in his training is lost to the armed services involved and another man must be given similar training. The Air Force in September 1948 made an analysis of its enlisted personnel which indicated that only 59 percent of all married enlisted personnel intended to reenlist. However, 79 percent indicated that they would reenlist if the Government were to provide family housing. Those failing to reenlist include some of the best trained and most able men.

Normally the housing units needed at each installation would be supplied through the construction of public quarters by the military forces. However, meeting this present need in its entirety through the use of public funds would require a tremendous direct expenditure by the Federal Government. It is therefore extremely important that private builders be encouraged to construct as much of this housing as possible.

The bill is designed to encourage them to construct such housing. Where housing is constructed with mortgage insurance under the bill, no cost to the Government would be involved unless, through deactivation or curtailment of military installations or other causes there are losses in excess of the premium and other payments by the mortgagee to the insurance fund. In any event, such losses would not approach the cost of construction by the Federal Government.

Testimony presented to the committee emphasized that housing constructed with mortgage insurance under this bill cannot possibly meet more than a portion of the military housing need either in terms of total units required or in terms of desirable rent levels. However, such mortgage insurance should encourage the production of substantial additions to the housing supply available to personnel at military installations and at rentals comparable to or lower than those which

many of them are now paying for inadequate quarters. Such privatehousing developments should increasingly free and make available to enlisted personnel and junior officers the existing public quarters on military installations.

TITLE II AND TITLE VI MORTGAGE INSURANCE AUTHORIZATION

Section 6 of the bill, added by your committee, would increase by $500,000,000 the total mortgage insurance authorization for title II of the National Housing Act. Of this sum $300,000,000 would be available immediately, and $200,000,000 additional would be available with the approval of the President. This title provides for the regular, permanent mortgage insurance program of the FHA for both sales and rental housing. As the authorization is now almost exhausted, it is essential that an increase be granted promptly in order that needed housing construction will not be delayed. The increase contained in section 6 of the bill is not intended to provide the full amount needed, but will prevent delay in mortgage insurance operations under title II until your committee has had an opportunity to examine fully a request for a larger amount.

Subsection (b) of section 6 of the bill would continue the mortgage insurance authorization under section 608 of title VI from June 30, 1949, until August 31, 1949. In view of the fact that nearly all of the multiple unit rental insurance under the FHA program is done under this section and in view of the continuing need for rental accommodations throughout the country, the committee deems it necessary to provide for this interim extension until it has an opportunity to consider the bills before it dealing with amendments to the National Housing Act in general.

SECTION-BY-SECTION ANALYSIS OF THE BILL AS AMENDED

Section 1

This section would add a new title VIII to the National Housing Act, as amended. This new title VIII providing for military housing insurance would be comprised of eight sections numbered 801 to 808 inclusive.

The terms used in this new title VIII would be defined in section 801. The definitions are similar to those in other titles of the National Housing Act except that a definition of the term "military" is added to make it clear that the term includes the Army, Navy, Marine Corps, and Air Force.

A military housing insurance fund of $10,000,000 would be created by section 802 for use by the Federal Housing Commissioner as a revolving fund for the purposes of title VIII, including general operating expenses. Pending such appropriation, the Commissioner would be directed to transfer temporarily $1,000,000 from the war housing insurance fund established under title VI of the National Housing Act. As housing is insured under title VIII, the fund would, of course, be augmented by deposits of fees and insurance premiums authorized to be collected under the bill, and, except in the event of unusual losses, the fund should be self-sustaining.

Section 803 (a) would authorize the Federal Housing Commissioner to insure eligible mortgages under this new title VIII in an aggregate

H. Repts., 81-1, vol. 4-67

principal amount of $500,000,000, except that this amount could be increased by the President to $1,000,000,000. No commitment for insurance under the bill could be made after July 1, 1951. Although the Federal Housing Commissioner would not be required to determine acceptable risk under this new title, he would be authorized by the bill to prescribe the terms upon which he would make commitments to insure n.ortgages under this title.

Section 803 (b) (1) would provide that the Commissioner could require the mortgagor to be regulated or restricted as to rents or sales, charges, capital structure, rate of return, and methods of operation.

Section 803 (b) (2) would provide that the mortgaged property would have to be designed for rental use by civilian or military personnel of the Army, Navy, Marine Corps, or Air Force assigned for duty at installations in the area in which it is constructed, or for employees of Government contractors at such installations. In this connection, preference or priority of opportunity in the occupancy of the mortgaged property for such personnel and their immediate families would be provided under such regulations and procedures as may be prescribed by the Federal Housing Commissioner.

Mortgages could not be insured under this title unless the Secretary of Defense or his designee certifies that the housing is necessary for the needs of the personnel at a military installation, that such installation is deemed to be a permanent part of the Military Establishment, and that there is no present intention to curtail substantially the activities at such installation.

In order to provide more flexibility in the handling of these certifications, the bill would require such certifications to be made by the Secretary of Defense or his designee rather than by the Secretary of the military department involved.

use.

Section 803 (b) (3) would provide that mortgages to be insured under the bill could not exceed in amount $5,000,000, 90 percent of the replacement cost of the property, or an average of $8,100 per family unit for the part of the property attributable to family dwelling The limitation of the mortgage amount to an average of $8,100 per dwelling unit would restrict the average cost per dwelling to $9,000 if the mortgagor borrows the full 90 percent of costs under the mortgage. This limitation is similar to existing limitations upon mortgage insurance for rental housing of all types. The interest rate on mortgages insured under this new title VIII could not exceed 4 percent per annum, which is consistent with existing rates for mortgages on rental housing.

Section 803 (c), relating to premium charges for insurance under the new title, is identical with the provision for such charges in title VI of the National Housing Act, except for the deletion of the proviso, discussed above, which would require a determination of acceptable risk by the Federal Housing Commissioner. Premium charges would be not less than an amount equivalent to one-half of 1 percent per annum, nor more than 11⁄21⁄2 percent per annum, of the principal amount of the mortgage outstanding at any time.

Upon default by the mortgagor in the making of payments under the mortgage, the mortgagee would be entitled, under section 803 (d), to the benefits of the insurance if he assigns the mortgage to the Commissioner or forecloses on the mortgage and transfers the property to the Commissioner, in the same manner as in the case of an insured

mortgage on war housing under title VI of the act. The insurance benefits would be paid to the mortgagee in 10-year debentures bearing up to 3 percent interest, and a certificate of claim, with 3 percent annual increments. Provision is made under which a mortgagee could receive the proceeds of the insurance in the event all or a substantial part of the mortgaged property is condemned or otherwise acquired by the United States for military purposes. Although it appears unlikely that the armed forces would seek to acquire property already serving their needs there would appear to be no reason why mortgagees should be deprived of the benefits of the insurance in any such types of cases.

Sections 803 (e), 803 (f), and 803 (g) contain detailed technical provisions with respect to the debentures and certificates of claim to be issued in payment of insurance claims. These provisions are identical in purport with provisions of title VI relating to insured mortgages on rental housing.

Section 803 (h) contains general administrative provisions to permit the Commissioner to deal with mortgages and property acquired by him under title VIII in the same manner as permitted with respect to mortgages insured under other titles of the act.

Under section 803 (i) the Commissioner would be authorized to insure, under title VIII, title II, or title VI, mortgages executed in connection with the sale by him of any property he may acquire under title VIII, without regard to restrictions otherwise applicable. This is similar to the power granted in other titles of the act.

Section 803 (j) contains the usual clauses making the contract of insurance conclusive evidence of the eligibility of the mortgage for insurance and providing for incontestability of contracts of insurance in the hands of an approved mortgagee except for fraud or misrepresentation on the part of such mortgagee.

Section 803 (k) provides that the powers of the Federal National Mortgage Association with respect to any mortgages may be used in connection with mortgages insured under title VIII.

The uses to which the military housing insurance fund could be put, and the charges and credits to such fund, would be governed by the provisions of section 804, which are similar to provisions in existing titles of the act with respect to insurance funds for mortgages on rental housing.

Section 805 would authorize the Secretaries of the military services to lease property under the authority of the act of August 5, 1947 (61 Stat. 774) for housing, insured under the new title, on such terms as they deem in the public interest without regard to existing limitations with respect to lease duration or to the right of revocation in the event of a national emergency. They would also be authorized to sell property for military housing use under this bill at fair value as determined by them.

Section 806 is a technical amendment necessary to assure that the determination of "acceptable risk" is not required for housing in Alaska, which is insured under title VIII.

Section 807 would provide that the acquisition of real property by the Commissioner under title VIII would not exempt if from taxation. Section 808 would authorize and direct the Commissioner to make rules and regulations to carry out the provisions of title VIII.