in which either events or their own policies are taking them, and to provide them with alternative choices. Opening up the planning process to citizen participation may help avoid the all too often practice of shelving "paper plans" and instead, move towards the active implementation of those plans. Section 601 (line 2, page 182). Add a new paragraph (3), following line 2, to read as follows: "(3) A five-year-capital programming element including the scheduling of public facilities and capital improvements consistent with other elements of the plan, and based on a determination of relative urgency." This amendment is intended to guarantee in all comprehensive planning one of the basic elements necessary to guide elected officials in their decision making process. Section 601 (line 1, page 183). Delete all of paragraph (e) and its long list of government reforms from this title of the bill, and legislate paragraph (e) as a separate title with separate funding. Government reform is a necessary and important objective, one that should be dealt with in a separate governmental program. The comprehensive planning program is funded at such a low level compared to the demonstrated needs, that we feel that Committee bill would dissipate already limited funds and most likely not achieve either goal of comprehensive planning or government reform. In fact, the newly added management activities necessary to implement the planning process will consume much of the limited new funding. Government reform is necessary. It should be put in proper perspective, distinguished in a separate title of the legislation, and funded as a distinct program. Section 601 (line 1, page 183). Substitute a new paragraph (e): "(e) After an initial application for assistance under this section has been approved, the Secretary may make grants on an annual basis, if— "(1) the applicant submits to the Secretary annually a description of its work program designed to meet objectives for the next succeeding one-year period and setting forth any changes the applicant intends to undertake to achieve better progress; and "(2) the applicant submits to the Secretary biennially (a) an evaluation of the progress made by it during the previous two years in meeting objectives set forth in its plan, and (b) a description of any changes in the plan's goals or objectives. "The Secretary shall make no grant "(i) to any applicant which has not made a good faith effort to implement its goals and objectives as set forth in its comprehensive plans; and "(ii) after three years from the date of enactment of the Housing and Urban Development Act of 1972, to any applicant (other than an applicant described in paragraph (5) or (6) of subsection (a)), unless the Secretary is satisfied that the comprehensive planning being carried out by the applicant includes the elements specified in paragraph (1)–(3) of subsection (c)." This amendment is intended to bring added accountability to the comprehensive planning and management program. "It is important that plans be more than 'paper plans', they must be implemented", we have heard these remarks many times during the course of this Committee's hearings and deliberations. We agree with the Committee that every step possible should be taken to achieve implementation of comprehensive plans. This amendment, with its required accountability reports, can be a tool to help achieve this goal. Section 601 (line 13, page 187): Strike the following sentence: "No more than 30 per centum of the amounts appropriated after July 1, 1972 shall be used for management activities as described in subsection (b) or as otherwise authorized under this section." This amendment is suggested because it is our belief that this type of sublimitation is totally unadministrable. In addition it would seem to be contradictory to the major objective of relating all management activities to the direct support and implementation of comprehensive plans. In place of this sublimitation we would like to urge the Committee to adopt the following language, line 13, page 187 following “1973.": "Of the sums appropriated for any fiscal year there should be available solely for grants to applicants described in paragraph (4) of subsection (a) an amount equal to (1) 30 per centum of any sums so appropriated which do not exceed $125,000,000 in the aggregate, and (2) 25 per centum of any sums so appropriated which are in excess of such $125,000,000." We believe that this amendment to guarantee a certain level of funding for areawide organizations in any metropolitan area is extremely important. Metropolitan planning organizations for the most part lack governmental structure and taxing power to raise their own funds for the crucially important function of comprehensive areawide planning. We believe that the Congress should indicate its continuing support for regional and metropolitan governments and their valuable planning and coordinative functions, by earmarking a certain guaranteed level of funding for these important entities. Section 601 (line 24, page 187). Insert the words "not to exceed 5 per centum of the funds so appropriated," between the words "this section", and the words "to assist". This amendment is intended to eliminate the open-ended amount of discretionary funds available to the Secretary to spend directly on studies and on the provision of technical assistance. Section 601 (line 3, page 192). Delete paragraph (2) lines 3-6 on page 192. This paragraph defines the term 'planning area'. This is an arbitrary designation that appears no where else in section 601. If left in the bill it could be mistakenly interpreted to allow the creation of special planning districts, this would seem contrary to the entire concept of the bill which seeks to provide assistance for general purpose units of government or combinations thereof. We commend for consideration by this Committee two sections of the Senate passed version of the Housing and Urban Development Act of 1972, (S. 3248). For your reference please see Section 402, Coordination of Federal Aids in Metropolitan Areas, commencing on line 22, page 177 of the Senate bill; and Section 403, Training and Fellowship Programs, commencing on line 17, page 180 and ending on line 11, page 184. We believe that these sections are important because they strengthen and improve upon (1) the concept and application of the areawide review and comment process that was fostered under the Demonstration Cities and Metropolitan Development Act of 1966, and Intergovernmental Cooperation Act of 1968, and (2) the Urban Studies Fellowship program established under the Housing Act of 1964. Both these amendments are very timely and important. Hon. WRIGHT PATMAN, NATIONAL ASSOCIATION OF REAL ESTATE BOARDS, Washington, D.C., June 12, 1972. Chairman, Committee on Banking and Currency, House of Representatives, Washington, D.C. DEAR MR. CHAIRMAN: On behalf of the National Association of Real Estate Boards I am attaching herewith several amendments to the pending housing bill (Committee Print, May 11, 1972) which we respectfully commend to your sympathetic consideration. We are also taking this opportunity to comment on several provisions of the Committee Print as approved by the Subcommittee on Housing. A. HOMEOWNERSHIP ASSISTANCE-SECTION 402 (235) 1. Local Governing Body Approval.-Section 402 (a) provides that section 402 projects of eight units or more must first be approved by resolution of the applicable local governing body. A similar requirement is provided subsequently in the bill for section 502 (236) projects. Our Association supports such a requirement. We believe it is consistent with the thrust of the Community Development block grant program (Title IV) which would invest more decision making power with local government. The type, number of units, and general location of subsidized housing projects should not be determined by the timeliness, good fortunes, or zeal of individuals working with FHA or HUD officials. On the other hand, responsible local officials must cope with the problems generated by the construction of such projects in the form of municipal services and schools. In addition, local governing bodies have the responsibility for planning urban growth and effective planning is impossible if third persons are free to launch such projects without regard to the ability of the local governing body to meet the impact. It has been suggested that local governing body approval would prevent the construction of section 402 and section 502 projects. The growth of public housing, which requires local approval, attests to the fallacious reasoning underlying this argument. 2. Eligibility Test for Section 402 (235) Assistance.-Section 402 (j) (2), in defining "lower income families" for homeownership assistance would limit assistance to families: "Who are financially unable to acquire new or existing housing, determined periodically by the Secretary to be available in adequate supply in the area, under section 401." While the apparent purpose of the amendment is to assure that only families who are unable to acquire homes without subsidy would be entitled to a subsidy, the language recited above defeats this objective by negating a finding with respect to each family. Under the language of the Commitee Print, the Secretary could determine that there were one thousand families with incomes less than 80% of median and only 50 available homes which could be purchased by such families without subsidy. He could therefore activate a section 402 (235) project. We believe that he test should be applied to the individual applicant family. A family that can buy a $17,000 home, adequate to it needs, without a subsidy should not be permitted to buy a new home costing $22,000 with a subsidy. The only test at present is whether the family could afford the $22,000 home without subsidy. This is an insufficient test for obvious reasons. We strongly recommend that the language of section 402 (j) (2)—beginning on line 5 page 44 of the Committee Print-be amended to meet this defect. A suggested amendment is attached herewith as Enclosure A. B. PUBLIC HOUSING 1. Appropriations. We recommend that the contract authorizations for public housing be subject to the limitations set forth in appropriations acts as in the case of other subsidy programs. We believe that this is necessary to provide effective oversight by the appropriations committees of all subsidy programs and not. as is presently the case, only sections 235, 236 and rent supplements. An amendment to accomplish this is attached as Enclosure B. 2. Leasing Programs.-We strongly support the language of section 5(a) which would require that 50 percentum of the units provided under the leasing program (now known as section 23) be reserved for existing units. The existing housing inventory is the largest single source for housing low income families. Not only is the inner city benefited by the use of existing housing, but the objectives of equal opportunity as well as economic int ration are served by this program to a greater degree than any other subsidy program. For these reasons we recommend that not less than 50 percentum (instead of 30) of units of public housing be provided under section 8 (now section 23), the leasing program. An amendment to accomplish this is attached as Enclosure C. C. REGULATION OF CLOSING COSTS AND SETTLEMENT PROCEDURES (TITLE IX) 1. Section 901 Definitions. We recommend that section 901 be amended by adding a new subsection defining "settlement costs" so as to exclude commissions paid on the sale of real estate. This is not a charge that is related to the financing of real estate. Also, the HUD-VA Report on Settlement Costs presented to the Commitee on February 22, 1972 contained no evidence of abuses in the area of sales or brokerage commissions, An amendment to accomplish this is attached herewith as Enclosure D. 2. Section 906 Prohibition Against Kickbacks. This section provides a criminal penalty for accepting or furnishing anything of value pursuant to any agreement "that business incident to or a part of such settlement shall be referred to any person." The section lacks the element of certainty--an essential ingredient of any criminal statute. The purpose of the section has considerable merit; however, unless amended, it may not stand up under judicial scrutiny. For example, participants in a real estate settlement often perform bona fide services for which they are compensated. At the same time they might have referred a participant to another person such as a title insurance compa y or mortgagee. To correct this inadvertent omission from the ection, I am submitting a proposed amendment (Enclosure E) to permit payiaents for bona fide services. D. EXPERIMENTAL HOUSING ALLOWANCE PROGRAM We strongly support the provisions of section 1002 (c) which would authorize the Secretary to utilize public housing authorizations in carrying out the experimental housing allowance program and applaud the language which would preserve intact that part of public housing contract authority reserved for the leasing program. The leasing program, in our opinion, is a highly successful "allowance-type" program which has already suffered from the overly production orientation of the Department of Housing and Urban Development. We believe that the leasing program already presents ample evidence of the success of housing allowances and that is why we have recommended that its share of public housing contract authorization be increased to 50 per centum rather than 30 per centum. (See B 2 above.) E. INTERSTATE LAND SALES FULL DISCLOSURE ACT 1. Waiver of revocation privilege where purchaser inspects the property and has read property report.-Section 1022 (c) (1) (B)—Page 266, lines 22 and 23deletes the existing waiver of right of revocation (extended from 48 hours to 72 hours by the bill) in cases where the purchaser has inspected the property and has read the property report. We support the objective of most of the pro-consumer legislation which has characterized this and other bills. However, we sincerely believe that there is no valid basis for preventing the execution of a valid binding agreement in cases where the purchaser has inspected the property and read the property report. If this opportunity had been afforded and exercised by purchasers in the past, we are confident that the Congress would not have enacted the Interstate Land Sales Full Disclosure Act. The overly-solicitous pro-consumer protection reflected by this amendment removes the small element of personal responsibility remaining with the consumer. In the final analysis even the most unsophisticated consumer must bear some-minute as it is-responsibility for his actions. While we have rejected "caveat emptor," we ought not to substitute the concept of “let the buyer never be wary, the government will protect you." Certainly this new concept is reflected in the amendment which we strongly urge the Committee to reject. 2. Industrial and Commercial Developments.-Notwithstanding the predominant evidence of homesite fraud and misrepresentation which led to the enactment of the Interstate Land Sales Full Disclosure Act, the language of the Act is broad enough to encompass commercial and industrial developments. Developers of industrial parks, for example, do not subdivide land into predetermined parcels but dilor each land unit to the needs of the commercial or industrial user. If the end result is 50 or more parcels, the developer is in violation of the law unless he has registered with HUD and provided the voluminous data and documentation which, incidentally, is homesite oriented. The Act already exempts developers who plan to construct buildings on the property, and those who buy land in order to resell it. These are the so-called business exemptions which are set forth in section 1403(a) (9) of the Act. It is proposed by the National Association of Real Estate Boards that this exemption be broadened to include land sold to those who would occupy and use the land for commercial or industrial purposes. The amendment would be limited to the end users in order to meet HUD's objection to ending any protection which might now be afforded to unsophisticated purchasers of commercial and industrial property for "investment” purposes. While we question the validity of this objection, the amendment (Enclosure F) would be limited to the end user who certainly could not be included among the unsophisticated purchasers for whom HUD is concerned. We strongly recommend the approval of an amendment which would exempt land sold to those who would occupy it for commercial or industrial purposes. This completes the several amendments which we propose to the pending bill. We respectfully request that this letter be printed in the record of the public hearings now under way before the House Committee on Banking and Currency. Sincerely yours, (Proposed amendments to the Committee Print (May 11, 1972)) ENCLOSURE A On page 44 beginning on line 5, rewrite paragraph (2) to read as follows: "(2) who are financially unable to acquire new or existing housing, determined by the Secretary to be available in the area, under section 401.” ENCLOSURE B On page 120 begining on line 15, amend the first sentence of subsection (e) of section 5 to read as follows: (c) There are authorized to be appropriated such sums as may be necessary to enter into contracts for annual contributions under this section aggregating not more than $1,199,000,000 per annum, which limits shall be increased by $225,000,000 on July 1, 1971, and by $150,000,000 on July 1, 1972; provided, that the aggregate amount of outstanding contracts for annual contributions shall not exceed amounts approved in appropriations acts." ENCLOSURE C On page 121, line 6, delete "30" and substitute in lieu thereof "50". ENCLOSURE Ꭰ On page 209, after line 2, add a new paragraph as follows: "(7) the terms "settlement costs" and "real estate settlement" shall not include real estate brokerage commissions paid in connection with the sale of real property." ENCLOSURE E On page 217, line 20, change the period to a semicolon and add the following proviso: "Provided, that nothing in this section shall be interpreted so as to provide any penalty for the acceptance or receipt of anything of value for bona fide services performed by the recipient in connection with a real estate settlement." ENCLOSURE F On page 266, after line 26, add a new subsection to section 1022 as follows: "(d) Section 1403 (a) (9) of such Act is amended to read as follows (new language italicized): "(9) the sale or lease of lots to any person who acquires such lots for the purpose of engaging in the business of constructing residential, commercial, or industrial buildings or for the purpose of resale or lease of such lots to persons engaged in such business or for occupancy for industrial or commercial purposes; or' ". Hon. WRIGHT PATMAN, NATIONAL ASSOCIATION OF BUILDING MANUFACTURERS, Rayburn House Office Building, U.S. House of Representatives, Washington, D.C. DEAR MR. PATMAN: I am writing this letter on behalf of the National Association of Building Manufacturers, an organization of nearly 400 industrialized housing manufacturers and suppliers to the industry. At this time, the House Banking and Currency Committee is considering the Housing and Urban Development Act of 1972. On September 13, 1971, NABM testified before the Housing Subcommittee stating our support for this very important piece of legislation. Accordingly, we urge expeditious consideration by your Committee and a favorable report so that early action can be taken on the bill. There is one provision added by the Housing Subcommittee that causes us real concern. That is the requirement that Section 236 projects, and Section 235 subdivisions with over eight homes, be subjected to approval by the local govern |