TABLE 11-77

Amount of mortgage by total requirements for purchase transactions, 1-family homes, Sec. 203, 1955

Amount of mortgage-percentage distributions

AMOUNT OF MORTGAGE BY TOTAL REQUIREMENTS.-FHA home buyers in 1955 generally obtained mortgage financing in amounts at or near the maximums available under the law. This is evident from the distribution pattern of the mortgage amounts in each total requirements group shown in Table 77.

Influenced primarily by the applicable maximum loan-to-value ratios, the median mortgage amounts increased as the amounts of total requirements rose. The rate of increase, however, tended to slacken in the higher requirement groups, especially those amounting to $12,000 or more. This stemmed from a more widespread distribution of the mortgage amounts as require ments increased, reflecting the fact that buyers of the higher-priced homes were frequently able to make larger downpayments and hence required relatively smaller amounts of mortgage financing. Another factor was the higher mortgage amounts allowed on the higher-cost properties in Alaska, Hawaii, and Guam, tending to expand the mortgage amount distributions into the higher-amount categories.

Median mortgage amounts for new-home transactions exceeded those of existing homes in nearly all of the corresponding total requirements groups. This was in line with the higher loan-to-value ratios permitted on new construction. The exception was the group of $20,000 or more, where the comparatively higher property values in the existing-home transactions warranted higher mortgage amounts.

Technical Notes

SIZE OF SAMPLE.-Data presented in this section of the report are based on 33,200 newhome and 58,100 existing-home cases. These cases represent a 40-percent sample of the cases insured under Section 203 (b) during the first 10 months of 1955, selected on the basis of case number in order to assure random distribution.

DEFINITION OF TERMS.-Throughout this report the use of technical terms is in keeping with the following definitions established for use in the FHA underwriting system in connection with the appraisal of properties and the evaluation of mortgage risk: Calculated Area is the area of spaces in the main building above basement or founds. tions, measured at the outside surfaces of exterior walls. Garage space, finished spaces in attics, and areas with ceiling heights of less than 5 feet are excluded.

Market Price of Site is the FHA-estimated price for an equivalent site including street improvements or utilities, rough grading, terracing, and retaining walls, if any. Mortgagor's Effective Income is the FHA-estimated amount of the mortgagor's earning capacity (before deductions for Federal income taxes) that is likely to prevail during approximately the first third of the mortgage term.

Number of Rooms excludes bathrooms, toilet compartments, closets, halls, storage and similar spaces.

Property Value is the FHA-estimated price that typical buyers would be warranted in paying for the property (including the house, all other physical improvements, and land) for long-term use or investment, assuming the buyers to be well informed and acting intelligently, voluntarily, and without necessity.

Prospective Monthly Housing Expense includes total monthly mortgage payment for the first year and the FHA-estimated cost of monthly maintenance and repair, and heating and utility expenses.

Rental Value is estimated by FHA on the basis of typical year-round tenant occupancy, excluding any premium obtainable because of local housing shortages or newness of the individual property.

Replacement Cost of Property is the FHA-estimated cost of the building (in new condition) and other physical improvements, market price of site, and miscellaneous allowable costs for the typical owner.

Sale Price is the price stated in the sale agreement, adjusted to exclude any portion of closing costs, prepayable expenses, or costs of non-real estate items which the agreement indicates will be assumed by the seller.

Taxes and Assessments include property taxes and any continuing non-prepayable special assessments, as estimated by FHA.

Total Monthly Mortgage Payment includes monthly payment for the first year to principal, interest, FHA insurance premium, hazard insurance premium, taxes and special assessments, and miscellaneous items including ground rent, if any.

Total Requirements include the total amount, including mortgage funds, necessary to close the transaction less any prepayable expenses such as unaccrued taxes, insurance premiums, and similar items.

CHARACTERISTICS OF MULTIFAMILY HOUSING MORTGAGE TRANSACTIONS

This discussion of multifamily housing characteristics is based on those projects for which the FHA issued commitments during 1955 for the insurance of mortgages secured by newly constructed rental or cooperative housing. During the year there were 85 such commitments issued, involving a total of 8,900 dwelling units. Of these, 6,900 units were in rental projects-3,700 processed under Section 207, 800 under Section 220 urban renewal, and 2,500 under Section 803, including 1,700 units in Wherry housing projects and 800 units in Capehart housing projects. Some 2,000 units were covered by commitments issued under the Section 213 cooperative housing program-1,500 units in management-type projects and 500 in sales-type projects. Not included in this analysis are 4 commitments issued under Section 207 pursuant to Section 223 to refinance the sale of certain public housing (600 units) and 1 commitment issued to refinance a Section 608 project mortgage. No commitment activity was reported under either the Section 221 relocation housing program or the Section 908 defense housing program.

Trends of Typical Multifamily Housing Transactions

The typical rental housing project approved for mortgage insurance by the FHA during 1955 included 69 dwelling units. The typical unit contained 4.7 rooms, rented for $94.27, and secured a mortgage of $7,850 which represented 81.8 percent of the estimated replacement cost.

TABLE 11-78

Characteristics of multifamily housing transactions, by section, 1955

The following footnotes apply to this and to all subsequent tables in this section of the report: 1 In determining the number of rooms per unit, baths, closets, halls, and similar spaces were excluded. 2 Not available.

3 Amount of mortgage allocable to dwelling use.

The characteristics for each of the several programs for which commitments to insure were approved by FHA during the year are presented in Table 78. In comparison with other rental housing, Section 803 projects were larger typically containing 275 dwelling units with 5.2 rooms, rented for considerably less-$73.81, and secured a smaller mortgage of $7,622. This results from the high proportion (86 percent) of dwelling units consisting of 1-family structures committed under this program and the fact that no land cost is involved for those projects built on land leased from the Department of Defense. In contrast, projects approved under Section 207 and Section 220 showed differences due, in part, to the relatively large numbers of units in elevator structures-56 percent and 100 percent, respectively with generally smaller but higher rental units. Under the Section 220 program, the commitments issued by FHA in 1955 covered sections 1, 2, and 3 of the New York City development known as Delano Village. Despite differences in size of typical projects for Section 207 (49 units with 4.6 rooms) and Section 220 (254 units with 3.8 rooms), the median monthly rental varied only slightly from $120.27 under Section 207 to $123.39 under Section 220. The unit mortgage of $8,681 for Section 220 was somewhat higher than the $8,506 reported for Section 207.

The typical Section 213 management-type cooperative project consisted of 112.5 dwelling units with a median room count of 5.2 rooms which secured a mortgage of $10,248 or 84.5 percent of replacement cost. In contrast, sales-type cooperatives were smaller (typically 45 units), had a higher room count of 5.8 rooms per unit, and secured a smaller mortgage of $7,339 which represented 94.4 percent of the replacement cost and reflected the higher participation of veterans in this type of project.

TABLE 11-79

Characteristics of mortgages and projects in rental project transactions, by years, 1947-55

1 Based on commitments issued in 1947-49 under Sec. 608, in 1950-51 under Secs. 207, 608, 803, in 1952–54 under Secs. 207, 803, 908, and in 1955 under Secs. 207, 220, 803.

2 Estimated.

30.6

56. 2

52.2

29. 2

15. 1

10.2

13.7

$22.99 $24.39 $21.34 $16.77 $16.91
$1,802 $1,817 $1,778 $1,579 $1, 619

$20.06 $22. 22
$1,835 $1, 940

$1,769

$20. 13 2$19.00 $1, 724

The trends of selected characteristics for rental housing projects are shown in Table 79 and Chart 26.

The median project of 69 units for 1955 was smaller than that of 77.5 units reported for 1954. It may be noted that project sizes have varied greatly during the 9-year period covered by the table and chart.

The most notable development for 1955 was the 8-percent decrease in monthly rental from the all-time high of $102.72 established in 1954 to $94.27. This decrease occurred despite the fact that the typical unit remained unchanged at 4.7 rooms and the average mortgage amount rose $228 over the $7,821 reported for 1954. This increased mortgage amount for 1955 set a new all-time high for projects approved for mortgage insurance by FHA. Coupled with this was the proportional increase in the number of dwelling units contained in 1-family structures-35 percent as compared to 20 percent a year ago-which, for the most part, were Section