Housing Act of 1954

Treasury Department, statement of, to Hon. Wright Patman.
United States Savings and Loan League-Amendments recommended.
$7,000 homes built in 1953, by geographic areas.......

227

522

163

HOUSING ACT OF 1954

TUESDAY, MARCH 2, 1954

HOUSE OF REPRESENTATIVES,

COMMITTEE ON BANKING AND CURRENCY,

Washington, D. C.

The committee met at 10 a. m., Hon. Jesse P. Wolcott (chairman) presiding.

Present: Chairman Wolcott (presiding), Messrs. Talle, Kilburn, McDonough, Widnall, Betts, George, Mumma, McVey, Oakman, Hiestand, Stringfellow, Van Pelt, Spence, Brown, Patman, Multer, Deane, O'Brien, Addonizio, Dollinger, Bolling, Barrett, and O'Hara. The CHAIRMAN. The committee will come to order.

We have met this morning to begin hearings on H. R. 7839, a bill to aid in the provision and improvement of housing, the elimination and prevention of slums, and the conservation and development of urban communities.

(The bill is as follows:)

[H. R. 7839, 83d Cong., 2d sess.]

A BILL To aid in the provision and improvement of housing, the elimination and prevention of slums, and the conservation and development of urban communities

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That this Act may be cited as the "Housing Act of 1954".

TITLE I-FEDERAL HOUSING ADMINISTRATION

AMENDMENTS OF TITLE I OF NATIONAL HOUSING ACT

SEC. 101. Section 2 (b) of the National Housing Act, as amended, is hereby amended

(1) by striking out clause numbered (1) and inserting the following: "(1) if the amount of such loan, advance of credit, or purchase exceeds $3,000";

(2) by striking out of clause numbered (2) the words "three years" and inserting "five years"; and

(3) by striking out of the first proviso "$10,000 and having a maturity not in excess of seven years" and inserting "$10,000 or $1,500 per family unit, whichever is the greater, and having a maturity not in excess of ten years". SEC. 102. Section 2 (f) of said Act, as amended, is hereby amended by adding the following at the end thereof: "The account heretofore established in connection with insurance operations under this section and identified in the accounting records of the Federal Housing Administration as the Title I Claims Account shall be terminated as of June 30, 1954, at which time all of the remaining assets of such account, together with deposits therein for the account of obligors, shall be transferred to and merged with the account established pursuant to this subsection. Moneys in the account established pursuant to this subsection not needed for the current operations of the Federal Housing Administration may be invested in bonds or other obligations of, or in bonds or other obligations guaranteed as to principal and interest by, the United States."

SEC. 103. Section 8 of said Act, as amended, is hereby amended by striking the period at the end of subsection (a) and inserting a colon and the following: “And

provided further, That no mortgage shall be insured under this section after the effective date of the Housing Act of 1954, except pursuant to a commitment to insure issued on or before such date."

AMENDMENTS OF TITLE II OF NATIONAL HOUSING ACT

SEC. 104. Section 203 (b) (2) of said Act, as amended, is hereby amended to read as follows:

"(2) Involve a principal obligation (including such initial service charges, appraisal, inspection, and other fees as the Commissioner shall approve) in an amount not to exceed $20,000 in the case of property upon which there is located a dwelling designed principally for a one- or two-family residence; or $27,500 in the case of a three-family residence; or $35,000 in the case of a four-family residence; and not to exceed an amount equal to the sum of (i) 95 per centum of $8,000 of the appraised value (as of the date the mortgage is accepted for insurance), and (ii) 75 per centum of such value in excess of $8,000: Provided, That the mortgagor shall have paid on account of the property at least 5 per centum (or such larger amount as the Commissioner may determine) of the Commissioner's estimate of the cost of acquisition in cash or its equivalent: And provided further, That such mortgage shall not involve a principal obligation exceeding the maximum amount prescribed by the provisions of this section 203 in effect prior to the effective date of the Housing Act of 1954, unless the President, pursuant to section 201 of the Housing Act of 1954 has authorized a greater maximum amount, in which event such principal obligation shall not exceed such greater maximum amount."

SEC. 105. Section 203 (b) (3) of said Act, as amended, is hereby amended to read as follows:

(3) Have a maturity satisfactory to the Commissioner, but not to exceed, in any event, thirty years from the date of the insurance of the mortgage: Provided, That the maturity of any such mortgage shall not exceed the maximum maturity prescribed therefor by the provisions of this section 203 in effect prior to the effective date of the Housing Act of 1954, unless the President, pursuant to section 201 of the Housing Act of 1954, has authorized a greater maturity, in which event the maturity of such mortgage shall not exceed such greater maturity." SEC. 106. Section 203 (b) (5) of said Act, as amended, is hereby amended to read as follows:

"(5) Bear interest (exclusive of premium charges for insurance, and service charges if any) at not to exceed 5 per centum per annum on the amount of the principal obligation outstanding at any time, or not to exceed such per centum per annum not in excess of 6 per centum as the Commissioner finds necessary to meet the mortgage market."

SEC. 107. Section 203 (c) of said Act, as amended, is amended by striking out of the second sentence the word "Provided" and inserting: "Provided, That debentures presented in payment of premium charges shall represent obligations of the particular insurance fund to which such premium charges are to be credited: Provided further.”"

SEC. 108. Section 203 (d) of said Act, as amended, is hereby amended by striking the period at the end thereof and inserting a colon and the following: “And provided further, That no mortgage shall be insured pursuant to this subsection after the effective date of the Housing Act of 1954, except pursuant to a commitment to insure issued on or before such date."

SEC. 109. Subsections (f) and (g) of section 203 of said Act, as amended, are hereby repealed.

SEC. 110. Section 203 of said Act, as amended, is hereby further amended by adding the following new subsection at the end thereof:

"(h) Notwithstanding any other provision of this section, the Commissioner is authorized to insure any mortgage which does not involve a principal obligation in excess of $7,000 or in excess of 100 per centum of the appraised value of a property upon which there is located a dwelling designed principally for a single-family residence, where the mortgagor is the owner and occupant and establishes (to the satisfaction of the Commissioner) that his home which he occupied as an owner or as a tenant was destroyed or damaged to such an extent that reconstruction is required as a result of a flood, fire, hurricane, earthquake, storm, or other catastrophe which the President, pursuant to section 2 (a) of the Act entitled 'An Act to authorize Federal assistance to States and local governments in major disasters and for other purposes' (Public Law 875, Eightyfirst Congress, approved September 30, 1950), as amended, has determined to be a major disaster."

SEC. 111. Section 204 (a) of said Act, as amended, is hereby amended—

(1) by striking out of the third sentence the words "any mortgage insurance premiums paid after either of such dates" and inserting "any · mortgage insurance premiums paid after either of such dates, any tax imposed by the United States upon any deed or other instrument by which said property was acquired by the mortgagee and transferred or conveyed to the Commissioner";

(2) by striking out of the second-proviso the words "or under section 213 of this Act," and inserting the following: "or under section 213 of this Act, or with respect to any mortgage accepted for insurance under section 203 on or after the date of enactment of the Housing Act of 1954,"; and (3) by striking the period at the end thereof and inserting a colon and the following: "And provided further, That notwithstanding any requirement contained in this Act that debentures may be issued only upon acquisition of title and possession by the mortgagee and its subsequent conveyance and transfer to the Commisioner, and for the purpose of avoiding unnecessary conveyance expense in connection with payment of insurance benefits under the provisions of this Act, the Commissioner is authorized, subject to such rules and regulations as he may prescribe, to permit the mortgagee to tender to the Commissioner a satisfactory conveyance of title and transfer of possession direct from the mortgagor or other appropriate grantor and to pay the insurance benefits to the mortgagee which it would otherwise be entitled to if such conveyance had been made to the mortgagee and from the mortgagee to the Commissioner."

SEC. 112. Section 204 (d) of said Act, as amended, is hereby amended by striking out of the second sentence thereof the words "three years after the 1st day of July following the maturity date of the mortgage on the property in exchange for which the debentures were issued, except that debentures issued with respect to mortgages insured under section 213 shall mature twenty years after the date of such debentures" and inserting "ten years after the date thereof".

SEC. 113. Section 204 of said Act, as amended, is hereby amended by adding at the end thereof the following new subsection:

"(i) In the event that any mortgagee under a mortgage insured under section 203 forecloses on the mortgaged property but does not convey such property to the Commissioner in accordance with this section, and the Commissioner is given written notice thereof, or in the event that the mortgagor pays the obligation under the mortgage in full prior to the maturity thereof, and the mortgagee pays any adjusted premium charge required under the provisions of section 203 (c), and the Commisioner is given written notice by the mortgagee of the payment of such obligation, the obligation to pay any subsequent premium charge for insurance shall cease, and all rights of the mortgagee and the mortgagor under this section shall terminate as of the date of such notice."

SEC. 114. Section 205 of said Act, as amended, is hereby amended to read as follows:

"SEC. 205. (a). The Commissioner shall establish as of July 1, 1954, in the Mutual Mortgage Insurance Fund a General Surplus Acount and a Participating Reserve Account. All of the assets of the General Reinsurance Account shall be transferred to the General Surplus Account whereupon the General Reinsurance Account shall be abolished. There shall be transferred from the various group accounts to the Participating Reserve Accounts as of July 1, 1954, an amount equal to the aggregate amount which would have been distributed under the provisions of section 205 in effect on June 30, 1954, if all outstanding mortgages in such group accounts had been paid in full on said date. All of the remaining balances of said group accounts shall as of said date be transferred to the General Surplus Account whereupon all of said group accounts shall be abolished.

"(b) The aggregate net income thereafter received or any net loss thereafter sustained by the Mutual Mortgage Insurance Fund in any semiannual period shall be credited or charged to the General Surplus Account and/or the Participating Reserve Account in such manner and amounts as the Commissioner may determine to be in accord with sound actuarial and accounting practice.

"(c) Upon termination of the insurance obligation of the Mutual Mortgage Insurance Fund by payment of any mortgage insured thereunder, the Commissioner is authorized to distribute to the mortgagor a share of the Participating Reserve Account in such manner and amount as the Commissioner shall determine to be equitable and in accordance with sound actuarial and accounting practice: Provided, That, in no event, shall any such distributable share exceed

the aggregate scheduled annual premiums of the mortgagor to the year of termination of the insurance.

"(d) No mortgagor or mortgagee of any mortgage insured under section 203 shall have any vested right in a credit balance in any such account or be subject to any liability arising out of the mutuality of the Fund and the determination of the Commissioner as to the amount to be paid by him to any mortgagor shall be final and conclusive."

SEC. 115. Section 207 (c) of said Act, as amended, is hereby amended

(1) by inserting after the first proviso in paragraph numbered (2) the following: "Provided further, That nothing contained in this section shall preclude the insurance of mortgages covering existing construction located in slum or blighted areas, as defined in paragraph numbered (5) of subsection (a) of this section, and the Commissioner may require such repair or rehabilitation work to be completed as is, in his discretion, necessary to remove conditions detrimental to safety, health, or morals:";

(2) by striking out the word "Alaska" in paragraph numbered (2) and inserting "Alaska, or in Guam,”; and

(3) by striking out paragraph numbered (3) and inserting the following: "(3) not to exceed, for such part of such property or project as may be attributable to dwelling use, $2,000 per room (or $7,200 per family unit if the number of rooms in such property or project does not equal or exceed four per family unit): Provided, That as to projects to consist of elevator type structures, the Commissioner may, in his discretion, increase the dollar amount limitation of $2,000 per room to not to exceed $2,400 per room and the dollar amount limitation of $7,200 per family unit to not to exceed $7,500 per family unit, as the case may be, to compensate for the higher costs incident to the construction of elevator type structures of sound standards of construction and design: And provided further, That such mortgage shall not involve a principal obligation exceeding the maximum amount prescribed by the provisions of this section 207 in effect prior to the effective date of the Housing Act of 1954, unless the President, pursuant to section 201 of the Housing Act of 1954 has authorized a greater maximum amount, in which event such principal obligation shall not exceed such greater maximum amount."

SEC. 116. Section 207 (d) of said Act, as amended, is hereby amended by inserting the words "of the Housing Insurance Fund" between the words "debentures" and "issued" in the first sentence of such section.

SEC. 117. Section 207 (h) of said Act, as amended, is hereby amended by striking out the period at the end of the first sentence and adding the following: "and a reasonable amount for necessary expenses incurred by the mortgagee in connection with the foreclosure proceedings, or the acquisition of the mortgaged property otherwise, and the conveyance thereof to the Commissioner."

SEC. 118. Section 212 (a) of said Act, as amended, is hereby amended, by inserting at the end thereof the following new sentence: "The provisions of this section shall also apply to the insurance of any mortgage under section 220 which covers property on which there is located a dwelling or dwellings designed principally for residential use for twelve or more families."

SEC. 119. Section 214 (b) of said Act, as amended, is hereby amended by striking clauses (1) and (2) and inserting:

"(1) not to exceed $5,000,000, or not to exceed $25,000,000 if the mortgage is executed by a mortgagor regulated or supervised under Federal or State laws or by political subdivisions of State or agencies thereof, as to rents, charges, and methods of operation; and

"(2) not to exceed, for such part of such property or project as may be attributable to dwelling use, $2,250 per room (or $8,100 per family if the number of rooms in such property or project does not equal or exceed four per family unit), and not to exceed 90 per centum of the estimated value of the property or project when the proposed improvements are completed: Provided, That if at least 65 per centum of the membership of the corporation or number of beneficiaries of the trust consists of veterans, the mortgage may involve a principal obligation not to exceed $2,375 per room (or $8,550 per family unit if the number of rooms in such property or project does not equal or exceed four per family unit), and not to exceed 95 per centum of the estimated value of the property or project when the proposed physical improvements are completed: Provided further, That as to projects which consist of elevator type structures, and to compensate for the higher costs incident to the construction of elevator type structures of sound

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Housing Act of 1954: Hearing Before ... , 83-2 on H.R. 7839 ... , March 2 ...