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Senator PROXMIRE. We have a plan for the outlays here. Can you give us specific hard figures on which you expect the commitments to be based?

Secretary ROMNEY. I told you what we expect to do basically in the subsidized housing field. We are going to do something never done before in the history of this country.

Senator PROXMIRE. In terms of dollars and cents.

Secretary ROMNEY. People don't live in dollars and cents. They live in dwelling units. I am concerned about housing production. This country has been trying to get housing production for low and moderate income families since 1934. I was down here when it started. Congress set goals at different times ever since then. They have never been achieved because the resources never have been committed to achieve those goals.

Now, as far as the goals for low- and moderate-income families are concerned, with what we have asked for here we will have the resources to get up to the annual goal level of output by the end of the next calendar year. That means an increase in last year's level of output by about 250 percent in a 2-year period. That is a terrific accomplishment.

Senator PROXMIRE. I can't understand why in the budget you cannot tell us what the outlays are and you say that is not relevant and you

want to tell us about commitments. You don't want to talk about it, you want to talk about commitments. Now, what are the commitments going to be!

Secretary ROMNEY. If you want us to get the budget out we will get the budget out and go through the dollar figures. I thought you were more interested in housing than dollars.

Senator PROXMIRE. Of course I am interested. I want to know what is going to be spent here in dollars and cents.

Secretary ROMNEY. We will get to the budget.

Senator PROXMIRE. Well, your assistant can work on that while I go to the next question.

You recommend a supplemental request for 235 and 236 which I approve and will support. It is good, needed. But this won't do anything to bring down rates and make mortgage credit available to the people I was talking about, the middle income buyers between the subsidized area and the affluent.

Secretary ROMNEY. Again I want to point out that there are many $10,000 income families in Wisconsin eligible under 236. The 236 program includes $10,000 income families.

Senator PROXMIRE. There may be many, but we have 2 percent of the population and 60,000 housing starts, 2 percent of 60,000 adds up to 1,200 houses, which is good. We would like to have those in our State. But we have a housing shortage in the tens and tens of thousands. This is a small contribution and a good one, but it is modest, limited. I don't criticise you on this point.

Secretary ROMNEY. Let me make one other comment on this point. We would have asked for all the money Congress has authorized when we ask for the $25 million for both programs. Now, if we are going to get more than that, Congress has to authorize more than that. We can't ask for more than that.


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Senator PROXMIRE. Fourth, you say the administration is talking with their lenders about the increasing mortgage investments. Talk is fine, but I wonder when the lenders will act. The administration already has authority to institute controls, that was my bill. You said that would be helpful in getting this, but we need concrete commitments rather than promises and it is good to know what is going on but so far there is no result from that.

Secretary ROMNEY. I agree. Not only has your bill been useful, but these hearings are useful. When I talk about $6 billion I am talking about firm commitments--commercial banks and insurance companies and pension funds indicating specific amounts they are willing to commit to the housing mortgage market this year. We have some commitments already from institutions. The commitments to date are running beyond the $6 billion level. In other words, if we could maintain that level we will be over the $6 billion. I have my fingers crossed. But we are going to see if we can nail down the $6 billion. If not, we are either going to use the credit authority or be back up here.

Senator PROXMIRE. When the President signed the bill he said he was not in favor of using the credit authority. If he is going to use that that will be fine.

Fifth, you say you are going ahead with GNMA-guaranteed mortgage-backed securities. This authority was first enacted in 1968 and you still speak about issuing regulations "shortly.” Because of the delay this device cannot possibly have an appreciable effect in 1970.

Secretary ROMNEY. Well, it can have some effect in 1970. Let me say this to you, sir. If you had given me authority to put those in instead of having to clear with so many other people in the administration we would have had it in a long time ago.

a Senator PROXMIRE. This is an administration committee.

Secretary Romney. You wouldn't turn the space program over to a committee. That is what you have done with housing. You have a committee in charge of 85 percent of the housing. To get this thing through I have been battling the Treasury Department for months.

Senator PROXMIRE. It is your Treasury Department.
Secretary ROMNEY. It is yours, too.
Senator PROXMIRE. I wish it were.

Secretary ROMNEY. In any event you have a certain structure here with respect to housing. My point is, that the basis on which you authorized this mortgaged-backed bond results in my having to get clearances from a lot of other people. This clearance process has taken a lot more time than it should because other people aren't as aware of this housing problem as I am.

Senator PROXMIRE. Now, your sixth point is that you support a FNMA and FHLBB secondary market for conventional mortgages. This is a good long-term reform but it will have virtually no impact this year. Yesterday we had President Oakley Hunter admit this.

Secretary ROMNEY. It is long term.

Senator PROXMIRE. Seventh, you advocate abolishing the FHA interest rate ceiling and letting lenders charge all they want without points or, in the alternative, they could comply with a ceiling set by you but charge as many points as they want.

This recommendation guarantees the home buyer the worst of both worlds—the high rates or a lot of points at the builder's optionI should say at the lender's option.


High rates do not help the home buyer. They help the lender and add to inflation.

So I can't see that this proposal is going to help the home buyer.

Secretary ROMNEY. The facts are that in those States where usury laws are having an impact the shortage of housing is increasing faster than other States because of the inability to attract funds in the mortgage market. You get down to the question of which is better, have some housing at a higher cost or not have the housing.

I deplore these high interest rates and the high costs. But these States are suffering from an inability to attract mortgage money because of the usury law.

Senator PROXMIRE. It seems to me you could have an administered rate with points or a free market rate without points, I can't understand how you can have both.

Secretary ROMNEY. You could easily have both. There is no difficulty in having a ceiling with respect to certain loans while other loans are on a free market basis. There is no problem there.

Senator PROXMIRE. All right, my time is up. I will be back to you.

Secretary ROMNEY. You may not agree with having both, but what this undertakes to do is test out both.

Now, as I pointed out, in the case of Canada-
Senator PROXMIRE. It is the option of the lender, though.

Secretary ROMNEY. No, it is the option of both, the borrower as well as the lender. It isn't the option of the lender.

My point with Senator Bennett was that I was reluctant to see this experimental dual rate go into effect in an abnormal period because as a rule I don't think the borrowers are as well informed as the lenders and they are in an unequal relationship in this situation.

Senator PROXMIRE. That was my point, if the lender has the money and doesn't have to lend, the buyer is in a weak situation.

Secretary ROMNEY. That is right. I think we have to wait until we can get a more normal situation.

In Canada the free interest market rate has sustained housing at a much higher level relatively than our controlled ceiling rate has in this country. Senator PROXMIRE. Mr. Brooke ?

. Senator BROOKE. Mr. Secretary, I remember very well when you appeared before this Commission prior to your confirmation and you stated at that time that one of your very laudable goals was to cut redtape.

Now, specifically, what specific redtape have you been able to cut to accelerate housing production!

Secretary ROMNEY. In the case of the FHA 235 program we have been able to give property appraisals and approvals within 5 days. We have been able to cut the time down to 5 days and in the case of credit approvals, in 90 percent of the cases, we are now able to give commitments in 3 days, or less. Gene Gulledge, who is the Assistant Secretary in charge of housing production, is also cutting the processing time in connection with the 236 program.

In connection with these programs we have taken the following steps, decentralization to the local insurance office of specific approval for a specific project. That is so it doesn't have to come up to a higher office and be delayed. We have eliminated reprocessing steps and re


views on a case-by-case basis; we put a reemphasis on the acceptance of certification by qualified architects so that when they certify that what they are proposing is in accordance with our requirements, we can do an auditing job and cut the time substantially.

As a matter of fact, we expect to get about 50,000 additional starts this calendar year as a result of this accelerated process.

I could go on with other things in connection with these two programs.

In the case of urban renewal we have cut the processing time in half. Senator BROOKE. What about 221 (d)3?

Secretary ROMNEY. That is being phased out. What I said about section 236 applies to 221 (d) 3.

Senator BROOKE. Perhaps Mr. Unger can answer this question, if you have no objection.

Section 214 of the 1969 Housing Act requires annual contributions to be amended to include requirements for notification of the public housing applicants concerning their rights at time of admission or rejection of their applications for public housing.

What steps have been taken to implement the provisions of last year's Housing Act? Has anything been done or has it been ignored?

Secretary ROMNEY. We have taken some steps in that area to provide notification and appeal and really that falls into Mr. Cox's area, he has the responsibility for it. I will submit a written response to it if you

like. Senator BROOKE. Are these applicants being notified that they have been rejected, have they been given any indication as to when they might have this housing available to them or any of these things?

Secretary ROMNEY. What we are currently engaged in are conferences with the national tenants organizations with respect to this provision and other procedures we have with a view to a more effective implementation of some of these provisions. Assistant Secretary Cox has been holding these discussion. We have implemented it to some extent but we believe we are going to have to go further in this connection. We felt it would be better to discuss this matter with the tenant group as well as the public housing groups in the process of further implementation.

Senator BROOKE. How long do you think it will be before tenants who are rejected will be given a hearing and an opportunity to correct misinformation about them!

Mr. UNGER. We have a task force in the Department now working on this problem. I serve on the task force along with Secretary Cox and others and I would be hopeful that within the next few weeks we would make a few basic decisions.

Senator BROOKE. I would like to be sure of your interpretation of section 212 and how you think the $75 million given to you as contract authority would be used.

Mr. UNGER. As we read the conference report, it limits it to existing deficits. I recognize lawyers may differ on interpretations and I gather in this instance we do. However, it seems appropriate to clarify any vagueness in it by the 1970 legislative package which we propose to submit.

If the 1970 legislative package is introduced and passed in the form in which we have it presently drafted, the limitation to present existing deficits will be eliminated.

Senator BROOKE. Well, we haven't seen the proposal as yet. I expect we will very shortly, but that will enable you to provide for future deficits as well, is that correct?

Mr. UNGER. That is correct.

Senator BROOKE. What about the second purpose; namely, the opcrating and maintenance costs?

Mr. UNGER. I have not ruled any limitation on that at the moment. The limitation I have cited is limited to existing deficits.

Secretary ROMNEY. In other words, this is an administrative decision by Mr. Cox at this point rather than a legal opinion by the General Counsel's Office. Let me say this to you, Senator. I understand Mr. Cox has ready at this point the implementation guidelines under this section.

The Under Secretary is looking at it this morning and I am going to be looking at it and hopefully we will have an opportunity to cover these points. I have not had an opportunity to look at them in the final form.

Senator BROOKE. I am pleased to hear that. In addition to the 25 percent, I want to be sure there is adequate money for maintenance and operating costs that would improve the quality of housing in public housing projects as well. Because I think if we limit it to the 25-percent rule, that does not mean there will be any improvement in the quality of living:

Secretary ROMNEY. As far as we are concerned, it applies to maintenance and reserves. There is no legal prohibition in that connection.

Senator BROOKE. Yes. Section 213(a) of the 1969 Housing Act places a ceiling on public housing rental equal to 25 percent of the man's income. The act went on to vest authority in the Secretary of Housing and Urban Development to determine what constitutes a family's income. At the present time, the U.S. Housing Act vests maximum responsibility in the administration of low-rent housing programs in local housing authorities. Now, I have been informed by local housing authorities that any attempt to establish new income requirements will create havoc with local authorities and tenant organizations.

I also have been informed that continuation of policies that vest maximum responsibility in the authority and permits them to establish income criteria subject to HUD's grouping will produce the optimum results.

Is HUD going to permit local authorities to retain existing income criteria or are new standards going to be levied upon them?

Secretary ROMNEY. We are undertaking to develop a greater degree of standardization and equity in these levels and that will be covered in the 1970 legislation. Obviously, you are going to have an opportunity to take a look at it and see whether you think this improves the situation or doesn't. We happen to think it will improve the situation and consequently we will make recommendations that will apply in those areas.

Senator PROXMIRE. Senator Cranston?

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