imposed by FHA have the anomalous effect of limiting participation in the program by most experienced builders. Many years of organizational and development work by the sponsors must necessarily go into these urban redevelopment projects. This heavy investment of effort, and frequently large cash outlay, precedes the issuance of FHA commitment. All of this work and cash outlay may conceivably be lost for any one of a host of reasons may arise out of the uncertainties inherent in negotiations which must be carried with as many as 7 different agencies at various governmental levels. These uncertainties arise in many cases out of frequently conflicting philosophies of these agencies. Thus, many years of effort and heavy cash outlays are in constant jeopardy. Thus, in our case, more than 31⁄2 years of intensive effort, both by my associate's organization and my own, were devoted to this project. In addition to this uncounted staff time, we expended more than $300,000 in out-of-pocket costs before construction commenced. There was superimposed on this investment FHA's cash requirements for closing which was in excess of $550,000. There were certain other cash requirements at the financial closing which brought our total cash investment before start of construction to a sum in excess of $1,000,000. In addition, in very many of these projects, the sponsors and the builder are one and the same organization. They build the project without any cash fee. The cash fee which a general contractor would normally earn in a project of this character is, therefore, an additional equity contribution by the sponsors. Congress recognized that this service was a valuable one and stipulated that FHA shall recognize this service to the extent of 10 percent of the value of the construction, for section 220 housing only. Thus, in this project we are making an additional equity contribution, by building this project, in a sum in excess of $1,400,000 which is in addition to our cash investment of a sum in excess of $1,000,000. It is apparent that our ability to participate further in this program has been severely impaired by these monumental equity requirements. This restriction is imposed on us at a time when we have developed new skills and experience in this field. Hon. J. W. FULBRIGHT, TREASURY DEPARTMENT, Chairman, Committee on Banking and Currency, United States Senate, Washington, D. C. MY DEAR MR. CHAIRMAN: Reference is made to your request for the views of this Department on S. 3824, "To clarify section 106 (f) of the Housing Act of 1949 with respect to the making of relocation payments for displacements caused by programs of voluntary repair and rehabilitation in connection with urban renewal projects." The proposed legislation would amend section 106 (f) of the Housing Act of 1949 to permit payments in connection with urban renewal projects to families for moving expenses arising from their displacement as a result of programs of voluntary repair and rehabilitation in conection with urban renewal projects. Such payments are at the present time limited to families displaced by urban renewal projects in an urban renewal area. The proposed legislation is not of primary interest to this Department, and the Department has no comment to make as to its general merits. Very truly yours, NELSON P. ROSE, General Counsel. Senator CLARK. We have a memorandum prepared by the Staff, Notes on Housing Activity, containing up-to-date information on various housing programs. It will be inserted in the record at this point. (The memorandum referred to follows:) NOTES ON HOUSING ACTIVITY PRIVATE HOUSING Private housing construction was down to 992,800 starts for 1957. This is 9 percent less than 1956 and 24 percent less than 1955. The best year in history for new private starts was in 1950 when 1,352,000 units were put under construction; the second best was in 1955. The 1957 record was the poorest since 1949. The poor showing in 1957 was caused by the shortage of mortgage money in general which affected particularly the FHA and VA Government-assisted programs. Last years' conventionally financed record was good-693,000 startsthe best since the 1920's. The first quarter figures for 1958 were disappointing also. The starts for January, February, and March were at an annual rate of 933,000 units, which is off 18 percent from the coresponding period in 1957. The home builders claimed the poor showing so far this year was caused by bad weather, builder caution, legislative uncertainty, and slow sales. Private Housing Starts (Conventional, FHA and VA, except Public Housing) New nonfarm private housing units started, by type of financing, 1950-58 Dwelling-unit starts, total and multifamily, public and private for United States, Source: U. S. Department of Labor and Federal Housing Administration. FHA-INSURED LOANS FHA-insured loans in 1957 were off 12 percent from 1956 and were at the lowest level since 1946. Administration officials claim that the two factors of controlled interest rates and limitations on discounts were responsible for the poor FHA record. The FHA activity for the first 3 months of 1958 looks encouraging. Starts under FHA were up 42 percent and applications were up 62 percent over the corresponding period last year. At this rate starts under FHA for 1958 should be better than for the 2 previous years of 1956 and 1957. Figures for April indicate that the upward trend shown in March is continuing. There is no doubt but that the emergency housing bill is responsible for much of this activity. Reports from FHA offices and builders alike indicate a decided spurt in consumer interest because of the more favorable downpayment provisions made available by the new bill. 40,100-up 42 percent from corresponding 3 months of 1957 but about the same as corresponding period in 1956. 63,000-up 62 percent from corresponding 3 months of 1957 but only about 7 percent above 1956. VA-LOAN GUARANTY PROGRAM The 1957 VA activity was very disappointing with only 128,200 units started under the program. The starts were down 52 percent from 1956 and represented the poorest year since the program started. 25834-58-54 The activity for the first quarter of 1958 was a continuation of the downward trend, being off 68 percent from the same 3 months of last year. A report from VA on activity during April show requests up to 24,800 for the month. This can be attributable almost entirely to the emergency housing bill. 10,000 units, down 66 percent from corresponding 3 months of 1957. 19,000 units, down 68 percent from corresponding 3 months of 1957. Trend in FHA-insured and VA-guaranteed applications for new home units [New units in 1- to 4-family structures] Applications for FHA insurance on projects amounted to 6,000 new units making a total of 37,600 new units for which FHA insurance was requested for the month of April 1958. PUBLIC HOUSING A great deal of criticism has been leveled at the Public Housing Administration for the poor progress of low-rent public housing since the Housing Act of 1956 authorized 70,000 units. Only about one-half of these have been reserved by the Agency, and 8,200 of these have been put under annual contributions contract. Only 220 units were put under construction as of the end of March. The program to date has 432,000 units under management. Of these, 220,000 were built under the Housing Act of 1949 (Public Law 171), which originally authorized 135,000 units a year for 6 years, or a total of 810,000 units. FNMA has three programs: (1) Secondary market operations; (2) special assistance functions; and (3) management and liquidation functions. 1. Secondary market operations This has been a very active program during the tight-money period of 1956 and 1957. FNMA purchased the following FHA and VA mortgages from 1955 to December 31, 1957: Fiscal year: 19551956 1957- First 6 months 1958----. Purchases (in millions) $9.5 229.0 1,036. 8 406. 4 The sales during the last few years have been negligible compared with purchases. During calendar 1957 only $2.9 million of mortgages were sold. During recent months the changed picture on the supply of private mortgage money has reversed the flow of money into FNMA under this program. During March 1958 FNMA purchased $27,009,000 and sold $28,803,000 Governmentsupported mortgages. The balance in the fund for purchasing mortgages as of March 31, 1958, was $1,009 million. 2. Special assistance function This program is intended for use in the purchase of FHA and VA mortgages under programs which are selected as requiring special aid. The mortgages are purchased by FNMA at par with a commitment and purchase fee totaling 11⁄2 percent. There are two separte parts of this program, one under an allocation authority of the President and the other under categories specified by the Congress. Under special assistance programs authorized by the President, the most active is for urban renewal housing (FHA secs. 220 and 221). Disbursements or commitments under this part amounted to a total of $151 million up to the end of April. Only $17 million of this was for purchase of mortgages representing about 1,700 units. This program is financed by borrowing from the Treasury but it is a profitable undertaking, having earned $4,759,000 through December 31, 1957. In 1957, Congress had authorized $450 million for this program. The emergency housing bill added another $500 million with the direction that FNMA should use the money to purchase home mortgages as a means of retarding or stopping a decline in mortgage lending and home construction. Up until the end of April, the Budget Bureau had released only a small part of this new money to FNMA and of the money released there is reason to believe that very little will be used at this time. FNMA has instituted no new programs or new policy which would take advantage of this new authorization by Congress to help the economy. The Emergency Housing Act also added $1 billion of authorization for FNMA to purchase mortgages under a new category of low- and moderate-priced housing (mortgages up to $13,500). The Budget Bureau released $700 million of |