We also recommend for your consideration that section 15 (8) (b) of the Housing Act of 1937, as amended, be amended by striking out "not later than 5 years after March 1, 1949," and inserting "not later than March 1, 1959." This provision of the law, which expired March 1 of this year, extended a preference to veterans and servicemen applying for admission to low-rent housing. Our proposed amendment would renew and continue such preference until March 1, 1959.

Again, I wish to express my thanks to the chairman and members of this committee for allowing us the opportunity to present our views with respect to the bill, H. R. 7839.

The CHAIRMAN. Thank you very much for being here, Mr. Foster. Are there questions of Mr. Foster?

Mr. PATMAN. Do you take the same position that the other veteran organizations take in connection with the increased interest rate? Mr. FOSTER. Definitely; yes, sir.

Mr. PATMAN. I want to state that, since your organization has been under attack, I have complete confidence in you. I know something about your organization, and have, ever since it was organized. These attacks are unwarranted, so far as I know, and I think it is a great organization and doing a fine public service. You have always been useful to me and to the congressional committees on which I have served since I have been in Congress. I want to express my appreciation to you particularly for the help that your organization has given to Congress in this and other matters.

Mr. FOSTER. Thank you for that, Mr. Patman.

I might say that the Veterans' Affairs Committee is at the present time working on a report relative to the charges that were made against us, and that report probably will be published within the next few weeks.

I feel certain that that report will bear out the fine statement you have just made.

Mr. PATMAN. And your organization will be exonerated, I am sure, because it is entitled to be.

Mr. FOSTER. Well, the report is based on the facts in the transcript, and there is no other answer.

Mr. PATMAN. At any rate, my admiration for your organization and confidence in it have not been lessened by these unwarranted and scandalous attacks.

Mr. FOSTER. I appreciate that, sir.

The CHAIRMAN. Are there further questions?

If not, thank you very much.

Mr. FOSTER. Thank you, Mr. Chairman.

The CHAIRMAN. Mr. Bernard Weitzer, national legislative director of the Jewish War Veterans.

We are very glad to have you, Mr. Weitzer, and you may proceed.

STATEMENT OF BERNARD WEITZER, NATIONAL LEGISLATIVE DIRECTOR, JEWISH WAR VETERANS OF THE UNITED STATES OF AMERICA

Mr. WEITZER. Mr. Chairman and members of the committee, I am grateful for the privilege of presenting to you, once again, the viewpoint of the Jewish War Veterans of the United States of America on

the housing problem and particularly, to comment on the bill introduced by your chairman, H. R. 7839, as a step toward the solution of the problem.

There are some features which I should like to see changed in view of the resolution passed at our 58th annual convention held in Chicago September 2-6, 1953. That resolution reaffirmed our support for the Housing Act of 1949 as amended by bills which went through your committee. I want to emphasize that characterization of such amendments. For we also passed, for the third or fourth time, a resolution at that convention opposing legislative amendments by riders on appropriations bills, such riders as have wreaked havoc in the functioning of the Housing Act of 1949.

In accordance with the convention-approved resolution on housing, I respectfully request that you modify the President's authority to adjust interest rates on FHA- and VA-insured mortgages, and to fix in the bill the rate for VA mortgages at a maximum of 4 percent, and the maximum for FHA mortgages at 412 percent.

I must similarly request that the Veterans' Administration retain its power to establish the limits on fees and charges for VA-aided residential-mortgage loans. Likewise, the weakening of the veterans' preference provisions for admission to low-rent housing as provided in section 501 should be changed.

The amendments proposed in sections 119 and 120 are a mixture of good and bad. The proposal for the increase to as much as $25 million in an FHA-insured cooperative-housing mortgage may be valuable in some instances, particularly in the builder-sponsored type of project. However, changing from a cost basis to a valuation basis in the amount of the mortgage will certainly cause difficulties in some cases. The amount of the mortgage under the changed basis would often be reduced and therefore call for a higher downpayment which is naturally an obstacle to the prospective cooperators. This can be substantiated by the former assistant commissioner for cooperative housing, who has had frequent opportunities to compare the effects on the mortgage amounts of the change proposed.

Furthermore, in these two sections of H. R. 7839, it is proposed to ratify an appropriations bill rider which has been a serious factor in slowing down the progress of cooperative housing. The original bill very clearly defined the need for helping cooperators to get together and organize cooperative-housing projects. Practically all such prospective cooperators find themselves frustrated by the complexities of real-estate transactions and the problems which are common to getting together and moving ahead with reasonable speed to progress toward the objective of a cooperative building project. Competent, disinterested advice is essential, but the regular FHA field staff, generally, has little knowledge about the opportunities afforded to cooperators by section 213. It was much easier for them to deal with the experienced contractors, builders, and real-estate men who talked their language and with whom they had had much experience.

For the foregoing reason, section 213 provided for an assistant commissioner for cooperative housing and a staff to help cooperators, directly, and even more to train FHA field employees to deal sympathetically and helpfully, with the cooperative projects brought to their FHA regional field offices. That operation paid off in dollars

and cents return to the Government because the fees collected on the projects outran, by a considerable amount, the outlays for the assistant commissioner's office, staff, and the work done by the FHA employees in the field and at the home office. Nevertheless, an appropriations bill rider stalled the whole operation without giving your important committee an opportunity to study and discuss the subject and thereby, in my humble opinion, usurped a proper function of your committee. H. R. 7839 would appear to confirm such usurpation by abdication. In line with our 58th annual convention resolution, I respectfully ask that you remove this provision from H. R. 7839 eliminating the assistant commissioner for cooperative housing, and thereby carry out the original intent of section 213.

In contradistinction to the readiness to buttress the Appropriations Committee rider regarding the assistant commissioner for cooperative housing, is the failure to include in H. R. 7839 a reaffirmation of the original provision of the National Housing Act of 1949 for 135,000 public-housing units per annum, and also the failure to include in H. R. 7839 authorization for the 35,000 public-housing units per annum for each of the next 4 years which is recommended in President Eisenhower's housing message. In line with the housing resolution passed at our 58th annual convention, I respectfully request that you insert a section in H. R. 7839 affirming the goal of the Housing Act of 1949 for 135,000 public-housing units per year and a section definitely authorizing the number of public-housing units requested by President Eisenhower in his message. Your failure to do this will be an invitation to the Appropriations Committee, once again, to write housing legislation by riders on its appropriations bills.

In general, insofar as H. R. 7839 departs from the National Housing of 1949, I feel that our convention resolution would call for some opposition, but there are many proposals in H. R. 7839 which are undoubtedly of good intention.

Section 101 of the bill increasing the amount and the time for repayment of property improvement and repair loans certainly belongs in the good-intentions category. However, it is a mistake to suppose that anywhere in the near-time future this provision will have a marked effect either in improving rundown city areas or in providing any larger amount of housing units for those who need them. The probable effect will be jacking up the rents so that current occupants will, in many cases, be forced into even poorer quarters. What is more, should there be any increased interest in such improvements and in the placement of loans under section 101 it would be necessary to have a new breed of FHA field employees to process such loans and a new group of contractors to do such work. Builders and contractors accustomed to work on complete new houses do not easily adjust either their thinking or their operation to go after such improvement business and set themselves up to carry out the work effectively or efficiently.

Section 221 of the bill, although fully entitled to be included in the good-intentions category, is admittedly of no use to that part of our population living in the highly populated metropolitan areas where high land costs admittedly make a $7,000 house impossible. People in such areas will certainly not be able to benefit from the provision of this section. It has not been made entirely clear just where a

$7,000 house is feasible, and whether a $7,000 house can be reasonably expected to outlast the 40-year mortgage term. Bankers and lenders, thus far, have shown no hot desire to acquire such mortgages. That such $7,000 houses with 100 percent mortgages running for 40 years can meet the needs of those who are eligible for public housing is completely out of the question. In some areas it is possible that there can be such houses available to meet the needs of the lower middleincome families-those whose monthly earnings range from about $275 to $325. That is based on the figures in exhibit 8, page 94, of the President's Advisory Committee report of December 1953.

As I recall it, that showed that monthly costs would run about $62.50 per month.

In considering the feasibility and the possibilities of this section, it is well to remember that it took mass production housebuilding methods in what was practically an assured housing market to put up the houses at Morrisville, near the Fairless works of United States Steel, at a sales price of $10,000 to $10,500 for a no-basement, 3-bedroom house, with a living room, kitchen including a dining nook, 1 bathroom and carport. A similar mass building effort at Leavittown, Long Island, produced a slightly less desirable house without a carport at a price range which started at $7,990 and in succeeding years, as building materials costs and labor building costs increased, moved first up to $8,990 and subsequently to $9,990. It is doubtful that the ordinary moderate-sized speculative builder can match this performance even on low-priced land at the $7,000 level.

It is a good idea to provide as in title III to aid bankers and other lenders, to set up their own association to insure a secondary market for mortgage loans. The opportunity to do so on their own initiative without Federal assistance has not heretofore appealed to such lending institutions. However, it is essential to keep FNMA in business for the indeterminate future and I believe that in order to avoid future large appropriations to enable FNMA to perform its functions as a secondary mortgage market it would be desirable to carry out a program somewhat as follows:

1. Organize a corporation under the auspices of FNMA or FHA which would hold in escrow as many hundred million dollars worth of FHA and VA mortgages as are now held by FNMA and which cannot be promptly sold to lenders who would hold such mortgages permanently.

2. To have such a corporation issue debentures secured by the mortgages held in escrow to sell to the general public-such debentures to be in amounts of $500, $1,000, and $5,000 carrying an interest rate of about 314 to 33% percent. The difference between such an interest rate and the interest rate on the VA and FHA mortgages held in escrow, would take care of servicing the mortgages and the paperwork involved. The testimony as to such costs was given by bankers and lenders at a special hearing of the Senate Banking and Currency Committee where representatives of lenders from all parts of the country had an opportunity to express their views on the mortgage interest rates, and the net returns to the lenders.

In summary, I would say that there is an opportunity for a housing bill which will truly meet the need of the people for housing as they were recognized by the late Senator Taft so recently as in the spring of

1953 at the National Housing Conference meeting at the Statler Hotel. Furthermore, the housing program stimulated by such a bill could take up the slack in our current economic situation very effectively. Thank you for this opportunity to appear before you.

The CHAIRMAN. Thank you, Mr. Weitzer.

Are there questions of Mr. Weitzer?

Mr. MULTER. Mr. Chairman.

The CHAIRMAN. Mr. Multer.

Mr. MULTER. Very briefly, Mr. Chairman. Mr. Weitzer, you have been before our committee many times, and we have always been very happy to have you here. You have always been helpful.

Do you know in what areas of the country you can get any $7,000 homes built?

Mr. WEITZER. Well, I occasionally see papers from various parts of the country where there are houses for $7,000, but it is difficult to get from the ads just what kind of houses they are, whether they are the sort of houses that would last 40 years, or whether they are the sort of houses on which anybody would give a 100-percent 40-year mortgage, even under Government insurance.

I am not in a position to say. All that I can go by is that I have talked with many people who have seen the Levittown and Morrisville houses, and I know that that was a tremendously successful building operation, but there was practically no speculation involved. Every modern, efficient, large-scale method of production was applied. Levitt Brothers, I think is the name of the firm, were able to get building materials at the lowest prices, they set up their own wholesale operation and dealer operation in order to overcome the present restrictions which the building materials dealers and the building material wholesalers put on having manufacturers sell direct to a builder, and with all of that they apparently were able to put up a decent house, but the price had to be around $10,000, or better. Now, I don't know just what the lot costs were there.

Mr. MULTER. I think in the Long Island area they were able to put up a very small one-bedroom house for just under $9,000.

Mr. WEITZER. That is what I say, the Long Island houses were smaller, but even that was considered quite a performance. It was considered a remarkable feat. So I am So I am a little dubious about the feasibility of this $7,000 house in the first place, and in the second place, I am certainly dubious about the implications that I have heard in the testimony here that this thing is going to remove the need for public housing, that this is the answer to the problem on which this Congress has worked for a great many years and on which Senator Taft worked, with Senators Ellender and Wagner. Finally, in 1949, a real bill had gotten through, and that bill has been fought, and hamstrung, and mutilated by appropriations bill riders so as to knock out its usefulness in every possible way, and so as to slow up the provision of the public housing that in the opinion of our organization is essential to meet the need of a small percentage of the people who just, for one reason or another, don't seem to be able to earn enough to pay the full economic rent. The question is whether they are going to rot in the slums or have an opportunity to get into a decent environment to raise American children in an American atmosphere.