program for those who cannot pay full economic rents and who are now living in slums, special financing featuring low interest rate and long-term amortization for families in the middle-income group and for cooperative housing, cutting redtape and appropriating adequate funds for speeding initiation and completion of urban renewal programs."

The expression of this resolution clearly indicates our feeling that there has been something lacking in the vigor, energy, and enthusiasm of the way in which the legislation has been administered and that greater guaranty capacity and more liberal mortgage terms should be authorized for the Federal Housing Administration, that larger special assistance funds should be made available to the Federal National Mortgage Association and that its fees for commitments and purchases should be lowered especially where cooperative housing is concerned, and the public housing programs and the urban renewal program, which complement each other, should be expanded to the end that slums may be cleared, that city improvement programs may be speeded and that the slum dwellers and other persons displaced by such programs may be decently housed.

Your committee has had much detailed testimony on these problems and recommendations for solving them. I have studied the statements of many of the organizations which have appeared before you and the presentations made by the Administrator and the Commissioners of the Housing and Home Finance Agency. The statements and recommendations which, I believe, will best fulfill the intent of the resolution passed at the 62d annual national convention of the Jewish War Veterans of the United States of America are those made before your committee by William L. C. Wheaton, chairman of the board of directors of the National Housing Conference and by Wallace J. Campbell, director of the Washington Cooperative League of the USA. I have worked with both of these organizations, closely, through the years and I urge, most respectfully, that your committee carry through on those statements in your consideration of the many bills before you including those proposed by your chairman, several members of your committee and S. 4035 which was passed by the Senate.

Hon. JOHN RHODES,

House of Representatives, Washington, D. C.:

PHOENIX, ARIZ., July 17, 1958.

Your attention is called to S. 4035 coming up for House of Representatives action. Request you review carefully the amendments under title 4 low-rent housing. Phoenix is opposed to section 403 (b). We don't believe in receiving subsidies when not needed. Furthermore, we see no purpose to be accomplished by giving local housing authorities one-third of their residual receipts when this money can be used to lower subsidies. Phoenix also opposes section 405 which if enacted will enable local housing authorities to enter into competition with private enterprise building and selling houses to ineligible tenants of low-rent housing projects. Many pitfalls can be expected if S. 4035 is enacted as passed by the Senate.

Senator WILLIAM LANGER,

Washington, D. C.:

Mayor JACK WILLIAMS. FARGO, N. DAK., July 3, 1958.

Vigorous objection to the savings and loan proposal in H. R. 10637 because it is highly discriminatory. It selects only one segment of the financing industry. It has no protection for the consumer as to minimum property requirements or independent appraisals. There is absolutely no need for this proposal and it would impair the effectiveness of the present FHA programs.

M. H. OSTREM,

Manager, Mortgage Loan Department, Western State Life Insurance
Co., Member of the Mortgage Bankers Association of America.

STATEMENT BY RUSSELL M. COOPER, ASSISTANT DEAN, COLLEGE OF SCIENCE, LITERATURE, AND THE ARTS, UNIVERSITY OF MINNESOTA AND PRESIDENT, ASSOCIATION FOR HIGHER EDUCATION, NATIONAL EDUCATION ASSOCIATION, ON THE COLLEGE HOUSING LOAN PROGRAM, INCLUDING H. R. 11173, H. R. 12752, AND S. 4035 Mr. Chairman and members of the subcommittee, it is a privilege to have the opportunity to file a supplementary statement on the college housing loan program on behalf of the Association for Higher Education, a department of the National Education Association. The Association for Higher Education is an association of individuals engaged in college and university work. It has approximately 17,500 members in 1,599 colleges and universities. Its membership is composed of administrative officers-presidents, provosts, deans-and of faculty members from every academic and professional field.

President Hurst R. Anderson, of the American University, on July 9, spoke on behalf of the Association for Higher Education as well as for other national organizations.

This supplementary statement concerns particularly the action of the Senate on July 18, in connection with the administration of loans for classroom buildings and other academic facilities, as dealt with in section 405 of the Rains bill and section 502 of the Senate bill.

In the report of the Senate Committee on Banking and Currency (Rept. 1732) to accompany S. 4035 are these statements:

"This program would be administered by the Housing and Home Finance Agency, with the full consultation of the Office of Education of the Department of Health, Education, and Welfare. The committee recognizes the fact that the Office of Education is the agency best qualified to deal with educational aspects of the college housing program and wishes to make clear that it expects full and complete cooperation between the HHFA and the Office of Education. A loan under this program should be approved only after concurrence by the appropriate official of the Department of Health, Education, and Welfare."

In recognition of the significant educational factors involved in this new area, the Senate, through positive action on S. 4035, has emphasized the importance of cooperation between the Administrator and the Office of Education.

Following Senate approval of the new section 504 to title IV of the Housing Act of 1950 (loans for classrooms, laboratories, and related facilities) an amendment was submitted and passed—which provides “That the Administrator shall extend financial assistance to educational institutions under section 405 (of the Housing Act of 1958) only after consultation with, and in accordance with the advice and recommendations of, said Office of Education."

The executive committee of the Association for Higher Education, meeting on June 28, went on record in favor of the principle embodied in the legislation approved by the Senate. It is the view of the Association for Higher Education that this will facilitate the proper administration of the new program by giving the Department of Health, Education, and Welfare, Office of Education, a positive responsibility for the educational aspects of the program while leaving the administration of the program-including the necessary financial determinations relative to proposed loans-with the Housing and Home Finance Agency.

The Association for Higher Education, therefore, strongly recommends for your consideration the concept of educational consultation and advice, on a positive basis, as expressed in S. 4035, for inclusion in the House bill and report.

HOME BUILDERS ASSOCIATION OF METROPOLITAN WASHINGTON, INC.,
Washington, D. C., July 21, 1958.

Hon. ALBERT RAINS,

Chairman, Subcommittee on Housing of the Banking and Currency Committee, House of Representatives, Washington, D. C.

DEAR SIR: Please permit this letter to become a part of the record of the housing legislation now before your committee. It pertains to one definite portion of the pending proposals, namely, the language contained in the Senate bill, title IV, low rent housing, section 401, which establishes the astonishing policy that public housing agencies may acquire existing private dwelling units for public housing use.

Even the most vocal advocates of public housing insist that its existence in our American system of private enterprise is not to compete but merely to supplement

private housing efforts and thus provide for those who cannot afford private rents. Those advocates who are most sincere in asking for public units for the low income, needy and slum dwellers, agree wholeheartedly that private housing should constitute the principal source of good dwelling units and that such supply should be increased, not decreased.

Every private unit acquired for public use is a step in the wrong direction from the standpoint of both public and private agencies. The basic fact to be remembered is that not one additional housing unit is created by any such change in ownership. Also, every dollar spent in such purchase and in annual Federal subsidies thereafter, means that much waste of taxpayers' money without a corresponding benefit to anybody except some extra employees of some public housing agency staff.

As a matter of statesmanship, the language above referred to should be eliminated from the final draft of any legislation approved by your committee. As a matter of pure politics, no constituents of any Member of the Congress can be provided with a dwelling unit under it without displacing an equally deserving constituent. And money spent in this direction could foreclose a program for those in need.

In Washington, D. C., every responsible facet of private enterprise protested vigorously against a recent attempt of the National Capital Housing Authority to acquire a fully occupied, low rental apartment development by purchase from a priviate owner at a price higher than its going market value. Had this attempt been successful, it would have resulted in ousting modest income families and replacing them with other families whose incomes would have had to be on a corresponding level, since the economic rents would have been the same. The Federal subsidies would have been used to overcome the higher maintenance and management costs of the public agency staff. The local agency already has authority and public money with which to build new units based upon its own survey showing there is a scarcity of private housing. While the industry's own survey disputes this, the fact remains the NCHA purchase of privately owned and occupied units would simply mean that the private supply was being reduced deliberately by a public agency and thus justify its own existence. Any such fraud upon the public should be discouraged at the outset and elimination of the power to acquire existing private dwelling units is best calculated to prevent such misuse of public funds.

Your favorable attention to this matter will be greatly appreciated.

Sincerely yours,

W. EVANS BUCHANAN, President.

FEDERAL HOUSING ADMINISTRATION,

Hon. ALBERT RAINS,

OFFICE OF THE COMMISSIONER,
Washington, D. C., July 23, 1958.

Chairman, Subcommittee on Housing, Committee on Banking and Currency, House of Representatives, Washington, D. C.

MY DEAR MR. RAINS: I appreciate your writing me as you did about CAP because this dynamic new program is still in an experimental stage. Naturally, there will be some misunderstanding about how it works until the public and industry become more familiar with it. We want to clear up such misunderstandings, and we want to get helpful suggestions to improve the effectiveness of CAP which is designed to meet the pressing problems of housing in our smaller communities.

From the reports we are getting we feel that the program is a sound practical approach to extending the benefits of the National Housing Act into new areas. The industry has wholeheartedly welcomed it in every area where it has been tried. The volume of applications being received is increasing each month. Builders, realtors, bankers, savings and loans associations, and consumers are asking us to extend it as soon as we feel we can. In this connection I believe you will be interested in the following excerpts from Bankers Research of July 9, 1958:

"The Federal Housing Administration's certified agency program, is making excellent progress. By June 1, the list of authorized agents had passed the 1,000 mark with more than 700 banks participating, 213 savings and loan associations, and 158 mortgage companies. The list grows weekly, as do the areas into which the program is being newly introduced.

"Despite the doubts expressed in some circles that lenders' attention to the benefits of this program would be diverted after the passing of the new housing legislation, the program is growing soundly and is being used to a steadily increasing degree."

I think that we have also gone a long way to overcome the attitude you refer to in your letter of career civil servants not taking too kindly to the program. This has been done by giving our own people a better understanding of the objectives. At first many of the old line employees felt that CAP would supplant the regular FHA programs, and their jobs would be jeopardized. This was never the plan, and as soon as we were aware of this attitude, great care was taken to explain to employees that CAP was designed to extend the benefit of FHA plans into new areas rather than take the place of the fine job being done in the larger communities. FHA's regular programs with insuring office processing will continue to handle mortgage insurance in cities and larger metropolitan areas.

I am attaching a memorandum of comments on the 14 items which you raised so that you can have a complete report.

In my opinion CAP will be most helpful in the smaller communities in America where our smaller builders can make the benefits of homeownership available to more and more of our citizens.

Sincerely yours,

NORMAN P. Mason, Commisioner.

COMMENTS ON ITEMS RAISED BY CONGRESSMAN RAINS' LETTER OF JULY 16

Item 1: The CAP program cannot operate successfully until appraisers have been appointed to serve every area in the State. The program for Alabama was announced on April 3, 1958, or approximately 2 months ago. As of this date, June 2, 1958, only eight appraisers have been appointed.

Comment: Since June 2, 35 appraisers have been appointed. Today, we have approved appraisers for all the eligible areas and will continue to expand our list as quickly as qualified people become known to use.

Item 2: As far as I know, no list of appointed appraisers has been distributed by the FHA.

Comment: We have not issued any list of the appointed appraisers. Up-to-date lists of their names are kept on file in the FHA office so that prompt assignments can be made when the mortgagees request their services. As when any program is started, there are some misunderstandings and certain mortgagees have though that we would publish a list from which they could choose appraisers. In the interest of sound, efficient operation, we assign an appraiser for each job. Item 3: Some of the eight appraisers are located in cities which are not eligible for loans through CAP. This means there are less than eight who are available to readily serve the areas in which CAP is designed to operate.

Comment: Feeling that competent appraisers are essential to the program's success, we have appointed some men from metropolitan areas for CAP. This is done only when these men express the willingness and demonstrate the ability to make competent appraisals in the nearby eligible areas and it is difficult locally to find qualified appraisers. The metropolitan areas from which these appraisers come are much closer to the property than the FHA office.

Item 4: On May 9, the FHA stated they had appointed 71 fee appraisers and it was their intention to use most of these men in the CAP program. No list of such fee appraisers and the fact that they might be used in the CAP program was sent to lenders.

Comment: Fee appraisers, like CAP appraisers, are appointed by the FHA office at the request of the local lenders. Benefiting from VA experience, we feel it is desirable for us to make the appointment rather than to let the lender choose the appraiser himself. We have felt that this was a protection to the FHA, the lender and the home buying public and this is the reason we have refrained from publishing lists of the qualified appraisers.

Item 5: It is stated that the fee appraisers must file separate applications to become certified as CAP appraisers even though they have already been approved as fee appraisers.

Comment: Congressman Rains is quite right that there is no need for a separate application for fee appraisers and CAP appraisers. We are pleased to report that a new application form is being prepared which will enable appraisers to apply for either or both categories on one form.

Item 6: In connection with proposed construction, there must be approved inspectors appointed to serve every area throughout the State. These inspectors are in addition to the appraisers though an appraiser can also qualify to serve as an inspector. I have seen no list showing the appointment of any approved inspectors.

Comment: It is quite true that we need inspectors throughout the State. I am pleased to report that we are now in a position to assign inspectors in any of the areas eligible for CAP processing in Alabama. No list of the approved inspectors has been published as these assignments will be made by the FHA office. Approximately one-half of those appointed in Alabama are qualified as both appraisers and inspectors but because there are some differences in the requirements and experience, some of the men have not qualified for both functions. Item 7 In connection with proposed construction, it is stated that both appraisers and inspectors must go through a period of training and instruction. Therefore, until this training has been received by a sufficient number of appraisers and inspectors to adequately serve the entire State, no proposed construction loans can be handled.

Comment: To make training available to interested persons anywhere in the State, training classes for appraisers and inspectors were held in the following towns:

Andalusia, June 3; 18 notified; 11 attended.

Montgomery, June 4; 12 notified; 9 attended.
Birmingham, June 6; 20 notified; 22 attended.
Decatur, June 10; 20 notified; 18 attended.

Instruction was provided by personnel from Washington and Birmingham and we felt the results were very favorable.

Item 8: The FHA has not advised lenders what territories may be covered by their appointed appraisers and inspectors.

Comment: We feel it is best for us to appoint the appraisers and inspectors on each job. We have not advised lenders regarding the territories covered by the various men but because we have been careful in our selection and training, we are pleased to advise lenders that they can request assignment in any eligible area and be confident of getting qualified service.

Item 9: The areas within 30 airline-miles of Birmingham have been declared ineligible. The FHA has published no list of adjoining towns which will fall within this ineligible category. Therefore, lenders have no way of knowing which towns bordering on the 30 airline-mile limit are eligible.

Comment: It was our thought that lenders could draw a 30-mile circle around Birmingham that would fairly clearly define the towns eligible. Because Congressman Rains indicates there may be some confusion, perhaps the answer is to print maps for general distribution to all lenders in Alabama which will clearly designate the eligible territories.

Item 10: The areas within 15 airline-miles of Montgomery and Mobile have been declared ineligible. The FHA has published no list of adjoining towns which will fall within this ineligible category. Therefore, lenders have no way of knowing which towns bordering on the 15 airline-mile limit are eligible.

Comment: Such a map as discussed in item 9 would also clarify the 30-mile radius around Montgomery and Mobile and if we cannot print a map, certainly we can consider publishing a list of adjoining towns in the ineligible areas. Item 11: The entire county of Madison is ineligible. This is the only county in Alabama which is so excluded.

Comment: The county of Madison was declared ineligible because the unusual conditions of the real estate market did not seem to lend themselves to this experimental phase of the program.

Item 12: The town of Fairhope "being a single tax colony and involving certain specific problems" has been declared ineligible. It is difficult to understand how this particular problem could affect the eligibility of Fairhope for the CAP program since the FHA regularly insures loans on Fairhope properties. The tax problem has nothing to do with the underwriting of the loan.

Be

Comment: The town of Fairhope presents the problem of additional instruction because of the fact that land can only be leased and not purchased. cause of the limited personnel available to introduce CAP in the balance of Alabama and our understanding that there was not a large volume of real estate activity taking place in Fairhope, we decided to concentrate on getting CAP started in the other areas first. We will be happy to devote some special effort there as quickly as possible.