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A cursory review of this new criteria could lead one to believe that the Department is taking a step in the right direction. In other words, it would appear that this new criteria would assist in breaking down some of our artifically enforced housing patterns. This is one of the stated purposes of this criteria and there are factors in there that would appear to carry this out. For instance, criterion no. 2, Minority Housing Opportunities, will prevent the authorization of public housing projects in areas of minority concentration if comparable opportunities for housing for minority families are not made available outside the areas of minority concentration.

On the surface, I can totally and completely endorse such a concept. However, what this criteria has in effect done is stopped all public housing approvals in the inner-city areas. If inner-city housing was not already at such a critically impossible state, I would suggest that we have the patience to wait out the implications of these criteria. Regretfully, I have to state that this crisis is so severe we cannot wait for the suburban areas to integrate before additional public housing can be approved for the inner-city areas.

Secretary Romney denies that this will in effect stop public housing in the inner-city, but I can only witness to you that I have been informed by private non-profit housing organizations that approvals for inner-city housing have been slowed or stopped and that these programs are coming to a halt particularly in the City of Philadelphia.

It is my request to you that you use your influence with Secretary Romney to retract the criteria that were promulgated on January 7, 1972. As I view it, this is necessary if we are to get on with our public housing programs in our major cities. Your assistance on this matter will be very much appreciated.

Very truly yours,

Hon. CHARLES E. BENNETT,

House of Representatives, Rayburn Building,
Washington, D.C.

K. LEROY IRVIS,
The Majority Leader.

OFFICE OF THE MAYOR,
Jacksonville, Fla., June 8, 1972.

DEAR MR. BENNETT: It as come to our attention that certain things proposed in the new legislation will affect Jacksonville and its operations considerably. I recognize that you do not serve on this committee, but I am sure that you have good relations with the chairman, Mr. Wright Patman. If you could express our concern, it would certainly be appreciated. The following are such concerns. 1. Local noncash contributions. We believe that the eligible activities should be expanded to include new public facilities or improvement which is an integral part of the locally approved community development program. You may recall that if we could not presently use these type of noncash credits, Jacksonville would not be able to participate in these programs to the extent that we are now participating. It would reduce our operation and not be near as meaningful for the work that has to be done in this city.

2. Expand the definition of hold-harmless communities to include those cities, such as Jacksonville, which have just entered the planning and acquisition stage of several of its projects. You may recall that our present Hogans Creek renewal application was not approved until 1971, and under the present definition this could not be counted towards our hold-harmless. You should also recognize that very few Florida cities could legally participate in this program until 1969 when state enabling legislation was passed. This particular definition, therefore, is harmful to Florida cities as a whole.

3. The House Subcommittee bill for public housing includes the cost of land and site improvements under the 110 percent of local prototype ceiling. This should be amended to exclude these items from the protoype calculation as it is in present law and in the Senate-passed bill. Otherwise, pressures will result to select below-standard site locations and reduce the quality of amenities of housing construction.

4. The House Subcommittee bill retains "continued occupancy limits" although it advocates a cross-section of income occupancy in public housing. The continued occupancy limits should be eliminated so that both economic and social stability can be maintained in housing projects to permit stable families to remain in housing to provide leadership and social stability, and they could remain without subsidy when their income rises sufficiently so that it is not

needed. The Senate bill passed on March 2, 1972 eliminated the continued occupancy limits, and we concur in this.

5. The income limits of FHA-mortgage-assisted housing passed by the Senate provides that maximum income entry limits would be increased to 90 percent of median income in the local area while the House Subcommittee bill sets income limits at 80 percent of median. The House provision is roughly equivalent to the maximum income limits in the present Section 236 program and does not allow significant flexibility to achieve a cross-section of income occupancy.

6. The Senate bill limits the amount of the mortgage to 120 percent of the prototype cost established by the Secretary for the area, while the House Subcommittee bill limits the mortgage amount to 110 percent. The House Subcommittee bill does provide that this figure can be raised to 120 percent on the basis of exceptional design standards. The limitation in the House bill may result in a lessening of the quality of housing produced in amenities provided, and would, in all probability, preclude certain sites in high land cost areas.

7. Both the House Subcommittee and Senate-passed bills provide for an additional authorization of $200 million for FY 1973. It is questionable whether this authorization will be sufficient to support increased production, while serving additional families of "low income" as required in both bills.

S. The Senate-passed bill provides that after initial rent-up, additional assistance payments could be made to offset increases in operating costs such as taxes, utilities and maintenance. These could equal either (1) actual increases or (2) the amount necessary to insure that no family pays more than 30 percent of adjusted income for rent. The House Subcommittee bill contains no comparable provision.

I realize that time is near for consideration by the Banking and Currency Committee but this is of vital concern to Jacksonville, and I trust that you will assist us in bringing this to the appropriate attention in Congress. Sincerely yours,

Hon. WRIGHT PATMAN,

HANS G. TANZLER, Jr., Mayor.

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Chairman of the Committee on Banking and Currency, House of Representatives, Washington, D.C.

DEAR CONGRESSMAN PATMAN: May I take this opportunity to commend you and your Committee on favorable resolving several issues of House Bill 9688. These are some following issues to be resolved:

(1) The Senate and House Bill doesn't provide for pooling Credits.
(2) The retaining of Section 312, Rehabilitation Loan Program.

(3) It is my concern on whether planning and technical services are eligible activities contained under Section 405.

(4) I am convinced that the contract for assistance is an annual contract as opposed to the two-year funding annual application technique of the Senate Bill.

(5) We would hope that the full committee would revise the application requirements set forth in Section 401 and coincide with the Senate Bill, a statutory mandate that HUD complete its review of applications within ninety (90) days. I am hopeful that the suggested amendments be acted upon and passed into law in the near future.

With warmest personal wishes, I am

Yours sincerely,

BASIL C. SCOTT. Mayor.

KENTUCKY BAR ASSOCIATION

RESOLUTION

Whereas, it is the considered opinion of the Board of Governors of the Kentucky Bar Association that Title IX of the omnibus Housing and Urban Development Act Amendments of 1972, Section 907 (a) would require an attorneyat-law to perform legal services for a corporation without compensation and in addition relieve the corporation of the obligation to pay for the service: and Whereas, title IX, Section 912 of said Act authorizes officers, agents and employees of a corporation to engage in the unauthorized practice of law, now

Therefore, the Board of Governors of the Kentucky Bar Association wish to make known its objection to the aforesaid sections.

The Director of the Kentucky Bar Association is hereby authorized to sign and immediately forward this Resolution to the Honorable William P. Curlin, together with a request that he vigorously oppose said sections and seek their removal from the Act.

This 8th day of June, 1972. [SEAL]

HENRY H. HARNED, Director.

Congressman OTIS G. PIKE,
Rayburn Building,
Washington, D.C.

THE SUFFOLK COUNTY BAR ASSOCIATION,
Hauppauge, N.Y., June 15, 1972.

DEAR CONGRESSMAN PIKE: I write to you at the direction of the Board of Directors of the Suffolk County Bar Association. Our Association includes over 1,000 lawyers in what is (as you know) perhaps the fastest growing county in the United States.

We oppose passage of Title IX of the above-referenced bill and respectfully request that you bring our objection to the attention of the committee chairman at the hearing.

Additional regulations in the mortgage market would create an unwarranted delay in transactions involving the purchase and sale of one and two-family homes. It is difficult now to coordinate the chain reactions when closings are dependent on other closings. The additional burden of meeting detailed governmental requirements would greatly compound the problem.

The current practice in New York City in transactions involving federally insured mortgages is a prime example. In such transactions the time between contract and issuance of a firm mortgage commitment usually exceeds two and one-half months, whereas in the usual, unregulated transaction the average time is two weeks.

The additional burden, necessary to comply with new regulations. would increase the cost of making mortgages. The mortgage institutions would be prohibited from passing on such expense to the mortgagor. The result would be to discourage many institutions from committing their investment portfolios to mortgages. Many institutions would instead secure a higher yield in other fields of investment.

Perhaps the most objectionable result of the proposed regulations is that it would downgrade the quality of services given to the general public. Obviously, if the emphasis is on price rather than on quality, the latter suffers and deteriorates. The person or institution rendering service would, therefore, tend to consider its function as merely perfunctory, and give the minimum required. The mortgagor indirectly would not be getting the best or proper service as to title insurance, the administrative functioning of title companies, survey coverage, and as to legal representation. The owners of savings banks and savings and loan associations are the depositors. By diluting the services given by those institutions, the general public will be deprived.

Most certainly, the value of an attorney's professional services cannot be regulated by formula varying only with geographic regions. The expertise and ability of each attorney differs and his fee should be commensurate with same. There are many specific instances and examples which have been excluded from his letter in the interest of brevity. Should you or the committee require elaboration, we would be most happy to comply. We could accomplish this in writing, or, if desirable, we could send a representative to appear before the committee.

Your efforts in this matter are very much appreciated.

Very truly yours,

BERNARD K. MEYER, President.

STATEMENT OF THE AMERICAN BANKERS ASSOCIATION WITH REGARD TO CLOSING

COSTS

The American Bankers Association, at prior hearings, on behalf of its 15.000 member banks expressed the desire to reduce and standardize closing costs paid by bank customers as it was well aware that a reduction in the amount of money that the home buyer will have to expend at time of closing will provide a material impetus to home ownership. Our Association has studied Title IX of the Committee Print bill and takes this opportunity to express its views concerning this Title. We do not comment on all sections but we do bring to your attention some of the more pressing problems that lenders foresee in Title IX as drafted:

(1) The legislation should define settlement costs. The restrictions on such costs should not include discount points or any charge in lieu of interest and should not include prepaid taxes, fire and extended coverage insurance premiums, premiums for FHA or private mortgage insurance, recording costs charged by a government unit or other charges not directly related to services. It should be clear that this authority could not be used to control interest rates or premiums for insurance through the settlement procedure.

(2) Section 901 as drafted would make the "closing costs" regulations applicable to conventional mortgages merely because they are made by an insured commercial bank, an insured savings and loan association, or an insured credit union. We see no reason for Congress to supersede State authority in this manner. We urge that any Federal legislation only be applicable to mortgages insured or guaranteed by the Federal Government.

Banks have shown increased interest in residential mortgage loans in recent years. For example, between 1965 and 1971 commercial banks increased outstanding holdings by $19.1 billion, or 59 percent. It would be unfortunate to handicap this expanding interest in conventional real estate loans by imposing needlessly complex Federal procedural requirements.

Moreover, The American Bankers Association has worked with others to initiate development of a uniform real estate code which, we believe, will encourage States to update and modernize their laws.

(3) Section 901 would make the "closing costs" regulations applicable to "residential real property." "Residential real property" is not defined but presumably would include large apartment projects. We urge that closing cost regulations be confined to "one-to-four" family homes. Investors owning large projects do not need this type of regulatory protection.

(4) The American Bankers Association believes that requiring "an accurate itemized disclosure in writing of each charge in connection with such settlement" 10 days in advance may delay settlement. Such delay could mean payment of 10 day's more interest by the builder on the construction loan.

The 10-day period is too long and should be reduced since both the amount of the cost and the actual services to be performed in the closing may not be determinable at this early date. For example, the lender may not know whether a survey will be necessary prior to completion of title search. We would suggest that the 10-day advanced disclosure period be reduced to 3 days.

Also, the requirement for "accurate" disclosure may be impossible. A requirement for a “substantially accurate” disclosure would be more practical.

In our opinion, it would be most difficult to estimate "utility costs" and recommend that advanced disclosure of "utility costs" be eliminated.

In many instances, the settlement attorney or title company is in the best position to disclose costs and, therefore, the lender should not be legally responsible for the correctness of costs disclosed.

(5) Sections 902(b) (c) and (d) impose on lenders that are financial institutions the responsibility for administering and enforcing compliance with restrictions on closing costs. In settlement transactions, customs and usage vary throughout the country. In some instances a lender is not involved in establishing and assessing many of the settlement charges. A uniform requirement imposing responsibility on the lender for enforcing compliance with ceilings on settlement charges is impractical. Furthermore, in many cases the lender does not have authority to be certain that other parties have complied with these requirements. (6) Section 906 would impose criminal penalties on any person who, in connection with a settlement involving a Federally related mortgage, accepts or gives

anything of value pursuant to an agreement to refer settlement business to such person.

We are in sympathy with any attempt to prohibit kickbacks. However, this language is so "broad" and so "indefinite" as to make interpretation most difficult. (7) The lender often has no means to verify disclosures required under Section 909. If Congress feels that this section is necessary, the ABA recommends that the disclosure be tied into the date of loan closings rather than loan commitments. From an operational standpoint, it would be most difficult for the lender to assure compliance with Section 909 five days prior to issuance of the loan commitment. Such a requirement may delay issuance of a loan commitment.

STATEMENT BY ANDREW J. BIEMILLER, DIRECTOR, DEPARTMENT OF LEGISLATION, AMERICAN FEDERATION OF LABOR AND CONGRESS OF INDUSTRIAL ORGANIZATIONS The AFL-CIO is pleased to submit our views on the housing legislation being considered by the full membership of the House Banking and Currency Committee. The concerns in this bill-from housing to urban mass transportationembrace a wide range of problems faced by urban areas today. Overall, we sup port the broad programs and purposes in the bill to continue and expand our national commitments in behalf of adequate shelter for all Americans. Our statement focuses briefly on those provisions of the bill wherein the AFL-CIO feels strong concerns both in support and in opposition. Briefly, they are:

EXISTING HOUSING UNITS

The AFL-CIO is disturbed by this provision that would permit 40 percent of Section 402 funds to be used for existing units. The AFL-CIO has supported this basic subsidized housing program-currently 235-since its creation in 1968. We have viewed this provision as a means of increasing the housing supply for those persons most in need of housing-lower income families and individuals. It is costly, but it has been supported as a means of increasing our Nation's housing inventory. If the housing goal of 26 million units, including 6 million low and moderate income units, is to be met, these subsidy programs should be used primarily to stimulate new housing production. In areas where there is currently an over-supply of available low-income housing, discretion must be used and flexibility must be allowed. However, a figure of 40 percent cannot be defended nor advocated when overall massive housing shortages are known to exist.

LOCAL GOVERNMENT APPROVAL

A second area of concern where low-income housing would be reduced is the provision for local governmental approval of all rental projects and homeownership developments with more than 8 units. We realize that the intent of the subcommittee is to assure that housing assisted by the Federal government is located in areas where supportive facilities and services are adequate. It was with this same concern that the AFL-CIO testified in Sept. 1971 in support of Representative Ashley's proposal for metropolitan housing authorities. Such authorities would have addressed themselves to all aspects of housing, including the relationship between housing and employment opportunities. However, requiring local governments to approve each project does not insure that approval-or rejection of a project will be tied to the adequacy or inadequacy of supportive facilities. In practice, it will probably provide a mechanism by which low-income. federally-assisted housing will be shunted aside. Much of what Congress has done over the years to promote fair housing would be negated, construction would come to a standstill and thousands of low-income families would be forced to remain in substandard housing.

INCOME LIMITS

We are also concerned about the maximum income limit that would be set on families seeking to enter 502 rental housing. The 80 percent of median income limit would preclude many families and individuals from considering such housing, yet there would be no alternative at a cost that they could afford. The 90 percent limit in the Senate bill would promote a better cross-section of incomes, open it to far more needy families and increase the stability of the projects.

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