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8. More attention should be paid in public housing to the problems of the aged, both in the design and size of dwellings. (Appendix 3, Recommendation 12.)



1. There should continue to be a single housing agency headed by an Administrator appointed by the President by and with the advice and consent of the Senate. The Administrator should be relieved of the miscellaneous operating responsibilities now assigned to his immediate office. A reassignment of these functions is proposed in Recommendation Number 3 below. The Administrator should, of course, be provided with necessary staff assistance which should include the new position of labor relations adviser. The Administrator should be given clear authority to supervise and direct, if necessary, the activities of constituent agencies where any matter of basic policy is involved. The Committee is convinced that, although the heads of constituent agencies should be fully responsible for the day-to-day operations of the programs of their agencies, the Administrator must have clear and unmistakable authority to supervise constituent operations for and on behalf of the President. (Appendix 5.)

2. The major housing activities of the Federal Government should be consolidated into the following five constituents: (Appendix 5.)

4. The Federal Housing Administration, h. The Public Housing Administration.

c. The Urban Renewal Administration, incorporating the functions of the present Division of Slum Clearance and Urban Redevelopment and some of the functions of the present Division of Community Facilities and Special Operations. Both of these Divisions are now located in the Office of the Administrator.

d. A Federal Home Loan Board responsible for the administration of the Feieral Home Loan Bank System, the Federal Savings and Loan Insurance Corporation, and the National Mortgage Marketing Corporation.

e. A new Housing Management and Disposition Administration responsible for the management and disposition of Lanham housing, temporary defense housing constructed under Public Law 139, 82d Congress, loans to the manufacturers of prefabricated housing, Alaska housing loans, and acquired property resulting from the activities of the Federal Housing Administration and the National Mortgage Marketing Corporation.

3. Miscellaneous activities and authorities now in the Administrator's office should be reassigned as follows:

a. Slum clearance and urban redevelopment: This program, amended to transform and extend it into a broad program of urban renewal, should become the nucleus of a new constituent known as the Urban Renewal Administration, Staff of the Division of Community Facilities and Special Operations not otherwise transfererd (see below) should be assigned to this constituent. (Appendix 5.)

6. Housing research.' This program is now in liquidation and it is not recommended that it be reinstituted on the former basis. At the same time, there is a need for better current statistical data on the volume and types of residential construction, mortgage financing trends, etc. Better data of these types should be obtained through the Bureau of the Census and other data collection facilities in the Department of Commerce and the Bureau of Labor Statistics, which agencies have the facilities for collecting such information on a completely objective basis. (Appendix. 5.)

c. Community facility and special operations. This organizational unit now includes a number of miscellaneous programs. The following disposition of these activities is recommended (Appendix 5):

(1) Maintenance and disposition of defense public works. This activity represents the windup of the Lanham Act public works provided in World War II. The remaining workload is small, and should be liquidated as rapidly as possible by staff transferred to the Housing Management and Disposition Administration.

(2) Advance planning of non-Federal public works. This activity is also in liquidation and should be expedited to conclusion by the new Urban Renewal Administration.

(3) Defense community facilities and services. This is an emergency activity under Public Law 139, 82d Congress. The Committee is not impressed with the need for continuing this legislation. It should be allowed to expire on June 30, 1954. Staff transferred to the Urban Renewal Administration should wind up any remaining projects as rapidly as possible.

(4) Alaska housing program. The Committee is of the opinion that the need for this program has passed. Any cases in process should be delegated to the Housing Management and Disposition Administration or to the Federal Housing Administration for handling, and no new business should be accepted.

(5) Prefabricated housing loans. This program has properly been placed in liquidation. The servicing and disposition of outstanding loans should be assigned to the Housing Management and Disposition Administration.

(6) College housing program. It is the conclusion of the Committee that this is not properly a housing activity. It should be transferred to the Office of Education, Department of Health, Education, and Welfare.

(7) School-construction program. It is the conclusion of the Committee that this is not a proper activity of a housing agency. It should be assigned to the Office of Education, Department of Health, Education, and Welfare.

d. Disposition of Lanham Housing. Although responsibility for this function rests in the Housing and Home Finance Administrator, actual operations have been delegated to the Public Housing Administration. It is the opinion of the Committee that it is a mistake to merge a program of housing disposition with a program of low-rent housing. This activity should be transferred to the new Housing Management and Disposition Administration. (Appendix 5.)

e. Programing of Defense Housing. It is the opinion of the Committee that this activity should be abandoned. An extension of Public Law 139, 82d Congress, is not recommended. Any activity necessary to the termination of this function should be delegated to the Federal Housing Administration. (Appendix 5.)

f. Federal National Mortgage Association. The purchasing authority of the Federal National Mortgage Association should be terminated and the Association should be transferred to the new National Mortgage Marketing Corporation which should act as a liquidating agent to dispose of the Association's portfolio of mortgages in an orderly manner. (Appendix 5 ; Appendix 4, Recommendation 2.)

9. International Housing Activities should be transferred to the Foreign Operations Administration. (Appendix 5.)

4. In place of the National Housing Council, the Administrator of the reorganized housing agency should be provided with a statutory Advisory Board composed of the heads of the five constituents above described and a representative of the Administrator of Veterans' Affairs. The Administrator should be requirea to review with this Board all current major policy matters with a view toward arriving at the best possible coordinated decisions. It should be made clear, however, that in the event the Advisory Board is unable to reach a conclusion on particular policy questions or if the Administrator is unable to accept the conclusions of the Advisory Board that his own decision can be independently made and enforced. (Appendix 5.)

5. The Administrator of the Housing and Home Finance Agency, the Administrator of Veterans' Affairs, and the Commissioner of the Federal Housing Administration should be requested to work out an interagency agreement under which the Veterans' Administration would contract for the Federal Housing Administration to perform the technical functions of processing veterans' home loan applications under the present home loan guaranty program. This recommendation is designed to achieve economy and efficiency by having one agency of the Federal Government, instead of two, charged with the administration of the technical functions of market analysis, land planning requirements, valuation and appraisal, minimum property and construction standards, and property inspection. To have such processing functions done by one agency should serve to eliminate the added costs of dealing with two agencies and in the long run to make more homes available to veterans at lower costs. Under this recommendation, the Veterans' Administration would retain the basic responsibility for fulfillment of the preferential treatment provided for veterans under the terms of the Servicemen's Readjustment Act, while at the same time eliminating the duplication and overlapping of technncal functions presently performed by the Federal Housing Administration for the mortgage insurance program and by the Veterans' Administration for the home loan guaranty program. (Appendix 1, Recommendation 33.)

6. The Urban Renewal Administration should be charged with the responsibility of advising the Administrator concerning the programs developed by the communities to comply with requirements that a workable program to attack the problem or urban decay has been submitted. Based on such findings, it will be

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.come the responsibility of the Administrator to certify to the Federal Housing Administration, the Public Housing Administration, and the Urban Renewal Administration those communities which are eligilble for the types of Federal assistance which are conditioned upon such a certification. (Appendix 2, Recommendation 9.)


1. Title VI of the National Housing Act should be repealed (with authority to insure mortgages for disposition of Government-owned housing and certain other routine and technical authorities being added to title II). (Appendix 1, Recommendations 11 and 18.)

2. Title VII of the National Housing Act should be repealed. (Appendix 1, Recommendation 19.)

3. Title IX of the National Housing Act should be repealed. (Appendix 1, Recommendation 21.)

4. The farm loan provisions of Section 203 (d) of the National Housing Act should be repealed. It is the opinion of the Committee that farm housing cannot be separated from farm management and operation. The Committee, therefore, concluded that questions relating to farm housing programs should be left for recommendation by the Department of Agriculture. (Appendix 1, Recommendation 10.)

5. The authority for loans and grants for defense community facilities under Title II of Public Law 139, 82d Congress, should not be extended beyond its present expiration date. (Appendix 1, Recommendation 31.)

6. Title VIII of the National Housing Act should be extended on a standby basis but not be used except upon the basis of firm estimates of need by the Department of Defense. (Appendix 1, Recommendation 20.)

Mr. COLE. In my judgment, one of the most important features of this bill is represented by various provisions which are designed to assist in the improvement and conservation of our supply of existing housing. Because of the housing shortages which developed during the depression and war years, much of the Federal housing legislation-particularly in recent years—has been directed primarily toward increasing the volume of new housing construction.

This bill, likewise, contains a number of important provisions designed further to assist in achieving and maintaining a high annual volume of new housing construction. At the same time, it recognizes that we need to direct more specific attention to the fact that, in our existing homes, we have a tremendous asset. It also recognizes that, by assisting families in their efforts to keep their homes in good repair and to bring them up to modern standards of comfort and convenience, we can make an important contribution to the raising of national housing standards.

Several provisions of the bill are directed toward this important objective. With respect to the home repair loan program under title I of the National Housing Act, the bill increases the maximum loan from $2,500 to $3,000 and the maximum maturity from 3 to 5 years.

The latter provision would reduce the monthly charges required to carry such loans by about 35 percent. For example, the monthly charge required to carry a $1,000 loan, having a 5-year maturity, would be about $21, as compared with about $32 in the case of a 3-year maturity.

Certain changes would also be made with respect to title I loans to finance the improvement or conversion of existing structures used or to be used as dwellings for two or more families. The present maximum of $10,000 for this type of loan would be changed to $1,500 per family unit, or $10,000, whichever is the greater, and the maximum maturity would be increased from 7 to 10 years.

It is recognized, of course, that the FHA title I home modernization and repair loan program has inherent limitations. Because they are usually unsecured character loans, the insurance of loans meeting the specified standards must be more or less automatic, the title I modernization and repair loans must be small and of short term.

The result, of course, is that the title I home modernization and repair loan program, while most useful and helpful in financing relatively less costly home repairs and improvements, is of limited assistance to families of modest income who need to finance major home improvements or modernization work. Assistance for such work, therefore, must be on a relatively long-term mortgage loan basis which permits lower monthly carrying charges.

Several other provisions of the bill are designed to help in better maintenance and fuller utilization of existing housing. The bill would eliminate the existing statutory disadvantages in the maximum loan to value ratios which now apply to FHA insured loans on existing housing, as compared with newly constructed housing.

In his statement, Commissioner Hollyday will furnish two examples which clearly illustrate the desirability of this provision of the bill. The bill would also eliminate the present statutory disadvantage in the maximum maturity which now applies to FHA insured loans on existing housing regardless of its physical condition or durability.

The FHA, of course, would not permit a maturity in connection with an existing house which was longer than warranted by the physical condition and the expected economic life of the particular house involved. I believe that these provisions of the bill would be of material assistance to families who desire to purchase good existing homes, well suited to their particular needs, and also to families who wish to enlarge or modernize existing homes.

Senator ROBERTSON. Your new section 221 is, to a large extent, a private enterprise undertaking!

Mr. COLE. Yes, sir.

Senator ROBERTSON. You will finance the new homes for the displaced person, for $7,000, 100 percent guaranteed, a 40-year mortgage?

Mr. COLE. Yes, sir. It provides for mortgage insurance on a longterm basis, with a low initial payment.

Senator ROBERTSON. That is a new experiment, Mr. Cole. If it works, it will take the place of the present public housing program?

Mr. COLE. Senator, I don't believe that is so. It is not my idea that the section 221 proposed is a substitute for the present public housing program. We do not believe that section 221, or any program which will provide for economic rents, or the purchase of homes, can meet the problem of the lowest income groups. The proposal is suggested, frankly, again as I said, on an experimental basis to relieve the pressure upon the need for the public housing program.

Senator ROBERTSON. Is it contemplated that we will have this type program for people who can't finance a new house, plus full-scale operation under the public housing program, too?

Mr. COLE. No. The answer is no. If I understand what you mean by a full-scale public housing program

Senator ROBERTSON. That is what I was trying to get at; if this new section 221 works, won't that be cheaper to the taxpayers in the long run than the public housing program?

Mr. COLE. In my judgment, without any question, it will be.

Senator ROBERTSON. And it will be a private enterprise system, whereas some felt that the public housing program, if carried to its final analysis, would lead is very definitely into a socialistic field.

Mr. COLE. Yes. There is a great deal of comment along that line, as you are well aware.

Senator ROBERTSON. You know how I felt about it.
Mr. COLE. Yes.
Senator Ives. May I raise a question, Mr. Chairman?
The CHAIRMAN. Senator Ives.

Senator Ives. I understand section 221 applies to domestic dwellings.

Mr. COLE. Yes.
Senator Ives. Small as well as large?
Mr. COLE. Yes; that is correct.
Senator Ives. Existing as well as new?
Mr. COLE. Yes.

Senator Ives. How would section 221, for instance, apply in New York City ?

Mr. COLE. I am sorry

Senator Ives. How would section 221 apply in New York City ? Are you going to develop your statement on section 221 as you go along!

Mr. COLE. Yes. We will develop it.
Senator Ives. I will withhold my questions for the time being, then.

The CHAIRMAN. Maybe it might be well, since we have broken in, to get a little more explanation of section 221 right now, rather than leave it in the air. Mr. COLE. Either way.

The CHAIRMAN. I was hopeful that maybe you were going to begin at the beginning of this bill.

Mr. COLE. That is what we are doing, Senator. We are going right through the bill, and will explain section 221. My statement will not answer all

questions, of course, but I think when we complete our testimony on FHA, we will have covered a great many questions that may be raised.

The CHAIRMAN. We want a good explanation of every section of this bill.

Mr. COLE. All right. I think it is not only in the statement, but . Mr. Hollyday is here

The CHAIRMAX. This bill is very complicated. Of course, one of the things that we want you to convince us of, if you can, and if it is true and actual, and that is that under the liberal terms of this bill, the builders are going to be able to sell the mortgages. It isn't going to do us any good if we are not going to be able to finance it. I hope you will spend considerable time on that, to show us how you are going to be able to get the job done, not only build houses, but to sell and finance them.

Senator ROBERTSON. The Government is going to guarantee them, and if they pay a fair rate of interest, it will be pretty good. They will be guaranteed 100 percent.

The CHAIRMAN. In the past, the Government has been guaranteeing them, and we have found a shortage of mortgage money.

Senator Ives. May I interrupt, Mr. Chairman?

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