3,800 481,000 Adjustment in selected resources (loan obligations). 9,000 505,800 623,200 2,023,800 -9,215 -174,320 -1,687,167 -2,023,800 -2,013,600 325,066 496,513 623,200 The secondary market operations of the Federal National Mortgage Association were authorized by the 117,400 Housing Act of 1954 to provide limited liquidity for Government insured and guaranteed mortgages and to improve the distribution of investment capital available for home 40,000 mortgage financing. Mortgage purchases and short-term 450,000 9,000 loans secured by FHA insured and VA guaranteed mortgages under these operations are financed by the proceeds from (1) the sale of obligations to private investors, or to the Secretary of the Treasury (the Secretary of the Treasury may not at any one time hold more than $2.25 billion of such obligations), (2) subscriptions by the Secretary of the Treasury to FNMA preferred stock ($92.8 million was authorized in 1955, $50 million in 1957, and $65 million in 1958, making a total of $207.8 million), (3) mandatory contributions into capital incident to subscriptions for the Association's common stock by mortgage sellers and by borrowers, (4) the sale of mortgages to the 147,000 investing public, (5) repayments and prepayments of mortgage principal, and (6) income from operations. Recommendations for such legislation as may be necessary or desirable to transfer ownership of the Association to the private holders of the common stock must be submitted to the Congress as promptly as practicable after all of the Treasury-held preferred stock has been retired. Meanwhile, the present interim program, financed by private as well as by Government investment funds, is treated as a trust fund. Operations are discussed in part II of this document in connection with the program's general fund financing and effect on administrative budget expenditures. Revenue, Expense, and Retained Earnings (in thousands of dollars) 4,500 145,500 457,000 Net income before Federal income tax 169.524 124,300 127,600 117,624 94,800 94,200 51,900 29,500 33.400 Federal income tax equivalent.. Net income for year..... 26,983 15,300 17,400 24,918 14,200 16,000 940 VETERANS ADMINISTRATION-Continued NATIONAL SERVICE LIFE INSURANCE FUND-Continued This fund (72 Stat. 1154) was established in 1940 as the financing mechanism for World War II servicemen's and veterans' insurance program authorized by the National Service Life Insurance Act of 1940. Over 22 million policies have been issued under this program. Because issuance of new policies ended in 1951 the insurance in force will continue to decline. The general decline in the activity of the fund is indicated in the following table (dollars in millions): June 30, 1962 June 30, 1963 June 30, 1964 June 30, 1965 The status of the fund excluding noncash transactions is as follows (in thousands of dollars): 1965 estimate Unexpended balance of fund, U.S. securities (par).. 5,803,529 5,713,915 5,815,500 6,049,400 beginning of year---- 5,773,134 5,810,651 5,721,305 5,823,328 Accounts receivable, net. 10,400 11,546 12,939 14,007 Policy loans.. 418,163 463,060 508,000 547,700 Cash income during year: Policy liens.. Interest on investments.. Payments from general and Total assets. 546 6,239,760 392 400 400 special funds.... 6,885 Premiums and other receipts.. 482,781 of year. 5,810,651 5,721,305 5,823,328 6,057,145 The The assets of the fund, which are largely invested in special Treasury interest-bearing securities and in policy loans, are expected to increase from $6,196 million as of June 30, 1963 to $6,619 million as of June 30, 1965. actuarial estimate of policy obligations as of June 30, 1963, totals $6,146 million, leaving a balance of $49.8 million for contingency reserves. The income of the fund derives from premium receipts, interest on investments, and payments which are made to the fund from the Veterans insurance and indemnities appropriation, for claims (1) resulting from extra hazards of the veterans' service, or (2) arising on certain policies held by personnel on active duty. Administrative expenses are charged to the appropriation General operating expenses. In order to bolster the economy, all dividends are being disbursed in January rather than being spread throughout the calendar year. The accelerated payment of dividends advanced $101 million of dividend expenditures into 1963 from 1964 and an estimated $105 million into 1964 from 1965. The 1963 expenditures also include $89 million for a special dividend payment. The fund is operated on a commercial basis to the greatest possible extent consistent with law. In the program and financing statement, the noncash transactions, which are offset by other claims of the fund, are excluded from program costs in order to show obligations. The following business-type statements of revenue and expense and financial condition include these noncash transactions relating to the status of insurance policy accounts. ability reserves... Reserve for future installments on matured contracts.. Total disability in come reserves. Total liabilities... 6,040,238 84,532 108,665 95,023 966,153 Revenues and other receipts: Policy loans repaid.... Policy liens repaid.. 18,008 Premiums earned.. 17,081 Interest on investments... 39,048 15,429 240 16,204 38,351 Payment from Veterans insurance and in demnities... 10,241 250 10,491 Assets of the fund, which are largely invested in interestbearing securities and policy loans, are estimated to decline from $1,105 million as of June 30, 1963 to $1,072 million as of June 30, 1965, as an increasing number of policies mature through death or disability. The actuarial evaluation of policy obligations as of June 30, 1963, totals $1,076 million, leaving a balance of $29 million for contingency reserves. The income of the fund derives from premium receipts, interest on investments, and payments which are made to the fund from the Veterans insurance and indemnities appropriation, for claims (a) resulting from the extra hazards of the veteran's service, or (b) arising on certain 37,728 policies held by personnel on active military duty. Administrative expenses are charged to the General operating expenses appropriation. 13,341 250 15,365 125 19,500 45 19,800 In order to bolster the economy, all dividends are being disbursed in January rather than being spread throughout the calendar year. The accelerated payment of dividends advanced $7 million of expenditures into 1963 from 1964 and an estimated $8 million into 1964 from 1965. The fund is operated on a commercial basis to the greatest possible extent consistent with law. In the program and financing statement, the noncash transactions, which are offset by other claims of the fund, are excluded from program costs in order to show obligations. The following business-type statements of revenue and expense and of financial condition include these noncash transactions relating to the status of insurance policy accounts. Revenue, Expense, and Retained Earnings (in thousands of dollars) June 30, Analysis of retained earnings: Retained earnings, 1965 254,000 $1,117 |