Hon. JACOB K. JAVITS,
Senate Office Building,
Washington, D.C.

NATIONAL ASSOCIATION OF HOME BUILDERS,
Washington, D.C., October 11, 1963.

DEAR SENATOR JAVITS: On September 24, 1963, while testifying before the Subcommittee on Housing of the Senate Banking and Currency Committee on behalf of S. 810, S. 811 and S. 2130, you posed two questions to me regarding the middle-income housing program. I indicated I would respond to these questions after a more complete analysis of the facts and figures.

The first of the two inquiries was directed at the progress of providing middleincome housing under the special mortgage insurance provisions of section 221 of the Housing Act of 1961. Implicit also in the question was the comparison of production under this program with the total need for such housing.

First, let us define the term "middle income" for the purpose of the question asked. Dr. Robert Weaver, the Administrator of the Housing and Home Finance Agency, in his statement on the provisions of the housing bill of 1961 before the Committee on Banking and Currency, defined the moderate- or middle-income family to be one with an income of $4,000 to $6,000 per annum.

Dr. Weaver indicated that there were approximately 11 million families within this income range. He also stated the number of housing units that were substandard, dilapidated, deteriorating, and sound but lacking some or all plumbing facilities. These figures were the total estimate, not merely the number of units in which moderate- or middle-income families dwelled.

The "U.S. Census of Housing 1960 (Metropolitan Housing)," volume HC (2)— No. 1, "U.S. Summary," lists the number of housing units by income level by condition in the United States as of April 1, 1960. By the process of addition of dilapidated units and deteriorating units (those that lack plumbing facilities) both sales and rental, it can be seen that the total number of families living in substandard housing in the $4,000 to $6,000 income level was approximately 727,300 as of 1960. A copy of this report is attached.

These statistics represent probably the best, and very likely a fairly accurate standard of judgment by which we can measure the progress of the middleincome provisions of the National Housing Act of 1961.

According to the most recent available statistics from the Federal Housing Administration, from July 1, 1961, to July 31, 1963, 42,907 units were insured under section 221(d) (2); 9,068 units were insured under section 221(d) (3) ; and 1,131 units were insured under section 221(d) (4). The total number of units insured under these programs in the 2-year period ending July 31, 1963, was 53,106 dwelling units. Also at that date FHA had commitments outstanding on an additional 25,688 units and applications were in process on 13,088 units. There is, of course, a timelag between the enactment of a new housing program and its translation into finished units of housing. Nevertheless it would appear that the production of housing for moderate-income families has responded promptly to the call of the Congress in providing or about to provide approximately 90,000 units of such housing within a relatively short period of time. Additional units of middle-income housing provided during this period which were financed either conventionally or under the auspices of State programs such as the New York Mitchell-Lama program swell the total production statistics well above the number of units provided by FHA mortgage insurance. No doubt the housing industry can and will do better in the future as these housing programs season with age. In an effort to publicize and promulgate these programs among our membership, we have prepared illustrative cases to aid builders and sponsors in preparing applications for projects under the sections 221 (d) (3) and 221(d) (4) programs. In addition, we have sponsored workshops and conferences designed specifically to explain the programs and assist builders in the implementation of middle-income housing programs. The most recent of these meetings was the eastern States rental housing conference held in New York City on October 1 and 2, 1963.

Your second inquiry asked our views of the program of the New York Housing Agency which is based on debentures issued by the agency to provide funds for consolidated groups of middle-income mortgages. Frankly we do not feel sufficiently acquainted with the program here in Washington to give you a prompt opinion. Therefore, we have referred this question to some of our leading members from the State of New York. As soon as we receive their views, we will forward a reply to you promptly.

Sincerely,

W. EVANS BUCHANAN, President.

METROPOLITAN HOUSING

METROPOLITAN HOUSING

The prepared statement of Mr. Buchanan follows:)

TESTIMONY OF W. EVANS BUCHANAN, PRESIDENT, NATIONAL ASSOCIATION OF HOME BUILDERS

Mr. Chairman and members of the committee, my name is W. Evans Buchanan and I am an active homebuilder in the metropolitan area of Washington, D.C., and in the State of Maryland.

I appear here today as president of the National Association of Home Builders to present to you our views on the bills S. 810, S. 811, and S. 2130 upon which this hearing is being held.

As you may know, the National Association of Home Builders is composed of some 40,000 members affiliated in 375 local and State associations in all of the 50 States, Puerto Rico, and the Virgin Islands.

The association headquarters and our staff of 145 are located here in Washington in our national housing center at 1625 L Street, NW. The housing center serves as a meeting place for all segments of the housing industry and as a showcase to exhibit the latest developments in building methods, equipment, and materials.

This association is the sole spokesman for the organized homebuilding industry. We estimate that our members build about 80 percent of all single-family homes constructed by professional builders, which is about 70 percent of the total volume of new one-family housing. In addition, our members build onethird or more of the new multifamily housing, which currently occupies about 35 percent of all new construction. Thus we estimate, conservatively, that NAHB builders account for at least 62 percent of the total nonfarm housing starts in the United States.

CONVENTIONAL FINANCING OF MAJOR SIGNIFICANCE

In recent years, increasingly, our industry has learned to use and rely upon conventional mortgage financing. These are mortgage loans which do not depend upon insurance by the Federal Housing Administration or a guarantee by the Veterans' Administration.

Today such conventional lending is an overwhelming force in the mortgage market. Let me illustrate this:

As of March 1963, FHA-VA financing accounted for roughly $52.8 billion of the estimated mortgage debt outstanding on nonfarm, 1- to 4-family homes. Conventional financing accounted for $108.9 billion of such debt-63 percent. At the end of 1962, records of nonfarm mortgages of $20,000, or less, showed that 77 percent were conventional. FHA accounted for only 15 percent and VA for just 8 percent.

In the first 5 months of 1963, similar mortgage recordings also show that 77 percent were conventional. Again, FHA accounted for only 15 percent and VA for 8 percent.

It is interesting to note that the same pattern is reflected in the total volume of mortgage lending in 1962. For example, of the $34.2 billion of home mortgage lending in 1962, 77 percent was on a conventional basis. Looking closer at the sources of mortgage funds, it is equally of interest to observe the following:

About 94 percent of all mortgage lending by savings and loans was on a conventional basis.

Approximately 75 percent of mortgage lending done by insurance companies was conventional.

Roughly 67 percent of the mortgage lending from mutual savings banks was conventional.

About 79 percent of mortgage lending by commercial banks was on a conventional basis.

And about 97 percent of all mortgage lending done by individuals, pension funds, and other miscellaneous sources was on a conventional lending basis. Most FHA-VA loans originated with or through mortgage banking or brokerage companies, where only 27 percent of mortgage lending was conventional and about 73 percent was insured or guaranteed by FHA or VA.

A BETTER CONVENTIONAL MORTGAGE MARKET WILL AID HOUSING

Historically this association has always favored proposals for new legislation which will advance, in a sound manner, new ideas for improvements of the mort