Lapas attēli
PDF
ePub

approved bill). The other, contained in Section 1005 of the Subcommittee bill would limit the maximum conventional loan eligible for purchase by FNMA under its conventional secondary market program to $40,000 (as contrasted with $45,000 in the Senate-passed bill).

We prefer the Senate provisions in these two areas. We do not believe that raising the unsubsidized FHA limit to 200% of the prototype or the FNMA limit to $45,000 in its conventional mortgage program will cause any reduction in the flow of funds into lower-priced housing.

THE DUAL INTEREST RATE

We are especially pleased that the Subcommittee has for the first time, incorporated the recommendations of the Commission on Mortgage Interest Rates which recommended in 1969 a dual interest rate system for FHA and VA mortgages. This provision has been approved in the Senate twice before, and has been approved again this year. It was also strongly recommended by the Administration. Because we believe that any interest rate ceilings are in the long run self-defeating, we have always favored a completely free FHA and VA rate. But we recognize the political difficulties inherent in obtaining Congressional approval for a completely free rate. We believe, therefore, that the dual rate is an acceptable compromise which will ultimately prove the wisdom of a completely free rate. By the same token, we recognize that Congress wants to be sure a free rate can work before granting it. Accordingly, this dual-rate system, on an experimental basis, seems to us to be a very appropriate action for the Congress to take. We recognize that there are many critics and even more doubters. But surely, an experimental program that would automatically terminate in two years unless further Congressional action is taken is reasonable. If it proves unworkable, it would terminate automatically in two years, or the Secretary could terminate it administratively immediately. The gamble involved is slight because of these safeguards. We commend the members of the Subcommittee for approving this provision for the first time, and we sincerely hope the members of the full Committee will also be agreeable to it. The proposal deserves a chance.

The chances for the dual rate system to work effectively will be immeasurably improved, however, if the incidence of the discount in the case of the fixed rate (which by administrative regulation now falls on the seller of the property) is permitted to fall on either the seller or the buyer as the private market dictates. This area should be subject of free negotiation between the buyer and the seller.

LOCAL APPROVAL OF 235 AND 236 HOUSING

Perhaps the only provisions in the Subcommittee bill to which we are strongly opposed are those that would require prior local approval for housing constructed under the Sections 402 and 502 programs (or 235 and 236 housing under commitments made after enactment of this bill). We can think of no provision more likely to damage subsidized housing than this one. We believe strongly that the right of local communities to exclude families solely on the basis of income from entire communities, and sometimes from entire suburban areas is a "luxury" the country can no longer afford. We, therefore, oppose giving local communities an absolute veto power over all subsidized housing. Zoning powers and building codes should give local communities enough power to assure their physical and environmental homogeneity, to the extent they desire such homogeneity.

However, in opposing these provisions we do not want to be understood to oppose any role in planning or site selections for local communities. On the contrary, we were supporters of Mr. Ashley's proposal to encourage local participation in decision making with respect to housing for low-income citizens, as our testimony before the Housing Subcommittee last year made clear. We continue to support reasonable proposals designed to confer these kinds of powers. The communities which must supply all the amenities to the people who live in this housing for many years are entitled to participate in such vital decisions as where the housing shall be located, what it will look like, whether the housing should be scattered or whether it should be ownership or rental housing. However, the communities should not be granted veto power.

TITLE IX REGULATION OF CLOSING COSTS AND SETTLEMENT PROCEDURES

The savings bank industry supports the basic thrust of the provisions in this title which would seek to remedy a number of abuses which have been uncovered in the area of real estate settlements. The measures would aslo standardize a number of mortgage settlement forms and procedures, goals we have long sought. We would offer a few clarifying modifications and changes, however.

Section 901-Definition of "Federally Related Mortgage." We believe this section needs revision in two respects. Since the rest of the provisions of the title apply to federally related mortgages, these, we believe, are extremely important, and qualify our endorsement of the rest of the title. First, we believe that the definition should exclude loans made to finance apartment buildings and construction loans to builders. These transactions are made between sophisticated parties, and these borrowers do not require the kind of protections which the bill affords in the remaining sections. On the other hand, we believe the protections should be extended to all single-family mortgage borrowers (other than builders applying for construction loans) regardless of the kind of institution to which they apply or the kind of loan they receive. As drafted, the bill would not cover insurance companies or even uninsured, state chartered institutions making conventional loans for their own portfolios.

Section 902-Maximum Allowable Settlement Charges. We believe some provisions should be added making clear that no institution would be liable to any borrower (under subsection (c)), and that a mortgage would still be eligible for insurance (under subsection (b)) where there is an inadvertent overcharge which is promptly refunded to the borrower upon being discovered.

Section 905-Advance Disclosure of Settlement Costs. There are some potential problems with this section that require attention in our judgment. We would prefer that the section require only a substantially accurate advance disclosure, because we fear that time delays will be great if totally accurate disclosures are to be required. There are a number of instances where costs cannot be precisely estimated. For example, in several states title insurance is not used. In these socalled abstract states title examinations are normally performed by attorneys a day or so before a scheduled closing. It would be difficult to be totally accurate with respect to the examination fee 10 days in advance. Moreover, we believe there may be good reasons why some borrowers will want to waive their right to a 10-day notice requirement because they must settle immediately. We think a borrower should have the right to waive the 10-day notice in appropriate cases. Such a provision is contained in the Truth-in-Lending Act. In the alternative, a period shorter than 10 days could be considered.

Section 906-Prohibition Against Kickbacks. As we pointed out in our statement on H.R. 13337, introduced by Chairman Patman, we believe this provision is not sufficiently clear to spell out exactly what conduct is being proscribed. We continue to be concerned that the provision as presently drafted is very difficult to interpret. Criminal statutes should be extremely clear. One solution would be to make this a disclosure provision rather than a criminal one.

Section 908-Limitation on Advance Escrow Deposits. This section, as presently drafted, could be construed to prevent a lender from collecting yearly tax deficits on a monthly basis. As drafted, if the amount in an escrow account was insufficient to meet a tax or insurance bill, the lender would be compelled to force the buyer to pay it in a lump sum. He could not pay it for the borrower and then escrow it over the next 12 months as is the custom now.

The language is also unclear as to whether tax or insurance escrows can be based on estimates of annual tax or insurance bills. Particularly in the case where a home has not yet been assessed for tax purposes, it is important that escrows can be based on reasonable estimates.

With the modest modifications we have recommended, we strongly urge passage of this bill. We are grateful for the opportunity to submit this statement. (Whereupon, at 4:40 p.m., the committee was recessed until Friday, June 9, 1972, at 10 a.m.)

HOUSING AND URBAN DEVELOPMENT ACT OF 1972

FRIDAY, JUNE 9, 1972

HOUSE OF REPRESENTATIVES,

COMMITTEE ON BANKING AND CURRENCY,

Washington, D.C.

The committee met, pursuant to recess, at 10 a.m., in room 2128, Rayburn House Office Building, Hon. Wright Patman (chairman) presiding.

Present: Representatives Patman, Barrett, Sullivan, Griffin, Archer and Frenzel.

The CHAIRMAN. The committee will please come to order. We have this morning as the first witness the National Housing Conference, Mr. Keith. Is Mr. Keith here? Come around, Mr. Keith.

Mr. Pollard from Los Angeles; and Mr. John Nangle, Washington Counsel for the National Association of Independent Insurers.

Mr. Keith, we will be very glad to hear you, sir, and identify yourself, who you represent, and take about 10 minutes and file your statement, if you please. And if you want to expand on your statement and extend your remarks and bring out additional points you may do so.

STATEMENT OF NATHANIEL S. KEITH, PRESIDENT, NATIONAL HOUSING CONFERENCE

Mr. KEITH. Thank you.

My name is Nathaniel Keith, I am president of the National Housing Conference, a public interest organization interested in housing. Mr. Chairman, we have studied the bill recommended by the Housing Subcommittee. In most respects we think it is very sound and far reaching legislation which we support. There are some features of it which we feel should be amended by the full committee.

The CHAIRMAN. In order to identify what you are talking about, you refer to the bill that was considered by Mr. Barret's Subcommittee on Housing?

Mr. KEITH. Correct.

The CHAIRMAN. And the committee print, which is 270 pages?

Mr. KEITH. That is correct.

The CHAIRMAN. Go ahead, sir.

Mr. KEITH. I have this position paper, Mr. Chairman, which I would like to file for the record.

The CHAIRMAN. Without objection it is so ordered.

Mr. KEITH. I might just mention very briefly the amendments to the subcommittee print, which we recommend for consideration by the full Banking and Currency Committee.

(425)

Very briefly, we recommend that the requirement for local governing body approval of all developments under 235 and 236 involving eight or more dwelling units, be deleted. We recommend that the income limits for housing receiving interest subsidies be increased at least to 90 percent of the median income for the area.

Mr. BARRETT. Mr. Chairman.

The CHAIRMAN. Mr. Barrett.

Mr. BARRETT. Because we just have a few of the panelists here today, would it be reasonable to ask if I could ask Mr. Keith a question at this time?

The CHAIRMAN. Mr. Barrett, now we have four witnesses and experience in this committee, and I think you have had the same experience, that unless

Mr. BARRETT. I withdraw it. Go ahead.

The CHAIRMAN. I want to tell the reason for this.

Mr. BARRETT. I just wanted to find out if Mr. Keith, saying he is against the income level, I just don't comprehend what he is saying here and I do want to follow him very closely and

The CHAIRMAN. Well, you will be one of the first to ask questions. Please don't disrupt us because I think experience has shown that this is the best way to proceed and it gives everybody a chance.

All right, Mr. Keith, go ahead and speak up so we can hear you. We don't hear you too well.

Mr. KEITH. Yes, sir. A further amendment to the subcommittee print which we recommend would be to delete the proposal that no mortgage be insured under the interest subsidized home ownership program unless HUD determines that other adequate or new existing housing is not available to the community, and likewise we do not favor the provision in the subcommittee bill of increasing the amount of existing housing to be assisted under 235 and 40 percent from 30 percent as at present. We recommend to the committee that the provision of section 10 of the H.R. 9331 as introduced involving home ownership opportunities in public housing be restored.

We recommend that the committee consider deleting the proposal that authorization for operating subsidies for public housing be subject to approval by the Appropriations Committee. We favor continuing the present longstanding setup under which the legislative committees have acted exclusively on authorizations of public housing contribution contracts.

We recommend against the provision that the unit price limits for public housing include the cost of land and site improvements. We feel this would jeopardize the ability of housing authorities to continue their efforts to locate housing projects on suitable sites by excluding land

costs.

We recommend that admission limits for continued occupancy in low-rent public housing be eliminated in the interest of securing better economic integration in public housing projects.

In connection with welfare rents for tenants occupying public housing, we support the subcommittee amendment to require that welfare agencies make payments directly to the agency on behalf of the welfare

tenants.

We urge further that the committee consider a further provision that welfare rents be at least equal to the operating costs in public housing projects.

« iepriekšējāTurpināt »