Mr. EHLERS. The only alternative would be to reduce the size and quality of the house to the extent that it would not be a desirable permanent type of accommodations and defeat the purpose of the legislation to provide adequate low rental housing for military personnel. It is therefore recommended that there be inserted after line 14, page 41 of section 201 of the bill the following: Notwithstanding the provisions of this section, mortgages insured under title VIII of the National Housing Act shall bear interest (exclusive of premium charges for insurance) at not to exceed 4% per centum per annum of the amount of the principal obligation outstanding at any time. Experience indicates that the Government-financed secondary-mortgage market is essential to the successful operation of any military housing program. There is no question that such would even more so be the case in respect to continued use of the title VIII program herein proposed. The proposed Housing Act of 1954 contemplates the rechartering of the Federal National Mortgage Association, substituting private financing for Federal funds. In order to provide adequate financing at reasonable interest rates and thus assure the feasibility and workability of this proposed program, it is recommended that there be added to section 306 of the proposed Housing Act of 1954 the following: Notwithstanding subsections (a) and (b) of this section, the Association is anthorized to enter into advance commitment contracts to purchase, and to purchase mortgages with respect to which Federal Housing Commissioner has issued a commitment to insure or a statement of eligibility under title VIII of the National Housing Act, as amended. Any advance commitment contract under this subsection shall provide for purchase in the amount of the insurance commitment. However, no mortgage may be purchased for an amount exceeding the principal balance thereof, plus accrued interest, at the time of purchase. The proposed Housing Act of 1954 contemplates the extension of title VIII for a period of 1 year. In order to permit sufficient time to properly determine the need for military housing and to permit adequate planning and processing, it is recommended that section 126 of the proposed Housing Act of 1954 be amended to read as follows: Section 803 (a) of the said Act, as amended, is amended by striking out "And provided further, That no mortgage shall be insured under this title after July 1, 1954, except (A) pursuant to a commitment to insure issued on or before such date, or (B) a mortgage given to refinance an existing mortgage insured under this title and which does not exceed the original principal amount and unexpired term of such existing mortgage." The 1-year limitation in the act is presently due to the custom that has grown up in this type of legislation which follows the pattern set in title VI, section 608 as well as title IX. The limitation as applied to the military program should be removed for the following reasons: 1. Military programing and development of bases required more than 1 year due to the contingencies of the availability of public works funds to complete the base structures. 2. The development of a housing project normally requires more than 1 year of planning, engineering and legal work. 3. The military program requires that the plans be developed and paid for from appropriated funds and reimbursed from construction or mortgage funds at the closing. The military departments cannot conscientiously spend appropriated funds in the processing period left in any year for such if you make it reasonably certain that a commitment could not be obtained prior to the automatic expiration of the insuring authority. 4. Removal of the automatic cutoff date will not cause increased numbers of projects but will develop better projects in that adequate time may be given to planning and development to insure the military will receive the best housing for the rent dollar. 5. The limitations proposed in the bill adequately limit the Government insurance risk. Consequently, there would appear to be no real benefit gained by continuing the yearly cutoff on the Wherry program. It is recommended that the provision for a "cost certification,' added to section 803 (b) of the National Housing Act by section 10 (b) of Public Law 94, 83d Congress, be eliminated. This provision requires the mortgagor under a title VIII FHA insured mortgage to agree to certify either (A) that the amount of the actual cost to him of the physical improvements on the property equaled or exceeded the proceeds of the mortgage, or (B) the amount by which the proceeds of the mortgage loan exceeded the actual cost of the physical improvements. In the latter case, the mortgagor would be required to agree to repay to the mortgagee, within 60 days after the certification, any excess of the amount of the mortgage loan over the actual cost of the improvements. Under the bid procedures which the Department of Defense is presently following in respect to the award of title VIII certificates. of need, the requirement for a cost certification is needless. It is our recommendation that this provision be eliminated from title VIII. Title VIII was designed to provide housing for military personnel under the private enterprise system and in keeping with the private enterprise system we deem it essential to make provision for and create incentive for efficient, well organized know-how in the planning, construction and management of said housing. The sponsor is required under the present statute to give a firm bid price for the providing of the said housing and further is required to put forth his private funds to augment any deficiencies in the amounts allowed for in said bid to complete and provide the housing. When a sponsoring organization is a successful bidder under the bid procedure he is, generally speaking, receiving less mortgage money than the maximum mortgage the FHA is willing to insure. All of this constitutes the normal calculated risk of the sponsor under the private enterprise system. The present statute further provides that in the event the sponsor is successful in completing his project at something less than the amount of the mortgage, which is predicated on his bid, he is required to return same within 60 days. The Association takes the stand that this final statutory requirement is inequitable and defeats the private enterprise system of competitive bidding. Mortgagees are not particularly interested in acceleration of mortgage payments through this method. They are primarily interested in money invested in order to receive the return. The military departments, on the other hand, receive no reduction in rent due to the efficiency of the builder. Consequently, whether he makes or loses money in the project is of no particular practical importance to the prospective tenants, to the mortgagee or the FHA. I believe that is all we have to offer, sir. Senator BRICKER. Thank you very much. Mr. BEAN. Thank you. Senator BRICKER. Well, now we will hear from Mrs. Houser. Good. morning, Mrs. Houser. Mrs. HOUSER. Good morning. Senator BRICKER. Do you wish to read your statement or just put it in the record? Mrs. HOUSER. I would like to read the statement, if I may. STATEMENT OF MRS. JENCY PRICE HOUSER, NATIONAL Mrs. HOUSER. Mr. Chairman, my name is Mrs. Jency Price Houser, national organizer for Residence At Ease Association and the Cause for Permanent Housing Designed for Occupancy by Single Persons. We have been active in the development of mutual housing plans on a national basis but principally in Detroit, Mich., and Washington, D. C., for the purpose of providing permanent housing designed for occupancy by single persons. We are coming back to Congress for assistance after having advocated the passing of paragraph (g) of section 213 of the National Housing Act in 1950. Now, we wish to support enactment of section 119 of H. R. 7839-Cooperative Housing-the section 213 of the former act-with regard to which we have the following two suggestions to make: 1. In connection with section 213, management-type projects, there is an administrative requirement under FHA that needs an amendment, because FHA requires that a commitment may not be issued pursuant to a certificate of eligibility until 90 percent of the cooperators have been obtained and their required subscription prices have been fully paid. This seems to us to be too costly, delaying the obtaining of a sponsor for this type of building. Moreover, it seems to be a great handicap since the lining-up of would-be tenants before any financing or building can be started has led to much misunderstanding and violent criticism on the part of those who are accustomed to projects being built under section 207, which allows for buildings to be sponsored first and the tenants found afterwards. Officials have considered it a misrepresentation to act on this part of the legislation, which requires 90 percent of the cooperators before a certificate of eligibility can be obtained, and it has become quite an imputation of wrongdoing that there are prospective tenants but no building. It is therefore recommended that section 213 be amended to provide for the issuance of the commitment to a sponsoring group, in the same manner and with the same provisions as are permitted under section 207, but providing means for a special trust. 2. Our second suggestion is that paragraph (g) of section 213 of the National Housing Act of 1950 should be expanded into a whole section, embodying the provisions under section 207 and the special trust. Section 213 (g) reads as follows: Nothing in this act shall be construed to prevent the insurance of a mortgage under this section covering a housing project designed for occupancy by single persons, and dwelling units in such a project shall constitute family units within the meaning of this section. There should be provided a means, through the special trust, of making use of private investment capital for long-term loans at low interest rates for financing the development of housing projects designed for single people as members of nonprofit organizations. This trust should make possible the investment of private capital through the same type of guaranty as has been so successfully used in the mortgage-insurance system of the Federal Housing Administration. The trust should also be so designed as to make this program a selfsustaining program, similar to the FHA, with adequate protection to the Government by a specific insurance fund reserve for possible losses, to be built up by an annual premium charge of one-quarter of 1 percent of the outstanding loan balance paid by the borrowers, and by additional protection against possible losses, in the form of a cushion of private capital supplied by the borrowers through the purchase of units in the trust, in an amount equal to 20 percent of the original principal amount of the loan. The Government should supply the initial capital through the purchase by the Secretary of the Treasury of up to $10 1illion of capital stock in the trust, or encourage private individuals to do so. However, when the privately subscribed share capital reaches $5 million the Government stock would be retired, dollar for dollar, as additional private share capital was paid in. The $10 million of capital initially supplied by the Government would thus be replaced with $15 million of privately subscribed share capital. This private share capital could be supplied by beneficiaries or others, including States or municipalities. The total amount of obligation which the trust should issue and have outstanding at any one time should be limited to $100 million, all of which would be private investment. Of this maximum authorization, $10 million should become available by July 1, 1954. This program should use essentially the same form of organization as is used in the case of the Federal home loan banks. It would combine the best features gained in the course of more than 15 years' experience with the FHA and the Federal home loan banks, 2 of our successful means of Government assistance to private enterprise in housing. Secondly, we suggest it should provide for the necessary technical assistance and advice in the organization of self-help housing trusts and similar nonprofit organizations, and for the planning, financing, development, construction, and operation of the various housing projects. Thirdly, we feel strongly that it should make limited financial assistance, in the form of preliminary advances of funds, available to soundly organized self-help housing trusts and similar nonprofit organizations to enable them to develop specific plans for their housing projects. As far as we know, ours is the only organization devoting itself to paragraph (g) of section 213 of the Housing Act of 1950, and we are making strenuous efforts against heavy odds to promulgate this program, which is so much needed by at least 2 million persons. An analysis of this need and of our efforts to meet it is in a separate document submitted herewith. Senator BRICKER. That will be made a part of the record. (The document referred to follows:) HOUSING DESIGNED FOR SINGLE PEOPLE-THE NEEDS OF 2 MILLIONS There are at least 2 million American citizens for whom we believe that housing should be specially designed; and some of them are already in dire need of it. These people are very worthwhile citizens, and yet are pushed around by circumstances to an unsuspected extent, especially as they get older. We are referring to the single women in America who are over the age of thirty or so; institutions like the YWCA take care of those who are below that age. It quite often happens that, as a single woman gets near the retiring age, she is asked to leave accommodation where she has lived possibly for many years. So as to be modest and within range of possibility, and also to allay any thought of our trying to take on more than we can fulfill, only 4 percent of the need is what we are expecting to help, which is 1 person in 25. The needs of single people have been curiously omitted from housing debates. We think that there should be housing specially designed for those having pased the age of 30, and so designed that the tenant may expect to continue living there in old age. There are definite points where housing designed for single people must differ from housing designed for families, and we have spent time, energy, thought, and money in developing a model design to meet the needs of such people. We were forced to consider the housing of single people from a national standpoint. A local project was too small to interest those with big money. Even from a national standpoint it is proving difficult; but it would have been impossible from a local standpoint only. Legislative people as a whole are not interested unless something has a national aspect, because it must touch their own constituents. An architect is interested when his work may be reproduced often enough for him to receive sufficient remuneration for the expense of providing the first plan on a nonprofit basis. The same is true with regard to organization, legislation, contracting, financing, and all other phases of development. The persons for whom we are catering are women living alone, many of whom have spent their lives working conscientiously outside the home, or women whose husbands have died and whose children are on their own (or would be if they were not obliged to live together for lack of just such housing as that which we are aiming at providing), or widows who have never had any children. Single men and women often occupy houses or apartments which could serve for whole families just in need of such accommodation. Privacy and undisputed ownership, even though their tenancy is limited to one room, will be deeply appreciated by the tenants and do much to lessen the strain which, in later life, might lead to unbalance and possibly becoming a ward of the State. One room is all that is essential for a single person's happiness, if it is kind of room we mean to provide, and it is all that is wise for an aged person to be responsible for. There will be a healthful sense of security in being sure of one's own place permanently. There is safety in company for persons and property, and there are also certain big advantages which the tenants will appreciate as they become old. A great deal of research has been undertaken on the kind of housing best suited to single people. Much reasearch has also been done on methods of financing, and the founders of the project originally expected that a sponsor would be forthcoming to supply the equity needed for getting a mortgage insured by the Federal Housing Administration. It was not found easy, however, to obtain such sponsors. The middle-income housing act which was voted on in the spring of 1950 and lost by three votes, originally provided for the settingup of a giant revolving fund which would of course have provided money with which to build, and rapidly. The trust fund plan we propose would build upon a sounder and more mutual foundation, we think. One of the original features of this project is that of lining up the prospective tenants before a building is started. This is in accordance with section 213 of the National Housing Act of 1950, but unfortunately doing this has led to much misunderstanding and violent criticism on the part of those who are accustomed to projects being built under section 207, which allows for buildings to be sponsored first and the tenants found afterwards. It has even led to officials stating that a sponsor has no place in the plan. Hence the preference for section 207. 44750-54-pt. 1- 23 |