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Type of institution purchasing and selling all home mortgages: Number and face amount of home mortgages transferred (including resales) under secs. 203 and 603, for the year 1948

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National bank..
State bank..
Mortgage company
Insurance company.
Savings and loan association
Sayings bank
Federal agency -
All other 2

9,069 $54, 642, 184 16, 925 102, 769, 028 3, 641

23, 648, 750 72, 678 486, 867, 828 543

3, 348, 600 12, 909 89, 649, 340 14,888 104, 263, 700 3, 271 21, 384, 100

6.2 11.6

2. 6 54.9

4 10.1 11.7 2.5

13, 757 25, 597 68,130 8, 939 7, 337

398

$90, 444, 727
162, 329, 161
458, 354, 492
60,473, 850
48, 476, 050

2,847, 150
1,460, 800
62, 187, 300

10. 2 18.3 51.6 6.9 5.5

3

420 9, 346

1 7.1

Total.

133, 924 886, 573, 530

100.0

133, 924

886, 573, 530

100.0

1 Based on amount of mortgage. 2 Includes industrial banks, finance companies, endowed institutions, private and State benefit funds, etc. 3 Excludes mortgages insured under sec, 603 pursuant to sec. 610 and under sec. 609.

Type of institution originating and holding all rental-project mortgages: Number and face amount of secs. 207 and 608 mortgages financed through 1948 and held in portfolios as of Dec. 31, 1948

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Total 3

National bank.
State bank
Mortgage company.
Life insurance company.
Other insurance company
Savings bank
Savings and loan association.
Federal agency.
All other

652 $172, 618, 775
784 381, 323, 645

526 117, 542, 289
1, 244

443, 323, 698 12 2, 251, 300 197 97, 694, 486 148 26, 570, 044

25 18, 949, 500 142 41, 399, 979

13. 3 29. 3

9.0 34. 1

.2
7.5
2.0
1.4
3. 2

466 $130, 223, 389
533 279, 794, 567

108 36, 957, 700
1, 697 511, 396, 417

23 3, 379, 300 354 159, 165, 607 85 14, 795, 102 5

481, 700 87 24, 767, 254

11.2 24.1

3. 2 44.0

3 13.7 1.3

.1 2.1

Total

3,730 1,301, 673, 716

100.0 3,358 1,160, 961, 036

100.0

1 Based on amount of mortgages.
* Type of institution holding mortgages at date of termination or as of Dec. 31, 1948.
Excludes mortgages financed and held under sec. 608 pursuant to sec. 610.

Senator SPARKMAN. Senator Douglas.

Senator Douglas. Mr. Foley, you submitted this morning a very interesting table on comparative cost figures for cooperatives as compared with section 608. Will you return to that mimeographed sheet? I think it is a very crucial set of figures.

Mr. FOLEY. Yes, sir.

Senator Douglas. I would like to ask some questions, if I may, about the estimates, how they were arrived at.

As I understand it, this is made up of about five estimated lower forms of cost under the cooperative form; a lower vacancy rate, lower operating costs, a lower interest rate, a longer amortization rate, and then a smaller balance left after costs were met.

I won't ask questions about differences in the interest rate, because I think we at least touched on that this morning, but I would like to take up the other items. I first come to the vacancy allowance which I understand you fix at 3 percent for the cooperative units and at 7 percent under section 608; so that the saving is around $4 a month.

The question I would like to ask is this: In practice, at the present time, do you have a 7 percent vacancy rate in units constructed under section 608? Are you not using a ratio in normal times, whatever those may be, or the 1930 vacancy ratio, but not the 1949 vacancy ratio? It is my observation that in the largest cities of the country, at least, vacancies are almost nonexistent. I don't want to give any ammunition to the opposition, but it will be hard to argue that there are no vacancies, and therefore rent control should be continued, and then in the next breath to argue that there are 7 percent vacancies. I think we have to base these policies on facts.

I want to know where you get this 7 percent vacancy figure.
Mr. FOLEY. Of course, Senator-
Senator MAYBANK. We have no rent control.

Senator Douglas. I don't want to get rent control mixed up in this. I can say, as far as Chicago is concerned, I know there is not a 7-percent vacancy rate. I doubt if it is 2 precent. Perhaps not 1 percent.

I am interested in having the same set of facts apply across the board. I would like to find out where the 7-percent vacancy rate comes in.

Mr. FOLEY. Of course, Senator, we would not contend that there is a 7-percent vacancy ratio at this time on an average in rental housing projects, either FHA insured or otherwise. You will recall that we are discussing a long-range set-up which has to be set up at the beginning with an evaluation of the risk as far as we can over a long term and an attempt to appraise what allowances have to be made so that the project will not fail.

Senator DOUGLAS. Then this is an estimate of the future?

Mr. FOLEY. That is an estimate of the future, based upon experience of the past.

Senator Douglas. What experience have you used on this, please?

Mr. FOLEY. In many quarters, in the past, a vacancy ratio of 10 is calculated, before we ran into critical housing situations. In this situation we have attempted to get a figure that would probably be realistic, as against a development of a more normal housing supply, and a greater freedom of choice.

Senator Douglas. Are you saying that in the past there has been an actual average vacancy of 10 percent?

Mr. FOLEY. There have been in many projects in the past.
Senator DOUGLAS. Is that an average for the past?

Mr. FOLEY. I wouldn't say an average. It was in many cases used in the industry in the lending field as a factor.

Senator DOUGLAS. Let's see. You mean the vacancies didn't exist, but private industry raised the rents as though they did; that there was a market for a nonexistent cost?

Mr. Foley. No; I am not saying that because I don't know that to be the case.

Senator DOUGLAS. That may be true.
Mr. FOLEY. It may be.
Senator DOUGLAS. I have heard it alleged to be the case.

We have $4 a month on that item. I want to see whether it is an illusion or whether it is a reality. If it is a reality it is an advantage. If it is an illusion, we won't be able to realize on it.

Mr. FOLEY. Mr. Greene reminds me that the 7-percent allowance is not necessarily a reflection of actual vacancy. It also reflects loss through failure to collect rents, and so forth.

He points out in the present cooperative operation in the FHA they are using a 3-percent ratio.

Senator DOUGLAS. Let's get down to the nub of the issue: Is it the practice of the real-estate industry to have a given mark-up for vacancies irrespective of whether or not those vacancies exist? Is there a general practice in the industry that the rent shall be adjusted on a given percent?

Mr. THOMAS. It is proven experience. You talk to your people in the city of Chicago. Historically, you have to include vacancy factors.

Senator DOUGLAS. How much has it been? Mr. Thomas. Fifteen percent on industrial buildings. Senator Douglas. This estimate of 7 percent, then, isn't an illusion? That is fine. It is solid ground, then.

Mr. FOLEY. That is right.

Senator DOUGLAS. What ground is there for thinking you will have only a 3-percent vacancy loss factor in the cooperatives?

Mr. FOLEY. The nature of the cooperatives, themselves, since those who will be occupying them will be themselves the owners of the project. Consequently, their tenancy is certainly to be expected to be much more stable.

Senator DOUGLAS. There are cooperatives in New York; the clothing unions have cooperative apartment houses. What has been their vacancy factor?

Mr. FOLEY. I don't believe I could quote them to you, Senator.

Senator Douglas. Would you be willing to have one of your assistants help you?

Mr. FOLEY. I don't know whether anyone here has that information. I will be glad to get it.

You are referring to the Amalgamated?

Senator Douglas. What is their experience record? There are a number of cooperative ventures. This is not merely a European experiment. In the cooperative experience that we have, what has been

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the average? Is there enough experience so that a statement can be made?

Mr. FOLEY. I doubt that there is enough experience of the type of cooperative which is a true, pure, all-the-way cooperative as contemplated here.

While there have been some hundreds of co-ops in this country, they have been of all varieties, and cooperatives going only part the way, cooperatives to get the land, cooperatives to build, cooperatives for getting various services, materials, and so forth. Relatively few on the basis of the pure cooperative such as is here contemplated. What we do have here, in the 3 percent vacancy allowance, is based upon the best information we can get on experiences of that type.

Senator Douglas. You don't seem to come out with any definite facts. Will someone submit a memo?

Mr. FOLEY. We will be glad to. Senator DOUGLAS. On what the actual vacancy rate has been. Until we get that, it is a generality, it is a hope, but it is not a reality.

Mr. Foley. I will be glad to submit a memo on such experiences as are available.

(The material referred to follows:)

VACANCY LOSSES IN COOPERATIVE HOUSING PROJECTS The loss of rental income through vacancy in the three cooperative housing projects operating under the New York State limited dividend law amounted to 2.64 percent of the gross rental of the apartments from the inception of the projects through August 31, 1947. The vacancy experience of the individual projects vary over a wide range as is shown in the following table which lists the total gross rental and gross vacancy through August 31, 1947:

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In addition to the dollar loss of rent through vacancy of dwelling units, there was reported for the apartments in the project rent loss and allowances that totaled $7,469.50 over the life of the projects and amounted to less than one-tenth of 1 percent of the gross rental. Including the rent loss and allowances, the total vacancy rate for apartments in the three cooperative projects was 2.65 percent.

The total vacancy of all 10 limited-dividend housing corporations under the supervision of the New York State Division of Housing over the life of the projects amounted to 1.96 percent of gross rental. However, three projects which began operations in late 1934 or 1935 accounted for about $25,824,000 of the total gross rental of $41,806,000, yet had a vacancy loss of 1.33 percent since the inception of the projects. In the year ended August 31, 1947, the 10 limited-dividend corporations had a vacancy loss from apartments of only 0.06 percent, and only one of the cooperatives, Amalgamated Dwellings, Inc., had any vacancies. In this project, the vacancy rate also was 0.06 percent.

City and Suburban Homes Corp., a limited-dividend corporation owning and operating a substantial number of low-rent projects outside the supervision of the New York State Division of Housing, had vacancy losses over a 42-year period ended in 1938 of less than 4 percent from the combined projects. Losses from uncollectible items during the same period amounted to less than 0.5 percent of gross chargeable rents. The peak losses occurred in 1934 when vacancy

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