In the past 3 years, we have seen the home building rate rise to 1,600,000 units, a 25 percent increase over 1960.

The number of communities undertaking urban renewal in this period has risen 56 percent, to a total of 743, and the number of projects has passed the 1,500 mark, a 76 percent increase.

We have authorized 100,000 new public housing units, approved financial assistance for 234,000 college housing accommodations, approved 500 public facility loans for small towns, exclusive of emergency loans for accelerated public works and area redevelopment, and we have approved 1,600 advances to local governments for planning public works projects. All of these represent sharp increases over the past.

We have also successfully launched FHA's new moderate-income housing programs, with commitments during this period totaling nearly 110,000 sale and rental units. We have also approved 98,000 units of housing for the elderly under our several programs.

These are some of the indicators of how our housing and community improvement programs have been accelerated and advanced under the Housing Act of 1961.

The administration omnibus housing bill would deal with the unfinished business of the present and the impending needs of the future in housing and community development.

Its housing provisions would broaden the scope and make more effective use of our mortgage insurance and secondary market programs. They would give greater assistance to the housing industry to meet the expanding housing demand of the years ahead. They would extend FHA assistance to encompass land development for our urban growth. The bill would continue and broaden the public lowrent housing program. It would afford new aids to deal with the problems of displaced persons, providing greater relocation assistance to elderly individuals, families, and small businesses displaced by urban renewal and public housing activities.

In the community development field, the bill provides for continued, unabated attack on slums and blight and the renewal and improvement of our urban communities. And it does more. It would help provide planned, economic, and orderly development of urban areas as our population grows.

In the words of the President:

Our Nation stands today at the threshold of the greatest period of growth in its history.

Most of the growth will occur in and around our urban areas. It will affect not only our larger cities and metropolitan regions, but also our medium and smaller towns and our once rural communities.

This year the FHA mortgage insurance program will have its 30th birthday. In the intervening years, it has insured loans for more than 7 million homes, more than 1 million rental units, and more than 26 million loans for home improvement. Through its mortgage insurance operations, and indirectly, through its incalculable effect on home financing, housing standards, and howeownership, the FHA has been the most important single factor of our generation in the expansion of the Nation's homebuilding and mortgage lending and in better housing for the majority of our people.

The provisions of the administration bill reflect a determination to see that the FHA continues to play the strategic role in the

future growth of this country that it has played in the housing progress of the past three decades.

The most significant new departure in the private aids in this bill is the proposal to authorize FHA mortgage insurance for the acquisition and development of sites for major subdivisions and new communities in our growing urban areas. In addition to the proposed new assistance for large subdivisions and new communities, which I will discuss later, there are other important provisions of the bill to assist private housing development:

FHA would be given authority to undertake the cost of correcting substantial defects in FHA-inspecting housing which the builder is unable or unwilling to remedy. This would not only protect the homeowner against possible serious loss, but also the security upon which the lender and the FHA must rely. Our experience shows that such cases of major defects would be relatively few, and would have no significant impact on FHA reserves.

The bill contains provisions designed to encourage lenders to exercise further forbearance in case of mortgage default beyond the homeowner's control. We believe these are desirable to help homeowners weather temporary periods of economic adversity and prevent defaults from resulting in unnecessary foreclosures.

FHA-insured rehabilitation loans would be liberalized, both inside and outside of urban renewal areas. Rehabilitation financing has been a difficult program to get moving, even under the new 20-year insured loans authorized by the 1961 act. Intensive work by the FHA and URA, however, is beginning to produce promising results in several areas. We believe these legislative improvements will spur this activity forward.

FHA mortgage limits on low-cost housing in outlying areas (sec. 203 (i)) would be raised from $9,000 to $11,000 and "vacation" homes would be made eligible, at lower loan-to-value ratios, if found to be acceptable risks.

Higher mortgage limits would be authorized on FHA-insured home loans. In the case of single-family homes, the maximum would be raised from $25,0040 to $30,000. The $20,000 limit on Government-backed mortgages eligible for purchase by FNMA under its secondary market operations would be removed so as to permit control by the FHA statutory maximums or other prudent lending practices. These changes are necessary to bring the benefits of mortgage insurance to many segments of the home-building market, in view of rising incomes and housing standards.

The bill would greatly simplify the collection of insurance claims by lenders. For example, it would eliminate certificates of claim on FHA home mortgages, and provide for increasing the amount of debentures received by the lender. It would authorize FHA to pay any claims in cash, and thus effect a large saving in administrative costs. The exercise of this permissive authority would depend upon fiscal considerations at the time of the claim.

The bill would also liberalize the terms and conditions of FHA's new mortgage insurance for "condominium" housing.

Let me turn now to the one-fifth of our people with income below the poverty level. Many of them live in substandard housing. These are the people who, in the President's words, "live on the; outskirts of hope."

The cure for poverty requires both a decent place to live and a chance to earn a decent living. Good housing provides the one. Program of education, training, health, employment, social assistance, and equal opportunity provide the other.

In this declaration of "unconditional war on poverty," President Johnson has called for an attack on both these fronts. The bill deals with the housing sector primarily by recommending the continuance and the broadening of our public housing program for low-income people.

Public housing serves the poor. The average family income of those in public housing is $2,460. That is well below the $3,000 to $4,000 income that defines the minimum level necessary to satisfy essential human needs in our non farm areas.

We still have nearly 14 million families with incomes of less than $4,000. More than half of them have incomes below $2,500.

We still have more than 8 million families and individuals living in substandard housing, and another 4.5 million in seriously deteriorating housing.

Let us look at a few more hard facts:

Public housing offers the most significant source of decent housing for our low-income elderly people, whose numbers are rapidly increasing. About half of the 100,000 public housing units authorized by the 1961 act have been planned for elderly occupancy and 24 percent of occupied public housing units house senior citizens.

Public housing offers the only viable source of decent housing for many of our low-income minority families.

Public housing offers the only visible source of decent housing that most communities have for rehousing many of the low-income families displaced by renewal and other community improvement operations.

The bill would provide for the continuance of the public housing program and authorize new and more flexible methods of housing low-income families. It would afford new means for helping the lowincome elderly, and it would provide new benefits and assistance for families uprooted by urban renewal and other public activities resulting from urban growth and change.

The Housing Act of 1961 released the balance of the annual contributions authority for public housing provided in the Housing Act of 1949. That has enabled us to approve some 100,000 additional new units over the past 3 years. That authority is now exhausted. This bill would increase this authority sufficiently to support 35.000 new public housing units per year over the next 4 years. In addition, this increase would permit an average of 15,000 existing private units per year to be purchased and, if need be, rehabilitated for public housing use. It would also enable local housing authorities to lease an additional 10,000 private units per year for low-income needs.

The present annual contributions formula is geared to a percentage of the total development cost amortized over 40 years. This is usu ally unworkable for the shorter term financing of older housing. The alternate formula provided in the bill would authorize annual contributions for existing housing, provided they are no greater than that for new long-term units. Since such contributions would apply to shorter term financing, depending on the economic life of the prop

erty, it would mean that the capital cost of such housing would have to be proportionately less than new construction.

Under the demonstration program for low-income housing authorized by the 1961 Housing Act we have initiated several experiments involving the purchase and leasing of existing structures, and a few local housing authorities have experience in the purchase of such structures for low-income occupancy. Out of these experiences we are convinced that our proposals are workable, but we also recognize that the degree of applicability varies from locality to locality, reflecting the types of structures and the degree of vacancies in various segments of the local housing market.

There is now a vacancy rate of 7.5 percent in the rental housing supply of this country. We also have a sizable number of FHAand VA-acquired homes which would be suitable for use in the lowrent housing program. Most of our rental vacancies are in older structures which have the necessary facilities for standard housing. Almost a quarter of them contain five or more rooms, making them especially suited for larger families.

As long as we have a substantial vacancy rate in older rental housing in many of our communities, we have an opportunity to provide decent housing for more of our low-income group. However, the use of existing housing is not a substitute for, but rather a supplement to, the continued increase in the supply of low-income housing through new construction. And it is not universally feasible to use existing dwellings since their efficacy for low-income occupancy is determined in each locality by the condition, size, location, and cost of available dwelling units.

Many of those displaced by urban renewal and public housing cannot afford to pay rents sufficient even to meet the essential costs of operating and maintaining a public housing unit. Public housing can accommodate only a limited proportion of these very poor persons without risking insolvency. The 1961 act authorized an additional $10 a month in contributions payment per unit occupied by the elderly where needed to offset this deficit. This bill would authorize a similar additional payment for persons of very low income, displaced by urban renewal or public housing.

I should like to remind the committee that, when the Congress passed the Housing Act of 1949, it intended to provide annual contribution authority for 810,000 new units over the next several years. Now, 15 years later, we find that, because of the lapse of time and resulting increased costs, this authorization could finance only 525,000 units-about 65 percent of the 1949 goal. Even with the 4-year program in this bill, we would still be short of the number of public housing units that the Congress determined should be built under the program 15 years ago.

The bill would extend special help to elderly homeowners of low income in urban renewal areas. Many of these people, on fixed incomes, are unable to make necessary improvements to their properties, and would be forced to sell their homes for dwindling equities and seek housing elsewhere.

For many of them we think this can be prevented. The bill would authorize FHA to insure rehabilitation loans on such homes at the below-market-interest rate provided under the section 221 (d) (3) program which currently is 33% percent. Where the mortgage is not

more than 75 percent of the value of the improved property, principal payments could be deferred during the period of ownership by the elderly borrower. Deferral of principal payments, combined with low-interest, relatively long term loans, could produce cost levels that most present elderly owners could afford to pay. Thus, these senior citizens could remain in their own homes, using their improved housing in upgrading neighborhoods as security for the loans."

The bill would also remove the limit on appropriations for direct loans for the elderly housing program, leaving the amount of appropriations to be determined by appropriations acts. It would make elderly individuals eligible for FHA moderate-income housing, both sale and rental, under section 221.

Finally, the bill would extend the program of low-income housing demonstrations. We now have 22 experimental projects underway, involving a wide variety of new techniques and approaches for serving the housing need of low- and moderate-income people. We believe continuation of this program will produce valuable guides for future application, in improving the housing opportunities of these people and often thereby helping many of them to become selfsustaining.

In the 15 years since urban renewal was initiated, it has become a vital and decisive force in redeeming our towns and cities from blight and transforming deficit areas into productive ones. Although nearly all our larger cities are participating, about two-thirds of the communities involved have populations of less than 50,000.

The program is generating private investment many times the amount of public funds expended. It has increased tax revenues and provided large desirable areas for good housing and neighborhoods. Under our policies of the past 3 years, an increasing amount of this is going for sorely needed moderate- and low-income housing. Urban renewal has revitalized business and downtown areas, increased employment, provided land for public buildings and recreational use. and for cultural, medical, and educational purposes. It has preserved and protected from decay many historic older buildings and neighborhoods. Increasingly, it is becoming an effective tool for strengthening the economic base of our cities. But, most important of all, it has given those who live in the central cities a new hope and a new dedication for their improvement.

Urban renewal is clearing slums on a large scale. In over 700 projects now in advanced stages, more than a quarter of a million substandard housing units have been, or are being eliminated. Despite the difficulties of rehousing displaced low-income families, the bulk of the people who lived in these slums are, or soon will be, living in decent standard housing.

Any program that effects change and touches people on so wide a scale as urban renewal will, necessarily, have its critics. It will also have its mistakes. We have heeded the criticism, and where we found mistakes, we have acted to correct them. In the process, I think the program has measurably matured through its years of operation and experience.

There will always be questions about how urban renewal should be carried out. Today, it seems to me, there can be no reasonable question about whether it should continue. The answer to that comes from the local communities, including the growing number of smaller