We suggest that page 75, line 18, of the present act be amended to require that adequate plans be made in advance for the rehousing of displaced families in accordance with section 105-C of the 1949 act. Also that on page 73 the workable program should include plans for adequate rehousing. RENEWAL We favor provisions to prevent further deterioration of property and neighborhoods that can be saved but this is no substitute for genuine redevelopment. FHA-PRIVATE ENTERPRISE HOUSING We have long complained about the lack of participation by Negroes in the private enterprise housing insured by the FHA. Only minor improvements have resulted. The Congress must act to see that FHA policies are adopted that will assure that Negro citizens obtain a fair and just proportion of the new housing to be constructed. We propose that the pending bill be amended to include the following: "Mortgage commitments under all FHA titles are to be issued to all segments of the population on the basis of their share of the effective housing demand." We further propose that the bill be amended to prohibit FHA insurance of property to be sold or rented unless prior commitment is given that the owner will not discriminate against persons because of race or color or religion. FNMA More precise instructions must be given to FNMA. The wishes of the Senate as contained in the report of the 1953 bill were not carried out. Although advance commitments were given to some 213 housing available to Negroes, it was not on a priority basis as this committee seemed to intend. PUBLIC HOUSING We are willing to experiment in regard to the new approach to low-income housing. But until the experiment has proved itself effective, the Government should continue and expand the public-housing program. We propose that a public-housing program in line with the numerical objectives of the 1949 act be included in this bill. We do not wish our criticism of the way the Federal Government's housing program has operated to be considered a reflection on either President Eisenhower or Administrator Cole. Both have shown an acute awareness of the problems of minorities and a willingness to do something about it administratively. Mr. Cole has constantly warned the building industry of the necessity to do something about the housing needs of minorities. The Congress, however, should provide the basic legislation to strengthen their hands. Great work has also been done by the race relations staff in HHFA and constituent agencies. This staff should be strengthened and enlarged. How BIG IS THE HOUSING JOB RELATING TO NON WHITES IN NONFARM AREAS? The magnitude of the nonfarm housing job required to serve nonwhite families adequately can be estimated from 1950 census data and projections applied to the nonwhite segment of the housing inventory and population changes. Such analysis for the intercensal decade, 1950-60, indicates that some 21⁄2 million nonfarm dwelling units would need to be provided through new construction, conversion, or rehabilitation to serve nonwhite families adequately by 1960. To meet this need within any reasonable period will challenge private industry to increase greatly the provision of good housing available to nonwhite families through new construction, conversion, or rehabilitation in nonfarm areas. If this total job were to be done by 1960, approximately 250,000 such nonfarm units would have to be so provided annually to serve nonwhite families adequately, and even to meet half of these requirements would mean an annual average of 125.000 such units. The Federal Government is ready to assist the housing industry in this task but the pace at which the job will be done rests largely with the industry itself. 700,000 This analysis for the intercensal decade, 1950-60, derives the following estimates of specific components of nonfarm housing requirements for nonwhites: Additional nonfarm units needed for new nonwhite family formation__ Nonfarm units occupied by nonwhites (in April 1950) which were identified in the 1950 census as either dilapidated nonfarm units or urban units lacking private bath or toilet... Nonfarm units occupied by nonwhites (in April 1950) which will be lost by 1960 through disaster, demolition, etc--- Total nonfarm units needed to be provided during 1950-60 through new construction, conversion, or rehabilitation to serve nonwhite requirements adequately. (These estimates include no allowance for any vacancy or undoubling in nonfarm units occupied by nonwhites, nor for their net inmigration to nonfarm areas.) 1,600,000 40,000 2,500,000 (Prepared by B. T. McGraw in consultation with E. E. Ashley III. Racial Relations Service, Housing and Home Finance Agency, Washington, 25, D. C.) Mr. HENDERSON. In the last line of the statement, it says, "2,500,000 total nonfarm units needed to be provided during 1950-60 through new construction, conversion, or rehabilitation to serve nonwhite requirements adequately." One of the reasons, Senator, as we have said in other appearances before this committee, for the severe state of housing conditions among the Negroes now, is the historic discriminatory practice of the real-estate industry. We have tried in every way we could to induce the administration and the Congress to recognize this fact and put into legislation some safeguards that would enable minorities to get the benefit of the Federal Housing programs. Going back to the matter of slum clearance, I would like to say that Administrator Cole of the Housing and Home Finance Agency has recognized very, very well the importance of trying to do something about the minority housing problem, if we are going to have a successful slum-clearance program. I notice that among his many speeches, the House and Home magazine contains an article, stating as a headline, "Slum Clearance Depends on Solving Minority Housing Problems, Says HHFA Administrator.” Unfortunately, in this legislation, although I am not critical of the legislation as such, there are no specific provisions that I have been able to find, that would particularly help us. We hope to be brought in under the general stream of all the people who are to benefit by this legislation, but I think we need a little more than that today. The CHAIRMAN. What do you think we might do? Mr. HENDERSON. Well, I will skip down here to FHA-what I call private-enterprise housing. The background of this is so well known to all the Senators, that I won't go into all of it. We would like to suggest two things. One is that the pending bill be amended to include this following state ment: Mortgage commitments under all FHA titles are to be issued to all segments of the population on the basis of their share of the effective housing demand. I believe that FHA can do that under its overall general program. It has done that in some instances. They have set up priorities for particular groups in the population who have not been equally treated by the industry under this legislation. I believe they could do it again in a way that would not discriminate against anybody else, and would help to correct the inequities that now exist. We would like the committee to consider that. (The following was received for the record :) Hon. HOMER E. CAPEHART, HOUSING AND HOME FINANCE AGENCY, United States Senate, Washington, D. C. OFFICE OF THE ADMINISTRATOR, DEAR SENATOR CAPEHART: We have carefully studied Mr. Elmer Henderson's proposed amendment to the pending housing bill, S. 2938. Mr. Henderson has suggested an amendment which would provide "Mortgage commitments under all FHA titles are to be issued to all segments of the population on the basis of their share of the effective housing demand." Let me say first of all that the Federal Housing Commissioner and I are completely sympathetic with the objectives of Mr. Henderson's proposal. We cannot, however, recommend the inclusion of the language which he has suggested. Our reasons stem from the very real difficulties which the Federal Housing Administration would experience in attempting to administer the insured mortgage program on the basis of this or any similar formula. As you will realize the Federal Housing Administration is essentially an insuring agency which issues its commitments to lending institutions on the basis of their applications. Commitments are not and could not be issued to "segments of the population." At the same time both Mr. Hollyday and I are equally presuaded that the Federal Housing Administration program of mortgage insurance ought to be and will be administered on a basis which will encourage the provision of good housing freely available to members of minority groups and financed on terms within their ability to pay. You have asked for an explanation as to how the pending legislation would provide an adequate amount of housing for minority groups. You have further asked for a concrete indication as to how the Federal Housing Commissioner would administer the National Housing Act so as to assure minority groups a fair share of FHA insured housing. These seem to me eminently proper questions and I shall here attempt to set forth our answers. As you know, the pending legislation does not provide a special program for the benefit of minority groups. Frankly, I should be most reluctant to see legislation of this type incorporated in the bill. It is my firm belief that we will best reach the objective of providing adequate housing for our Negro and other nonwhite citizens by administering the Federal Government's housing activities so that these citizens like all others have equal opportunity to buy or rent good housing. If we were to attempt to develop a special program for the benefit of minority groups we should be recommending what is essentially class legislation—legislation which in my judgment could tend to perpetuate rather than cure the un-American prejudices which disadvantage our minority group families. The provisions of the pending bill, which would authorize the FHA to insure mortgages on both new and existing housing on terms better adjusted to the paying ability of all families of moderate income, should be of particular help to minority group families, many of whom are now effectively priced out of the market. The provisions of the bill which are designed to encourage the modernization and rehabilitation of existing structures will make good, inexpensive housing available to many families, both white and nonwhite, whose housing requirements are not adequately met by the purchase of small new homes. I am convinced that these provisions, plus the proposals affecting the Federal National Mortgage Association about which I will comment later, will give the Federal Housing Administration the legislative authority which it needs. Turning to the matter of administration, the FHA now requires that no distinction whatever be made as to race, creed, or color on applications for mortgage insurance and that underwriting considerations should recognize the right of equality of opportunity to receive the benefits of the mortgage insurance system and of obtaining adequate housing accommodations irrespective of race, color, creed, or national origin. FHA's instructions require that determinations adversely affecting eligibility of properties for mortgage insurance and the degree of mortgage risk on the valuation of the property to be insured be supported by observable conditions, precedent, or experience directly applicable to the subject case. Other policy statements and instructions likewise emphasize that each case is to be treated on its merits as an insurance transaction. The Federal Housing Commissioner and I have reepatedly stressed in public statements and conferences with industry representatives that the minority housing market needed and must receive priority attention. There are indications, and important ones, that both the building and lending interests of the country are now devoting honest efforts to meeting the housing needs of minorities. Both the National Association of Home Builders and the Mortgage Bankers Association have recently established working committees to push the production and financing of good housing for Negroes. The Racial Relations Service of the Housing and Home Finance Agency is working closely with these new organizations to give them every possible help in the task they have undertaken. I have been particularly impressed with the suggestion of the life-insurance representatives for the establishment of a voluntary home credit program. You will recall that the draft bill presented to your committee specifically states that one of the major purposes is "To encourage and facilitate the flow of funds for housing credit into remote areas and smaller communities where such funds are not available in adequate supply and without regard to race, creed, or color." I believe there are real possibilities of achievement in this effort, and I hope the Congress will act favorably on the proposal. Regional mortgage credit extension committees could become a significant new means for encouraging the investment of private funds in FHA and VA loans to minority families. I should like to make a very frank statement about the problem of minority housing. There is no question that our minority citizens have been disadvantaged in ways which I consider shameful. We have every intention of so administering the new legislation, if passed, in every way which will tend to correct that situation. I am realist enough to recognize, however, that the only real test of our efforts will be a steady and substantial increase in the supply of housing available to nonwhite families. I am optimistic that this will happen. However, if after a reasonable period of time I am not satisfied with the progress being made, I want to make it perfectly plain that I would have no hesitancy in recommending to the President that he use the authorities under title III of S. 2938 to give direct, special assistance to housing for minority families. Such action should be taken only if necessary, but if other means prove inadequate FNMA support for minority housing would, in my judgment, be fully justified. Sincerely yours, ALBERT M. COLE, Administrator. Senator FREAR. May I ask one question, while you are on that proposal: I am not quite sure what you mean by "effective housing demand." Mr. HENDERSON. More the need and demand that exists in any given community among the different segments of the population. Senator FREAR. In proportion to their need, these facilities should be made available to them? Mr. HENDERSON. That is right, sir. The CHAIRMAN. What he means, you take the population of whites and nonwhites, and then, percentagewise in respect to the need. For example, if the whites had a lot of new houses, and the nonwhites didn't have any, then the percentage might be a little greater per capita. Mr. HENDERSON. That is right. The actual fact of the matter is, Senator, that very little housing construction anywhere in the country is being made available to minority groups. The CHAIRMAN. The way we handled it in Indianapolis, we simply denied commitments to people unless they built minority housing. As a result of that, we are getting a lot of minority houses built in Indianapolis, as you know. Mr. HENDERSON. Yes. The CHAIRMAN. So, it gets back to whether it is a good thing to write it into law, or whether it can best be handled by administration. I think it can be handled by administration, if the administrators will just make up their minds to do it. Senator FREAR. I think that is a good point, Senator, that in many instances the local people know more about the needs of minority groups than perhaps some of these people sitting here in Washington may know. I do think that the control in Washington should remain there, in case of any violations in the States or local communities. But if that is agreed to by the local communities, as to the need existing between groups, then I think it should be carried out, if there are no prejudices or discriminations to any great extent. Mr. HENDERSON. That would be the case, Senator. However, the FHA works as a Federal agency, with local branches, and the FHA would make the final determination. I am sure their local branches consult with the effective leadership in the various communities where they exist, but it would be up to the FHA to do that. And of course they should do it, in consultation with community leaders. The CHAIRMAN. Right now we will ask the chief clerk of our committee to write a letter to the FHA and ask how, under this existing proposed legislation, they intend to make certain that minority groups do get their share. (The information requested follows:) Hon. HOMER E. CAPEHART, FEDERAL NATIONAL MORTGAGE ASSOCIATION, Chairman, Senate Committee on Banking and Currency, Senate Office Building, Washington 25, D. C. DEAR SENATOR CAPEHART: This is in reply to your March 15, 1954, letter in which you requested me to furnish you with a report regarding the issuance by Federal National Mortgage Association of advance commitments providing for the purchase of eligible FHA-insured section 213 cooperative housing mortgages, as authorized by Public Law 94, 83d Congress, approved June 30, 1953. It appears that Mr. Elmer W. Henderson, during the course of his testimony on S. 2938, now under consideration before your committee, expressed the opinion that the Association, in administering the commitment authority contained in Public Law 94, had not carried out the intent of the Congress as evidenced by your committee's report which stated: **** that the FNMA in issuing commitments for cooperative housing, should take into consideration the need for low- or moderate-cost housing and should also give a preference in processing to minority housing, a field where the backlog of need is greatest." Public Law 94, S3d Congress, by amending Public Law 243, 82d Congress, authorized FNMA to issue commitments not to exceed $30 million outstanding at any one time if such commitments relate to mortgages with respect to which the Federal Housing Commissioner had issued prior to September 1, 1953, pursuant to section 213 of the National Housing Act, as amended, either a commitment to insure or a statement of eligibility. Not more than $3.5 million of this authorization may be available in any one State. Due to the legislative limitations on the total commitment authorization that could be outstanding at any one time, FNMA did not reserve for or allocate to any particular State any specific amount of funds since such action would, in the aggregate, have required an authorization greatly in excess of the $30 million total permitted under Public Law 243 and Public Law 94. Under the legislation, the total $30 million commitment authorization is the maximum allowable for issuance throughout the United States, but only about $25.5 million was available for additional commitments during the period between July 1, 1953, and August 31, 1953; the remainder of the overall commitment authority was represented by commitments amounting to approximately $1.5 million outstanding under previous legislation, that is, Public Law 243. FNMA announced on July 29, 1953, that it would begin accepting applications for advance commitments under Public Law 94. Applications for commitments aggregating $35,820,700, or almost 11⁄2 times the amount of the funds that were then available to the Association under Public Law 94, were received by FNMA |