Mr. O'HARA. That is the only qualification he has to meet? I have in mind cases where homes are owned by aging people with limited incomes. Is it possible for people in that category to get these property loans? Mr. MASON. Yes, it is. It is pointed out to me that while the law itself imposes no restriction, Mr. O'Hara, the lending institution has a latitude in this. The lending institution can make its credit restrictions differently than-I mean one than the other-but the law itself does not provide this. Mr. O'HARA. Thank you. That is the area that I desired to get into. As a matter of practice, isn't it very difficult for an aged couple, without any large income, to get a loan? Mr. MASON. I would say that I haven't a lot of complaints on this score, sir, and I do get, when things don't go right in our programas I am sure you know-I mean we get told about it. I am aware that I think you are bringing this up is because you certainly come from an area where if anybody has seen deterioration of property you have seen it. I think it happens more rapidly in your area than in almost any other area in the country. Mr. O'HARA. All my life I have seen it. When I went to St. Louis as a young man, from the University of Missouri, I lived for a while in a cheap boarding house, $5 a week, room and board. What struck me was that this house, then rundown and used as an inexpensive boarding house, only a few years before had been a millionaire's home. Later I went to Chicago and saw the building up and going down of neighborhoods. It comes about because people build their homes, the years go on, money for one reason or another is not put into improvements and the neighborhoods start running down. If the head of a household builds a home for his family in his prime and then when he is getting older cannot obtain a loan for improving the property the home easily can get run down and the neighborhood suffers. I am interested deeply in housing for the aged. This has some relationship. Under the present set up as regards improvement loans is it more difficult for a man past the prime of life to get an improvement loan than one who is younger in years? Mr. MASON. Yes. I would say that lenders do use an element of discretion, certainly, in making their loans, but customarily if lenders are being unreasonable in their requirements constituents write to Congressmen who in turn take FHA over the coals and say "What are you doing?" and in that way we find out many of the things that are going wrong in our program, and we have not had much of thisvery little, if any-of this sort of letter. Maybe I will get them now. Mr. O'HARA. Mr. Cole, I am sure, knows, from his own distinguished service in the Congress, the nature of congressional correspondence and the earnestness of Members in giving it attention. Thank you very much. Mr. BROWN. Any further questions of Mr. Mason? Mr. BETTS. I have no questions. acting not too differently than the public body, and that the businessman should have the same privilege as the public body. I think you understand that this is intended for large areas, like Chicago and New York City, San Francisco, Los Angeles, places of that kind, where there is a need to develop an area in a pattern and let that private individual have the same right to develop it in that pattern as the Federal Government, or any other Government agency would have. Mr. MCDONOUGH. You presume an area in a town where a $50 million rehabilitation or urban development program will take place? You wouldn't say Chicago, Philadelphia, New York, or Los Angeles that this would occur, but in some cities of a smaller area than that, or smaller population, where such project might monopolize the housing situation in that area. Take Indianapolis, for instance. Mr. MASON. It could, sir, without the Government requirements that are on this. You see, in the first place, of course, this is an upper limit, and the Housing and Home Finance Agency Administrator must approve this and, therefore, we felt, and I am sure that the safeguards were there, because I am opposed to monopoly in this as much as this committee is, I am sure. I think that that is the reason for a limit, instead of asking for no limit, to prevent any one person from monopolizing a housing market. Mr. MCDONOUGH. If the loan were granted to a corporation in a large city, would the $50 million be used for the disposal of some of the unsanitary, unlivable homes in order to rehabilitate the area, as well as to lay out a new subdivision and new plans? Mr. MASON. The answer to your question comes under the urban renewal program. FHA only insures loans on new construction that is planned and put in place. Mr. COLE. In other words, this $50 million limitation is solely for the instance of new or rehabilitated housing in this area. You understand, prior to that the Federal Government may or may not have entered into a loan and grant program for the clearance of the land under the urban renewal program. Mr. MCDONOUGH. The $50 million would be used for building of new or rehabilitated housing in that area? Mr. MASON. And the land on which it stands. Mr. MCDONOUGH. It wouldn't necessarily mean, if the maximum were granted, would you grant for instance the maximum for one project, or for more than one project in the area? Mr. MASON. Well, sir, there will be more loans less than $5 million than there will be large ones, like this. Mr. MCDONOUGH. That is all, Mr. Chairman. Mr. O'HARA. Mr. Chairman. Mr. Mason, I would like to come back for a moment to the property improvement loans under FHA title I. I am very much interested in that phase because I have seen a first-class neighborhood deteriorate to a second-class neighborhood because homes were not kept in repair. In obtaining an improvement loan is there any age qualification? Mr. MASON. Mr. O'Hara, they tell me there is no age qualification excepting this one written into the law by the last Congress, that the man must have lived in the house for six months. Mr. O'HARA. That is the only qualification he has to meet? I have in mind cases where homes are owned by aging people with limited. incomes. Is it possible for people in that category to get these property loans? Mr. MASON. Yes, it is. It is pointed out to me that while the law itself imposes no restriction, Mr. O'Hara, the lending institution has a latitude in this. The lending institution can make its credit restrictions differently than-I mean one than the other-but the law itself does not provide this. Mr. O'HARA. Thank you. That is the area that I desired to get into. As a matter of practice, isn't it very difficult for an aged couple, without any large income, to get a loan? Mr. MASON. I would say that I haven't a lot of complaints on this score, sir, and I do get, when things don't go right in our program— as I am sure you know-I mean we get told about it. I am aware that I think you are bringing this up is because you certainly come from an area where if anybody has seen deterioration of property you have seen it. I think it happens more rapidly in your area than in almost any other area in the country. Mr. O'HARA. All my life I have seen it. When I went to St. Louis as a young man, from the University of Missouri, I lived for a while in a cheap boarding house, $5 a week, room and board. What struck me was that this house, then rundown and used as an inexpensive boarding house, only a few years before had been a millionaire's home. Later I went to Chicago and saw the building up and going down of neighborhoods. It comes about because people build their homes, the years go on, money for one reason or another is not put into improvements and the neighborhoods start running down. If the head of a household builds a home for his family in his prime and then when he is getting older cannot obtain a loan for improving the property the home easily can get run down and the neighborhood suffers. I am interested deeply in housing for the aged. This has some relationship. Under the present set up as regards improvement loans is it more difficult for a man past the prime of life to get an improvement loan than one who is younger in years? Mr. MASON. Yes. I would say that lenders do use an element of discretion, certainly, in making their loans, but customarily if lenders are being unreasonable in their requirements constituents write to Congressmen who in turn take FHA over the coals and say "What are you doing?" and in that way we find out many of the things that are going wrong in our program, and we have not had much of thisvery little, if any-of this sort of letter. Maybe I will get them now. Mr. O'HARA. Mr. Cole, I am sure, knows, from his own distinguished service in the Congress, the nature of congressional correspondence and the earnestness of Members in giving it attention. Thank you very much. Mr. BROWN. Any further questions of Mr. Mason? Mr. BETTS. I have no questions. Mr. VANIK. I just had one question, Mr. Chairman. I don't know whether I am properly asking this question now or at a later time, but I would like to ask Mr. Cole specifically-I presume you are both going to cover this general topic-with respect to the number of loans that have now been granted to this time on the voluntary mortgage arrangement. I think the last report we had there were only a few loans granted. Mr. COLE. I think 109 is the last figure. I might be corrected. It is 201. Mr. VANIK. 201 loans granted and obtained? Mr. COLE. Yes, sir. Mr. VANIK. That is to this date? Mr. COLE. Yes. Mr. MULTER. Mr. Chairman? Mr. BROWN. Mr. Bell? Mr. BELL. I have no questions. Mr. BROWN. Mr. Multer. Mr. MULTER. Mr. Cole, I think throughout the years of service since you have been administrator you have been in agreement-and I think we all have that hotels and motels, the so-called transient dwellings, should not come within your program. Mr. COLE. That is true. Mr. MULTER. You know of no reason to change that, do you? Mr. COLE. No, we don't. Mr. MULTER. In other words, you recommend we continue the same limitations, that hotels or motels not qualify under the FHA program? Mr. COLE. That is correct. Mr. MULTER. Thank you. Mr. BROWN. Mr. Cole, you might continue your statement. Under the provisions of the Housing Act of 1949, capital grants in the aggregate amount of $500 million were authorized to assist in carrying out the title I slum clearance and urban redevelopment program, and this capital grant authorization was made available for the broader urban renewal program under the Housing Act of 1954. The bill would increase that authorization by an additional $200 million to be made available on July 1, 1955, and another $200 million to be made available on July 1, 1956. Also, the President would be authorized to increase the authorization at any time or times by not to exceed $100 million. By May 1 of this year a total of almost $470 million of capital grants had been effectively committed, including a $50 million reserve for possible overruns. It is almost certain that by June 30 of this year the entire $500 million capital grant authorization now available will be committed, including the $50 million reserve for overruns. A commitment of capital grant funds for a project is effected when the original allocation of an advance for surveys and plans is made. The commitment consists of the reservation of capital grant funds for such project based upon estimates of the capital grant needs for the project. Reservations of capital grant funds do not represent legally binding obligations of the Federal Government. Such obligations are created when a contract for capital grant is executed following the completion of the surveys and plans. However, a reser vation does indicate that a project approved for planning advances may in the normal course of events be covered by a contract for a capital grant, chargeable to a legislative authorization in effect when planning commences, in substantially the amount reserved. To that extent, therefore, such capital grant funds are earmarked or committed for such project. By the end of June additional capital grant authorization will be required for the title I urban renewal program. By the end of the year it is estimated that capital grants in the aggregate amount of $585 million will be committed, of which $60 million will represent a reserve for overruns. By June 30 of next year a total of $700 million will have then been committed, of which $70 million will constitute a reserve for overruns. Thereafter, it is anticipated that the commitment of capital grants will increase at a more rapid rate. The broadened scope of the program and the anticipated increase in the number of municipalities that will participate in the new urban renewal program will accelerate capital grant commitments to the point that the balance of the increased capital grant authorization now requested would be fully committed by about June 30, 1957. The need for legislation at this time providing for the additional authorization required for use over a period of more than 2 years arises out of the type of program involved. Many months of preliminary work are required to develop an urban renewal project. The local community must engage in long-range preparatory activities involving such matters as establishing and maintaining an appropriate urban renewal organization, making surveys, preparing plans, revising capital improvement programs, and providing funds. In order to undertake such time-consuming activities involving the expenditure of funds, local communities need the assurance that capital grant funds are authorized and will be available at the time needed by the communities. Also we do not normally make even planning advances for any project unless there is available adequate capital grant authorization to cover the project. This means that without the capital grant authorization the planning of many urban renewal projects cannot be commenced by local communities, nor can the program be carried out at an orderly and efficient pace. The additional authorization is thus essential to enable local communities to commence and carry out necessary preparatory activities and to keep the urban renewal program moving forward to achieve the objectives of the Federal law. Limitation on captal grant authorization for any one State: Under existing law, not more than 10 percent of the total title I capital grants authorized may be expended in any one State, except that an additional $35 million may be allocated for use in States where more than two-thirds of the amounts they could otherwise receive have been legally obligated. It should be noted that this amount is part of, and not in addition to, the amount of title I capital grants to be authorized. The bill would double the present $35 million amount. It is anticipated that by June 30 the existing amount will be committed. Our Deputy Urban Renewal Commissioner, Mr. Steiner, is here with me, and together we will try to answer any questions you may have on these urban renewal provisions. |