Mr. EVANS. In our view the acceptance of a mobile home as a dwelling unit is an acceptance of defeat. The fact that the low- and moderate-income families in this country would be forced to accept trailer existence in lieu of an adequate home of proper structure as we traditionally know it is an admission of defeat. We do not think dependence on the mobile home industry is in any sense a solution to the problem of housing.

Senator PROXMIRE. I was interested in your theory that FNMA would deal in conventional mortgages and neglect its other responsibilities. Suppose a restriction were imposed to the effect that FNMA could not buy conventional mortgages whose value exceeded the maximum value under FHA? Will not this guarantee that all the assistance would go to low- and middle-income families?

Mr. EVANS. There has been considerable room for concern about the quality of conventional mortgages that would be purchased and from past banking experience we believe they will have increased risk of foreclosures. That is just one question that concerns us

Senator PROXMIRE. Would that question take care of it by private insurance or by participation?

Mr. EVANS. Private insurance indicates quite a high loss. The exercise of private insurer options demonstrates the need for protection from losses over a fifth of the total price of the mortgage. We find it difficult to believe that FNMA can absorb that kind of program-can take into account this kind of factor-and still give the full concern to low and moderate income FHA programs we feel are so necessary. Senator PROXMIRE. Thank you.

The CHAIRMAN. Senator Percy?

Senator PERCY. Mr. Evans, on page 7 you mention your support of the concept of having four consumers on the Special Advisory Commission. I agree with you. I think there has been too much of producer's emphasis in many areas, and we need strong, effective consumer voices in any commission set up.

I am interested in the faith you attach at the end of your statement on union investments. I wish to commend the AFL-CIO for putting its money where its mouth is.

What is your opinion of the program for assuring low-income home owners against the loss of their homes due to death, disability or loss of jobs? This is provided in the 1968 act, and it has yet to be instituted.

Mr. EVANS. I think it is good because they have far less ability to provide this protection. We are already doing so much-double the subsidies for wealthy people's housing and not enough for poor people's housing.

Senator PERCY. The insurance companies said themselves they feel it is feasible and practical to provide such insurance. In order to encourage builders to become more interested in 235 and 236 programs, why cannot you provide for FNMA and GNMA in periods of tight money, adequate incentives to attract them into these programs?

Mr. EVANS. We have a definite concern about lack of controls in providing whatever points are necessary because this is what the market demands. If there are ways of restricting the amount of points that can be charged by limits, as is presently found in 235 and 236 we would prefer that. However, if something is additionally necessary to finance

these programs it would be preferable, in our opinion to find some other mechanisms, such as direct Federal loans rather than unlimited interest-levels or limited rates and unlimited points.

Senator PERCY. I am rather glad we did not provide the limit, though we disastrously had the number of units we were thinking of reduced some 40 percent already. That legislation is just 2 years old. If we actually put a limit, which might have looked extreme, we would have been out of the market totally right now.

In the area of national priorities with AFL-CIO taking a very broad look at all requirements-defense, space, the human needs here at home and all the conflicting areas how high do you put housing as meeting a human need, and how high should we put housing in our order of national priorities now?

Mr. EVANS. We have emphasized three things: Jobs, education and housing. I think we would necessarily have to put jobs first, but I would hate to have to make a decision between those three elements. But we think housing is absolutely one of the top domestic priority programs we must emphasize.

Senator PERCY. So the Commission's conclusion that housing was one of the most vital and important areas is concurred by AFL-CIO? Mr. EVANS. Yes, sir, 100 percent.

Senator PERCY. How do you explain the lack of emphasis placed by Federal Government in adequately doing the job in the area of housing?

Mr. EVANS. Successful as this country is, it is a fact that there is a large stratum of lower and moderate income people who do not have proper housing. By the same token even though they are a shockingly large group they do not have the political power necessary to emphasize to the rest of the population the extreme need in which they find themselves and they have not, we believe, received proper attention.

Senator PERCY. Thank you very much, Mr. Evans. It was an excellent and helpful testimony.

The CHAIRMAN. Thank you, Mr. Evans.

Before you leave the stand, I want to say that many times the presentations on behalf of the AFL-CIO have been made to this committee by Mr. Boris Shiskin. I am glad to see him in the audience today and I pay my respects and the respects of this committee for the tremendous job he has done throughout the years. Thank you very much.

That concludes the hearing and the committee will stand adjourned. (Whereupon, at 12:15 p.m., the subcommittee was adjourned.)

APPENDIX

Additional Statements and Data

Hon. JOHN SPARKMAN,

AMERICAN LAND TITLE ASSOCIATION,
March 12, 1970.

Chairman, Subcommittee on Housing and Urban Affairs,
New Senate Office Building, Washington, D.C.

DEAR SENATOR SPARKMAN: Members of this Association, who represent more than 2,000 abstracting and title insurance concerns throughout the nation, resectfully wish to go on record in opposition to Section 2 (a) and (b) of S. 3442 as proposed. We further urge that this section be eliminated from the bill in its present form.

While we commend the intent of increasing the availability of funds for the financing of urgently-needed housing as stated in the bill, we believe that empowering the Secretary of the Department of Housing and Urban Development and the Veterans Administrator to determine fees for settlement-related services including charges for abstracting and title insurance is unnecessary, improper, and could inadvertently prove detrimental to the American home buyer. A study of settlement-related costs, as called for in Section 2(b) of the bill, certainly is not undesirable as such. But we object to a study on the apparently existing premise that settlement costs are too high-since we know of no comprehensive study that presently supports and justifies such a predetermination. One limited study of settlement-related costs that has come to our attention indicates that the public in areas covered may generally feel that these costs are not too high. We refer to loan closing costs on single-family homes, a 1965 study conducted in areas around and including Chicago, Indianapolis, Newark, St. Louis, St. Paul, and San Antonio, published by the Housing and Home Finance Agency. These quotations are from the publication:

"In the opinion of the researchers who conducted this study, the answer to the first questions (except as regards Newark, commented on later) is that closing costs are not, in the typical case, exorbitant. How high a level of closing costs would be "too high" is a matter of opinion, but we suggest that there are two reasonable ways of measuring whether or not the levels of cost described in this report are too high:

"1. If a substantial majority of home buyers felt that costs were exorbitant. As a matter of fact, a substantial majority of borrowers interviewed in connection with this study had no complaint about closing costs.

"2. If closing costs were at a level which, in effect, raised his cost of borrowing more than they would have been raised by increasing the interest rate onequarter of one percent."

If a thorough study is made in the future, we respectfully suggest that it be conducted on an extemely objective basis-and that sufficient time be allowed for a statistically justifiable approach and thorough analysis of findings before any legislative recommendations are formulated. In our experience, settlementrelated costs and situations vary a great deal over the nation. We seriously doubt whether appropriate legislative and administrative recommendations on reducing and standardizing mortgage settlement costs can be made even if they are justified in an objective study-by the July 1, 1970 deadline called for in S. 3442.

The makeup of settlement-related costs, and who pays them, depend greatly on local laws, custom and practice. Nonetheless, it should be pointed out that a significant part of these costs in many areas is determined by taxes and other government exactions. Considering all costs a home buyer must pay in connection with the purchase of real estate, any reductions presumably would

not involve a cutback in payments to government. If this be so, then any reductions would come in services closely related to direct handling and protection of home buyer interests—such as real estate broker's fee; land survey; owner's title evidencing, examination, and insurance; mortgage lender charges; buyer's attorney; hazard insurance; and any other charges of this nature. A government-imposed reduction of costs for these services would tend to lessen their quality in a manner detrimental to the best interests of the buyer. Your consideration of the previously-expressed viewpoint will be appreciated. Sincerely yours, THOMAS J. HOLSTEIN,

President.

STATEMENT OF CLAY L. COCHRAN, CHAIRMAN, THE NATIONAL RURAL HOUSING COALITION, WASHINGTON

Mr. Chairman and Members of the Committee:

The National Rural Housing Coalition is a nonprofit, non-partisan organization financed by contributions from its members.

The Coalition hopes to build a national awareness of the need for low-income housing in small towns and rural areas. It also plans to serve as the focal point for those who want to act to make existing programs work better and to create workable new programs.

The honorary chairmen of the organization are Representative John Conyers, Senators Charles E. Goodell and George McGovern, Mrs. Martin Luther King, Jr., and Richard Chavez.

The Committee of Sponsors includes Senators, Congressmen, Mayors, and other leaders drawn from the professions, organized labor, church organizations, universities, farm organizations, and minority support groups.

We wish to make it clear at the outset that while all of us, sponsors, honorary chairmen, board of directors and members, are united on the broad issue of improving rural housing, we speak on specific legislative issues only in the name of the contributing members.

Rural need is an integral part of the Nation's needs

We believe that a solution to the nation's rural housing problems requires cooperation among all concerned people and communities. The development of a decent home for every family in small towns of 25.000 population and below and in the open countryside, should not take precedence over the efforts to cure the ills of the larger cities. The rural housing problem is real indeed, but it is still only part of the nation's total housing problem.

We are aware that for years the rural housing situation was largely ignored, and the spotlight was focused on the explosive cities with their eroding tax hases and troubled social institutions.

Today, however, we believe there is a growing understanding that part of the troubles faced by the central cities are traceable to the neglect of the rural areas. We believe that enlightened policies can and must be devised to improve life in metropolitan areas while at the same time meeting the needs of people in small towns and rural areas.

No "red circles” needed

In short, we do not seek to divide, we seek to inform and cooperate with all concerned people, rural and urban. There is no doubt that the Federal Housing Administration's "red circling" of central city areas over a long period of years was a major contributing factor to the deterioration of the central cities. But we wish to let people know that for all practical purposes over those same years. as far as Federal programs were concerned, most of the small towns and rural arews were also "red circled."

Most of the bad howieng is in rural areas and smaïs towES

Too often when we think of bad housing we think first of the inner cities. It should be the other way around.

Consider these facts:

.. Two thirds of the matuom's substandard housing is in small towns and tural areas. According to a Census Bureau sample survey in 1968, places outside Mtandard Metropolitan Statistical Areas accounted for 67.3 per cent of housing defined as substandard.