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CONTENTS

Statement of-

Foley, Raymond M., Administrator, Housing and Home Finance
Agency, Washington, D. C., accompanied by Franklin D. Richards,
Commissioner, Federal Housing Administration; John T. Egan,
Commissioner, Public Housing Administration; Berchmans T. Fitz-
patrick, General Counsel, Housing and Home Finance Agency; and
Warren J. Vinton, Chief Economist, Public Housing Administration__
Taft, Robert A., United States Senator from the State of Ohio_____

Exhibits, letters, statements, etc., submitted for the record by-

Flanders amendments to S. 866_-_.

Page

184

145

Clark, Lewis J., secretary-treasurer, United Packinghouse Workers
of America, CIO, letter to Senator Tobey__

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Table, Goverment fiscal commitments under General Housing Act__

Ketchum, Omar B., director, legislative service, Veterans of Foreign
Wars, letter to Senator Tobey----

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HOUSING

WEDNESDAY, MARCH 31, 1948

UNITED STATES SENATE,

COMMITTEE ON BANKING AND CURRENCY,

Washington, D. C. The committee met at 10 a. m., pursuant to call, in room 301 of the Senate Office Building, Senator Charles W. Tobey (chairman of the committee) presiding.

Present: Senators Tobey, Buck, Flanders, Cain, McCarthy, Maybank, Fulbright, and Robertson of Virginia.

(The Flanders amendments to S. 866; a study of the Flanders amendments; S. 866; and the report of the committee to accompany S. 866, follow :)

[S. 866, 80th Cong., 2d sess.]

AMENDMENTS Intended to be proposed by Mr. Flanders to the bill (S. 866) to establish a national housing objective and the policy to be followed in the attainment thereof, to facilitate sustained progress in the attainment of such objective and to provide for the coordinated execution of such policy through a National Housing Commission, and for other purposes, viz: As follows: 1. By striking out in the title the words "and to provide for the coordinated execution of such policy through a National Housing Commission";

2. By striking out the words "National Housing Commission Act" on page 1, in lines 3 and 4, and inserting in lieu thereof the words "General Housing Act"; 3. By striking out the words "Title I" on page 1, in line 5, and by striking out the figures "101" on page 1, in line 7, and inserting in lieu thereof the figure "2"; 4. By striking out the last sentence of section 101 on page 2, in lines 23 through 25, and on page 3, in lines 1 through 4; and

5. By striking out all of titles II through XIII on pages 3 through 112 and inserting in lieu thereof the following:

"TITLE I-FHA TITLE VI AND TRANSITIONAL PERIOD AMENDMENTS "SEC. 101. The National Housing Act, as amended, is hereby amended as follows:

""TITLE VI AMENDMENTS

"(a) Section 603 (a) is amended

"(1) by striking out "$4,450,000,000" and inserting in lieu thereof "$5,950,000,000";

"(2) by striking out "$4,950,000,000" and inserting in lieu thereof "$6,950,000,000";

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“(3) by striking out "March 31, 1948" in each place where it appears and inserting in lieu thereof "March 31, 1949";

"(4) by striking out the period and adding a comma and the following: "and that, of the total authorization provided in this subsection, not less than $800,000,000 shall be made available for the insurance of mortgages on rental properties under section 608, and not less than $200,000,000 shall be made available for the insurance of mortgages on multifamily dwellings under section 603, on which commitments for insurance are issued subsequent to the effective date of the "General Housing Act."

"(b) Section 603 (b) (2) is amended by striking the following: "necessary current cost (including the land and such initial service charges and such appraisal, inspection, and other fees as the Administrator shall approve)" and inserting in lieu thereof "value (as of the date the mortgage is accepted for insurance)".

"(c) Section 604 (b) is amended by striking "necessary current cost" and inserting in lieu thereof "value".

"(d) Section 608 (b) (3) (B) is amended by striking out the semicolon and the word "and" at the end of the first proviso and inserting in lieu thereof a colon and the following: "And provided further, That the principal obligation of the mortgage shall not, in any event, exceed 90 per centum of the Administrator's estimate of the replacement cost of the property or project on the basis of the costs prevailing on December 31, 1947, for properties or projects of comparable quality in the locality where such property or project is to be located; and”.

"(e) Section 608 (b) (3) (C) is amended by striking out "$1,500 per room" and inserting in lieu thereof "$8,100 per family unit";

"(f) Section 608 (b) (3) (C) is amended by striking out the colon and the proviso and inserting in lieu thereof a period.

"(g) Title VI is amended by adding after section 610 the following new

section:

"""SEC. 611. (a) In addition to mortgages insured under other sections of this title, and in order to assist and encourage the application of cost-reduction techniques through large-scale modernized site construction of housing and the erection of houses produced by modern industrial processes, the Administrator is authorized to insure mortgages (including advances on such mortgages during construction) which are eligible for insurance as hereinafter provided.

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""(b) To be eligible for insurance under this section, a mortgage shall—

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"""(1) have been made to and be held by a mortgagee approved by the Administrator as responsible and able to service the mortgage properly; ""(2) cover property, held by a mortgagor approved by the Administrator, upon which there is to be constructed or erected dwelling units for not less than twenty-five families consisting of a group of single-family or twofamily dwellings approved by the Administrator for mortgage insurance prior to the beginning of construction: Provided, That during the course of construction there may be located upon the mortgaged property a plant for the fabrication or storage of such dwellings or sections or parts thereof, and the Administrator may consent to the removal or release of such plant from the lien of the mortgage upon such terms and conditions as he may approve; “(3) involve a principal obligation in an amount—

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"(A) not to exceed 90 per centum of the amount which the Administrator estimates will be the value of the completed property or project, exclusive of any plant of the character described in paragraph (2) of this subsection located thereon, and

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"""(B) not to exceed a sum computed on the individual dwellings comprising the total project as follows:

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""(i) $8,100 or 90 per centum of the valuation, whichever is less, with respect to each single-family dwelling, and

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"(ii) $12,500 or 90 per centum of the valuation, whichever is less, with respect to each two-family dwelling.

"""With respect to the insurance of advances during construction, the Administrator is authorized to approve advances by the mortgagee to cover the cost of materials delivered upon the mortgaged property and labor performed in the fabrication or erection thereof.

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"""(4) provide for complete amortization by periodic payments within such term as the Administrator shall prescribe and shall bear interest (exclusive of premium charges for insurance) at not to exceed 4 per centum per annum on the amount of the principal obligation outstanding at any time. The Administrator may consent to the release of a part or parts of the mortgaged property from the lien of the mortgage upon such terms and conditions as he may prescribe and the mortgage may provide for such release.

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"""(c) Preference or priority of opportunity in the occupancy of the mortgaged property for veterans of World War II and their immediate families and for hardship cases as defined by the Administrator shall be provided under such regulations and procedures as may be prescribed by the Administrator.

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""(d) The provisions of subsections (c), (d), (e), and (f) of section 608 shall be applicable to mortgages insured under this section."

66 "TITLE II AMENDMENTS

"(h) Section 203 (b) (2) (B) is amended by striking out "$5,400" and inserting in lieu thereof "$6,300”.

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"(i) Section 203 (b) (2) (C) is amended

"(1) by striking out "$8,600" and inserting in lieu thereof “$9,500”;

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"(2) by striking out "$6,000" in each place where it appears and inserting in lieu thereof "$7,000";

"(3) by striking out "$10,000" and inserting in lieu thereof "$11,000". "(j) Section 203 (b) is amended by striking out in paragraph numbered (3) the following: "of the character described in paragraph (2) (B) of this subsection" and inserting in lieu thereof the following: "on property approved for insurance prior to the beginning of construction".

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"(1) By striking out the period at the end of paragraph (2) (C), inserting in lieu thereof a comma and the word "or", and adding the following new paragraph:

"""(D) not to exceed $6,000 and not to exceed 90 per centum of the appraised value, as of the date the mortgage is accepted for insurance (or 95 per centum if, in the determination of the Administrator, insurance of mortgages involving a principal obligation in such amount under this paragraph would not reasonably be expected to contribute to substantial increases in costs and prices of housing facilities for families of moderate income), of a property, urban, suburban, or rural, upon which there is located a dwelling designed principally for a single-family residence the construction of which is begun after March 31, 1949, and which is approved for mortgage insurance prior to the beginning of construction: Provided, That the Administrator may by regulation provide provide that the principal obligation of any mortgage eligible for insurance under this paragraph shall be fixed at a lesser amount than $6,000 where he finds that for any section of the country or at any time a lower-cost dwelling for families of lower income is feasible without sacrifice of sound standards of construction, design, and livability: And provided further, That with respect to mortgages insured under this paragraph the mortgagor shall be the owner and occupant of the property at the time of the insurance and shall have paid on account of the property at least 10 per centum (or 5 per centum, in the case of a 95 per centum mortgage insured pursuant to this paragraph (D)) of the appraised value in cash or its equivalent, or shall be the builder constructing the dwelling in which case the principal obligation shall not exceed 85 per centum of the appraised value of the property."

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"(2) By striking out the period at the end of paragraph numbered (3), and adding a comma and the following: "or not to exceed thirty years in the case of mortgage insured under paragraph (2) (D) of this subsection." (3) By striking out the period at the end of paragraph numbered (5), and adding a comma and the following: "or not to exceed 4 per centum per annum in the case of a mortgage insured under paragraph (2) (D) of this subsection."

(1) (1) Section 203 (c) is amended (1) by striking out in the last sentence the words "section or section 210" and inserting in lieu thereof the word "title"; and (2) by striking out in said sentence (i) the words "under this section", and (ii) the following: “and a mortgage on the same property is accepted for insurance at the time of such payment,”.

"(2) Section 603 (c) is amended by striking out in the next to the last sentence the following: "and a mortgage on the same property is accepted for insurance at the time of such payment,".

"(m) Section 204 (a) is amended

"(1) by striking out, in the last sentence, the following: "prior to July 1, 1944,";

"(2) by inserting between the first and second provisos in the last sentence the following: "And provided further, That with respect to mortgages which are accepted for insurance under section 203 (b) (2) (D) or under the second proviso of section 207 (c) (2) of this Act, there may be included in the debentures issued by the Administrator on account of the cost of foreclosure (or of acquiring the property by other means) actually paid by the mortgagee and approved by the Administrator an amount, not in excess of two-thirds of such cost or $75 whichever is the greater,".

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