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USA
AY.10

09 09
07 07

06
05 05
04 04 04 04 04 04

03 03 03 03 .

02 02 02 02

Οι Οι

OHIO
INDIANA
WYOMING

NEBRASKA
DISTRICT OF COLUMBLA
SOUTH DAKOTA

NEVADA

IDAHO
MINNESOTA
NORTH CAROLINA
PENNSYLVANIA
MISSISSIPPI
MISSOURI
DELAWARE
NEW JERSEY

TEXAS

NEW MEXICO

COLORADO
LOUISIANA
MARYLAND

ARKANSAS
CALIFORNIA
ALABAMA
KANSAS

ARIZONA
WASHINGTON
SOUTH CAROLINA

SIONITII

WISCONSIN
WEST VIRGINIA

NEW HAMSHIRE

NEW YORK
NORTH DAKOTA

GEORGIA
MICHIGAN

OKLAHOMA

FLORIDA

VIRGINIA

UTAH

KENTUCKY

CONNECTICUT
MASSACHUSETTS

MONTANA

RHODE ISLAND

VERMONT

LESS THAN QI PERCENT

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GEORGIA
ALABAMA
MARYLAND
MISSISSIPPI
SOUTH CAROLINA
SOUTH DAKOTA

INDIANA
TENNESSEE
NEBRASKA
MISSOURI
COLORADO

OREGON
ARKANSAS

KANSAS
VIRGINIA

IDAHO
WYOMINO
LOUISIANA
MICHIGAN

NEVADA
FLORIDA
CALIFORNIA
NEW MEXICO

RHODE SLAND
NORTH DWOTA
MASSACHUSETTS
DISTRICT OF COLUMBIA
NEW HAMPSHIRE
WISCONSIN

VERMONT
NEW YORK

IOWA

MAINE
CONNECTICUT
MINNESOTA
KENTUCKY

ILLINOIS

MONTANA
NORTH CAROLINA
PENNSYLVANIA

SUPPLEMENT TO TESTIMONY OF R. G. HUGHES, PRESIDENT, NATIONAL ASSOCIATION

OF HOME BUILDERS ON S. 2938

PROSPECTIVE FNMA OPERATIONS

Charts on the following pages show the transition of the secondary mortgage market portion of FNMA from a Government-operated, Government-financed organization to a Government-operated organization using private funds.

The figures used in the charts are based on the following assumptions:

(1) That the Federal Treasury will furnish the original capital in the sum of $70 million;

(2) That users of the facility will buy certificates in the amount of 2 percent of mortgages sold. Certificates to be exchanged for stock when total certificates equal $70 million Treasury stock.

(3) That FNMA will pay 242 percent to the Treasury in annual dividends on original capital and 212 percent on all paid-in certificates;

(4) Projected purchases, sales, average portfolio are listed by years on following pages:

(In thousands of dollars)

[graphic]

$450,000

24,000 325,000 650,000 600,000 41,000

6th year

7th year

8th year

9th year

10th year

$450,000

$450,000

$450,000

Mortgages purchased (at 97).
Repayments (4 percent of average port-

folio)
Sales (at 9744 percent).

Outstanding at end of year.
Average portfolio for year..
Contributions (2 percent of FNMA's pur-

chase)-cumulative balance.. Accumulated surplus-end of year.

28,000 322,000 750,000 700,000 50,000 24, 021

32, 000 318,000 850,000 800,000 59,000 30, 975

36,000 314,000 950,000 900,000 68,000 38, 668

$100,000

39,000
311,000
1,000,000

975, 000
76,000
46, 841

$350,000

40,000 310,000 1,000,000 1,000,000

83,000 56,061

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Proposed FNMA change-over
GOVT. SUPERVISED-GOVT. FINANCED

in 10 years to

GOVT. SUPERVISED-PRIVATELY FINANCED
OS TREASURY

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[graphic]

ENMA

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ISSUES
DEBENTURES

FOR SALE
TO PUBLIC

$70 million to be repaid Govt to receive going interest race Praitos trocable

BUYS,
HOLDS,

SELLS
MORTGAGES

Stoch owners receive going interest rate

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1. Private capital replaces government capital
2. Adequate, progressive secondary market established.
3 Channels home financing into the areas where needed

at the right time in the right amounts, in the
public interest, thus broadening the market for low-

income and minority loans
4. Doesn't cost the taxpayer a dime
6. Taxpayer receives a profit

SCHEDULE A

SUGGESTED AMENDMENTS TO TITLES I AND II OF H. R. 7839 Suggested amendment No. 1

1. Section 104, page 3, commencing at line 22, strike the colon and the proviso that follows and insert a period.

2. Section 105, page 4, line 10, strike the colon and the proviso that follows and insert a period.

3. Section 115, page 11, line 18, strike the colon and the proviso that follows and insert a period.

4. Section 120, page 14, line 7, strike the colon and the proviso that follows down to and including the word "amount" in line 15.

5. Section 123, page 19, line 18, strike the colon and the proviso that follows down to and including the word "amount” in line 25.

6. Section 123, page 21, line 19, strike everything after the word "exceed" down to and including the word "exceed” in line 25. Suggested amendment No. 2

Amend section 104 by (1) inserting at page 3, line 18, following the figures "$8,000" the following: “And provided further that closing costs and prepaid mortgage expenses paid in cash at the time of closing shall be included in ‘appraised value' for the purpose of determining the maximum permissible mortgage under this section", and (2) striking the figures “$8,000” at page 3, lines 16 and 18 and substituting the figures "$10,000" in both places. Section 125, page 19, lines 15 and 18 should be correspondingly amended. Suggested amendment No. 3

Amend section 104, page 3, by inserting, following the word "principally" at line 12, the following: "(Whether or not it may be intended to be rented temporarily for school or other community purpose)." Suggested amendment No. 4

Section 103, commencing at page 2, line 23, insert the following: “The Com. missioner shall establish under section 203 of the National Housing Act, as amended, special standards appropriate to properties with respect to which the mortgage does not exceed $6,000 and may permit a service charge with respect to such mortgages.” Suggested amendment No. 5

Amend section 123, page 25, line 5, by (1) striking the word "relocating" and inserting in lieu thereof the following: "Meeting the needs of low-income families that are not and cannot be met from the existing supply of all other private financing and to provide pereference to"; and (2) striking the words "to be so displaced" at page 25, line 15; and (3) commencing at line 21, striking the words “the relocation of families to be so displaced and who would be" and inserting in lieu thereof "low income families." Suggested amendment No. 6

Amend section 123, page 26, line 18, by striking the figures “$7,000” and inserting in lieu thereof the words and figures: “$7,600 (except that such amount may be not in excess of $8,600 in any area in which the Commissioner shall determine such higher figure to be necessary, by reason of cost levels in such area, to attain the purposes of this section).” Suggested amendment No. 9

Section 201, page 42, commencing at line 18 through page 43, line 18, strike numbered clause (5).

SCHEDULE B

SUGGESTED AMENDMENTS TO TITLE III OF H. R. 7839

Suggested amendment No. 1

Amend section 301 (a) by inserting at the end thereof (p. 45, line 7), a comma, and the following: "and to assist in providing an adequate and stabilized market for the financing of homes in the volume, in areas, of the kinds, and at the prices that the market for homes from time to time may require." Suggested amendment No. 2

Amend section 303 (a) by inserting at the end of such subsection (p. 48, line 6) the following: "At such time as the capital stock held by the Secretary of the Treasury has been fully retired the then balance of the general surplus account and of the reserves of the Association shall be paid to the Secretary of the Treasury.” Suggested amendment No. 3

Amend section 303 (b) (p. 48, commencing at line 7) so that the first sentence thereof reads as follows: "The Association shall accumulate funds for its capitalsurplus account from private sources by requiring each mortgage seller to make payments of nonrefundable capital contributions equal to not more than 2 percent of the unpaid principal amount of mortgages involved in purchases between such seller and the Association." Suggested amendment No. 4

Amend section 303 (c) by inserting, following the sentence which ends at page 49, line 10, the following: "Such certificates shall be entitled to cumulative dividenr's at the same rate as determined by the Secretary of the Treasury under subsection (a) of this section with respect to capital stock held by him but no dividends shall be paid upon such certificates if dividend payments on the capital stock held by the Secretary of the Treasury are at the time in arrears."

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