Report on Recommendation No. 8—Continued Table 21. Outstanding balance of insurance in force, insurance re- serves, and estimated reserve requirements in the section 220 hous- Table 23. Outstanding balance of insurance in force, insurance re- serves, and estimated reserve requirements in the section 221 hous- Table 25. Outstanding balance of insurance in force, insurance re- serves, and estimated reserve requirements in the national defense Table 26. National defense housing insurance fund, statement of income and expense, and changes in insurance reserves. Table 27. Outstanding_balance of insurance in force, insurance re- serves, and estimated reserve requirements in the armed services Table 28. Armed services housing mortgage insurance fund, state- ment of income and expense and changes in insurance reserves. Table 29. Schedule of annual insurance premium charges based on net proceeds of loan insured under section 2 provided for in the regulations in effect from July 1, 1939, to November 1, 1960-- Table 30. Outstanding balance of insurance in force and insurance Table 32. Selected participation shares per $1,000 of original face amount of mortgage payable from the mutual mortgage insurance fund to eligible mortgagors with insurance contracts terminating between July 1, 1960, and December 31, 1960_. Table 33. Participations declared and number of participants among mortgagors in the mutual mortgage insurance fund.. Table 34. Comparative current cost to home mortgagor under present method of FHA mortgage insurance premium collection with two alternative methods for premium collection for a $10,000, 25-year, 5 percent mortgage in the event the mortgage is held to ma- Table 35. Comparative cost to home mortgagor under present method of FHA mortgage insurance premium collection with two alterna- tive methods of premium collection for a $10,000, 25-year, 53⁄4 percent mortgage in the event of prepayment prior to maturity. Table 36. Certified agency program activity, sections 203 and 222, during August 1960 and cumulative August 31, 1960 Table 37. CAP cases as percent of total commitments, section 203, STUDY OF MORTGAGE CREDIT U.S. SENATE, COMMITTEE ON BANKING AND CURRENCY, Hon. A. WILLIS ROBERTSON, Chairman, Committee on Banking and Currency, February 13, 1961. DEAR MR. CHAIRMAN: I am transmitting reports received from the Federal Reserve Board, the Federal Home Loan Bank Board, and the Housing and Home Finance Agency, in accordance with recommendations Nos. 5, 6, 7, and 8 of the report of the Subcommittee on Housing on mortgage credit, dated April 15, 1960. The purpose of these reports was to obtain additional information to supplement the findings of the mortgage credit study. As you may recall, this study was made to ascertain the adequacy of the supply of mortgage credit during the decade of the sixties and to determine the need for Federal legislation on this subject. It has been generally agreed that during the next 10 years housing production should expand considerably. The rate of home construction, which has been at a constant level for the past several years, must increase to meet the needs of a growing population with a rising standard of living. Net new family formation resulting from the births of the 1940's, the replacement of units to be demolished in order to carry out the national housing policy of a decent home for every American family, the increased mobility of American families, and the higher standard of living toward which we strive, will require more and better housing facilities in the future. According to the findings of the mortgage credit study, a minimum of 16 million new nonfarm permanent units would be required for the period 1961-70 under an assumption that an active effort on the part of private industry and Government would be made to cut in half the number of substandard units by 1970. The resources of materials, land, and labor required to build the 16 million units appeared to be adequate, but there was some question about the supply of mortgage credit. According to the report, the supply of credit would be adequate only if the past rate of savings and the proportion flowing into mortgages were to continue as in the past decade. It was concluded that affirmative action needed to be taken to insure this flow of savings into mortgage credit; also that new sources of credit would have to be explored and new financial instruments developed to insure the flow of credit. In order to implement the findings of the mortgage credit report, 10 recommendations were made. Four of these recommendations requested reports from Government agencies. The report submitted by the Board of Governors of the Federal Reserve System analyzes the factors contributing to the instability in residential construction and considers ways of minimizing this instability during the 10-year period, beginning in 1961. The Federal Home Loan Bank Board reported on (1) the extent to which member institutions should be permitted to increase their volume of long-term borrowings and (2) the desirability of establishing a secondary market for conventional mortgages within the Federal Home Loan Bank System. The Housing and Home Finance Administrator submitted a report on (1) the adequacy of mortgage credit to finance the construction of 16 million permanent nonfarm units during the next 10 years, (2) the extent to which legislative or administrative changes need to be made to insure an adequate flow of credit for this purpose, and (3) the desirability of creating an independent board to establish interest rate policies for FHA and VA, and purchasing and marketing policies for FNMA. The Housing and Home Finance Administrator also submitted a report on (1) FHA insurance premiums, mutuality, and method of collection, (2) FHA certified agency program, and (3) FHA staffing and budget. The reports from these agencies contain valuable information which, when added to the findings of the mortgage credit study, represent a wealth of information for future action. After the reports have been printed and analyzed by the committee, it may be desirable to develop implementing legislation. Sincerely, Enclosures. JOHN SPARKMAN. 9 5. |