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8. The maximum loan to cooperatives (sec. 213) would be increased from $5 million to $25 million if the mortgagor is regulated or supervised under law as to rents, charges and methods of operation.

9. Consolidates all mortgage insurance authorizations and increases FHA insurance authorization by $142 billion plus up to one-half billion dollars with approval of President.

10. Changes Title II, Mutual Mortgage Insurance Fund, by eliminating group accounts and substituting a general surplus account and a participating reserve account.

11. Authorizes new section 220 FHA insurance on new or existing family dwellings in designated areas in urban renewal areas and where HHFA has approved community programs for slum prevention and urban redevelopment. In such areas authorizes loans on houses with more than 4-family units of $35,000 plus $7,000 for each additional unit over 4. For multifamily units insurance on 90 percent loans with maximum of $2,250 per room $2,700 in elevator type). Loan insurance would be available on same terms as in section 203 (sale) and section 207 (multifamily rental) until President authorizes higher limits within provisions of section 220.

12. Authorizes a new section 221 FHA insurance program on low-cost housing for families displaced as a result of slum-clearance operations or Government action, where community requested such insurance and it met eligibility requirements of HHFA. The FIA Commissioner would determine the need and the number of units to be insured in a particular area. It provides :

(a) Maximum insured loan of $7,000, 100 percent insurance, ($200 cash down required for closing costs) 40-year loans on new or existing structures.

(b) Insurance of $7,000, 100 percent 40-year loans for repair and rehabilitation of dwellings for more than 10 families where mortgagor is nonprofit organization, public or private, and regulated by Federal or State government as to rents and charges.

(c) Eighty-five percent 40-year loans to builders to facilitate sales to owneroccupants under purchase contract or lease option agreements.

(d) Option to assign mortgages not in default after 20 years to FHA for 10year dehentures at Federal going rate at date of issuance.

13. Extends military housing (title 8) to July 1, 1955. 14. Terminates defense housing (title 9) at expiration date, July 1, 1954. 15. Authorizes FHA insurance of open-end mortgages on 1- to 4-family houses.

TITLE II. MORTGAGE INTEREST RATES AND TERMS

1. Authorizes flexible mortgage rates and terms.

(a) Gives President authority to set maximum interest rates on FHA and VA loans at different levels for different classes of mortgages, but could not be more than 212 percent above average market yields on Federal bonds having remaining maturity of 15 years or longer.

(b) President authorized to establish limits on FHA and VA fees and charges.

(c) President authorized to establish maximum maturities and minimum downpayments on FHA and VA loans, also maximum dollar limitations on FHA mortgages.

2. Repeals section 504 of Housing Act of 1950, relating to fees and charges.

TITLE III. FEDERAL NATIONAL MORTGAGE ASSOCIATION 1. Recharters FNMA as constituent agency of HHFA, with HHFA Administrator as Chairman of Board of Directors of five Government members.

2. Authorized to purchase FHA and VA mortgages or participations not to exceed $12,500 per family unit.

3. In effect, capital and surplus of existing FNMA would be used to capitalize new FNMA (estimate at $70 million).

In connection with the secondary mortgage facility (see 4) capital contributions of not less than 3 percent of the mortgage or participation amount would be required of all sellers to the Association. In return conrefundable convertible certificates would be issued to the sellers, to be exchanged for capital stock when Treasury stock is retired.

4. Establishes a new secondary mortgage market facility.

(a) To purchase eligible mortgages at prices (not above par) for particular classes of mortgages as determined by Board of Directors. Volume of purchases and sales, prices, charges, and fees would be determined with the view that excessive use of the Association's facilities should be avoided.

(0) May enter into one for one contracts, but otherwise may not make advance commitments.

(c) To issue Association nonguaranteed obligations, not in excess of 10 times its capital, surplus, reserves, and undistributed earnings to carry out its secondary market operations.

(d) The Secretary of Treasury is authorized to invest in such obligations up to $500 million, plus an amount equal to reduction in FNMA present portfolio, but not more than $1 billion, until Treasury stock in Association is retired. 5. Provides special assistance functions.

(a) President could authorize advance commitments and purchases of mortgages of various types and classifications as a support for special housing programs or to retard a serious market decline.

(6) Treasury would supply funds in return for obligations of not more than: 5 years maturity.

(c) President could authorize not more than $200 million in purchases and commitments to be outstanding at any one time, but would have additional authority up to $100 million to enter commitments for mortgage participation agreements for a fixed 20-percent undivided interest in each mortgage, but with a deferred participation agreement to purchase the remainder in the event of default. 6. Liquidation of existing FNMA portfolio.

(a) Issue to public nonguaranteed obligations against its assets. The funds so obtained would be used to reduce existing Treasury's investment.

(0) Treasury authorized to purchase Association's obligations in sufficient amount to carry out Association's liquidation functions. Such obligations would have maturities of 5 years or less and the interest rate would be based on the average rate of outstanding Government obligations.

(C). Three hundred million dollars of the present authorization of FNMA for mortgage purchases would be made available for the special assistance program. (See 5.)

7. Separate accountability would be maintained for the (a) secondary market operations, (b) special assistance functions, and (c) management and liquidating functions of the rechartered FNMA.

SLUM CLEARANCE AND URBAN RENEWAL

TITLE IV. All the amendments are designed primarily to broaden and redirect the present slum clearance and redevelopment program so as to assist not only the communities in clearing their slums, as is presently provided, but to prevent their spread by rehabilitating and improving blighted, deteriorated, or deteriorating areas. The criteria, terms and definitions of title I of the Housing Act of 1949 are changed in accordance with the broader scope of the program. In these larger areas, known as urban renewal areas, there could be carried out (in addition to the slum clearance and redevelopment now authorized) plans for voluntary repair and rehabilitation of buildings, clearance of deteriorated structures, and reconstruction of streets and other necessary improvements.

Requirements with respect to local responsibility and local action would be strengthened and increased.

The requirement that a commercial or industrial deteriorated area may be cleared with Federal assistance only if the area be redeveloped for predominantly residential purposes is eliminated. In other words, a deteriorated commercial site can be redeveloped for commercial purposes. However, there would be substituted a requirement that the project be in accordance with an urban renewal plan to achieve "such community objectives for the establishment and preservation of well-planned residential neighborhoods."

The 4=13 formula for Federal local grants now in the law would not be changed. However, in the gross project cost might be included, in addition to those items now included, expenditures for carrying out plans for a voluntary repair and rehabilitation and the acquisition of property for the broader purpose indicated above, as well as the installation, construction and reconstruction of streets, utilities, parks, playgrounds, and other improvements (which need not be in a slum clearance area) necessary for carrying out the urban renewal plan.

TITLE V. LOW-RENT PUBLIC HOUSING 1. Extends preference in public housing, now limited to those displaced from public housing or slum clearance projects, to include also those displaced by

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other public actions, such as code enforcement and closing of structures, highway construction, etc.

2. Makes payment of 10 percent of shelter rents in lieu of taxes mandatory for public housing projects, except where this would reduce local contribution to less than 20 percent of the Federal contribution.

3. Permits localities to elect to charge full taxes provided they make up the difference in cash to maintain a local contribution equal to 20 percent of the Federal contribution.

4. Requires that the governing body and the public be informed of total local contribution, including the difference between payments in lieu of taxes and amount that full taxes would require.

5. Provides that after projects are fully amortized, that net revenues go proportionately to Federal and local governments on the basis of their contributions, in order that in time such contributions may eventually be recovered as far as possible, and the projects be made self-liquidating.

TITLE VI. HOME LOAN BANK BOARD 1. Provides method whereby Federal Savings and Loan Insurance Corporation may be served with notice of suit anywhere, and not just in the District of Columbia. Also bars enforcement of claim against the Corporation after 3 years from date of default, or, if the Corporation denies validity of the claim, after 2 years from the date of denial.

2. Increases maximum loan that a Federal savings and loan association may make (beyond exception already allowed) to $35,000, instead of the present $20,000 limit, set in 1933. Makes comparable changes as to collateral acceptable by Federal Home Loan Bank for advances. Also provides procedures for appointment of conservators and receivers of Federal savings and loan associations.

TITLE VII. URBAN PLANNING AND RESERVE OF PLANNED PUBLIC WORKS

1. Provides $5 million to Housing and Home Finance Administrator for planning grants up to 50 percent of estimated cost to State, metropolitan, and regional area agencies for metropolitan or regional planning, and to State planning bodies to assist municipalities under 25,000 in urban planning.

2. Provides $10 million to resume non-interest-bearing planning advances to local and State bodies for public works plans, repayable when construction is undertaken, in order that such works can be ready for construction if the economic situation should require it.

TITLE VIII. MISCELLANEOUS PROVISIONS

Includes exemptions from preference provisions of unusual types of permanent Lanham Act projects and provides for a consolidated report to Congress on agency's activities instead of assorted reports on various programs and activities. * * * Provides for consideration to be given to the reduction of vulnerability of congested areas to enemy attack in carrying out housing programs.

The CHAIRMAN. Before proceeding, Senator Maybank, who has to leave here in a few minutes and possibly will be away the rest of the afternoon

Senator MAYBANK. I will be back.

The CHAIRMAN. Before he leaves, he has 2 or 3 questions he wants to ask you, Mr. Cole, on this legislation as it applies to another matter.

Senator MAYBANK. Mr. Chairman, I want to join with you in extending your congratulations to Mr. Cole. The housing group appointed by the President has done a good job. I want to concur with your statement that there are changes recommended in the basic law which should be discussed here before too many changes are made.

On the other hand, I introduced the Housing Act of 1949. I was chairman of this committee at the time. I have been on this committee since 1941. I am deeply interested in housing. The first or second housing project in the United States was built in Charleston, before there was a public housing program. The concern I have is over legislation by an Appropriations Committee, of which I am also a member. If the basic law should be changed, then it should be changed by this committee. In this instance it has been changed by the Appropriations Committee.

I understand that the Reorganization Act prohibited legislation on appropriations bills, so far as the Senate was concerned, without suspending the rules. Of course, the House operates under its own rules. I am a believer of government by law and I concur thoroughly that if the housing law is to be changed, it should be changed by this committee, not by the Appropriaions Committee. In the first place, the Appropriations Committee has not listened to the housing arguments that we had here over a period of years and year.

Mr. Chairman, this is all leading up to a question. The Congress passed the independent offices appropriation last year, and that bill changed the Housing Act to abolish public housing at the end of this year.

Therefore, the law that I struggled for, that Bob Taft and many others struggled for, is no longer the law.

Am I correct, Mr. Cole, that in your judgment, as Administrator, that there is now no public housing law, unless the Appropriations Committee that is not charged with housing should make another change in the public law?

STATEMENT OF ALBERT M. COLE, ADMINISTRATOR, ACCOMPANIED BY B. T. FITZPATRICK, DEPUTY ADMINISTRATOR AND GENERAL COUNSEL, HOUSING AND HOME FINANCE AGENCY; GUY T. O. HOLLYDAY, COMMISSIONER; AND ALLAN T. THORNTON, DIRECTOR, PERSONNEL AND STATISTICS DIVISION, FEDERAL HOUSING ADMINISTRATION

Mr. COLE. Senator Maybank, you are correct. Unless there is a change in the existing laws, no more public housing will be started after this fiscal year than that which is already under construction.

Senator MAYBANK. I might say, in admiration of the Administrator—he knows how I feel about it-because I asked him these questions when he was confirmed by the Banking and Currency Committee, and he said he had studied the law and he believed in the law as it was at that time; that he would not suggest changing the law. The committee which he appointed accepts that. There should be 35,000 units built according to the President's own statement. Am I correct in that?

Mr. COLE. The President's Advisory Committee recommended the continuation of public housing, pending demonstrated success of other programs. No specific number of public housing units, however, was recommended by the President's Advisory Committee.

The President, in his special housing message, did, however, recommend to the Congress that it adopt a program of 35,000 units per year for the next 4 years.

Senator MAYBANK. That is what I have reference to.

Now, of course, coming back again to the basic law, if this committee decides to abolish public housing, I think this committee should do it in this bill. Therefore, so that everyone will have a chance to vote on the legislation, Mr. Chairman, I am going to introduce an amendment to this bill which provides that, I will ask the clerk to read it, if I may.

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(Mr. McMurray read the amendment which appears below.)

Senator MAYBANK. It merely means this: We go back to the basic law and if we have enough courage to change the basic law, then let's change it in this committee. Let's change it on the Senate floor. Let's change it on the House floor. Let's not hide behind schemes and appropriation bills which, in most instances, are most outrageous. That is all I ask this committee to do.

As far as I am concerned, I do not think 135,000 public-housing units are necessary. I do think some are necessary. I would not vote for 135,000 units, but I would vote for whatever seems necessary, as the President's committee said, after there has been an exhaustion of the efforts by private enterprise. In my own city private enterprise couldn't do it all. The same housing authority they appointed in 1936 is still in effect today. I bring this up because if we are going to change the law, let's not change it by amendment to the appropriation bill or bobtail the bill. Let's change the basic law.

I don't know how many units the Appropriations Committee would vote for. It might be only 10,000 or 15,000.

I will ask the Administrator this question : There are some cities who have gone along in good faith, and if this thing is shut off, would have put up money and have made arrangements to complete housing that would be shut off; is that correct?

Mr. COLE. That is correct.
Senator MAYBANK. Thank you, Mr. Chairman.

The CHAIRMAN. The able Senator is introducing an amendment to S. 2938 which will be printed in the record at this point.

(Senator Maybank's amendment follows:)

[S. 2938, 83d Cong., 2d sess. ]

AMENDMENT

Intended to be proposed by Mr. Maybank to the bill (S. 2938) to aid in the provision and improvement of housing, the elimination and prevention of slums, and the conservation and development of urban communities, viz: On page 94, after line 11, insert the following new section :

SEC. 506. The third sentence of subsection (e) of section 10 of the United States Housing Act of 1937, as amended, is hereby amended by striking out the period at the end thereof and inserting a colon and the following new proviso: "And provided further, That, notwithstanding any other provisions of law except provisions hereafter enacted expressly in limitation hereof, the provisions of this subsection and of section I shall be in full force and effect, and, insofar as the provisions of any other Act are inconsistent with the provisions of this subsection or of said section 9, the provisions of this subsection and of said section 9 shall be controlling."

The CHAIRMAN. We will place in the record at this point the statement that you secured from the general counsel of the Housing and Home Finance Agency.

(The statement referred to follows:) The First Independent Offices Appropriation Act, 1954, contains the following proviso applicable to low-rent public housing projects:

"Provided further, That notwithstanding the provisions of the United States Housing Act of 1937, as amended, the Public Housing Administration shall not, with respect to projects initiated after March 1, 1949, (1) authorize during the fiscal year 1954 the commencement of construction of in excess of twenty thou

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