Hearings, Reports and Prints of the Senate Committee on Banking and Currency

marginal in the sense that they are basically good mortgages but people don't want to buy them because they haven't been seasoned as yet, or else where a mortgage is marginal and will not be competitive in the market and therefore will not attract private investors, then Ginnie Mae would buy it.

Senator MCINTYRE. So these properties that might be close to the central city, for instance, which are causing some concern, no marketability, would be retained and serviced by the Ginnie Mae.

Mr. WEAVER. We would hope that the programs in title I and title II, with the provisions which are made here for special servicing and special reserves, that these would also be able to get into the market. But insofar as they would not, Ginnie Mae would be a backup. Senator MCINTYRE. Thank you very much, Mr. Secretary. Thank you, Mr. Chairman.

Senator PROXMIRE. Senator Williams?

Senator WILLIAMS. I see we have almost run out of time. I do, however, want to ask you one question, Mr. Secretary. As you know there is a great deal of sentiment that the interstate sale of underdeveloped land be regulated through full disclosure.

The original bill which I introduced put it in tandem with SEC provisions and gave jurisdiction to the SEC. Out of many thoughtful suggestions which we have received, I have amended this proposed legislation to give jurisdiction to HUD.

Mr. WEAVER. Yes, sir.

Senator WILLIAMS. Do you have any observations on this amendment?

Mr. WEAVER. Yes; two things. First, we are in complete agreement with the objective that this should be done, and we feel that we should do whatever we can and whatever we can do best in this connection. Second, there has now been a proposal that this be done by us in conjunction with the Federal Trade Commission. We are working with them; we are trying to work out something. We are committee to do it, and if it can be done in any way, we will cooperate a hundred percent. And when I say "be done in any way"

Senator WILLIAMS. Does that mean you would be willing to accept this responsibility?

Mr. WEAVER. Yes. If we can work out something that is viable, we would be willing to do it, and provided we also feel that we can perform it successfully. But it is now under discussion.

Senator WILLIAMS. On the merits of the matter, do you agree that people who are buying undeveloped land should know what they are getting?

Mr. WEAVER. Well, from some of the advertisements I get in the mail, I certainly think they need a lot of protection.

Senator WILLIAMS. Thank you.

Senator PROXMIRE. I would like to ask one quick question, and I want to yield to Senator Tower before we recess.

First, I would like to commend you, Mr. Secretary, on getting into this bill the provision that waives the economic soundness doctrines for the ghettos so the FHA can make available funds which they have not for the inner core section of our cities.

I would like to ask, in view of the limited economic resources and in view of the inflationary potential of this program, the immense demand it will make on capital, and so forth, would not it be perhaps

wise for us to recognize the greater urgency of low-income housing than you seem to in your legislative proposal, and put more stress on this and to write the law in such a way that the resources would be directed here first?

Mr. WEAVER. Well, I think the bill does that, Senator. I think the whole idea of subsidizing and having an adequate subsidy for this 6-million-unit program over a 10-year period really creates an effective demand, and I think it is going to attract private investors in this field as never before.

Senator PROXMIRE. I think perhaps that is true.

Mr. WEAVER. They will have a guaranteed market.

Senator PROXMIRE. What I am concerned with is there are reasons why budgetarily it is easier to build the houses for middle-income or the higher of the low-income people than it is for the low-income people. But the economic resources, it seems to me, should be put on a first-priority basis for the low-income people who need this in a most urgent way and a most critical way, and because of the difficulty we had in our cities last summer and may have in the future, that the faster we can move for this the better off we will be.

Mr. WEAVER. I still feel that we have to have a balance here. I think we have to move in this direction for two reasons. In the first place, as I said yesterday, I don't think we want to develop economic ghettos after we have had serious problems with other kinds of ghettos. I think it is important to have moderate and low income families mixed together.

Second, I think we have two problems. We have, on the one hand, the problem of the families most in need, and this represents the lowest income family having the priorities. But we also have the need in these areas of having something produced and produced quickly and in large volume. And to achieve this volume I think you have to do not only the most difficult, which is going to take a longer time, but also the less difficult, as long as it contributes to the objective of providing housing for those for whom adequate housing is not available in the marketplace. You have to have this mix for sound economic and sound social purposes.

Senator PROXMIRE. Thank you. Senator Tower?

Senator TOWER. Mr. Chairman, I still fail to see how making up to 70 percent of the families in this country eligible under this bill is going to resolve the problem of economic ghettos.

Mr. Secretary, in fiscal 1967, total housing starts, private and public, were estimated at 1,322,000. That is the National Association of Home Builders' figure. Total Government assistance starts were 57,500, or about 412 percent of the total.

I read that your Department estimates that the Government-assisted housing for fiscal 1968 is around 100,000 units, or about 72 percent of the 1967 total figure.

Now, according to what the President has advocated in 1969, fiscal 1969, we will go to 300,000, which will be 22 percent of the 1967 total. Of course, we could anticipate that private starts increased, too, but probably not at the same rate that public starts would increase.

Now, what maximum percentage of total housing production do you think reasonable and justifiable for Government-assisted housing? Mr. WEAVER. I think, in part, you answered the question yourself, because what we are talking about is two moving targets. We are

talking about increasing-and I think we are going to have to increase it appreciably the amount of housing starts, both subsidized and unsubsidized. We expect, for example, in 1969, when we are talking about 300,000 publicly assisted housing, both new and rehabilitation, that we will have 1,700,000 total starts. And I am sure that if we aren't able to move both of these, we are not going to be able to move either of them. So you see that the proportion is less than a fifth-about 18 percent.

And I would like to point out, too-going back to something you said earlier when you said that 70 percent of the families would be eligible for subsidized housing under this proposal, this could not possibly happen, because only those families and they are relatively small and become smaller as you get higher up in the income levels, fortunately for us only those large families would be eligible at the higher income levels. So that the program still would serve primarily the average among both the low and moderate income and not the extreme.

I just wanted to make that point clear. In other words, a two-person family making the maximum you cited would not be involved, nor would a family with two children, but if the family had six or eight or nine children, then it would be eligible in the upper income levels. And this is true regardless of where you make the cutoff point.

Senator Tower. Returning to my question, what do you think is the maximum percentage of total housing production that is a reasonable and justifiable, viable figure for Government housing? In other words, what is the maximum which the Government could go, percentage of total housing starts?

Mr. WEAVER. About 25 or 26 percent is the maximum that we have for any one year in our projected figures.

Senator TOWER. Do you think that is as high as the Government should go?

Mr. WEAVER. Well, I don't like to say what it should do, because I think that if we could in some way wipe out this whole problem of substandard housing in a shorter period, in 1 year, this would be fine. I would be willing to go to any percentage, if it were possible. I don't think it is politically possible, I don't think it is economically possible. So I don't like to have the idea there is a magic figure. It seems to me the figure becomes one we resolve in the light of what is possible.

What we are proposing to do is to wipe out substandard housing. The figure we arrive at is that figure which is responsive to the needs as well as to the abilities of the economy to absorb and to produce and still keep going. I think that 25 percent is a good peak year figure in light of these circumstances.

Now, once we get rid of substandard housing, then the figure would automatically become less each year. But it is a large need.

Senator TOWER. That was the last one. Thank you.

Senator PROXMIRE. Thank you, Mr. Secretary. As usual, your testimony and your responses have been excellent.

Senator PERCY. Mr. Chairman, I wonder if we have one moment? Could I give the benediction this morning?

Senator PROXMIRE. I cannot think of anyone better qualified. Senator PERCY. I would just like to close our meeting on this note: I deeply believe the President was quite sincere in the state of the Union message that he gave last year when he said he needs bipartisan support for these programs. I think we have tried to approach that in

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this way. I know in my own instance I have tried to give support to urban development, support to model cities, rent subsidy, open occupancy and many other programs where I believe the administration has been sound and right, and I fought for these programs. I do hope that in the spirit of bipartisanship it is not going to be just a oneway street. I think that when the administration says that they oppose sweat equity when it is worded "prospective homeowners shall, to the extent feasible, be given the opportunity to contribute the value of their labor as equity in their dwellings," but support it when it says in their bill, "such mortgagor shall, to the maximum extent feasible, be given the opportunity to contribute the value of his labor as equity in such dwellings. **** I think this is simply a case that I have seen so many times before "NIH"-not invented here. If it is our idea, it's OK. If it's your idea, it's no good and we are going to fight it. Senator WILLIAMS. I raise objection to that.

Mr. WEAVER. I have to inject here we did not oppose "sweat equity." There was no such administration position as to delineate in regard to sweat equity last year.

Senator PERCY. There was no support that

Mr. WEAVER. It was an AFL-CIO position, not an administration position.

Senator PERCY. I am referring to the attitude. If I am wrong, I would like to be corrected, but I have a deepseated feeling there is an intention not to allow many of these proposals that we have tried to work on to see the light of day. But if we can see a receptivity, if we can have an attitude where we can sit down and talk over how we can both contribute ideas on both sides of the aisle; I think we are going to get this job done. And if I am wrong in my impression, then I would stand to be corrected.

But my own personal impression is-and it is an impression shared by many of my colleagues, including, I think, Senator Brooke-that there has to be more give on both sides. And if we can do that, we can go about this job that we have got to do, the task that we have set ahead of us, both legislative and executive, and I pledge you my full support. If I can overcome this feeling that we have not gotten any receptivity for any ideas that the opposition party sets forth, I would be grateful.

Many of my colleagues say, "There is no use trying to give them any ideas, they are not going to consider them, they are going to fight every idea we try to present." I hope we can overcome that feeling.

Mr. WEAVER. I would only like to say two things. First, I would like to make sure that the record shows that there has not been an administration position in opposition of sweat equity last year or any other year. As a matter of fact, we permit it now in section 203.

Second, I think that the best evidence of give-and-take and of bipartisan activity has occurred within your own committee, sir. Last year when you struggled long, a group made up primarily of the chairman, Senator Mondale, and yourself-and then we came in, the HUD people, then the Director of the Bureau of the Budget, and othersand spent afternoon after afternoon in trying to come out with a bill that would have just what you say-something that all of us con

tributed to. The essence of that bill, 80 percent of it-particularly the
title I part, is in the administration bill.

Senator PERCY. Four major proposals were thrown out by the ad-
ministration.

Mr. WEAVER. These were not all in title I.

Senator PROXMIRE. The committee will stand in recess until Monday,
March 11, at 9:30 a.m.

(Whereupon, at 10:15 a.m., the hearing was recessed, to reconvene
at 9:30 a.m., Monday, March 11, 1968.)

(A more detailed statement of Secretary Weaver on the Housing

and Urban Development Act follows:)

STATEMENT OF SECRETARY WEAVER ON THE HOUSING AND URBAN

DEVELOPMENT ACT OF 1968

CONTENTS

Title I-Low- and moderate-income housing:

Section 101-Homeownership for low- and moderate-income families..