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(2) Because of the difference between cooperative housing and ordinary commercial apartment building, I urge you to reinstate the provision for an Assistant Commissioner to administer the section 213 cooperative housing program. This would be accomplished by reenacting section 213F. Educational and sound promotional work is essential if the FHA program is to be what is expected and represented.

(3) The difference between cooperative housing and ordinary apartment building under the former section 608 program shows up in the matter of inspection of the building as it progresses. Under the section 608 program if the builder took a shortcut here or there, he would only be harming himself since he was the owner. It was greatly to his self-interest that the building be properly built and FHA inspection procedures developed along this premise.

Under the section 213 program an entirely different attitude is necessary on the part of the inspectors. Under section 213 the owner (i. e., the cooperators) has no control over the building operation and his only protection is rigid supervision by the FHA personnel. Thus, in addition to having an Assistant Commissioner to administer section 213, Congress should provide for a more rigid inspection at every stage of construction to make sure that the investor is getting what he paid for.

(4) Lists of cooperators should be available. Now they are denied, although a recent decision of the supreme court in New York holds that they should be made available. The result is that the buyers do not know who their partners are and are unable to organize, protect their interests, and plan for the development of the cooperative features when the buildings are turned over. There should be no secrecy about lists of cooperators.

The above four recommendations are suggested to help make cooperative housing more helpful to the cooperator and the movement. If carried out, the investor would know what he is getting, the builder would be substantially protected against harassment during the building process, and the lenders would have the protection which the FHA has always provided. Cordially yours,

LOUIS H. PINK.

UNITED STATES SAVINGS & LOAN LEAGUE,

Chicago, Ill., January 1, 1954. Hon. HOMER E. CAPEHART, Chairman, Senate Banking and Currency Committee,

United States Senate, Washington, D. O. MY DEAR SENATOR CAPEHART: At its 61st annual meeting held in Chicago last November, the delegates of the United States Saving & Loan League adopted the enclosed resolution concerning the role of the Federal Government in housing. We are happy to share this statement with you. Sincerely,

NORMAN STRUNK, Executive Vice President.

A RESOLUTION APPROVED AND ADOPTED BY THE UNITED STATES SAVINGS & LOAN

LEAGUE AT THE 61st ANNUAL CONVENTION, HELD AT CHICAGO, ILL., NOVEMBER 22-24, 1953

PUBLIC HOUSING

For 16 years a Federal law has been in effect which permits public bodies to build housing, provides for continued public ownership of these structures, and authorizes substantial subsidies out of the Federal Treasury to the rent of the tenants of these buildings. To date the program has been extremely costly ; aside from its annual drain on the Federal revenues of upward of $30 million at the present rate, with a prospective annual increase in the amount in the years ahead, it has been financed by tax-free bonds sold to the public with complete Government guaranties. In addition, the overhead cost of the Public Housing Administration is an expensive item in the Federal Government's budget.

Lengthening experience with the program has brought to light increasing disadvantages. Political repercussions that come in its wake gave rise to a congressional investigation last year in at least 1 major city; at least 84 communities have voted either in city council or public referendum against such projects by clear majorities. The Congress of the United States, in its wisdom, has for 3 successive years curtailed the program of new Government-subsidized housing units far under the maximum permitted by the law, because it has felt that the whole program is out of keeping with the free-enterprise system and is something which the United States cannot afford in the light of its current unprecedented budget needs for defense.

The United States Savings & Loan League reiterates its unconditional opposi. tion to any further expansion of the public housing program. We commend the House of Representatives in the 820 and 83d Congresses which voted overwhelmingly for curtailment or complete stoppage of further building and further subsidies under this program.

SHIELDS & Co.,

New York, N. Y., March 18, 1954. Re Title VII, United States Housing Act, 1937, as amended. Hon. HOMER E. CAPEHART,

United States Senate, Washington, D. C. MY DEAR SENATOR CAPEHART : It has been brought to my attention that recommendations have been made for the elimination of title VII from the United States Housing Act, and that those recommendations are based upon lack of interest in the type of financing provided by title VII.

Please let me explain that Shields & Co., in which firm I am a partner, have had a keen interest at all times in title VII. It is our belief that with cooperation from the Federal Housing Administration that title VII could be made an excellent instrument in the financing of housing projects for the middle-income group, particularly in connection with plans for urban development. We believe that title VII, if activated, would provide a vehicle for low-interest rates for such financing and that the results would be highly beneficial to large cities where certain types of housings are badly needed.

Should you desire for the benefit of your committee further explanation of my viewpoint, I shall be pleased to make myself available either over the telephone or in person. Yery truly yours,

ROBERT T. VEIT.

SHIELDS & Co.,

New York, N. Y., March 30, 1954. Re: Title VII, United States Housing Act of 1937, as amended Hon. HOMER E. CAPEHART, Chairman, Committee on Banking and Currency,

Senate Office Building, Washington, D. C. MY DEAR SENATOR: Please let me thank you for your kind letter of March 25. It is correct to assume that we feel, as the result of our own experience and that of two other parties, that good cooperation had not been given by FHA in implementing title VII. We attempted to activate title VII to cover two guineapig projects, one to be financed by a private limited profit corporation, the other by a local housing authority and, of course, on a nonprofit basis. We seemed to encounter a continual series of roadblocks which, when surmounted or circumvented, were soon reerected. FHA seemed to be definitely and firmly committed to financing through mortgage channels.

We, on the other hand, believe that a bond issue secured by the yield insurance provided by title VII and distributed through bond-dealer channels would command considerably lower interest rates than available to mortgage financing. Title VII, you may recall, in essence provides for equal yearly amortization installments as compared in other FHA financing to equal yearly installments of principal and interest taken together. As under title VII the aggregate of principal and interest would decrease year after year, rents could be expected to decrease as the housing became older, certainly an eminently sound and desirable factor.

FHA appeared opposed to public distribution of title VII securities in the (in our opinion) mistaken belief that they were charged with looking after the interest of investors and on that ground perhaps rested their main objection to title VII. We maintain that, inasmuch as the debenture issues we proposed for issuance would at all times during their existence be covered by at least 100 percent insurance under Federal auspices, the resulting obligation would provide a type of security as sound as are the new housing authority bonds of PHA which are commonly granted the highest investment ratings. In addition the project would presumably be wholly self-liquidating and thus in no way a charge upon the Federal Treasury. Consequently we venture the thought that a directive to FHA from higher authority might clarify their position in the matter.

In view of the apparent policy of the administration to stimulate slum clearance and redevelopment with low-rent housing facilities that would be selfliquidating we respectfully suggest not only that title VII be kept alive but that every reasonable effort be made to implement it through a positive attitude by the Federal agency. Very truly yours,

ROBERT T. VEIT.

VAN DYKE, Mich., March 16, 1954. Senator CAPEHART, Senate Office Building,

Washington, D. C.: Title 1, section 8, has produced 1,000 low-cost homes in Warren Township. Great need for title I program and strongly urge it to be continued.

ARTHUR J. MİLLER, Supcrvisor, Warren Township.

WASHINGTON HOUSING ASSOCIATION,

Washington, D. C., March 19, 1954. Hon. HOMER CAPEHART, Chairman, Senate Banking and Currency Committee,

Senate Office Building, Washington, D. C. MY DEAR SENATOR CAPEHART : The board of directors of the Washington Housing Association yesterday voted to approve the enclosed resolution and to submit it to you as chairman of the Senate Banking and Currency Committee, with the hope that the committee will take immediate steps to attach such an amendment as we urge to the Housing Act of 1954.

We believe an explicit reference to the Discrict of Columbia Redevelopment Land Agency is necessary since the agency was originally established by the District of Columbia Redevelopment Act of 1945, and not by the National Housing Act of 1949. Very sincerely yours,

CAMPBELL C. JOHNSON, President.

1. Whereas the President of the United States in his housing message to Congress, listed three points which long-range programs directed to the prevention of neighborhood decay should include:

"First. Prevention of the spread of blight into good areas of the community through strict enforcement of housing and neighborhood standards and strict occupancy controls;

Second. Rehabilitation of salvable areas, turning them into sound, healthy neighborhoods by replanning, removing congestion, providing parks and playgrounds, reorganizing streets and traffic, and by facilitating physical rehabilitation of deteriorated structures;

Third. Clearance and redevelopment of nonsalvable slums;" and

2. Whereas the recently introduced housing bill of 1954 provides that no contract can be entered into for any loan or capital grant under title I of the Housing Act of 1949 or for annual contributions or capital grants pursuant to the United States Housing Act of 1937, unless the locality presents to the Housing and Home Finance Administrator a workable program for eliminating and preventing slums and urban blight and encouraging the rehabilitation or redevelopment of blighted areas or slums, which plan is approved by the Administrator; and

3. Whereas the housing bill of 1954 further provides that the term "urban renewal area' shall be substituted for "redevelopment area" in title I of the National Housing Act of 1949 and shall be defined to include slum clearance and redevelopment, rehabilitation, or conservation, or any combination or part thereof; and

4. Whereas the close coordination of housing enforcement with the projected extension of the powers of redevelopment authorities is essential to the effective accomplishment of the stated goal: Therefore be it

Resolved, That the Washington Housing Association urge and support an amendment to the proposed Housing Act of 1954 which will assure the District of Columbia Redevelopment Land Agency of full participation in all phases of the urban renewal program, in the same manner as is proposed for redevelopment authorities elsewhere in the Nation.

YPSILANTI, Mich., March 16, 1954. Senator CAPEHART, Senate Office Building,

Washington, D.C.: Urgently imperative new housing law retain section 8, title I, provisions. absolutely necessary here in local slum-clearance program.

N. G. DAMOOSE, City Manager.

NATIONAL BANK OF ALASKA,

Anchorage, Alaska, April 5, 1954. Senator H. E. CAPEHART,

United States Senate, Washington, D. C. DEAR SENATOR CAPEHART: In reviewing Senate bill 2938 relating to housing, we note that section 305 repeals subsection (b) of section 2 of the Alaska Housing Act. The proposed repealer would eliminate the power of the Federal National Mortgage Association from purchasing FHA loans without limitation in Alaska.

Under our territorial status, we have virtually no insurance money seeking investment in Alaskan housing. Consequently, our dependence is entirely upou the FNMA as a secondary market. The Alaska Housing Act did facilitate the large-scale project construction of homes. However, I am sure that you will agree that the backbone of any community is the individually owned residence constructed on the lot and according to the plans of the family living therein. Without the assurance that we can have a steady secondary market, we cannot continue to render the necessary service to the community of processing these FHA loans. No bank in Alaska has the resources to carry the paper in the quantity that is needed to satisfy the residential housing needs. For example, our bank has approximately $1 million in our inventory at all times of FHA loans, counting the disbursements from the time construction is started until the time the home is finished and the loan is ready for sale.

There is an entire area, principally composed of Government employees, living in what is called the Government Hill section of Anchorage who are in the course of building homes under FHA requirements. They acquired their land under these understandings and our bank, as well as other banks, are trying to process the loans. In our opinion there is no longer any need in the Anchorage area for large-scale project housing. However, there continues to be the insistent need for the individually owned and occupied home. To obtain this secondary market it is necessary that the FNMA have specific statuatory authority. We have had experience in the past with the uncertainties of administrative procedures and know that there can be no assurance that the market will continue if this section is repealed.

We urge that as a visitor to our Territory and therefore having had first-band acquaintance, you point out to your committee the vacuum of mortgage financing in Alaska and that we must have the FNMA continue for the above-named purpose. If there is any further information that our bank or any other lending institution in Alaska could give to your committee on this point, we would appreciate having the opportunity. Sincerely yours,

E. E. RASMUSON, President.

ALASKA DEVELOPMENT BOARD,

April 13, 1954. Hon. HOMER E. CAPEHART, Chairman, Banking and currency Committee,

United States Senate, Washington 25, D. C. DEAR SENATOR CAPEHART: It is our understanding that that section in Senate bill 2938, permitting the Federal National Mortgage Association to purchase FHA approved loans in the Territory of Alaska, has been deleted from this resolution. It is our further understanding that general provisions are con

tained in this measure permitting the President of the United States to designate special areas from which FNMA would be authorized to purchase FHA approved mortgages.

In order for the Territory to continue its badly needed housing program, specific provisions should be retained in this legislation providing that FNMA may be allowed to purchase FHA approved mortgages. If such permissive language is not contained in this legislation, it will be impossible for local lending authorities to finance home construction in the Territory of Alaska.

Ketchikan, Alaska, the site of the newly constructed $52 million pulp mill, has woefully inadequate housing facilities to care for the hundreds of new workers needed to operate the pulp mill. At the present time, a subsidiary of the parent Company is attempting to finance the construction of some 200 homes. These homes will undoubtedly have FHA approved loans, but local banks are not able to handle the financing of such an enterprise and must dispose of these mortgages in other channels outside of the Territory of Alaska. The logical and best place to sell these mortgages is through FNMA.

Other communities in Alaska will be faced with situations similar to that of Ketchikan when new industries come into the Territory. We, therefore, urge members of this committee to retain the original language of section 305 permitting FNMA to purchase mortgages in Alaska approved by FHA. Sincerely,

AL ANDERSON, Assistant Manager.

THE AMERICAN BANKERS ASSOCIATION,

Washington 5, D. C., April 15, 1954. Mr. Ira Dixon, Chief Clerk, Senate Banking and Currency Committee,

Senate Office Building, Washington 25, D, C. DEAR MR. DIXON: I am submitting herewith two statements supplementing testimony presented by Mr. John A. Reilly on behalf of the American Bankers Association on S. 2938.

One of these statements relates to the proposal for a voluntary home credit program which was presented by a representative of the insurance companies subsequent to the presentation of our testimony. The other statement relates to certain sections of H. R. 7839 as passed by the House which has now been referred to your committee, proposing to change the name of the Federal Savings and Loan Insurance Corporation.

It would be appreciated if it could be arranged to have these statements included in the record of the hearings on S. 2938. Sincerely yours,

J. OLNEY BROTT, General Counsel.

SUPPLEMENTARY STATEMENT OF THE AMERICAN BANKERS ASSOCIATION ON THE

PROPOSED VOLUNTARY HOME CREDIT PROGRAM

This supplementary statement is submitted with respect to the proposal intended to encourage and facilitate the flow of mortgage credit into remote areas and small communities, through the voluntary cooperation and effort of private lending institutions, which was presented by a representative of the insurance companies subsequent to the testimony of Mr. John A. Reilly who appeared on behalf of the American Bankers Association on S. 2938.

The insurance companies' proposal has been included in H. R. 7839 as title VI: Voluntary Home Credit Program.

We believe that this voluntary home credit program is more in accord with the national housing policy as expressed in the President's housing message and in the report of the President's Advisory Committee on Government Housing Policies and Programs than the central mortgage marketing facility under a rechartered Federal National Mortgage Association provided under title III of S. 2938, in that the voluntary home credit program is intended to encourage private enterprise to assume greater responsibility in meeting housing and home financing needs without Government support or assistance.

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