Lapas attēli
PDF
ePub

cent months because of the severe tightness of mortgage money and the lack of any real national secondary market, and that the establishment of a sound secondary market will serve to provide a much needed stability in times of tight credit such as in 1966 and the present.

As Under Secretary Volcker indicated in his testimony before the Subcommittee on Financial Institutions of your Committee on September 10, 1969, a number of specific steps have been taken this year to increase the flow of funds to both conventional and Federally guaranteed mortgages. In direct support of the conventional mortgage market, the Federal home loan banks have very substantially increased the volume of their advances to member institutions. In support of Federally guaranteed mortgages, FNMA has been making new commitments at a record rate equal to about three-fourths of the entire volume of FHA and VA mortgage organizations.

These and other measures which have been taken are intended to provide strong support for the flow of mortgage credit, and thus help to cushion the effects of tight money on home building. However, the basic problem is one of excessive total demands for credit, and the fundamental corrective must be to restore the economy to a noninflationary growth pattern as promptly as possible through fiscal and monetary policies. Thus, inflationary expectations will be reduced, interest rates will decline, and the flow of mortgage funds through normal institutional lenders will be restored.

The increased support already being provided to the mortgage market, which has been financed by means of a record volume of FNMA and home loan bank borrowings, has added substantially to pressures on market rates of interest. As individual investors become increasingly aware of the high returns available on Federal agency and other securities, and shift their funds from savings institutions, the resulting disintermediation will undermine further the position of normal suppliers of mortgage credit.

The Department believes that FNMA support should continue to be reserved for those segments of the housing market for which the Congress has already established priority through Federal guarantees and subsidies, especially in light of the increased need for FNMA support of low income housing, e.g., through the new mortgage purchase program in tandem with the Government National Mortgage Association.

In view of the foregoing, the Department would be opposed to the enactment of the bill.

The Department has been advised by the Bureau of the Budget that there is no objection from the standpoint of the Administration's program to the submission of this report to your Committee.

Sincerely yours,

PAUL W. EGGERS,

General Counsel.

91ST CONGRESS 2D SESSION

S. 3503

IN THE SENATE OF THE UNITED STATES

FEBRUARY 25, 1970

Mr. PROXMIRE (for himself, Mr. HARRIS, Mr. Hart, Mr. HARTKE, Mr. HOLLINGS, Mr. HUGHES, Mr. KENNEDY, Mr. MCGEE, Mr. McGOVERN, Mr. MCINTYRE, Mr. MAGNUSON, Mr. MONDALE, Mr. Moss, Mr. NELSON, Mr. PELL, Mr. RANDOLPH, and Mr. WILLIAMS of New Jersey) introduced the following bill; which was read twice and referred to the Committee on Banking and Currency

1

A BILL

To reduce mortgage interest rates charged middle income families, and for other purposes.

Be it enacted by the Senate and House of Representa

2 tives of the United States of America in Congress assembled,

3

4

SHORT TITLE

SECTION 1. This Act may be cited as the "Middle In

5 come Mortgage Credit Act".

6

7

8

9

10

11

II

FINDINGS AND PURPOSE

SEC. 2. The Congress finds that

(1) periodic episodes of monetary stringency and

high interest rates make it extremely difficult for families of middle income to obtain mortgage credit at rates

which they can afford to pay;

1

2

3

4

5

6

7

8

9

10

12

2

(2) periods of monetary stringency and high interest rates are directly related to the Government's mone

tary and fiscal policies;

(3) a disproportionate share of the burden of sustaining these anti-inflationary policies of the Government falls on families of middle income who are buyers or prospective buyers of homes; and

(4) the Government has a responsibility to lessen the disproportionate burden which such families bear as a result of such policies.

It is the purpose of this Act to provide, during such periods,

a source of mortgage credit for such families which is within 13 their financial means.

14

15

MORTGAGE CREDIT FOR MIDDLE INCOME FAMILIES

SEC. 3. (a) The Federal Home Loan Bank Act is 16 amended by inserting after section 11 a new section as fol

17 lows:

18

19

20

"FUNDS FOR FINANCING THE PURCHASE OF

MIDDLE INCOME HOUSING

"SEC. 11a. (a) Whenever it determines such action to

21 be necessary in furtherance of the purpose set forth in section 22 2 of the Middle Income Mortgage Credit Act, the board may 23 issue housing certificates which shall be the joint and several 24 obligations of all the Federal Home Loan Banks. Certificates 25 issued under this section shall have such maturities, bear

3

1 such rates of interest, and be subject to such other terms and 2 conditions as the board may prescribe. Notwithstanding any 3 other limitation contained in this Act, the aggregate principal 4 amount of certificates issued in any calendar year shall not 5 exceed $3,000,000,000; except that (1) in the year in which 6 this section takes effect such aggregate amount shall not 7 exceed an amount which bears the same ratio to $3,000,000,8 000 as the number of months remaining in that year bears 9 to twelve, and (2) certificates issued solely for the purpose of 10 retiring certificates previously issued and outstanding under 11 this section shall not be subject to the annual limitations 12 herein prescribed.

13

"(b) Proceeds from the sale of certificates under this 14 section shall be deposited in a Middle Income Housing Fund (hereinafter referred to as the 'fund') to be established by 16 the Federal Home Loan Banks under rules and regulations

15

17

prescribed by the board. Each Federal Home Loan Bank is 18 authorized, in accordance with this section and rules and

[blocks in formation]

regulations prescribed by the board, to make advances from

the fund to member institutions and to nonmember mortgagees eligible for advances under section 10b. Except as otherwise specifically provided in this section, such advances shall not be subject to the other provisions of this Act but shall be subject to the following restrictions and limitations:

"(1) Any such advance shall bear interest at such rate,

42-120 0-702

4

1 not less than 6 nor more than 61 per centum per annum, as

2 shall be determined by the board.

3

"(2) The provisions of sections 10 (a) and 10 (d) shall

4 be applicable to any such advance.

5

66

(3) Any institution receiving such advance shall be

6 required to use the proceeds thereof solely for the purpose of

7

[merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][ocr errors][merged small]

assisting families whose gross annual incomes do not exceed

$10,000 to finance the purchase of a dwelling, or to acquire membership in a cooperative association operating a housing project. The appraised value of any such dwelling or membership shall not exceed $25,000 at the time a loan to assist such

purchase or acquisition is made, and no such loan shall have

an effective rate of interest (exclusive of premium charges,

if any, for mortgage insurance under the National Housing

Act) in excess of 6 per centum per annum. The effective

rate of interest on any such loan shall be determined under

rules and regulations prescribed by the board, and shall include any discounts or charges in the nature of points or

otherwise which are borne by the borrower or seller.

"(c) Any part of the assets of the fund which is not required for advances under subsection (b) may be invested, subject to regulations of the board, in obligations of the United States."

(b) The first sentence of section 13 of such Act is

amended

« iepriekšējāTurpināt »