Section 3

ACCOUNTS AND FINANCE

The figures for 1952 and 1953 in the financial statements of this report are on an accrual basis and are shown for the fiscal year rather than the calendar year. Section 2 of the report, Statistics of Insuring Operations, is on a calendar-year basis to coincide with the housing year. In order to provide comparable figures, those statements in the Accounts and Finance section which are coordinated with the statistical tables shown in Section 2 have been prepared on a calendar-year basis.

Before July 1, 1939, there was no provision in the National Housing Act for collecting premiums on insurance granted under Title I; therefore, moneys for salaries and expenses and for the payment of insurance claims were advanced by the Federal Government, and recoveries of claims paid were required to be deposited to the general fund of the Treasury.

An amendment of June 3, 1939, to the National Housing Act authorized the collection of premiums, and an amendment of June 28, 1941, authorized the retention of recoveries on insurance granted on and after July 1, 1939. Therefore, only the results of operations with respect to insurance granted on and after July 1, 1939, are included in the June 30, 1953, combined statement of financial condition (Statement 1) and the combined statement of income and expense (Statement 2). Transactions on insurance granted before July 1, 1939, have been shown separately in a statement of accountability for funds advanced (Statement 6).

Combined Funds

Gross Income and Operating Expenses, Fiscal Year 1953

Gross income of combined FHA funds for fiscal year 1953 under all insurance operations totaled $115,288,193 and was derived from fees, insurance premiums, and income on investments. Operating expenses of the FHA during the fiscal year 1953 totaled $31,273,988.

Cumulative Gross Income and Operating Expenses, by Fiscal Years

From the establishment of FHA in 1934 through June 30, 1953, gross income totaled $757,547,246, while operating expenses totaled

$314,631,112. Gross income and operating expenses for each fiscal year are detailed below:

NOTE. Operating expenses include profit or loss on sale and charges for depreciation of furniture and équipment.

The above income was derived from the following insurance operations: Title I Insurance Fund (property improvement loans), $96,740,139; Title I Housing Insurance Fund (home mortgages), $1,215,524; Title II Mutual Mortgage Insurance Fund (home mortgages), $420,353,197; Title II Housing Insurance Fund (rental housing projects), $13,137,092; Title VI War Housing Insurance Fund (war and veterans' emergency housing), $212,807,296; Title VII Housing Investment Insurance Fund (yield insurance), $50,146; Title VIII Military Housing Insurance Fund (rental housing projects), $10,313,031; and Title IX National Defense Housing Insurance Fund (home mortgages and rental housing projects), $2,930,821.

Salaries and Expenses

The current fiscal year is the fourteenth in which the Federal Housing Administration has met all expenditures for salaries and expenses by allocation from its insurance funds.

The amount that may be expended for salaries and expenses during a fiscal year is fixed by Congress. Under the terms of the National Housing Act, expenditures for the operations of each title and section are charged against the corresponding insurance fund.

The amounts charged against the various titles and sections of the Act during the fiscal year 1953 to cover operating costs and the purchase of furniture and equipment are as follows:

Salaries and expenses, fiscal year 1953 (July 1, 1952, to June 30, 1953)

Capital and Statutory Reserves of Combined FHA Funds

The combined capital and statutory reserves of all FHA funds on June 30, 1953 amounted to $306,566,011, and consisted of $158,297,813 capital ($12,000,000 investment of the United States Government and $146,297,813 earned surplus), and $148,268,198 statutory reserves as shown in Statement 1.

STATEMENT 1.—Comparative statement of financial condition, all FHA funds combined, as of June 30, 1952 and June 30, 1953

STATEMENT 1.-Comparative statement of financial condition, all FHA funds combined, as of June 30, 1952 and June 30, 1953—Continued

The paid-in capital of $12,000,000 and the earned surplus of $146,297,813 are available for future contingent losses and related expenses. The statutory reserves of $148,268,198 represent the net balances of the group accounts under the Mutual Mortgage Insurance Fund, and are earmarked for participation payments to mortgagors under the mutual provision of Title II of the National Housing Act after providing for contingent insurance losses, expenses, and related charges.

The capital and statutory reserves of each fund are given below:

In addition, the various insurance funds had collected or accrued $319,641 unearned insurance fees and $69,253,730 unearned insurance premiums, as shown below. Since the accounts are on an accrual basis, these fees and premiums have been deferred and will be allocated to income each month as they are earned.

Combined Income, Expenses, and Losses, All FHA Funds

Total income from all sources during the fiscal year 1953 amounted to $117,966,524, while total expenses and insurance losses amounted to $37,692,874, leaving net income, before adjustment of valuation and statutory reserves, of $80,273,650. Increases in valuation reserves for the year amounted to $8,613,072, leaving $71,660,578 net income for the period. Cumulative income from June 30, 1934, through June 30, 1953, was $768,372,312 and cumulative expenses were $358,223,373, leaving net income of $410,148,939 before adjustment of valuation

reserves.