The bill recognizes that there now exists a proven and workable system for meeting the housing needs of our lower-income families. Title VII of the bill appropriately perfects and provides for a còntinuation of this program of aid to the local communities for low-rent public housing. While the program provided for by this title of the bill is similar in many ways to the applicable recommendations adopted by our committee, the proposed goal of 500,000 houses to be built within the next 4 years is only half of what the National Housing Administrator reported would be a minimum requirement in this field. We would, therefore, like to see this goal increased to 1,000,000 houses. Title VII also provides for a 20-percent gap between the upper rental limits for admission to public-housing projects and the lowest rents at which private enterprise is providing a decent supply of new construction. We can see no useful purpose that will be served by this gap. The bill also recognizes that the housing needs of our families of substantial and fairly moderate income are being met through private enterprise operations supplemented through the systems of homemortgage credit and insurance carried out through the Federal Home Loan Bank Administration and the Federal Housing Administration. Title III of the bill, therefore, seeks to perfect these systems, through various amendments which experience has indicated would enable them to serve the housing needs of these groups more broadly and more effectively than they can under the present provisions of the statutes under which they operate.

While these amendments of the Federal Home Loan Bank Administration and Federal Housing Administration statutes may also serve to broaden somewhat the area of housing needs which can be served. adequately by private housing enterprise supplemented with these aids, there is a clear recognition that there nonetheless remains the vast housing market represented by the great bulk of American families. of what may be termed "moderate incomes"-incomes too high to be served by public housing and too low to be served through the existing systems of aid to private housing enterprise operations, even when perfected and extended by the amendments contained in title III.

As to both home ownership and rental housing the bill provides in titles IV and V for supplementary and additional systems of insurance of home-mortgage loans and direct investments in rental housing for those families who, if they are to have good housing, require more favorable terms than are obtainable under existing systems. It is the housing market represented by these families which must be reached in volume if, in the postwar years, we are to build better America by meeting the consumer needs of all groups for decent housing, while at the same time securing the high and sustained volume of house production which, we believe, is necessary if we are to achieve the high levels of production and employment required.

We are particularly in favor of the plan embodied in title IV for 95-percent insurance of a mortgage loan of not more than $5,000 with a 32-year amortization period and a maximum interest rate of 4 percent. We call attention to the fact, however, that the recommendations adopted by our board anticipated a maximum interest rate of 32 percent, and we hope that the committee will give full consideration to amending the bill to provide for this lower maximum rate. This type of insurance would cover the financing of a house

costing not more than $5,300. The property securing the loan is therefore squarely in the broadest and most stable housing market. The loan is 100 percent insured throughout its entire life.

Moreover, the provisions of sections 403, as we understand them, would protect the lender against the possibility of incurring any loss on the loan as a result of default in interest or from foreclosure expenses. It is a better loan for the lender-and from the standpoint of the borrower also-than a loan which is guaranteed under the GI Act only up to 50 percent, or a lesser amount, with the liability under the guaranty decreasing pro rata with the decrease in the loan as it is paid off. Yet the maximum interest rate on loans guaranteed under the G. I. Act is 4 percent.

Also there has been a good deal of testimony before this committee that home-mortgage funds will be available in quantity, so that we might hope for a healthy competition as these funds actively seek new outlets. Under such circumstances, we would hope that a maximum rate of 312 percent would assure a sufficient flow of mortgage funds into the financing of this most desirable type of home.

We are strongly in favor of the provisions of the bill permitting a lapse and extension of the fixed monthly payments when the home buyer is temporarily unable to meet them because of ill health, unemployment, and the like, and also the warranty provisions. We believe that they represent improvements in our home-financing and home-building practices which are long overdue.

We also endorse the plan embodied in title IV for the insurance of mutual ownership and rental housing and the plan embodied in title V for the insurance of direct investments in rental housing, both of which are limited to meeting needs of families of moderate income which are not being adequately met without such insurance. These provisions, along with titles III and VII, are needed to assure a well-rounded program which will help avoid overbuilding in the higher price class and provide good housing for purchase and rental in all price classes. This also is consistent with the recommendations adopted by our board.

The special provisions of titles IV and V for supplying good housing for our families of middle income, who constitute the largest and most neglected area of the entire housing market, are further supplemented by the provisions of title II relating to technical hous ing research and matching aid to local communities for studies of their own housing needs and markets.

Senator TAFT. What do vou call a family of middle income? Mr. OSTRANDER. Well, I would guess at approximately $2,000 to $2,500 annually.

Senator TAFT. Well, a fellow with an income of $2,500 would not have any trouble buying a home today. He could buy about a $6.200 house. So he is not neglected. You say there "neglected." Perhaps the fellow with $1,500 income is neglected, but not $2,500. So I wondered what the middle income was.

Mr. OSTRANDER. That is my own guess at the moment, that figure. The figure of $2,500 represents about the upper limit in terms of the annual income of middle-income families, I suppose. However, a figure of twice the annual family income is quite generally accepted as a rule-of-thumb measure of the amount which a family can safely

afford to put into the purchase of a home. On that basis, a family with a $2,500 annual income could not, with safety, undertake the purchase of a home costing much more than $5,000. I would like to submit a statement identifying a bit more definitely what we would consider as middle-income families.

(The statement referred to follows:)

STATEMENT REGARDING THE MOST NEGLECTED AREA OF THE HOUSING MARKET

We would identify "our families of middle income, who constitute the largest and most neglected area of the entire housing market" as follows:

(a) In terms of annual family income.-Those families with annual incomes ranging from approximately $1,200 to $1,500 per annum, as the lower limits, to approximately $2,500 to $3,000 per annum, as the upper limits, the range of variation in both the lower and upper limits depending upon geographical location and upon family size.

(b) In terms of monthly housing costs.-Those families who can afford to pay from approximately $20 per month to approximately $40 per month, either in terms of the monthly costs of home ownership or in terms of monthly rent. Mr. OSTRANDER. These bear most importantly upon improving our existing means and developing new techniques for reaching in adequate volume the neglected portion of the housing market represented by the needs of the great bulk of our families of modest incomes. This is especially true on the side of technical housing research.

While that portion of the house-building industry represented by the manufacturers of various components which are incorporated into finished houses unquestionably do a good deal of technical research, it is concentrated almost entirely upon the improvement or development of their special products. What is most needed, however, is technical housing research directed to the whole house-toward improving the techniques and methods of house building and assembly. Some of this type of research, which is so greatly needed if housing costs are to be effectively reduced, is being done in the laboratories of a handful of universities today. The Government could do much to stimulate this type of technical research and to pull the results together. A relatively small expenditure in this area may be productive of enormous benefits through lowered house construction costs. We also endorse and support the provisions of title VI which would establish a system whereby the Federal Government would share with the local communities the cost of acquiring and clearing the slums and blighted areas and preparing the land for redevelopment in accordance with its most suitable use. This system, as we understand it, is based on the fact that the revenues which could be derived from the most appropriate reuse of the land in these areas are not sufficient to support the cost of acquiring and clearing them.

We believe that the continued existence and growth of slums and blighted urban areas is clearly a matter which affects the general welfare of all our citizens and that the Federal Government should assist the local communities in undertaking a program which will eliminate them. This title should also prove effective as a further supplement to private housing enterprise operations by making land in the more central city areas available for the development of good housing. Operations under this title should also tend to stabilize municipal tax revenues and expenditures.

Specifically on those features of the bill designed to afford special preference to veterans particularly title IX relating to the disposi

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tion of permanent war housing owned by the Federal Government, we should like to indicate that, in our judgment, they seem to be reasonable and appropriate. Unquestionably, today it is the veteran who has returned and who is seeking a place to live who is most directly affected by the current housing shortage. To the extent that it is feasible to do so, we think he ought to be assured of a reasonable preference in getting a place to live. It is noted that with respect to the low-rent public-housing program the reference is provided for a 4-year period. Since the contributions supporting that program become available over a 4-year period and the bulk of the dwellings to be provided may not be available of occupancy for perhaps 2 years, it is really only a 2-year preference. We therefore suggest that the committee give consideration to extending the period during which this preference should be accorded to veterans to 6 or 7 years.

We also desire to commend the sponsors of the bill for the provisions of section 311 which would permit the FHA to consent to the extension of the maturity of insured mortgages made by veterans to cover a period equal to the period of military service. This would permit the veteran to obtain by voluntary agreement with the mortgagee and the FHA the same relief which he is entitled to obtain by court action under the Soldier's and Sailor's Civil Relief Act and thus avoid expense and delay. It is noted, however, that there are no provisions which would accord to veterans a preference in obtaining FHA insured dental housing or in that built for sale. We recommend that the committee consider the feasibility of including appropriate provisions in this respect.

We also recommend that there be included in the bill a nondiscrimination clause which would be applicable to the entire housing program.

We regard as appropriate and desirable those provisions of the bill which seek to make good housing available to farm families on terms consistent with their capacity to pay, and as especially important those provisions requiring a periodic report to the Congress by the National Housing Administrator concerning estimates of housing needs and the progress made in meeting them, along with an evaluation of the house-building industry's contribution to production and employment.

Although they appear in the first title of the bill, we have deferred until this point our recommendations as to those provisions relating to the consolidation of these related housing functions and activities in a single national housing agency. We have done so because we believe that the essential relationship of the varied functions and activities must be apparent from our consideration of the merits of the proposals embodied in this bill. These functions are interrelated; some are supplementary to others. But if we are to have a national housing policy and program capable of meeting the housing needs of all our people, all of these functions must be appropriately concentrated upon those needs through the application of that policy. Our only recommendation as to this point at variance with the provisions of title I of the bill would be that, in view of the special importance of housing in terms of both the needs of the people and the national economy, consideration should be given to changing the status of the agency from an independent agency to an executive department represented in the Cabinet.

The American Veterans Committee, it is thus seen, finds itself in agreement with almost all of the provisions of this bill and feels that its passage would be an important step in providing the housing necessary for this country. Two omissions from the bill, howeverboth recently referred to by the President-threaten to reduce its effectiveness. There is nothing in the bill which would insure that building materials-now scarcer than ever before-will be available for the construction of houses selling in the lower-price brackets. Some method for allocating these materials is vitally necessary, and one possible method is that proposed during a previous section of this statement. The absence of any restriction on excessive pricing may also go a long way in defeating the excellent goals of this bill. The American Veterans Committe ehopes that action will be taken to incorporate both of these features in the bill.

There is one other matter which I desire to place before this committee before I close. I refer particularly to two types of statements which have been made by some of the organizations who have appeared before this committee and opposed the enactment of this bill. I think it may be fairly stated that the first of these two types of statements, while generally hedged and qualified to assure a wide avenue for later retreat, is quite apparently intended to convey the impression that the home-building industry-unfettered and unaidedhas always produced and is now ready, willing, and able to produce a substantial volume of good housing in the moderate price class where unquestionably it is most needed.

For example, the statement made by the president of the National Association of Home Builders before this committee on December 6, states:

I find that a surprisingly large number of these builders are pressing to meet the demand for housing in the lower-priced classes. They have learned that it is the best kind of business in that it is by far the largest market for their product. In the South and West particularly many operators who built $5,400 and $5,800 war housing are redesigning such housing for a lower price.

In addition, the policy statement, released at the time when this same organization was demanding that L-41 be lifted, pledged that they would "concentrate upon constructing dwellings for modestincome groups."

Now I think some light on the merits of this matter may be found in the statement released by the Home Builders just 4 days before the announcement of President Truman's temporary emergency program restoring the priorities system, with a $10,000 price limitation on priority-assisted housing. In discussing the plan then under consideration by the President, the release of the Home Builders organization states:

Priority plan penalizes present construction. Prepared hastily, without industry consultation, the original plan would have drained off critical materials for new construction under $8,000 from all housing presently under construction above that figure. * It is hoped that our vigorous recommendations will be accepted that all housing under construction be given the same preferential treatment and that the $8,000 ceiling be raised to $10,000.

I think that many will agree with our conviction that certainly under present conditions and to the extent that past experience is indicative of what we may expect in the future—a maximum price