to maintain the same standards, as may be desirable under other sections authorizing mortgage insurance commitments in excess of $8,100 per unit." Change (a) would allow issuance of insurance commitments for a single unit to an elderly person who was not interested in purchasing a project house. Change (b) would allow the issuance of insurance commitments for existing units primarily used or intended for housing for the elderly.

Change (c) gives the basis for insuring existing or rehabilitated units. The original language of this section could lead to a different interpretation.

Change (d) merely has this section conform to amendment suggested in change (b).

Change (e) this amendment is not designed to allow inferior construction but to indicate the congressional intent that commissioner should have a more flexible set of standards to assure low cost housing for the elderly in contrast to a more luxurious program as under sections 207, 213, etc.

AMENDMENT TO SECTION 203 (1) OF NATIONAL HOUSING ACT

Strike the language "and which is approved for mortgage insurance prior to the beginning of construction."

This would allow the insurance of existing or rehabilitated units under this section.

Senator SPARKMAN. I have a letter here from Mr. Robert W. Larson, vice president of the National Mortgage Co., regarding the proposal for amending section 203 (i). We will put this in the record at this point.

(The letter referred to follows:)

NATIONAL MORTGAGE COMPANY,
Newark, N. J., May 8, 1958.

Re Suggested FHA-203 (i) legislation (low-cost housing).
The Honorable JOHN SPARKMAN,

United States Senate, Washington 25, D. C.

DEAR SENATOR SPARKMAN: In the interest of new housing legislation, to benefit the country as a whole, especially those in the modest-income group, please consider the following:

We, the National Mortgage Co. of Newark, N. J., have been one of the few mortgage brokers in the East originating section 203 (i) FHA mortgages. These are our recommendations for legislation under this title:

1. We feel that the mortgage limit should be raised to $9,000 under FHA section 203 (i), with all other provisions remaining the same, except where the builder takes advantage of the $9,000 limit, he should provide at least one public service, approved by the State authorities, i. e., either public sewer or public water. The effect of this would be to relieve a future burden on the community and to produce a more marketable house and mortgage. The resulting decrease in hazard insurance rates (if public water is installed) should partially compensate for the increase in mortgage payments over the present $8,000 mortgage.

2. More builders would be attracted to this price range with the additional $1,000 because

(a) The proportion of profit would be slightly higher.

(b) In many areas, strict codes prohibit the construction of low-cost housing. This additional $1,000 would permit the builder, in many cases, to meet these heavier code restrictions.

(c) Builders will be more willing to enter into long-range community planning which will produce an ultimately better community. The extra engineering required to put in curvilinear streets instead of a gridiron, monotonous street pattern is one concrete example.

(d) The few extras necessary to provide housing for senior citizens will be possible.

(e) Areas that are a little less remote could be utilized because the builder could pay a greater proportion for the land.

(f) An incidental factor-in cases of bombing of the urban centers, these houses located in rural areas would be additional shelter possibilities for the overflow of homeless people.

(g) An interesting development in our area is that industries have begun to locate nearer the large 203 (i) developments-specifically, Minnesota Mining, Brockway Glass & CIBA Pharmaceutical who have established new plants near these new low-cost communities. One of the reasons, obviously, is the development of a labor market. The Civil Defense people would not object to this decentralization.

Summary. The production of low-cost houses will be stimulated by the increase in mortgage amount, just as they were when the mortgage amount was increased in 1957.

In the opinion of the writer, at least 50,000 additional units could be produced with this change. The enactment of this legislation would provide more homes for the aged, with a corresponding lift to the economy.

The writer is available for discussion on this matter and can be of definite help should you require the aid of someone who has specialized in this field. Very truly yours,

ROBERT W. LARSON,
Vice President.

Senator SPARKMAN. The committee will stand in recess until 10 o'clock tomorrow morning.

(Whereupon, at 3: 30 p. m., the subcommittee recessed until 10 a. m. the following day, Thursday, May 15, 1958.)

HOUSING ACT OF 1958

THURSDAY, MAY 15, 1958

UNITED STATES SENATE,

COMMITTEE ON BANKING AND CURRENCY,

SUBCOMMITTEE ON HOUSING,
Washington, D. C.

The subcommittee met, pursuant to recess, at 10:05 a. m., in room 301, Senate Office Building, Senator John Sparkman (chairman of the subcommittee) presiding.

Present: Senators Sparkman, Douglas, Clark, Capehart, and Bush. Senator SPARKMAN. Let the committee come to order, please. Our first witness this morning is Mr. James E. Bent, president of the Hartford Federal Savings & Loan Association, representing the National League of Insured Savings Associations.

Mr. Bent, will you come around, please?

Also, accompanying Mr. Bent is Mr. Harold P. Braman, managing director of the National League of Insured Savings Associations. We are glad to have both of you here.

Senator Bush, do you want to say something?

Senator BUSH. Yes, Mr. Chairman. Thank you for recognizing me.

I am very happy to introduce Mr. Bent to this committee, although he needs no introduction, having testified here numerous times. He is one of the outstanding leaders in commercial life, and, broadly speaking, in social life, in Hartford, the capital of our State, and in that whole area. He is a very prominent citizen, and a very much respected one. It is always a pleasure to me to meet him, and a special pleasure to welcome him here before the Banking and Currency Committee. I think he is a very vigorous and able man in his field, and we should pay a lot of attention to what he has to say about this subject.

Senator SPARKMAN. Thank you, Senator Bush.

STATEMENT OF JAMES E. BENT, CHAIRMAN, LEGISLATION COMMITTEE; ACCOMPANIED BY HAROLD P. BRAMAN, MANAGING DIRECTOR, NATIONAL LEAGUE OF INSURED SAVINGS ASSOCIATIONS

Mr. BENT. Thank you very much, Senator.

Senator SPARKMAN. Mr. Bent, we have your statement, but you proceed in your own way.

Mr. BENT. It is not a long statement, Senator, so I will read it and see if there are any comments you wish to make.

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My name is James E. Bent. I am president and managing officer of the Hartford Federal Savings & Loan Association, Hartford, Conn., and chairman of the legislation committee of the National League of Insured Savings Associations, in which capacity I am appearing today.

Needless to say, Mr. Chairman and members of the committee, I am most appreciative of the opportunity to appear before the Subcommittee on Housing. Over the years we have felt that this committee has always considered and carefully weighed the arguments we have presented.

Before commenting upon some of the specific issues before this committee, I want to take just a moment to place in proper perspective our industry's role in providing economical financing of American homes.

At the end of last year mortgage debt outstanding on 1- to 4-family homes totaled about $107 billion. Savings and loan associations held $40 billion of this debt or about 37 percent. Currently, we are financing about 38 percent of sales.

The object of our business, as stated in the charter of all Federal associations, is

to promote thrift by providing a convenient and safe method for people to save and invest money and to provide for sound and economical financing of homes. That we have supplied economical home financing may be illustrated by the following data showing gross return on mortgages and return paid on savings during the period 1943-56.

There has been some comment on the fees, particularly in our industry, and you will note in those fees during that period the return to our association runs from a minimum of 5.1 percent to a maximum of 5.6 percent. Currently in 1956 it is no higher than it was in 1943. Interest alone ran from a minimum of 4.9 to a maximum of 5.6 percent. Currently it is 5.2 percent.

When I say currently, I mean in 1956.

At the same time the institutions are paying dividends to their savers, and they have varied from a low of 2.2 percent up to a high of 3 percent in 1956.

These figures are taken from the Home Loan Bank Board report.