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OFFICE OF THE ADMINISTRATOR-Continued

Public enterprise funds-Continued

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URBAN MASS TRANSPORTATION FUND-Continued Analysis of Government Equity and Undrawn Authorizations (in thousands of dollars)

10

70

Total Government equity...

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1 The changes in these items are reflected on the program and financing schedule.

93

94

1

Program by activities:

Capital outlay:

Housing for the elderly or handicapped loans. Administrative reservations, start of year. Administrative reservations, end of year.. Change in selected resources

Total, capital outlay obligation............. Operating costs, funded: Administrative expenses....

Total obligations.

Revenue...

21.98 Unobligated balance available, start of year... 24.98 Unobligated balance available, end of year.......

40

New obligational authority (appropriation).

1964 actual

71

Obligations affecting expenditures.... 72.98 Obligated balance, start of year.. 74.98 Obligated balance, end of year...

90

Expenditures...

Cash transactions: Gross expenditures.. Applicable receipts..

Relation of obligations to expenditures:
Total obligations...

Receipts and other offsets (items 11–17).

1965 estimate

Financing:

Receipts and reimbursements from: Non-Federal sources: Loan repayments.......

1966 estimate

122,377 242,377 -50,719 -50,719

71,658 191,658

43,358 108,058
2,500 4,950 99.0
71,519 117,019
5,000 12,350

25.3 Payment to "Salaries and expenses," Office of the Administrator..

Object Classification (in thousands of dollars)

1964 actual

HOUSING FOR THE ELDERLY OR HANDICAPPED FUND

Program and Financing (in thousands of dollars)

195

1966

1965 estimate estimate

300

33.0 Investments and loans..

41.0

Grants, subsidies, and contributions.

Total costs...
94.0 Change in selected resources.
Adjustment in selected resources (grant
obligations).

Total obligations..

Administrative reservations

1964 actual

49.296 79,692 -81,855

[HOUSING FOR THE ELDERLY]

[HOUSING FOR THE ELDERLY FUND]

[For the revolving fund established pursuant to section 202 of the Housing Act of 1959, as amended (12 U.S.C. 1701q et seq.), $25,000,000]. (Independent Offices Appropriation Act, 1965.)

47,133

1965 estimate

65,000 81,855 -77,227

69,628

1966 estimate

77,227 -11,584

65,643

4,995

5,190

1 Balances of selected resources are identified on the statement of financial condition.

16,500 48,400

45,858

67,150

-17,058

-659
4,531 45,300

550 2,500 7,550 13,700 40,300

1964 actual

Costs and obligations

115,550

1965 1966 estimate estimate

29,199 47,475 52,666

17,934 22,153 12,977 47,133 69,628 65.643

1,000

885 48,018

950 70,578

66,643

30,076

-984

-527

-19 -427 -1,273 -2,732 -4,680 -90.952 -80,097 -133,371 133,371 90,952 29,516

100,000 25,000

48,018 70,578 66,643 -1,292 -5,207 -3,159

46,726 67,419 61,436 63.076 85,130 45,442 -63,076

--85,130 -97,787

29,092

45,365

48,779

48,422 -3,057

53,663 -4,884

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11

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The Housing Act of 1959, as amended (12 U.S.C. 17010 et seq.), authorizes direct long-term loans at low interest rates to assist in financing new construction and rehabilitation, alteration, conversion, or improvement of existing structures to provide rental housing and related facilities for the elderly or the handicapped. Loans may be made to private nonprofit corporate sponsors, cooperatives, and those public bodies and agencies not receiving Federal financial assistance exclusively for public housing. The program is intended to provide housing for those elderly or handicapped persons and families whose incomes are too high for public housing but not sufficient to meet the cost of private rental housing, and to improve the ability of the handicapped to live more independently.

Loans may be made for the total development cost and may run for as long as 50 years. Interest rates are based on a statutory formula and are limited to the higher of either 2.75% or 0.25% above the average rate on all interest bearing obligations forming part of the Federal debt. The 1965 rate is 3.75%.

Budget program. -Net loan reservations are estimated at $65 million for the current year. Legislative proposals to provide more effective methods of meeting the needs for housing of the elderly or handicapped in the middleand lower-middle-income segments of the population will make new loan reservations under this direct-loan program unnecessary in the budget year.

Financing.-The program is financed by a revolving fund which is initially supported by direct appropriations. Appropriations of $350 million have been authorized, of which $275 million has been appropriated. No further appropriation is proposed for this account. The following table shows the relationship of this program to available funds in thousands of dollars):

100,000 25,000 -1,140 -1,160

150,000

250,000

Retained earnings or deficit....

275,000

152

275,000

3,307

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248,840

275,152

278,307

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Operating results.--Estimated retained earnings at the close of the budget year are $3.3 million and in addition the cumulative allowance for losses is $1.5 million. This favorable result stems largely from the fact that the program has been financed by appropriations rather than borrowings from the Treasury, which require payment of interest on capital.

If interest income continues to cover operating costs and prospective program losses, dividends will be paid to the Treasury in lieu of interest on capital.

Not to exceed ($915,000] $1,000,000 of funds in the revolving fund established pursuant to section 202 of the Housing Act of 1959, as amended (12 U.S.C. 1701q et seq.), shall be available for administrative and nonadministrative expenses, but this amount shall be exclusive of payment for services and facilities of the Federal National Mortgage Association, the Federal Reserve banks or any member thereof, the Federal home-loan banks and any insured bank within the meaning of the Federal Deposit Insurance Corporation Act, as amended (12 U.S.C. 1811-1831). (Independent Offices Appropriation Act, 1965.)

Program and Financing (in thousands of dollars)

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APPENDIX TO THE BUDGET FOR FISCAL YEAR 1966

23.5 Payments to "Salaries and expenses" Office of the Administrator..

93.0 Administrative expenses included in fund as a whole...

Total obligations.........-

Identification code 25-05-4111-0-3-551

Financing:

21.47 Unobligated balance available, start of year: Authorization to spend public debt receipts.

90

24.47 Unobligated balance available, end of year: Authorization to spend public debt receipts.-

New obligational authority.

1964 actual

INVESTMENT IN FLOOD INDEMNITY OPERATIONS

Program and Financing (in thousands of dollars)

Relation of obligations to expenditures: Expenditures...

885

-885

1964 actual

1965 1966 estimate estimate

950 1,000 -950 -1,000

500,000

1965 1966 estimate estimate

-500,000-500,000-500,000

500,000 500,000

The Administrator is authorized to borrow up to $500 million, plus such additional amounts as the President shall approve, from the Secretary of the Treasury in the furtherance of the programs enacted in the Federal Flood Insurance Act of 1956. No borrowings have been made and none are proposed.

FEDERAL NATIONAL MORTGAGE ASSOCIATION

The Association, operating under the Federal National Mortgage Association Charter Act (12 U.S.C. 1716, et seq.) purchases, manages, and sells residential mortgages are by Housing

or guaranteed by the Veterans Administration; makes short-term bank-type loans that are secured by those types of mortgages; manages and sells certain noninsured or nonguaranteed mortgages that have been or may be acquired from authorized sources; and sells to private investors beneficial interests, or participations, in its own U.S. Treasury-financed mortgages and those of other government agencies or instrumentalities. The Association's functions are carried out through three programs for which separate accountability is required by statute.

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The secondary market operations of the Federal National Mortgage Association were authorized by the 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 mortgage financing. This assistance to the secondary market for home mortgages is provided by the purchase and sale of mortgages (including participations therein) insured by the Federal Housing Administration or guaranteed by the Veterans Administration on or after August 2, 1954, that are of such quality, type, and class as meet, generally, the purchase standards imposed by private institutional mortgage investors. Purchases and sales may be made only at such prices and on such terms

as will reasonably prevent excessive use of the Associa- must be submitted to the Congress as promptly as praction's facilities and will permit the Association to operate ticable after all the Treasury

ticable after all the Treasury-held preferred stock has been on a fully self-supporting basis.

retired. Meanwhile, the present interim program, fiThe Association, under its secondary market opera- nanced by private as well as by Government investment tions, was authorized by the National Housing Act, as funds, is treated in the budget as a trust enterprise and amended on or after June 30, 1961, to make short-term the financial statements related thereto appear in part 2 loans secured by FHA-insured or VA-guaranteed mort- of this document. gages.

Such loans are intended to further home construc- The Association is authorized to finance its secondary tion by providing a degree of liquidity for mortgage market operations through borrowings from the public on investments and, generally, to provide supplementary the security of non-guaranteed debentures and shortassistance to the general secondary market.

term discount notes. Such obligations may not exceed The secondary market operations were initially capi- the lesser of: (a) ten times the sum of the capital and talized by the issuance of $92.8 million of Federal National surplus applicable to these operations, or (b) the sum of Mortgage Association preferred stock to the Secretary of assets, free from any liens or encumbrances, of cash, the Treasury. Subsequently, additional preferred stock mortgages, or other security holdings and obligations of subscriptions by the Secretary of the Treasury amounting the United States or guaranteed thereby, or obligations, to $50 million (Public Law 85-10, approved March 27, participations, or other instruments which are lawful 1957) and $65 million (Public Law 85-104, approved July investments for fiduciary, trust, or public funds. The 12, 1957) were authorized. Authorized preferred stock | Secretary of the Treasury, so long as the preferred stock has actually been issued only as needed to support the is outstanding, is authorized to purchase such obligations Association's borrowings. At the end of 1964, authorized in an amount not exceeding $2.25 billion outstanding at unissued stock amounted to $49 million. These estimates

any one time. contemplate that no additional preferred stock will be

Budget program.The secondary market operations, issued in either 1965 or 1966.

established in 1955, are now fully recognized by the home The authorizing statute contemplates that the secondary mortgage market and have reached significant levels, market operations will ultimately be completely owned These estimates assume that FNMA's secondary market and financed by private participants. To that end, the facilities will continue to be used by lenders to bridge a preferred stock will be retired as rapidly as feasible and, part of the gap between their need for and the availain the meantime, the Association will pay dividends on bility of private housing funds. the utilized portion to the Treasury at rates which will It is assumed that FNMA's facilities will be used in not be less than those determined by the Secretary of the

increasing amounts in 1965 and 1966. It is estimated Treasury. These estimates contemplate that no pre

that FNMA purchases will increase by $240 million over ferred stock will be retired in either 1965 or 1966. How

1965 to $500 million in 1966. Mortgage sales which ever, under arrangements entered into between the

amounted to $113 million in 1964 I are now estimated at Secretary of the Treasury and the Federal National

$ 100 million in 1965 and $195 million in 1966. The Mortgage Association, FŇMA will purchase from the

excess of mortgage purchases over sales and other liquidaSecretary that portion of the Association's outstanding

tions in 1965 and 1966 will result in a net increase of preferred stock which is not deemed to be required in the

portfolio during those years as compared with a net definancing of the secondary market operations and will

crease in 1964. hold such stock as FNMA treasury stock, subject to subsequent repurchase by the Secretary as may be

In addition to the mortgages which it purchases in the required for these operations. Under these arrangements,

regular manner, the Association also acquires, from the $70.8 million of preferred stock was purchased from the

Federal Housing Administration, Commissioner-owned Secretary during 1964 and $38 million in 1965. No such

mortgages in exchange at par (100) for FNMA-held FHA purchases are contemplated in 1966.

debentures. The volume of mortgages so acquired was Private capitalization for these operations is accumu

$126.5 million in 1964, and is estimated to amount to

$40 million in 1965 and $80 million in 1966, lated pursuant to a statutory requirement which provides that sellers of mortgages to the Association must make

Financing.–Funds required to finance the secondary payments into capital incident to subscriptions for com- market operations during 1965 and 1966 will be obtained mon stock in an amount equal to not more than 2% nor

from (1) proceeds from the sale of mortgages to the less than 1% of the unpaid principal amounts of the

investing public, (2) capital contributions by program mortgages involved, as determined from time to time by participants, (3) sales of debentures and short-term disthe Association, taking into consideration conditions in

count notes to private investors, (4) repayments and the mortgage market and the general economy. Bor

prepayments of mortgage principal, and (5) earnings. rowers from the Association are currently required to make

Such interim Treasury borrowings as will be necessary capital contributions in an amount equal to not more

during 1965 and 1966 will be repaid during each of those than one-half of 1% of the amounts borrowed.

years. Recommendations for legislation to transfer ownership Operating results.-Operations are reflected in budget of the Association to private owners of the capital stock expenditures only to the extent of Treasury financing.

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Program by activities:
Capital outlay, funded:
Urban renewal rehabilitation loans.

1,000 1,000
Urban renewal housing-

500 23,462

1,000

106,000 154,000 24,737 Moderate income housing-below-market-interest rate.

29,000

60.000

132,657 310,000 485,000 51,110 70.000 205,000 Housing for the elderly -

60 7,000 20,000 1,541 7,500 Cooperative housing -

7,000

5,000 5,000 Guam, disaster, and experimental..

2,000 358

3,000 4,000 5,000

50 Armed service housing..

1,000 1,000

8,718 10,000 2,000 1,845 3,000 1.000 Restricted Indian lands

652 1,000 1,000

651

1,000 Undistributed purchase discounts.

1,000 -143 -300

- 700 Total capital outlay, funded.

165,907 444,000 673,000 79,791 113,700 278,300 Change in selected resources

-46,931 Adjustment in selected resources (loan obligations)

290,000 340,000

133,047 40,300 54,700 Total capital outlay obligations..

165,907 444,000 673,000 165,907 444,000 673,000 Operating costs, funded: Mortgage servicing fees..

4,692 4,200 4,000 Interest on borrowings from Treasury.

53,972 Other expense.

41,500 30,000 3,973 3,300

3,700 Total operating costs, funded.

62,636 49,000 37,700 Change in selected resources

392 800 10 Total obligations.

228,543 493,392 711,500 Financing:

Receipts and reimbursements from: 11 Administrative budget accounts: Mortgage loan repayments and other credits.

-62,356 - 42.000 - 24,000 Interest on mortgage loans..

-13,500 Non-Federal sources:

-6.000 14 Mortgage loan repayments and other credits..

-43,342 -42,670 - 35,700 Mortgage sales..

--85,203 -349,800 -24,900 Sale of participation certificates.

-200,000 -350,000 Interest on mortgage loans..

-59,946 --51,300 -41,025 Commitment fees..

- 1,051 -4,200

-6,000 Purchasing and marketing fees and other revenues.

-658 -900

-1,075 17 Recovery of prior year obligations..

-133,047 --40,300 -54,700 21.47 Unobligated balance, start of year: Authorization to spend public debt receipts 22:42 Unobligated balance transferred from “Management and liquidating functions fund” (75 Stat. 149): Authorization to

-1,637,707 -1,837,310 -2,000,310 spend public debt receipts

-146,028 -147.222 24.47 Unobligated balance available, end of year: Authorization to spend public debt receipts.

1,837,310 2,000,310

1,450,210 25.47 Unobligated balance lapsing: Authorization to spend public debt receipts..

39,271 184,584

328,500 26.47 Unobligated balance rescinded: Authorization to spend public debt receipts.

77,715 43,415

47,500 New obligational authority

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228,543 — 399, 103

ment

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Relation of obligations to expenditures: 10 Total obligations70 Receipts and other offsets (items 11-17). 71 Obligations affecting expenditures.

Obligated balance, start of year: 72.47 Authorization to spend public debt receipts.. 72.98 Fund balance.

Obligated balance, end of year: 74.47 Authorization to spend public debt receipts... 74.98 Fund balance...

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90

Expenditures..

-141,925

-515,080 -- 153,000

Bude

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93 94

148, 139 -290,064

WP

1 Balances of selected resources

are identified on the statement of financial condition.

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