and those set up for wealthy people. They are, for all practical purposes, left out of our overall housing program in this country today and are thereby forced to be ever on the move. One woman Government employee living here in Washington, D. C., told me a few days ago that she moved 13 times between 1941 and 1950 and is still trying to find a suitable place to live within her. means. Some of the reasons given to me for this constant forced moving by single women are: 1. Creeping increases in rentals-about which they have no say, but have to pay or move. 2. Changes to undesirable management-about which they have no say, but have to endure or move. 3. Sale of property-about which they have no say, but have to move. 4. Cutting down on services-about which they have no say, but have to endure or move. 5. Retirement necessitating a cheaper place, or frequently the rent is raised specifically and they have to pay, or move. Then there are problems of becoming misplaced or displaced persons, due to various expansion programs or highway and urban renewal programs; these too create an even greater shortage of the bits and pieces of housing which often constitute the living quarters of single women. This complex and humiliating housing problem is not brought about usually through any fault or shortcoming of these people, except the fact that women do exist. This need for proper housing for them has been neglected and/or perhaps ignored for many, many years, and now with a quickened sense of the increasing presence of the elderly it is staring us in the face. It is my firm belief that if our retired people of today had been offered, even 10 years ago, when we first began working on the problem, a workable and attractive housing program, some preventive mutual plan such as ours, much of our present crisis would not exist. In surveys among single persons I found that only about 32 percent of them pay 20 percent of their income or less for rent. The others indicated that they pay from 20 to 150 percent of their income for housing; 30 percent indicated that they pay between 20 and 30 percent; over 22 percent indicated that they pay between 30 and 40 percent; over 7 percent pay between 40 and 50 percent; and 8 percent pay between 50 and 150 percent. There were more than twice as many paying over 20 percent than paying 20 percent or less. It was interesting to note that while a large percentage of those paying from 40 percent and up are retired or in semiretirement, a number of employed single women are paying upward of two-thirds of their income for housing, in places not designed for single-person occupancy, and against which they receive no financial interest in the property. While our long-range figures for the need of such housing have indicated that two-thirds of the single people are employed and onethird retired, this particular group came to 40 percent retired and 60 percent employed. We believe that the natural age trend for housing designed for single-person families should be one-third retired or elderly and twothirds working persons. We recommend this as a national noninstitutional formula, for credit purposes, as well as for a natural and happy way of living. We firmly believe that housing designed for the single person is essential for housing designed for elderly citizens, and housing designed for elderly citizens should be tied into housing designed for single persons. Most women are single at least twice in life, and many of us more than twice. Allowing an encouraging single people (beginning with those not acceptable to the Y. W. C. A.) to share in some attractive form of a mutual housing program will enable them to help pay off mortgages or other such obligations while younger and earning more. By the time they reach retirement age, much of their major financial indebtedness will have been paid off and result in lower rentals at the time of retirement, when incomes are usually much lower. Also, it would give more than one generation of workers a chance to help pay for the housing. This is just the opposite of what is happening to these people now, many of whom when they retire must either pay higher rentals or become pilgrims, to roam without a home. But to our knowledge, there had been no encouragement and there had been no planning to help take care of this national need, until my colleagues and I took a forward-looking and energetic interest a few years ago. With single people themselves, we have labored to develop the research and planning that has been done to date, including such things as the type of housing unit and site selection desired, and an acceptable, workable, and safe system from a financing standpoint, keeping always in mind the potential ability of these patriotic, worthy citizens to pay for such housing on some mutually agreed upon plan. Many of them, however, may give up and drift into lonely charitable or semicharitable cases, is sufficient hope and proper help are not given in time. In the case of senior citizens, either their retirement income must be increased substantially, or the cost of housing must come down. It is a question whether both are not necessary. Such housing as advocated here will build up the morale of these citizens, and will surely help to remove the fear that is likely the cause of much mental and physical illness. It stands to reason that when worries of obtaining proper housing (a permanent residence) vanish, these people can and will become good-will ambassadors, here and abroad, thus raising the American standard of living-in a very real sense. All they need is a chance. During the past years we have tried in every way that we know how to get financial leadership including in the form of a temporary revolving fund loan. You will remember my appeal for a $10 million direct national revolving fund loan, at a fair rate of interest, in each of my four previous statements to you. A $50 million direct national revolving fund loan for this purpose is more in line now, since a financial and industrial crisis does exist, and such a loan will harness and bring into the housing market a large untapped supply of money from single persons themselves. If such financial leadership by the Government can be permitted to come into being, it will enable single women to know that their savings will be reasonably safe, should they participate financially. This group of forgotten citizens, forgotten insofar as the housing field is concerned, should not be expected to advance any part of their small savings as equity, or other similar thing, until such financial leadership and some assurance of protection as I have described above is forthcoming. These women are already taking a beating, and have been for years. There has always been the "tight-money policy," insofar as these single women are concerned, single women, of any age, having been erroneously considered or I might say labeled "poor credit risks" without scarcely a second thought or consideration by some who were in a position to help. These women will be most conscientious in paying for their housing, if given a fair chance. It seems to me that the Government should be eager to recognize such a preventive program and assist its people by taking on temporary financial leadership, thereby helping to establish an incentive housing system for its mature single citizens. I sincerely hope that this statement will be helpful to you in your continued efforts to round out a well-balanced overall National Housing Act, one which will include preventive measures along the specific lines recommended. That is all. Thank you. Senator SPARKMAN. Thank you very much, Mrs. Houser. I know something of the work you have done in behalf of the type of housing you are presenting to us here, and we are very glad to have the sug gestions that you make, as well as the suggestions that you offer to us from time to time. Mrs. HOUSER. I wonder if tomorrow morning at 10 o'clock you could announce that I gave my statement this afternoon because there will be people coming, I think, that I might not be able to get in touch with. If you will just announce it. Senator SPARKMAN. I shall be very glad to. Mrs. HOUSER. Thank you. I shall leave this copy with you. Mrs. HOUSER. And thank you very kindly. Senator SPARKMAN. Thank you. I want to report that Senator Beall wanted very much to be here this afternoon but he was unavoidably absent, attending a meeting of the District of Columbia Committee on a matter that required his presence there. Senator Beall was very much interested in this matter about which the representatives of the National Retail Furniture Association testified. He has submitted a short statement which he requested be placed in the record. It has already been inserted in the record. The committee will stand in recess until 10 o'clock tomorrow morning. (Whereupon, at 3:34 p. m., the subcommittee recessed until 10 a. m. the following day, Thursday, May 22, 1958.) HOUSING ACT OF 1958 THURSDAY, MAY 22, 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 presiding. Present: Senators Sparkman, Clark, Capehart, Bush, and Payne. Senator SPARKMAN. Let the subcommittee come to order, please. There have been some changes in the schedule of witnesses for today, so we shall not follow the original listing. May I call your attention to the fact that Mrs. Jency Price Houser, who was scheduled for this morning, gave her statement yesterday afternoon in order to help us make these changes. At that time she had only her reading copy, and she promised to make copies available to us. We have them this morning. There are copies on the press table if anyone should want one. We are glad to have with us this morning again Mr. Cole of the HHFA and Mr. Mason of FHA. It is very good to have you back. Just proceed in your own way. STATEMENTS OF ALBERT M. COLE, ADMINISTRATOR, HOUSING AND HOME FINANCE AGENCY; AND NORMAN P. MASON, COMMISSIONER, FEDERAL HOUSING ADMINISTRATION-Resumed Mr. COLE. Thank you, Mr. Chairman and members of the committee. I am pleased to have this opportunity to appear again before your subcommittee on proposed legislation which would have an important impact on the provision and financing of homes. Under date of May 9, in response to a request from the chairman of the Committee on Banking and Currency, I reported the views of the Housing and Home Finance Agency on S. 2791, a bill to create a home loan guarantee corporation. That report recommended against the enactment of the bill and stated that the legislation would not be in accord with the program of the President. Since then, on May 15, a witness before your committee proposed enactment of a substitute draft bill to create a Federal home mortgage guarantee corporation. For reasons which I will explain in this statement, I strongly recommend that the substitute draft not be enacted. The draft would establish a Federal home mortgage guaranty corporation as an instrumentality of the United States to be operated by the Federal Home Loan Bank Board. The corporation would have 25834-58- 47 authority to guarantee first mortgages, not exceeding $25,000, on singlefamily homes where the ratio of the loan to the appraised value does not exceed either 90 percent or the maximum ratio then permitted in the same "price class" under section 203 of the National Housing Act. The mortgages would be regularly amortized within a 25-year period. The draft is silent with respect to interest rates. The guarantee would be limited to 90 percent of the loss, and would also be limited to 90 percent of 25 percent of the original mortgage amount. A premium of not less than 1 nor more than 2 percent of the original mortgage amount would be payable at the time the mortgage is guaranteed. Foreclosure costs and related outlays could be guaranteed for an additional premium. My basic objections to the proposed legislation do not relate to the idea of coinsurance itself. Rather, they relate to deficiencies in the particular proposal which make it discriminatory, unsound financially, and most undesirable from the standpoint of Government organization and policy. These deficiencies are so numerous and so serious that they cannot be avoided merely by a series of minor or technical amendments. It is my opinion that they evidence the need for a great deal of further study by the Congress, the executive branch, the home-building industry, and the mortgage-lending industry before any proposal along the lines of the draft can be developed to a point where it is ready for perfecting and enacting by the Congress. One major objection to the draft is that it would limit participation to a single class of lenders, namely, members of a Federal home loan bank. Such membership consists almost entirely of savings and loan associations and serves as a basis of eligibility for obtaining certain advances of funds. I cannot think of any sound basis for limiting the very substantial benefits of a coinsurance proposal to this single class of mortgage lenders, thereby discriminating against all other segments of the mortgage-lending industry. For Such discrimination would not only be unfair to other types of lenders but would also severely limit the benefits which the homebuying public might receive under a better devised program. example, it is contended that this coinsurance proposal would be particularly effective in small towns and rural areas in which FHA and VA aids are not readily available. However, the force of this argument is greatly diminished by arbitrarily denying participation to many classes of lenders who operate in small towns and rural areas, including the small-lending institution which may be the only one operating in a particular small town or rural area. In this connection, it is very significant that the survey of residential financing of the 1950 census of housing shows that over 78 percent of the first mortgage debt held by savings and loan associations was on properties located inside metropolitan areas. Another extremely serious deficiency in the proposal relates to features which would have the effect, during period of deflation or depression, of accelerating deflationary forces. The provisions of the bill governing payments of insurance claims in the event of default contemplate the ascertainment of the loss to the lender by means of the liquidation and resale of the security. That is to say, the insurance claim will be paid to the lender after he has acquired title to the prop |