made prior to default are based on a 4-month claim experience, January, May, August, and November of 1948, covering loans insured by FHA under the July 1944 and the July 1947 reserves of Title I. Chart XVII includes only the number of claims paid during the same period. Of the total number of claims paid during the period covered, 11.9 percent represented loans on which no payments had been made and 43.3 percent represented loans on which five or less payments had been made. For both number and dollar amount of claims paid the 6-10 payment group appears to represent the heaviest concentration of claims paid, 23.3 percent of number and 22.9 percent of amount.

An average amount of $368 was paid by FHA on the 10.765 claims shown in Table 59. However, for those claims on which no payments were made prior to default an average amount of $538 was paid by FHA.

Section III

ACCOUNTS AND FINANCE

Gross Income and Operating Expenses, 1948

Gross income for the year 1948 under all insurance operations totaled $65,690,760 and was derived from fees, insurance premiums, and income on investments. Expenses of administering the agency during the year 1948 totaled $21,824,605. This left $43,866,155 to be added to the various insurance funds.

Cumulative Gross Income and Operating Expenses, by Years

From the establishment of FHA in 1934 through 1948, gross income totaled $351,110,297, while operating expenses totaled $182,335,841. Gross income and operating expenses for each calendar year are detailed below:

Income and operating expenses through Dec. 31, 1948

NOTE.-Operating expenses include charges for depreciation on furniture and equipment.

The above income was derived from the following insurance operations: Title I (property improvement loans), $48,722,986; Title II (small-home mortgages), $208,957,323: Title II (rental housing projects), $6,799,181; and Title VI (war and veterans' emergency housing), $86,630,807. An analysis of gross income by calendar year under each insurance fund is given in Statement 1.

STATEMENT 1.-Income from fees, insurance premiums, and investments under Titles I, II, and VI by calendar years, 1934-1948

STATEMENT 1.--Income from fees, insurance premiums, and investments under Titles I, II, and VI by calendar years, 1934-1948-Continued

Minus figures caused by adjustments relating to prior years.

In addition, cash recoveries and other income in the amount of $15,441,071 have been collected on claims paid on insurance granted on and after July 1, 1939, and credited to the Title I Insurance Fund.

Administrative Expenses

The current fiscal year is the ninth in which the Federal Housing Administration has met all expenses of administration by allocation from its insurance funds.

The amount which may be used for administrative expenses during a fiscal year is fixed by Congress. Under the terms of the National Housing Act the amount expended for the administration of each title and section is charged against the corresponding insurance fund. Administrative expenses during the fiscal year ended June 30, 1948, covering operating costs, as well as furniture and equipment purchased, have been charged against the titles and sections of the act as follows:

Administrative expenses, fiscal year 1948 (July 1, 1947 to June 30, 1948)

Government Corporation Control Act

Section 501 (b) of the Housing Act of 1948 (Public Law 901, 80th Congress) made the Federal Housing Administration subject to the Government Corporation Control Act (Public Law 248, 79th Congress) and provided that the audit, required under Section 105 of that act to be made by the General Accounting Office in accordance with principles and procedures applicable to corporate transactions, shall begin with the fiscal year commencing July 1, 1948.

The changes in fiscal and accounting procedures which were necessary in order to comply with the regulations under the Government Corporation Control Act have been effected.

Capital and Operating Reserves of Combined FHA Funds

During the year it was administratively determined that cperating reserves to meet possible future insurance losses, expenses, and other charges should be established, and allocations were made for this purpose from the surplus of the insurance funds. These reserves amounted to $151,475,127 as of December 31, 1948, of which the sum of $28,652,006 was allocated from income received during 1948.

Figures in the financial statements as of December 31, 1947 have been revised to reflect these reserves and to place them on a comparable basis with those of December 31, 1948.

The combined capital and operating reserves of all FHA funds on December 31, 1948 amounted to $200,369,176, and consisted of $48,894,049 capital and $151,475,127 operating reserves, as shown in Statement 2.

STATEMENT 2.-Comparative statement of financial condition, all FHA funds combined, as of Dec. 31, 1947 and Dec. 31, 1948