STATEMENT OF E. R. SHAW, FOR THE TRAILER COACH ASSOCIATION, LOS ANGELES, CALIF., ACCOMPANIED BY RALPH KAUL, CONSULTANT AND REPRESENTATIVE, TRAILER COACH ASSOCIATION, AND PAT McCORMICK, GENERAL COUNSEL, TRAILER COACH ASSOCIATION

Mr. SHAW. My name is E. R. Shaw, and I am president of the Columbia Trailer Co., Van Nuys, Calif. I am also a member of the board of directors of the Trailer Coach Association, which includes manufacturers, suppliers, dealers, and park operators in the trailercoach mobile homes industry, principally in the Western States. I am appearing today in behalf of this association and have with me Mr. Ralph Kaul, its consultant and representative in Washington, D. C., and Mr. Pat McCormick, general counsel.

With us today also are representatives of the Mobile Homes Manufacturers Association, which represents the manufacturers mainly in the Midwest and East, and the Mobile Home Dealers National Association. These associations have collaborated with us in developing the industry's legislative program and proposals and are here today to support them.

Our purpose in appearing before you is to obtain the recognition of this industry as a part of our national housing resources, and to eliminate the discrimination against more than 2 million occupants of mobile dwellings who are now deprived of the benefits of the National Housing Act.

I have briefly summarized (1) the need to include the mobile home in the housing law; (2) how this need can be met within the existing framework of FHA statutes and procedures; and (3) the advantages that would accrue to the public, advantages, as I will show later, that can be obtained without subsidies or cost to the taxpayer.

With your permission, Mr. Chairman, I can present this summary to the committee in about 10 minutes.

First, I would like to call the committee's attention to a very startling fact: As it now stands, the National Housing Act completely neglects the Nation's most important low-cost housing resource, the trailer coach mobile dwelling. Under section 8 of title I, the National Housing Act recognizes low-cost housing as that costing $6,000 or less. Approximately 6,000 such houses have been built each year in recent years under FHA mortgage insurance, and this has been the bulk of the fixed-to-site housing in the low-cost category. During those same years, about 80,000 mobile dwellings in the same low-cost category were built and sold in the United States annually. In other words, about 90 percent of the market for low-cost housing has been met by mobile dwellings.

Essentially, we are dealing with a situation in which the law has not caught up with the facts. In the 1930's when Congress was first considering and enacting housing legislation to provide better credit terms for home ownership, there was no such thing as a trailer coach mobile home. The trailer coaches of that day were small, partially equipped vacation units connected with motor touring, and the trailer parks were usually camping facilities for transient vacationists. But the industry has changed greatly during the past 15 years, and more particularly during the postwar period. Today it is

an important segment of the housing industry. Some 800,000 trailer coaches are providing permanent homes for more than 2 million people. These people are living in trailer coaches because they find their housing needs are best met that way.

The modern trailer coach mobile home has been developed to meet high standards of living. It has become, by apartment standards, a livable 2-bedroom dwelling unit with a fully equipped bathroom and kitchen, and includes all the essential house furnishings. The modern trailer park is developing into an attractive, suburban development with landscaping, recreation areas, and utilities equal in every respect to the average garden apartment.

Mobile dwellings are the best housing solution for some people and the only solution for many others.

People in all walks of life and income groups live in trailer coach mobile dwellings. It is the best housing solution for most of these people and for some it is the only solution.

Mobile homes are the homes of military personnel who are enabled to have their families with them wherever stationed in the United States, of defense workers and their families, of newlyweds, of retired folks, of construction and agricultural workers and others in mobile or semimobile employment. For many of these workers it is their only practical solution for family living and home ownership.

Now let us examine why these people need equal consideration with others under FHA. Let us take an example of a family that can afford only a $6,000 house, in other words the FHA low-cost house. Under section 8 of title I, if they buy a fixed-to-site house, they would have to pay only $250 down and $31 a month for interest and amortization; and would have 30 years to pay off the mortgage at an interest rate of 5 percent including FHA insurance premium.

On the other hand, if the family needs and buys a mobile dwelling, they will be called on to pay one-fourth to one-third down and the balance in 3 to 5 years at 5 to 6 percent discount. Assuming the most liberal terms under present lending practices this family would have to pay for a $5,000 trailer coach $1,250 down and $78 a month. On top of this they would have to pay $25 a month for a trailer-park rental making a total of $103 a month. What starts as low-cost housing in total price becomes high-cost housing in monthly payments.

The manufacturers and dealers of mobile dwellings are also at a disadvantage as compared with the builders of fixed-to-site housing. When a family buys a dwelling under FHA, the builder and realtor immediately get their money. When a mobile dwelling is sold, the dealers in many areas are called upon to deposit 5 percent of the purchase price as non-interest-bearing collateral to secure the loan for the mobile-home family.

These disadvantages are despite the fact that trailer-coach loans involve negligible risks. Whereas in recent years the FHA has been experiencing net losses of about 1/2 of 1 percent on loans made for property improvements, the lending institutions financing trailer coaches have experienced losses of less than 1/4 of 1 percent. In view of this excellent credit record there could be no objection to mobile dwellings as an unsound FHA credit risk.

The mobile-home industry does not seek the identical terms that FHA gives to low-cost, fixed-to-site housing. Nor does it oppose

pending amendments to grant even more generous terms to such housing. But we are seeking adjustment of the adverse credit relationship. This, we believe, can be accomplished within the framework of the present law and without conflicting with other amendments.

There are two basic proposals: First, we are proposing that title I, section 2 of the National Housing Act be broadened to include the trailer coach mobile dwelling. Under this title lending institutions are partially insured against losses on loans which do not involve appraisals, mortgages or long-term financing.

The procedure and terms of title I are applicable to mobile dwellings with the following safeguards and limitations: Insured loans should be limited (1) Only to those meeting high construction standards, (2) to $5,000 per loan or 75 percent of the purchase price whichever is less, and (3) a maximum term of 7 years.

Our second proposal is to include trailer parks under the rental housing mortgage insurance of title II, section 207 on the same basis as the garden-type apartment.

With trailer parks, as with the mobile dwellings, we recommend reasonable safeguards, namely: (1) A high standard of construction, (2) a $1,000 maximum loan per trailer space and a $300,000 maximum per mortgage, and (3) a term of amortization reasonably comparable with rental housing.

Now, let us consider how the family in the foregoing example would benefit from these proposals.

First, the total monthly payments would be reduced from $103 under present terms to $85 a month which is more in line with reasonable housing costs and ability to pay.

There would be additional indirect benefits. The more liberal terms for trailer-park financing would be translated into improved facilities, perhaps at lower rentals, and finally, the family would be in a better position to trade in its present home because the financing of used mobile dwellings would also be improved.

We believe these proposals are clearly in the public interest.

First, they remove the penalty against a free choice by Americans to select housing that best fits their particular needs. We are talking about the really low-cost housing of our times. A Housing Act which overlooks this fact is simply not doing the job for which it is intended. Secondly, the proposals will encourage a strong mobile-housing resource for national security. Millions of taxpayers' dollars have been spent in housing arrangements that have outlived their usefulness at the original site but could not be moved to places where they were subsequently needed.

Defense production has been constantly hampered by housing shortages. Should the uncertainties of the international situation result. in new housing dislocations, the mobile-homing resources may well prove to be a decisive factor on the homefront.

Third, the proposed amendments will improve general property values and community relations by encouraging modern standards for trailer-coach dwelling.

Wherever substandard conditions do exist in trailer parks this proposed legislation would permit private enterprise to do the job of property improvement and modernization.

Fourth, in this far-flung industry, the effect of providing more reasonable credit terms will be to sustain employment in more than 150 factories employing, with their component suppliers, nearly 100,000 workers.

When consideration is given to the 3,000 dealers and more than 12,000 park operators in the country, the economic benefits are further evident.

Finally, I would like to make this point unmistakably clear: there are no subsidies involved in this proposal. Not a cent of cost to the taxpayer. Not a cent to tack on to the national debt.

We are talking here of extending credit on secured loans with reasonable limitations and conditions. In our opinion the insurance premiums which the FHA will receive would very substantially exceed the losses. This will be a fully self-supporting and self-amortizing program.

That completes my prepared statement, Mr. Chairman. With your permission, I would like to file attachments which include a draft of the specific amendments we are supporting:

Attachment A-Proposed amendments to include mobile dwellings in the National Housing Act.

Attachment B-Master draft, National Housing Act, title I, section 2; and title 21, section 207; showing proposed amendments to include mobile dwellings and parks.

Attachment C-Summary outline of proposal (1 page).

Attachment D-Basic facts on trailer coach mobile homes industry and market.

Attachment E-Questions and answers concerning proposed legislation for mobile dwellings.

(Attachment A)

PROPOSED AMENDMENTS TO INCLUDE MOBILE DWELLINGS IN THE NATIONAL HOUSING ACT FOR CONSIDERATION OF THE BANKING AND CURRENCY COMMITTEE OF THE SENATE AND HOUSE OF REPRESENTATIVES, 2D SESSION, 83D CONGRESS, IN CONNECTION WITH H. R. 7839 AND S. 2938

To aid in the provision of housing for families in essential and migratory occupations and to encourage the growth of a mobile housing resource for national security by extending certain credit insurance provisions of the National Housing Act to occupants of trailer coach mobile dwellings.

FEDERAL HOUSING ADMINISTRATION

Amendments of title I of National Housing Act

Section 2 (a) of the National Housing Act, as amended, is hereby amended by striking out the period at the end of the first sentence and inserting the following: "and for the purpose of financing trailer coach mobile dwellings by owner-occupants thereof.".

Section 2 (b) of said act, as amended, is hereby amended-(1) by striking out the semicolon at the end of the clause numbered (1) and inserting the following: "or for the purpose of financing mobile dwellings exceeds 75 percent of the purchase price or $5,000, whichever is less;"; (2) by inserting in clause numbered (2) the following: "or for mobile dwellings seven years and thirty-two days," between the words "days" and "except".

Section 2 (c) of said act, as amended, is hereby amended by inserting in paragraph numbered (2) the words "or mobile dwelling" immediately after the phrase "any real property".

Amendments of title II of National Housing Act

Section 207 (a) of said act, as amended, is hereby amended—(1) by inserting in paragraph numbered (1) a comma followed by the words "including facilities

for trailer coach mobile dwellings" immediately following the phrase "designed principally for residential use"; (2) by striking out the period at the end of paragraph numbered (6) and inserting the words "or space in a trailer court or park properly arranged and equipped to accommodate a trailer coach mobile dwelling."

Section 207 (c) of said act, as amended, is hereby amended by inserting in paragraph numbered (3) the words "or not to exceed $1,000 per space or $300,000 per mortgage for trailer courts or parks" immediately following the parenthesis and words "four per family unit".

(Attachment B has been filed with the committee.)

(Attachment C)

SUMMARY OUTINE PROPOSAL TO INCLUDE TRAILER COACH MOBILE HOMES AND PARKS IN NATIONAL HOUSING ACT

(A) FHA credit insurance should be extended because mobile homes: (1) Supply 90 percent of the low-cost market under $6,000.

(2) Are permanent housing for nearly 2 million people.

(3) Are high quality with 2 bedrooms, bathrooms, complete kitchens and household equipment as compared with some FHA houses and apartments with 1 bedroom, no inside sanitary facilities, and no stoves, refrigerators, or furnishings.

(4) Are only housing solution to many essential migratory occupations. (5) Owners are good credit risks to whom existing FHA procedures can readily be applied.

(b) Under this proposed legislation:

(1) FHA would insure lending institutions against losses up to 10 percent on mobile home loans on same basis that property improvement loans are now insured, fixing the maximum loan at 75 percent of the purchase price or $5,000, whichever is less, and providing a maximum term of 7 years.

(2) FHA would insure mortgages on trailer parks on the same terms as garden apartments provided that no loan could exceed $1,000 per trailer space and no mortgage could exceed $300,000.

(3) All trailer coach mobile dwellings and parks would meet minimum standards established by FHA.

(C) Advantages:

(1) Will enable home ownership by essential workers requiring highquality low-cost mobile housing.

(2) Will encourage a strong mobile housing industry and resource for national security.

(3) Will improve general property values and community relations by encouraging modern standards for trailer coach dwelling.

(4) Will sustain employment in the many factories throughout the Nation, producing trailer coaches, parts, supplies, and among dealers and trailerpark operators.

(5) Will be a fully self-supporting and self-amortizing FHA program not requiring an increase in taxes or national debt.

(Attachment D)

BASIC FACTS ON TRAILER COACH MOBILE HOME INDUSTRY AND MARKET

Prepared by The Kaul Company, Washington, D. C., for the Trailer Coach

Association.

The trailer coach mobile dwelling is home to more than 2 million Americans. Today, the bulk of low-cost housing is provided by trailer coaches. Yet the National Housing Act-still rooted to the concepts of 1934 when the trailer coach was only a partially equipped shelter for vacationists-makes no provision whatever for this tremendously important part of the Nation's housing resources. This anachronism must be ended. The needs of the purchasers of low-cost housing, and the defense, emergency and essential civilian uses of mobile dwellings can be met only by an amendment which will bring our housing legislation up to date.