question to officials in charge of examining the credit information of FHA home applicants, and I verfied the answers with the Director of the Chicago Area HUD office. These officials conceded that barely half the applicants could qualify for the minimum 3 percent downpayment, and that virtually none had sufficient assets to make a downpayment exceeding 20 percent of the value. Although the Area Director did not have first hand information of the precise statistics, one official contended that he would be surprised if more than one applicant a year, among the tens of thousands who apply for such loans in the Northern Illinois District, had sufficient assets to raise a downpayment exceeding 20 percent of the value. (It would take about 10 hours for a GAO examiner to verify the credit data for 1975).

Conclusions

I interpret these data to mean that, in the Chicago Metropolitan area, with 7 million people, perhaps one qualified applicant per year is denied a conventional loan and is obliged to turn to FHA for a mortgage. How do we reconcile this with the finding of Congress that some conventional lenders do not make loans in cases where buyers are creditworthy and the properties are sound? FHA is insuring a massive number of buyers with no more downpayment than the equivalent of a security rent deposit and with insufficient assets to maintain their homes. No one has ever asked why, if there indeed are creditworthy buyers being turned down by conventional lenders, they do not avail themselves of an' FHA-insured loan. .There is a refusal to face the fact that a permissive FHA policy is the only means presently available of clearing