Mr. MUMMA. Per month?

Mr. SUMMER. Yes; per family per month. The Federal subsidythis is from page 313 of the subcommittee report, and on the committee was the chairman of the CIO housing committee, and on the committee were people representing the public housing group, the Federal subsidy, based on the 1949 act-the earlier acts were somewhat less, but the present housing fits this formula, and we personally think these figures of loss of local taxation are very low-Federal subsidy, $26.90, lost through tax exemption on the sale of public-housing bonds, $4.20 per family per month, administrative, Federal administrative costs, per family per month, $2, and using their figures, which my research proves are very inadequate, the difference between normal realestate taxes, per family per month, and the payment in lieu of taxes, the difference is $6.50 a month, which represents a subsidy of $39.60 per family per month.

Multiply that by 40 years, and you have a total subsidy of $19,000. I am not going to the fact that the tenants pay an average of $30 a month rent, which carried out shows another payment of $15,000 per unit, which brings the overall figure to $34,000 per family, but that totals, gentlemen, $72 billion, and that accommodates, including public housing authorized and not yet completed, 394,000 families.

Now, according to the census, there are 3 million families earning less than $2,000 a year, and to take one more moment of your time to show how we cannot afford to dissipate our dollars in the face of the need, if that were translated into dollars, you could afford to give away-not that I advocate this-1,069,400 houses free at $7,000 each, which would then pay full local taxes, and save the cities from insolvency.

Now that, of course, is not a recommendation, but it is interesting to point out that the $19,000 a unit, which does not include the tenant's payment, and which is not the true figure in my opinion, but is their figure, is enough to subsidize a family-this is per family-at $10 a month for 158 years, or $20 a month for 79 years, or $25 a month for 63 years, or $50 a month for 31 years.

Putting it another way, since 1949, incomes have increased. I believe that of the 3 million families earning less than $2,000 per year, only a fraction of them may ever need subsidy, because many of them have since bettered their lot, but if we assume that there were 1,200,000 families needing subsidy in this country, you could afford to pay them $30 per month per family for 10 years, and still save more than $3 billion under that program-$4 billion less than the present subsidy. I merely point these things out

Mr. MUMMA. Did you say millions or billions?

Mr. SUMMER. Billions. You would reduce the subsidy more than $3 billion if you paid 1 million people $30 per month per family for 10 years, to give a chance to this program to operate.

Mr. MULTER. Did you multiply that to get the aggregate of $30 a month for 1,200,000 families for 10 years?

Mr. SUMMER. Yes, sir.

Mr. MULTER. What does it amount to?

Mr. SUMMER. Thirty dollars a month for 10 years for 1.2 million families is $4,300,000,000.

The point I am making is this: Why should 13 percent of the 3 million people that fit into that category have the benefit of assistance, and the other 87 percent receive no benefit?

If we do believe that all Americans should be adequately housed, I believe the concentration of people in structures, good, sound, wellbuilt structures, subsidized for 40 years, is not the answer for several

reasons.

Number one, children growing up in those subsidized houses grow up as American citizens expecting housing subsidies as a matter of course. And you can't blame them.

If a man wants to do something to help himself-and we have a case in Ohio where a fellow in a public housing unit wanted to paper his bedroom. He couldn't do it. He can't do anything to help himself, and his children can't do anything to help themselves. And we think a program which enables the American family, or gives it the opportunity to help itself, is a commendable one.

And I merely showed you these figures to show how much more wisely those dollars could be spent, and I agree, that there will be in our economy, always, people who need subsidy in some form or other. That time has always been and always will be, though as time goes on the need for it lessens. And we have failed to consider a very im portant point, gentlemen, and that is minority groups.

There are in slum areas many people who can't afford, as I said before, to pay an economic rent, or to buy a property, and they are forced into public housing not because of economic causes, but because they have nowheare else to live. And we think that should be rectified. In my statement of New Jersey I have evidence where overincome families are paying up to $170 a month, and one fellow was put out because of overincome, and within a week he had a place, and they said, "How come?" He said, "I had an $18,000 house, but I was renting it."

We can show you where public housing is not limited to the underincome families, but covers the field of overincome families as well. In Newark, with over 60 vacancies in public housing, they have since built three or four thousand other units and they have had to employ people to go around to industry and beg industry to supply people to fill these units.

I admit there are many people who sincerely believe in public housing. I talked to the League of Women Voters last night. I believe many people are sincere, and who have felt with justification there was no other solution, but now they are coming forth with a program where money will be available for new housing and rehabilitation of housing, and the need for public housing that was genuine in some cases will no longer exist. But I do think indigent families should always be helped.

Mr. MULTER. That was a nice statement against public housing, but it has nothing to do with my question. What in this bill calls for public housing as of this moment? Is there a single section in this bill calling for public housing?

Mr. SUMMER. No, sir, I am trying to point out, sir

Mr. MULTER. Now let's get, if we may continue a few minutes more, to the question I asked. How you are going to do anything, what is there in title IV that is going to help you or make it more possible to

clear slums? You have two distinct problems: One is clearing the slums, the other is taking care of the indigent.

Let's try to keep them separate.

Mr. SUMMER. All right.

Mr. MULTER. We agree that the indigent must be taken care of and that slums must be cleared. What in title IV will make it possible for you to clear more slums than under title I ?

Mr. SUMMER. No. 1, a prerequisite, that before Federal grants are available, or before FHA financing in rehabilitation is available, that the cities must first enforce its codes, including occupancy codes. That will prevent the creation of new slums, in tearing down areas to remove slums. I think that is a most important point.

No. 2, the adoption of an overall master plan, which obviously must take into consideration the income of the families who are being displaced, and where they will go, and we have got to face up to that problem.

The third is, we must face up to the minority problem.

Now, specifically answering you, under the 1949 act there was no requirement to enforce codes, there was no requirement for a master plan, which is essential if money is to go in.

Mr. MULTER. But the Federal Government can't make localities enforce their codes.

Mr. SUMMER. I don't think the Federal Government should go into a city and tell them what to do.

Mr. MULTER. Or a State. Those are purely matters of local legislation, State, and municipal and local enforcement.

Mr. SUMMER. Right. All the Federal Government can do is to say, "Before we grant you any aid, or before we recommend that FHA mortgage financing can be made available in this area, you must meet certain basic conditions," and that is the key, I think, to making the program work as compared to the 1949 act, which merely moved the slums into another area.

The CHAIRMAN. Mr. Multer, if it is agreeable to you, and without objection, may I inquire of the gentlemen if it is convenient for them to be back this afternoon?

Mr. WALTEMADE. If it is your desire, we will be glad to, Mr. Chair

man.

The CHAIRMAN. If it is agreeable to the committee, we will stand in recess until 2: 30 this afternoon.

(Whereupon, at 12:16 o'clock p. m., the committee recessed until 2:30 o'clock p. m. the same day.)

AFTERNOON SESSION

The committee reconvened at 2:30 p. m., pursuant to its morning recess, Hon. Jesse P. Wolcott (chairman) presiding.

Present Chairman Wolcott, Messrs. Gamble, Talle, Kilburn, MeDonough, Betts, Mumma, McVey, Oakman, Hiestand, Spence, Brown, Multer, Deane, O'Brien, Dollinger, and O'Hara.

The CHAIRMAN. The committee will come to order.

We will continue the hearings on H. R. 7839. I believe Mr. Multer had the witnesses when we adjourned.

Mr. MULTER. Thank you, Mr. Chairman.

Now, we have heard considerable during the course of these hearings about doing something for the minorities. I think you made a very nice statement, gentlemen, about doing something for the minorities. What in this bill is going to do anything for the minority groups, to give them some housing?

Mr. SUMMER. I will be glad to make reference to it, Congressman. No. 1, for the first time in the history of this Nation there has been a guaranteed mortgage facility made available, in slum areas, subject, I hope, to several conditions I mentioned this morning.

Mr. MULTER. Let me stop you a moment. You say in slum areas. Do you mean to clear the slums and put up these $7,000 houses? They will be made available to the minority groups?

Mr. SUMMER. May I explain that?

Mr. MULTER. Yes.

Mr. SUMMER. It is impossible to take any one segment of this slum rehabilitation or slum removal program, and isolate it completely, but the recommendation for section 221 is as follows:

No. 1, it is limited, for relocation purposes.

No. 2, it must be programed. By that I mean there must be a study made by the FHA Commissioner as to the number of people or families being relocated, how many of them are not minority groups and will have no trouble because of their income, to rent or buy existing houses.

Mr. MULTER. Let me stop you a moment. In all of this law, that we have been writing all through the years, we have never said specifically, to any of the agencies, you must build X percentage of this housing for minority groups. We have always had the assurance of the agencies, and it was given in good faith, that they would do their utmost to provide housing for the minority groups. I think you put your finger on it a moment ago, and then passed over it, though not purposely. If you can't get the mortgage money for the minority group housing you won't get the majority group housing.

Mr. SUMMER. I agree with you.

Mr. MULTER. Guaranty or no guaranty.

Mr. SUMMER. I agree.

Mr. MULTER. All we have done through the years is to set up a method for guaranteeing mortgages. But the difficulty has always been with the minority groups, not being able to get the mortgage money. Isn't that so?

Mr. SUMMER. That has been the difficulty, sir. And I think that is why your secondary mortgage facility is so important, because in the event it is impossible-I don't think it will be impossible, but in the event you don't get sufficient mortgage money to properly house minority groups, there should be a facility which makes it possible to do so. Mr. MULTER. Yes, but the secondary mortgage market brings additional money into the market by buying up the existing mortgages and turning them into cash so there is more money to be loaned. If in the first instance the institutions won't lend to minority groups, the secondary mortgage market won't bring more money into the market for that purpose.

Mr. SUMMER. I happen to be the recipient by a colored group known as the Franklin D. Roosevelt Association, 2 years in a row, of the award of the year for providing, financing, and arranging for housing for colored people, new housing, under title 608.

We do find there are organizations or institutions willing to loan. on that type of housing, but up to the present the difficulty has not been exactly lack of mortgage funds. It has been a combination of two things: Lenders unwilling to lend in the area selected, because the area is not generally a sound area but was a declining area.

And many of those lenders today, with or without the secondmortgage facility, would lend provided FHA insured the mortgage, if the area was not on a downward grade. Now, the whole purpose of this program is to have rehabilitation areas enforcing codes and the like I won't go into all the details-but a master plan, to reverse the trend of downward grade to an upward grade and under those conditions mortgage lenders are interested.

But I can readily understand that they are responsible to their stockholders, or if it is a mutual company, to the investors, and they could be criticized for lending in an area that was on its way down, and this whole program is designed to reverse that downward trend to a better trend through enforcement of codes. So it is a combination of those things, Congressman.

Mr. MUMMA. Will you yield?

Mr. MULTER. I yield.

Mr. MUMMA. Isn't that due to some gimmicks in the guaranty of the FHA, that if the mortgage is in default they can't just say, "Here, FHA, pay us off." There are certain gimmicks in there that make it hard to get your money back in a case of default, aren't there?

Mr. SUMMER. To answer you on that point, there were several things that have caused the problem.

First, the cost of foreclosure was assumed by the lender.

Secondly, the FHA itself, under its underwriting policies, refused to lend in a declining area. That is the basis of good underwriting. And this whole program is not designed to ignore good underwriting or good lending principles, but rather to take the necessary steps to upgrade an area, upgrade a city and make it a sound investment rather than an unsound one. I don't think we could criticize FHA for that.

But your lenders did face a loss themselves in case of foreclosure, and they faced further criticism from stockholders and depositors; as the case may be.

Mr. MULTER. And you are going to have the same difficulty under this bill if this is enacted in its present form.

Mr. SUMMER. I don't agree with you.

Mr. MULTER. Because you are limiting these new $7,000 houses to those slum areas.

Mr. SUMMER. I might say that this particular section 221 is limited to those areas, but

Mr. MULTER. Why should it be? If the area is a bad area and you want to clear the slums out, and there is cheaper ground somewhere else where you can put up the houses, why not put them up in a nearby place rather than there?

Mr. SUMMER. You can, sir. It is part of the same community and as I understand it, it is limited, however, to those who are being relocated. As I interpret it, I don't think it is spelled out that it must be in that location specifically.

Secondly, other sections, 220, make available more liberal financing in the area, in addition to section 221.

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