HUD NEWS-U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT, WASHINGTON, D.C., JULY 16, 1970

MORE HOMES IN BLIGHTED AREAS APPROVED FOR HUD-FHA MORTGAGES

About 14 percent of all home mortgages insured by the Federal Housing Administration in 1969 covered new and existing homes in blighted areas of cities. This ratio doubled the proportion of home mortgages insured in such areas in 1967.

The figures were reported today by Secretary George Romney of the U.S. Department of Housing and Urban Development.

He disclosed that 51 percent of all homes purchased with FHA mortgage insurance last year were in central cities. This compared with 47 percent in 1967 and 41 percent in 1964, when most FHA mortgage volume involved homes in the suburbs, small towns, and outlying areas.

The figures were obtained in a survey by FHA insuring offices and covered mortgages insured during the first 11 months of 1969. Similar surveys had been made in 1967 and 1964.

The new survey reveals that, in addition to the 14 percent of mortgages covering homes in blighted areas of cities, 13 percent were on homes in other "incity" areas and 24 percent in the remainder of cities. Two years earlier, 7 percent were in blighted places, 11 percent in other "in-city" places, and another 29 percent elsewhere in cities.

Eugene A. Gulledge, FHA Commissioner and HUD's Assistant Secretary for Housing Production and Mortgage Credit, attributed the greater share of activity in the core areas of cities to FHA's greater efforts to help central city residents and to new housing programs that provide special assistance for lower income people.

Some of the higher concentrations of this mortgage activity were under these programs. Under Section 221(d) (2), which has liberal financing terms for low-price homes, more than a third (34 percent) of homes insured were in blighted areas. Activity in blighted areas was also high under Section 235, the new program of interest subsidies for homeownership. Under this program, 18 percent of all homes purchased were in blighted areas. The ratio under FHA's regular home mortgage insurance program was 10 percent in blighted parts of cities.

New construction, which accounted for only one-fifth of insured mortgages, continued to be more prevalent outside larger cities last year. Sixty-two percent of all new homes with FHA mortgages were in the suburbs around central cities, and another 10 percent were in small towns and rural areas. In contrast, suburban areas accounted for only 37 percent of existing home mortgages, and small towns and rural area mortgages totaled only 7 percent of existing homes.

The classifications of locations of properties represent the judgment and experience of the FHA officers who conducted the study. Copies of the survey are available from the Division of Research and Statistics, HPMC-FHA, U.S. Department of Housing and Urban Development, Washington, D.C. 20411.

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HMPC-FHA
MAY, 1970

Senator PROXMIRE. Before we recess, would you identify the distinguished gentleman with you at the table.

Secretary ROMNEY. I have on my left, Mr. Lawrence Cox, the assistant secretary in charge of urban renewal and housing management; on my right, Mr. Irving Margulies, our associate general counsel, and who probably had more to do with preparing this legislation than any other single man in the department.

Senator PROXMIRE. Fine. Thank you, gentlemen, very much.
The committee will be in recess until tomorrow at 10.

(Whereupon, at 12:05 p.m., the hearing was recessed, to reconvene at 10a.m., Tuesday, July 14, 1970.)