Government project of 500 units, where the tenants, when they knew that the housing project was going to be sold, organized into a cooperative. They raised capital, over $100,000, they set up a down payment of $375 per family. I think they had 367 families that came into the organization of the cooperative and they ran into the experience of having veterans' widows in the project that were not able to raise this kind of a sum of $370. They tried to work out some means of a secondary finance, themselves, so that these people could make their down payment. After they had taken a credit rating from all of the people, they then applied-they had been approved by FHA and they were unable to find any private lending institution that would loan them money, because of the fact that they had the cooperative provision in there which prevented speculation. It required that they sell their equity back to the Cramer Homes housing project, or housing cooperative. For that reason, they have been unable to find any finances. The reason that we think we ought to have that housing legislation or the amortization of the loan ought to be extended over the life of the property, is that the loans could be very low or the payments would be very low and they could get it at a much lower price. We ought to have some means of direct loans because of the fact that the private lending institutions are not anxious or are not willing to finance this kind of a housing project, at least at the present time. I cite these two examples. There are others that we could name that have had an equal difficulty. Some of them have been able to get over that hump. Others have not been able to achieve success. We can think of Glenview in Chicago, which is just outside of Chicago, where a group of people, not industrial workers, had a little better income and were able to successfully operate or get their cooperative housing project built. We have another one in Dayton, Ohio, the Oak Park Homes, which was built during the war. It is adjacent to the Greenmont housing project, which was sold as a mutual housing project. These fellows put a provision within their contract, so that they paid in several dollars a month extra to take care of any feature, as sort of a reservement, so if they had any difficulty, that some fellows became unemployed, they would have a reserve that would take care of the payments on the project. We think that is a good business venture, that these people are responsible, that they have a limited income, or rather produce at so many pieces per hour in a plant at an hourly wage and they take their money and go out into a speculative market to buy housing, and it is almost impossible for a group or for individuals, for that matter, to be able to buy and have any substantial equity in a home after they have made a reasonable down payment. For those reasons, we think that the cooperative provision of this House bill 5631 should be incorporated and should be a part of the: House bill. Thank you. Mr. HAYS. Thank you. Mr. Talle. Mr. TALLE. No questions. Mr. HAYS. Mr. McKinnon. Mr. MCKINNON. No questions. Mr. GAYS. Mr. Cole. Mr. COLE. No questions. Mr. HAYS. Mr. Mitchell. Mr. MITCHELL. Just one question as to the attitude of the people living in these cooperative apartments. Would you say that they are both living and working together in a good fashion and are indicating the successful outcome of their cooperative effort? Mr. RIGHTLEY. I think they view it as a means of obtaining ownership. Just to cite this Cramer Homes housing project, they are living like any other people would live in a community. They do have a common bond of being in a certain income-class group and living in this one community. This organizing a cooperative, to be able to buy it, is simply a means of being able to have shelter and eventually get home ownership. Rather than have a private person buy it or a private group of people, here the tenants who are occupying it are using the same features that any private individual would do in organizing a cooperative, so that they are guaranteeing that they have shelter and homes. Mr. MITCHELL. They are taking the attitude of an owner toward the project? Mr. RIGHTLEY. Yes. Mr. MCKINNON. Can you tell me what your administrative costs on this project that you had had experience on have been? Mr. RIGHTLEY. No; I cannot give you the figures on either Oak Park or Glenview. Those are individual homes. They are individual free-standing homes where the individual has title to the home. They are not garden-type apartments that would require maintenance. Mr. MCKINNON. The witness before you was not talking of that group of people. Mr. RIGHTLEY. No; apartment units, or multiple units. Mr. MCKINNON. You are referring to individual ownership to those homes? Mr. RIGHTLEY. That is right, and he takes care of the individual maintenance. Mr. HAYS. Thank you. The committee will be adjourned until 10 o'clock Monday. (Whereupon, at 1:38 p. m., the committee was adjourned until 10 o'clock, Monday, August 1, 1949.) HOUSING AMENDMENTS OF 1949 MONDAY, AUGUST 1, 1949 HOUSE OF REPRESENTATIVES, COMMITTEE On Banking AND CURRENCY, Washington, D. C. The committee met, pursuant to adjournment, at 11:10 a. m., Hon. Brent Spence, chairman, presiding. Present: Messrs. Spence, Brown, Monroney, Rains, Buchanan, Multer, McKinnon, Mitchell, Kunkel, Talle, Cole, Hull, and Nicholson. The CHAIRMAN. The committee will be in order. We will continue our hearings on H. R. 5631. We would like to hear from you, Mr. Holifield, as the first witness this morning. STATEMENT OF HON. CHET HOLIFIELD, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF CALIFORNIA Mr. HOLIFIELD. Mr. Chairman and members of the committee: I appreciate the opportunity of coming before you this morning to make a statement on this bill which I introduced on January 13 of this year. I realize that the bill itself will not be reported from your committee, but it is on the principles of the bill that I wish to speak, and I wish to to offer them as amendments, of course, to your omnibus bill Since the introduction of H. R. 1324 the omnibus bill, H. R. 5631, has been introduced by Congressman Spence, chairman of this committee, and an identical bill, H. R. 5616, by Congressman Rains. I feel that the Veterans Home Loan Act of 1949, H. R. 1324, and its companion bill, S. 616, introduced by Senator Elbert Thomas, represent the best measures that have been introduced in this Congress to back up the promise of the United States made to veterans in 1944 to assist them to acquire their own homes. I stand firmly behind these measures designed to meet the moral obligations of the Federal Government to the veterans of World War II. Four major obejctives would be accomplished by these amendments. Briefly, they provide that: 1. There shall be established in the Federal Government a full secondary market for all loans made under the GI Act. 2. The maximum interest rate on GI loans is already established at 41⁄2 percent in the Servicemen's Readjustment Act but no provision is made for a definite procedure to establish what the current rate should be. H. R. 1324 and S. 616 would provide for adjustment to a lower or a higher rate at the end of each 3-month period if the mortgage market warrants it. H. R. 1324 also includes an adequate method of determining what the interest rate should be, not leaving it to one man's decision as it is at the present time. 3. The maximum allowable term for the amortization of GI loans should be extended to 30 years, instead of the present 25 years. 4. There shall be no further guaranty by the Veterans' Administration of second mortgages on GI loans. Now, I have a lot of material to support these provisions, but the legislation necessary to accomplish these objectives is simple. To put the matter before you as simply as I can, and to show my support, I will discuss these points in the order in which I have previously mentioned them. I wish to call to your attention the fact that the number of GI home loans guaranteed by the Veterans' Administration has seriously declined in the last 2 years. October 1946 was the peak month of operations. $350,000,000 were guaranteed. In April 1949, the amount of such loans dropped to $85,000,000. These figures show that the GI home-loan program fell off more than 74 percent in 31 months. This information is authenticated by a report recently obtained from the Veterans' Administration, which I wish to submit at this time to the committee, and which I propose to desginate as "exhibit 1." (The document referred to is as follows:) EXHIBIT 1.-Veterans' Administration guaranty of home loans, starting with peak month, October 1946 The above figures show that there has been a 70-percent decline in the total value of loans guaranteed by the Veterans' Administration since the peak month of October 1946. Another exhibit will show that during the same years new home construction in the United States was ascending, thus proving that the veteran is not getting his share of the homes promised him by the Servicemen's Readjustment Act of 1944-GI Bill of Rights. Mr. HOLIFIELD. Mr. Chairman and members of the committee, I will submit a prepared statement to each and every one of you after this is over with these charts that I mentioned in them. I have some large charts here which we intend to use, which are duplicated in my prepared statement. The CHAIRMAN. I do not know whether the charts can be published in the records or not. Mr. HOLIFIELD. I am not asking they be published. I am submitting them for your own information. Before giving my own views, which, I believe, are shared by many, I would like to take up two frequently expressed but erroneous observations made by others as to the cause of the falling off of VA-guaranteed home purchases by veterans. First, many people say that production has not kept up with the desire and ability of veterans to purchase homes. In addition to old houses which become available for purchase by persons of the young veteran's age, production of new homes for purchase has almost reached the all-time high record in this country. I would like to submit a chart to you gentlemen which shows the record of new construction of nonfarm homes in this country for the period from February 1, 1946, to December 31, 1948, along with the record of GI home-loan purchases, showing that home loans guaranteed for veterans have not in any way kept up with homes built. May I submit this as exhibit 2? The CHAIRMAN. All right. (The chart referred to above is as follows:) EXHIBIT 2 NON-FARM PERMANENT DWELLING UNITS NUMBER DWELLING UNITS BUILT IN 1946-47-48 SHOWING PERCENTAGE OF VETERAN LOANS TO TOTAL CONSTRUCTION NUMBER DWELLING UNITS 1,000,000 900,000 300,000 200,000 100,000 1946 1947 1948 Mr. HOLIFIELD. It may be noted also that while the volume of loans guaranteed by the Veterans' Administration in 1948 declined more than a third from the 1947 total, the volume of loans on single dwellings insured by the Federal Housing Administration practically doubled. An even more dramatic demonstration of how the GI loan program has been curtailed is given in exhibit 2-a, which I hereby submit. |