HOUSING LEGISLATION OF 1966 ATTACHMENT B 329 NATIONAL ASSOCIATION OF HOME BUILDERS PROPOSED AMENDMENTS TO S. 2978 (THE HOUSING AND URBAN DEVELOPMENT AMENDMENTS OF 1960) "I. MORTGAGE INSURANCE FOR COLLEGE HOUSING FACILITIES “(a) Section 207 of the National Housing Act is amended by "(1) inserting in subsection (a) (1) immediately after 'designed principally for residential use' the following: (including housing of the type constructed with finanical assistance pursuant to title IV of the Housing Act of 1950'; "(2) inserting at the end of the second paragraph of subsection (b) (2) the following: 'Nothing in this subsection shall be construed to prohibit the insurance of a mortgage under this section covering property on which there is or is to be located housing for students or faculties of an “aducational institution" as defined in section 404(b) of the Housing Act of 1950.'; and "(3) inserting in subsection (c) (3) after the first semicolon the following: 'except that with respect to housing to consist of dormities of the type constructed with financial assistance pursuant to title IV of the Housing Act of 1950, not to exceed $5,000 per sleeping accommodation ;'." EXPLANATION This amendment would authorize FHA mortgage insurance for housing facilities for college students and faculties of the type constructed with financial assistance under title IV of the Housing Act of 1950, the college housing loan program. Mortgage insurance would be provided under FHA's section 207 regular rental housing program. Under the college housing loan program, the Secretary of Housing and Urban Development makes direct loans (at 3 percent interest rates) to assist institutions of higher education in the provision of housing and related facilities for students and faculty where such assistance is not otherwise available on equally favorable terms. We understand that the program level for college housing loans for fiscal year 1967 is approximately $300 million. As college enrollments continue to rise, the need intensifies for additional housing facilities for college students and faculties. In the context of available college housing funds, HUD cannot finance all the needed facilities. Accordingly, FHA mortgage insurance is recommended to supplement assistance to college housing being provided under the existing college housing loan program. Private enterprise is already active in this field. The availability of FHA mortgage insurance for college housing (which would be provided at the current 5%1⁄2 percent interest rate) would increase private activity, especially in dormitory-type construction presently eligible for section 207 mortgage insurance. In addition, private construction and ownership of housing facilities would benefit colleges and universities by (1) freeing their debt capacities so that they can undertake other projects (such as infirmaries and student unions) which private enterprise is not equipped to handle; and (2) providing them with greater flexibility in meeting a broad variety of housing needs. "II. INCREASED MORTGAGE LIMITS; LARGER INSURED MORTGAGES “(a) Section 203 (b) (2) of the National Housing Act is amended by (1) striking out $30,000, $32,500,' '$32,500,' and '$37,500,' each place they appear, and inserting in lieu thereof $35,000, $37,500,' '$37,500,' and $42,500,' respectively; and "(2) striking out '80 per centum' and inserting in lieu thereof '85 per centum'. "(b) Section 222(b) of such Act is amended by (1) striking out '$30,000' in paragraph (2) and inserting in lieu thereof $35,000'; and (2) striking out '85 per centum' in paragraph (3) and inserting in lieu thereof '87.5 per centum'. "(c) The third sentence of section 234 (c) of such Act is amended by (1) striking out $30,000' and inserting in lieu thereof $35,000'; and (2) striking out '75 per centum' and inserting in lieu thereof '85 per centum.' 999 EXPLANATION This amendment would increase the dollar limit on the amount mortgage which can be insured by FHA under its regular section mortgage insurance program from $30,000 to to $35,000 in the case family home, from $32,500 to $37,500 in the case of a two- or t home, and from $37,500 to $42,500 in the case of a four-family home. C ing changes would be made in the dollar limits on section 222 mortga ing servicemen's homes and section 234 mortgages financing famil condominiums. It would also reduce the minimum downpayment required under programs for homes or units in a condominium having an appraise excess of $20,000. The amount of downpayment necessary with resp portion of the value of a home or a unit in a condominium which exce would be reduced from 20 to 15 percent under section 203, from 15 to 1 under section 222, and from 25 to 15 percent under section 234. The proposed dollar limits are needed because of continually ris building and land costs, particularly in and adjacent to high-cost m areas. The new limits would be more consistent with limits on 1 by Federal savings and loan associations which can make home loans i up to $40,000 for single-family homes. The slightly reduced dov schedules on higher cost homes will make the FHA programs su more competitive work conventional financing. "III. INCREASED MORTGAGE LIMITS; LARGER INSURED MORTGAGES IN URBA AREAS "(a) Section 220(d) (3) (A) (i) of the National Housing Act is ame "(1) striking out '$30,000,' '$32,500,' '$32,500 $37,500,' '$37,500 000' and inserting in lieu thereof '$35,000,' '$37,500,' '$40,000,' '$42 500,' and '$9,500'; "(2) inserting immediately after 'in excess of four located on erty' the following, except that the Commissioner may, by regu crease the foregoing $9,500 limitation by not to exceed 45 per cent geographical area where he finds that cost levels so require'; and "(3) striking out '75 per centum' and inserting in lieu there centum'." EXPLANATION This amendment would (1) increase the dollar limit on the amount mortgage which can be insured by FHA under its section 220 program ing in urban renewal areas from $30,000 to $35,000 in the case of a home, from $32,500 to $37,500 in the case of a two-family home, from $40,000 in the case of a three-family home, and from $37,500 to $42, case of a four-family home; (2) increase from $7,000 to $9,500 the d on additional units (over 4 but not more than 11) in the case of sm projects; and (3) reduce the minimum downpayment required under t 220 program for homes having an appraised value in excess of $20,00 to 15 percent. The proposed dollar limits are needed because of continually rising and land costs. The new limits and slightly reduced downpayment on hogher cost homes will make the FHA program substantially more tive with conventional financing. In addition, the new limits will encou struction in urban renewal areas by small builders who ordinarily undertake such projects. Existing law permits up to 11 single-family units to be constructed bilitated and held for rental. However, the existing maximum mor such a development is $86,500, or approximately $7,800 per dwelling creasing cost levels have rendered this amount grossly inadequate. posed increase in the basic limits, coupled with a maximum "high cost' tion would produce a maximum mortgage of approximately $12,600 1 unit. In an area where no "high cost" designation is made, the increas would permit a maximum mortgage of approximately $9,900 per living "IV. REDUCED DOWNPAYMENTS ON FHA MORTGAGES FINANCING HOMES FOR "(a) Clauses (i), (ii), and (iii) of the next to last sentence o 203(b) (2) of the National Housing Act are amended to read as follows HOUSING LEGISLATION OF 1966 331 per centum of $20,000 of the appraised value of the property as of the date the mortgage is accepted for insurance and (ii) 90 per centum of such value in excess of $20,000"." EXPLANATION This amendment would reduce the minimum downpayment required under the FHA section 203 (b) veterans' mortgage insurance program for homes having an appraised value in excess of $15,000. There would be no downpayment necessary on a home valued at up to $20,000 (rather than the existing $15,000). The amount of downpayment necessary with respect to that portion of the value of a home which exceeds $20,000 would be decreased from 15 to 10 percent. The larger maximum mortgage at the basic veterans' loan-to-value ratio is needed because of rising housing construction costs and related expenses of homeownership. In many high-cost areas, the $15,000 limit on a mortgage requiring no downpayment does not provide an adequate or appropriate home. "V. MORTGAGE INSURANCE FOR VACATION HOMES "(a) Section 203 (i) of the National Housing Act is amended by inserting the following after the second proviso: 'Provided further, That notwithstanding the requirement of this subsection, the Commissioner may in his discretion insure under this section a mortgage on a dwelling to be used by the mortgagor for vacation purposes if the amount of the mortgage is not in excess of 90 per centum of the appraised value of the property and he finds that the project with respect to which the mortgage is executed is an acceptable risk :'." EXPLANATION This amendment would authorize the insurance of a mortgage under the section 203 (i) program for low-cost homes in outlying areas where the housing is to be used by the mortgagor for vacation purposes if the property is an acceptable risk, and if the amount of the mortgage does not exceed 90 percent of the value of the property. The generally rising incomes and increasing leisure time of American families have resulted in a demand for FHA mortgage insurance to provide financing of safe and decent housing for vacation or seasonal use. Under existing law and regulations, schools and other public or community facilities are required to be available to permit year-round occupancy of the home. Under this amendment, the FHA Commissioner would have greater flexibility in determining what facilities are appropriate for vacation homes used seasonally in locations intended for vacation or recreational use rather than year-round occupancy. “VI. TITLE I PROPERTY IMPROVEMENT LOANS "(a) Section 2(b) of the National Housing Act is amended by "(1) striking out '$3,500' and inserting in lieu thereof '$5,000'; and EXPLANATION This amendment would (1) increase the limit on the amount of a property improvement loan that can be insured by the FHA under its title I property improvement program from $3,500 to $5,000, and (2) permit the loans to have a maturity of up to 7 years rather than the present 5 years. Home repair costs continue to increase along with home construction costs. Increasing the title I loan amount is necessary to enable the property improvement program to assist homeowners in maintaining their properties. In addition, the longer term will help to reduce monthly financing costs and thereby bring the benefits of the program to more homeowners. "VII. ELIMINATION OF BUILDER'S COST CERTIFICATION ON SMALL RENTAL PROJECTS "(a) Section 227 (a) of the National Housing Act is amended by inserting 'consisting of 25 or more units' immediately before 'approved for mortgage insurance'." EXPLANATION This amendment would exempt from the requirements of cost new or rehabilitated multifamily projects consisting of less than 25 ur the existing law, all such projects are subject to cost certification re Many small builders are unwilling to undertake small rental proj the burdensome requirements involved in cost certification. This by exempting small rental projects from these requirements, would få construction of small projects by small builders, particularly in urb areas where a demand exists for such projects. It would also encour pation by small builders in many urban renewal projects. "VIII. DISPOSAL OF LAND IN URBAN RENEWAL AREAS FOR LOW- AND MODER SALES HOUSING "(a) Section 107 (a) of the Housing Act of 1949 is amended by inse the period at the end thereof the following:: Provided, That any re held as part of an urban renewal project may be made available to any at fair value for use by such purchaser in the provision of sales occupancy by families of low- or moderate-income'." EXPLANATION This amendment would permit the sale of real property in an urb area at a reduced price to any purchaser who will use such real prope vide sales housing for low- or moderate-income families. Under existing law, property in an urban renewal area may be s value for the "provision of new or rehabilitated rental or cooperative 1 occupancy of families of moderate income," rather than at the regu value of the property. This reduced purchase price is not available f to be used for sales housing for families of low and moderate income. This amendment would remove the anomaly of a higher price for used for rental housing than for low- or moderate-cost sales housing. ment should spur the construction of single-family homes for low- and income families in those urban renewal areas where the provision of ing is in accordance with urban renewal plans for such areas. "IX. INCREASED AUTHORIZATION FOR SECTION 810 DEFENSE RENTAL HO "(a) Section 810(i) of the National Housing Act is amended by s 'five thousand' and inserting in lieu thereof 'ten thousand'." EXPLANATION This section would increase from 5,000 to 10,000 the number of u may be constructed under the section 810 program of mortgage ins rental housing. It is our understanding that the Department of Defense has allocate authorized to be insured under the program. In view of the rece of our Armed Forces and the increased need for housing adjacent to fense Establishments, the NAHB strongly recommends reactivating 810 program. "X. EXTENSION OF FHA MORTGAGE INSURANCE FOR VETERANS "(a) The next to last sentence of section 203 (b) (2) of the Nationa Act is amended by striking out 'If the mortgagor is a veteran who ceived any direct, guaranteed, or insured loan under laws administe Veterans' Administration for the purchase, construction, or repair of (including a farm dwelling) which was to be owned and occupied by home', and inserting in lieu thereof the following: 'If the mortgago eran,'." EXPLANATION This amendment would amend the FHA mortgage insurance pr veterans authorized by section 206 of the Housing and Urban Develo of 1965. Existing law makes liberal FHA mortgage insurance avai HOUSING LEGISLATION OF 1966 333 for veterans who have not received benefits under the Veterans' Administration program for purchasing, constructing, or repairing homes. The amendment would remove this prohibition and make the FHA program available whether or not VA benefits had been received. Enactment of this amendment would make an additional 6 million veterans of World War II and the Korean conflict eligible for low down-payment FHAinsured mortgages at no cost to the Treasury. Senator SPARK MAN. The next witness is Mr. Eugene Nickerson, county executive of Nassau County, N.Y., representing the National Association of Counties. Mr. Nickerson, we are glad to have you and your colleague with us. We have your printed statement. It will be printed in full in the record, and you proceed as you see fit. STATEMENT OF EUGENE H. NICKERSON, COUNTY EXECUTIVE, NASSAU COUNTY, N.Y., ON BEHALF OF NATIONAL ASSOCIATION OF COUNTIES; ACCOMPANIED BY C. D. WARD, GENERAL COUNSEL Mr. NICKERSON. Thank you, Mr. Chairman, members of the committee. I have with me Mr. C. D. Ward, who is general counsel of the National Association of Counties. Senator SPARKMAN. Very good. Mr. NICKERSON. I am county executive of Nassau County, which is the largest suburban county in the Nation and the third largest unit of government in New York State, next to the State itself and the city of New York. Nassau's population, which doubled between 1950 and 1960, is now approaching 112 million people. Within Nassau's 300 square miles can be found the full gamut of problems and crises which beset America's metropolitan regions. We have core cities suffering from symptoms of decay, and new developments growing faster than the tax base necessary for adequate services. We have old people and poor people and minority group people whose desperate housing needs are not being met. At the same time we have a continuing influx of middle-class families seeking better schools, better homes, a better life. We have in Nassau 26,000 acres of some of the finest recreation areas in the Nation. Yet, despite the development of 17 new county parks during my administration, we will need at least 9,000 more acres to meet the recreational needs of our expanding population of young families and senior citizens. cars. We have fine roads in Nassau, jammed bumper to bumper with We have the largest communter railroad in the Nation, just barely rescued from bankruptcy. We have an extensive bus service that specializes in going its own way, oblivious to the needs of the people and the requests of the county government. We have poverty and affluence, prosperity and unemployment, bigotry and civic spirit-in short, all the unresolved conflicts of urban and suburban living that are the concern of this committee. I appear today not only in behalf of Nassau County, but also as the spokesman for the National Association of Counties, which repre sents county governments throughout the Nation |