Loan Bank members. Any loan restrictions on the amount, term, repayment provisions, number of families, or status as a first lien on real estate would be left to the optional regulation of the Federal Mortgage Marketing Corporation itself. Moreover, the amount of debt issued by this new Federal agency, according to Section 6 of the bill, would be limited only by whatever prohibitions or restrictions that the Corporation might choose to adopt. It should also be noted that unlike the case of the Federal Home Loan Bank System itself, neither the amount nor the terms of FMMC's borrowings would be subject to the approval of the Secretary of the Treasury-a provision that would assure closer coordination with broad Government fiscal policy. Attracting funds into conventional mortgages through the FMMC could mean that funds might be siphoned away from support available for FHA and VA mortgages which finance programs charged with a special public interest, unless the total pool of available housing credit were expanded. The most feasible way to do that is to reduce the demands that the Federal Government makes on private capital markets. The Federal Reserve Board believes, therefore, that proposals such as S. 3508 which would increase rather than diminish the total credit demands of the Government and its agencies should be examined with caution. Sincerely yours, Subject: S. 3508. ARTHUR F. BURNS. THE SECRETARY OF HOUSING AND URBAN DEVELOPMENT, Hon. JOHN SPARKMAN, Chairman, Committee on Banking and Currency, Washington, D.C. DEAR MR. CHAIRMAN: This is in further reply to your request for the views of this Department on S. 3508, a bill which would establish a Federal Mortgage Marketing Corporation within the Federal Home Loan Bank system. This Department favors the objectives of this bill-to establish a secondary market facility within the Federal Home Loan Bank system. With respect to the desirability of specific provisions in the bill, we defer to the views of the Federal Home Loan Bank Board. Sincerely, RICHARD C. VAN DUSEN (For George Romney). 918T CONGRESS 2D SESSION S. 3442 IN THE SENATE OF THE UNITED STATES FEBRUARY 16, 1970 Mr. SPARKMAN introduced the following bill; which was read twice and referred to the Committee on Banking and Currency A BILL To increase the availability of funds for the financing of urgently needed housing, to authorize the establishment of standards governing the amount of settlement costs allowable in the financing of federally assisted housing, and for other purposes. 1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 3 That this Act may be cited as the "Mortgage Credit Act of 4 1970". 5 INTEREST RATES ON THE FINANCING OF FEDERAL HOUSING 8 SECTION 1. Section 3 (a) of the Act of May 7, 1968 9 (Public Law 90-301), is amended— II 1 2 3 4 5 6 7 2 (1) by inserting "(1)" immediately following “(a)"; (2) by striking out "October 1, 1970" and insert ing in lieu thereof "January 1, 1972"; and (3) by adding at the end thereof the following new paragraphs: "(2) Notwithstanding the provisions of the sections re8 ferred to in paragraph (1) and any maximum interest rates 9 established pursuant to paragraph (1), the Secretary of 10 Housing and Urban Development and the Administrator of 11 Veterans' Affairs, respectively, are authorized, pursuant to 12 commitments issued prior to January 1, 1972, to insure or 13 guarantee mortgages and loans at whatever interest rate may 14 be agreed upon by the borrower and the lender if the lender 15 certifies it has made no charges in the nature of discounts in 16 connection with the mortgage or loan transaction except as 17 compensation for expenses in accordance with regulations prescribed by the Secretary and the Administrator. 18 19 "(3) The Secretary and the Administrator shall take 20 appropriate steps to assure that prospective borrowers have 21 adequate information as to (A) the alternative methods for 22 establishing interest rates pursuant to this subsection, (B) 23 24 current mortgage interest rates and discounts in the area, (C) the amount of any discounts to be charged each party to 3 1 the transaction, expressed in terms of dollars and yield; and 2 (D) the amount of allowable settlement costs and other fees. 3 "(4) The Secretary and the Administrator shall jointly 4 report to the Congress not later than March 1, 1970, and at 5 least once during each three-month period thereafter, with 6 respect to the adequacy of the interest rates established pur7 suant to paragraph (1) in meeting the mortgage market, in8 cluding the level of discounts incident to such rates and the 9 relation of such rates and discounts to interest rates estab10 lished in accordance with paragraph (2). The Secretary and 11 the Administrator shall also jointly report to the Congress 12 not later than July 1, 1971, evaluating the dual interest rate 13 system established by this subsection and making recom14 mendations as to permanent legislation with respect to inter15 est rates on Government-assisted mortgages and loans." 16 SETTLEMENT COSTS IN THE FINANCING OF FEDERAL 17 18 19 HOUSING ADMINISTRATION AND VETERANS' ADMINIS TRATION ASSISTED HOUSING SEC. 2. (a) With respect to housing built, rehabilitated, 20 or sold with assistance provided under the National Housing 21 Act or under chapter 37, United States Code, the Secretary of 22 Housing and Urban Development and the Administrator of 23 Veterans' Affairs are respectively authorized and directed to 24 prescribe standards governing the amounts of settlement 4 1 costs allowable in connection with the financing of such hous 2 ing in any such area. Such standards shall 3 4 5 6 (1) be established after consultation between the Secretary and the Administrator; (2) be consistent in any area for housing assisted under the National Housing Act and housing assisted 7 under chapter 37, title 38, United States Code; and 8 9 10 (3) be based on the Secretary's and the Administrator's estimates of the reasonable charge for necessary services involved in settlements for particular classes of mortgages and loans. 12 (b) The Secretary and the Administrator shall under 13 take a joint study and make recommendations to the Con 14 gress not later than July 1, 1970, with respect to legislative 15 and administrative actions which should be taken to re16 duce mortgage settlement costs and to standardize these costs for all geographic areas. SPECIAL ADVISORY COMMISSION ON HOUSING SEC. 3. (a) (1) There is hereby established the Special Advisory Commission on Housing (hereinafter referred to as the "Commission") consisting of thirteen members appointed by the President. Of these members of the Com mission, not more than three shall be regular full-time employees of the Federal Government and not less than four shall represent the consumer. Appointment shall be |