Below-market mortgages not yet endorsed for insurance

It is the intent of the committee that in cases where commitments have been issued at a higher rate of interest than 3 percent, and the mortgages have not been finally endorsed for insurance, the lower interest rate should be made available whenever practicable. Low-rent housing in private accommodations

The House bill contained a provision not in the Senate amendment authorizing local housing authorities to use as low-rent housing up to 10 percent of the units in an existing privately owned structure, and to make annual contributions to the owner in amounts not exceeding the amounts that would be payable for units in a newly constructed low-rent project. Contracts with owners would be for 12 to 36 months, renewable. Tenants would be selected by owners, subject to the contracts between local authorities and PHA. Rentals would be determined under standards applicable to conventional public housing.

The conference substitute contains the House provision with an amendment stating that the provisions of the new program shall not apply to any locality unless the governing body of the locality has by resolution approved the application of such provisions to such locality. Rehabilitation grants

The House bill contained a provision authorizing grants for the full cost of necessary repairs (up to $1,500) to homeowners in urban renewal areas with annual incomes of $2,000 or less; in the case of owners with larger incomes, grants would be limited to the portion of cost which cannot be financed without increasing housing expense to more than 25 percent of income.

The Senate amendment contained a similar provision except that the income limit for the full cost of repairs was $3,000. The conference substitute conforms to the Senate provision.

Direct loans for housing for the elderly or handicapped

The House bill removed the existing $350,000,000 ceiling and terminated the program on October 1, 1969. The Senate amendment simply increased the existing ceiling from $350,000,000 to $500,000,000. The conference substitute conforms to the Senate amendment. Mortgage moratorium

The House bill contained a provision providing a moratorium of up to 3 years on payments under FHA or VA mortgages in the case of a mortgagor unemployed due to closing of a Federal installation. The Senate amendment contained the same provision except that the moratorium period is limited to 1 year. The conference substitute conforms to the Senate amendment.

TITLE II-FHA INSURANCE OPERATIONS

Land development mortgage insurance

The House bill authorized a maximum of $12,500,000 on the aggregate amount of outstanding mortgages involving a single land development undertaking. The Senate amendment provided a maximum of $10,000,000, and the conference substitute contains the Senate provision.

Maximum mortgage term

The House bill limited the maturity of land development mortgages to 7 years. The Senate amendment contained a provision permitting a longer maturity (as determined by the Commissioner) to the extent a mortgage is secured by private water and sewer systems. The conference substitute contains the Senate provision.

Water and sewer facilities

The House bill contained a provision requiring a public water and sewerage system after the land is developed under the new FHA program, except that if public ownership is found not feasible an adequately regulated private system may be approved upon assurances of eventual transfer to public ownership. The comparable provision in the Senate amendment permitted either a public system or an adequately regulated private one. The conference substitute conforms to the Senate amendment.

Downpayment for low-income housing demonstration homes

The Senate amendment contained a provision not in the House bill permitting a downpayment under section 203(b) to be made by a person other than the mortgagor on the purchase of a home under the low-income housing demonstration program. The conference substitute contains the Senate provision.

Nondwelling facilities in urban renewal housing

The House bill contained a provision permitting nondwelling facilities to be included in a section 220 mortgage if the Commissioner finds that they contribute to the economic feasibility of the project. The Senate amendment contained a similar provision except that the Commissioner must find that the facilities are essential to the economic feasibility of the project and that the financing will not result in unfair disadvantage to other business enterprises in the vicinity.

The conference substitute conforms to the House language with respect to the finding that the facilities contribute to the economic feasibility of the project and requires the Commissioner to give due. consideration to the possible effect of the project on other business enterprises in the community.

Home improvement loans in high-cost areas

The Senate amendment contained a provision not in the House bill authorizing an increase in the amount of loans under sections 220(h), 203 (k), and 312 by up to 45 percent when cost levels so require. The conference substitute conforms to the Senate provision.

Mortgages for servicemen

The House bill contained a provision providing minimum downpayments under section 222 the same as the regular section 203(b) program (3 percent of the first $15,000 of value, 10 percent of the next $5,000, and 25 percent of all over $20,000). The Senate amendment contained a provision providing a minimum downpayment of 5 percent of the first $20,000 (or the amount under the sec. 203(b) program if less) plus 15 percent of all over $20,000.

The conference substitute provides a minimum downpayment of 3 percent on the first $15,000 of value, 10 percent on the next $5,000, and 15 percent on all over $20,000.

Optional cash payment of insurance benefits

The House bill contained a provision authorizing the FHA Commissioner in his discretion to pay benefits under any FHA program either in cash or in debentures, and authorized Treasury borrowing for cash payments as the Commissioner deems necessary. The Senate amendment contained the same provision except it did not authorize Treasury borrowing.

The Senate receded from its position and accepted the House provision which authorizes the Federal Housing Commissioner to borrow from the Treasury in connection with the making of optional cash payments of insurance benefits rather than the issuance of debentures. The conferees want to make clear that this Treasury borrowing authority is to be used prudently and only if receipts accruing to the insurance fund are inadequate to support continuation of payments in cash and only where such payments would represent a savings to the Government.

FHA loans for veterans

The House bill contained a provision authorizing section 203(b) mortgage insurance for veterans who have not received benefits under the VA program with no downpayment required on the first $20,000 and 15 percent on all above that amount. The term "veteran" was defined as a person who served in the Armed Forces and was not dishonorably discharged.

The Senate amendment contained a similar provision providing no downpayment on the first $15,000 of value, 10 percent between $15,000 and $20,000, and 15 percent of all over $20,000. The term "veteran" was defined as a person who served in the Armed Forces on or after September 16, 1940, for at least 90 days (or is certified by the Secretary of Defense as having performed extrahazardous service) and was not dishonorably discharged.

The conference substitute provides for no downpayment on the first $15,000 of value, 10 percent between $15,000 and $20,000, and 15 percent above $20,000. The definition of "veteran" is the same as the Senate provision except that the limiting eligibility date of September 16, 1940, is deleted.

Refinancing of housing for elderly projects

The House bill contained a provision permitting refinancing of housing projects for the elderly under FHA's section 231 program. The Senate amendment contained no similar provision and none is contained in the conference substitute.

Approval of technically suitable materials

The Senate amendment contained a provision not in the House bill directing the FHA Commissioner to adopt uniform procedure for acceptance of, and to accept, technically suitable materials and products to be used in structures approved for FHA insurance. The conference substitute contains the Senate provision but with an amendment making it clear that the decision that a material or product is technically suitable must still be subject to the financial decision of the Commissioner that it is within the scope of underwriting requirements for mortgage insurance and that he must find that the use of the material or product is consistent with "economic soundness" or "acceptable risk," as the case may be, under the several FHA programs.

The conference substitute language is not intended to lessen the responsibility of the Commissioner to approve products or materials which are shown by acceptable research, testing, or performance to be technically suitable. It should also be clear that if a material or product is shown to be technically suitable and widely accepted in housing financed by conventional mortgage lenders, as being economically sound, these facts should be persuasive upon the Commissioner that such material or product is an acceptable risk for FHA-financed housing.

The conferees expect both Committees on Banking and Currency to observe carefully the actions taken by the FHA Commissioner under the intent of this section and further expect that the FHA Commissioner will exercise extra effort to keep abreast of technological advances and the use of new products where suitable, and that he should bend every effort to minimize the long delays which have often been experienced before technically suitable materials are determined to be acceptable.

Water and sewer facilities

The Senate amendment contained a provision not in the House bill prohibiting FHA insurance or a VA loan for new housing which is not served by a public or adequate community water and sewerage system, if local officials certify that such a system is economically feasible. The conference substitute contains this provision.

Downpayment requirement under section 203(b)

The Senate amendment contained a provision not in the House bill reducing from 25 to 15 percent the required downpayment on that part of the value of insured property which exceeds $20,000. The conference substitute reduces the downpayment requirement to 20 percent of that part of the value in excess of $20,000.

TITLE III-URBAN RENEWAL

General neighborhood renewal plans

The House bill contained a provision permitting general neighborhood renewal plans to cover adjoining areas as well as the urban renewal area. The Senate amendment contained a similar provision but required that adjoining areas have "specially related problems. Also, the provision in the Senate amendment provided that all projects in the plan area need only be initiated in 8 years (rather than completed in 10 years). The conference substitute conforms to the Senate amendment.

Increase of nonresidential exception

The Senate amendment contained a provision not in the House bill increasing from 30 to 40 percent the existing exception to the "predominantly residential" requirement (but only with respect to the new capital grant authority provided by the bill). The conference substitute provides for an increase in the nonresidential exception to 35 percent, making it clear that the 35-percent factor applies only to the new money authorized in the bill. It also makes it clear that this is in addition to amounts previously available (and still unused) for such projects.

Projects financed on three-fourths grant basis

The Senate amendment contained a provision not in the House bill including as gross project costs for projects financed on a three-fourths basis certain expenses incurred for staff services in connection with code enforcement and voluntary rehabilitation programs. It also would have given credit for certain tax losses in case of projects financed on a three-fourths grant basis in the same way as such losses are now credited to projects on a two-thirds grant basis.

The conference substitute contains that part of the provision including expenses for staff services but deletes that part of the provision giving credit for certain tax losses.

Demolition of unsafe structures

The Senate amendment contained a provision not in the House bill authorizing grants (up to two-thirds of cost) to cities, other municipalities, and counties for the demolition of unsafe structures located in urban renewal areas or located in other areas which have workable programs and meet specified conditions. The conference substitute contains the Senate provision.

Concentrated code enforcement program

The Senate amendment contained a provision not in the House bill authorizing grants (up to two-thirds of cost, or three-fourths of cost in the case of cities of less than 50,000) to cities, other municipalities, and counties for programs of concentrated code enforcement in deteriorated or deteriorating areas (rather than only in urban renewal project areas as in existing law). These programs may include the provision and repair of specified public improvements. The locality would be required to maintain its own code enforcement expenditures at normal levels and to have a satisfactory public improvements program. FHA section 220 housing, and rehabilitation loans under section 312 of the 1964 act, would be available in these areas. conference substitute contains the Senate provision.

Rehabilitation loan program

The

The House bill contained a provision eliminating the present $50,000,000 ceiling on the rehabilitation loan authorization under section 312 of the 1964 act, and terminating the program October 1, 1969. The Senate amendment contained a provision substituting a $100,000,000 per year ceiling for the existing total $50,000,000 ceiling, and terminating the program October 1, 1969.

The conference substitute conforms to the Senate amendment. The Senate amendment contained a provision not in the House bill making rehabilitation loans available where the funds needed are not available on "comparable" (rather than "reasonable") terms and conditions and making the revolving fund available for loan servicing expenses (including those incurred by FNMA or other agencies). The conference substitute contains the Senate provision.

Workable program requirement and Indian tribes

The Senate amendment contained a provision not in the House bill providing that the workable program requirement shall be applicable to any Indian tribe, band, or nation only to the extent it has legal jurisdiction and power to carry out the requirement. The conference substitute conforms to the Senate amendment.