AMENDMENT NO. 3 Page 4, line 2, strike out the words "Provided further," and insert in lieu thereof "And provided further,". This is a technical amendment. AMENDMENT NO. 4 Page 5, line 4, strike out the word "Preference" and insert in lieu thereof the words "Notwithstanding the provisions of any other law, preference". This is considered necessary to assure that the veterans' preference requirements of the Housing and Rent Act of 1949 will not apply to housing insured under this title. AMENDMENT NO. 5 Page 5, line 8, add after the word "insured" and before the word "unless" the words "under this title". This is a technical amendment. AMENDMENT NO. 6 Page 5, line 11, strike out the words "mortgaged property" and insert in lieu thereof the words "housing with respect to which the mortgage is made". This is a clarifying technical amendment. AMENDMENT NO. 7 Page 5, line 19, strike out the figures "95" and insert "90". This amendment would limit the maximum amount of the insured mortgage to 90 percent of necessary current cost instead of 95 percent. The reasons for this change were explained in my testimony on the bill. AMENDMENT NO. 8 Page 6, line 1, strike out the semicolon and insert in lieu thereof the following: : Provided, That such mortgage shall not in any event exceed the amount which the Commissioner estimates will be the cost of the completed physical improvements on the property or project, exclusive of off-site public utilities and streets, and organization and legal expenses; The addition of this proviso would further conform the maximum mortgage limitations under tihs new insurance title to the existing limitations in the National Housing Act with respect to insurance of rental housing. AMENDMENT NO. 9 Page 6, line 2, change "$9,000" to "$8,100". This amendment, referred to in my testimony, would limit the maximum amount of the insured mortgage to $8,100 instead of $9,000. It would make the limitation consistent with other insurance provisions of the National Housing Act applicable to rental housing. AMENDMENT NO. 10 Page 6, lines 4 through 12, strike out the proviso concerning housing in Alaska. In view of the recent passage of the Alaska Housing Act, this provision is unncessary. Deletion of the limitation contained in the Alaska Housing Act concerning the finding of acceptable risk is contained in the proposed new section 806, set forth in amendment No. 13. AMENDMENT NO. 11 Page 10, line 8, change the word "herein" to "hereinafter". AMENDMENT NO. 12 Page 11, lines 10 and 11, strike out the words "section upon the assignment of an insured mortgage to the Commissioner" and insert in lieu thereof the word "title". This amendment would make the subsection applicable to all debentures issued under the title in accordance with the apparent intention. As changed, this provision would conform to other provisions of the National Housing Act. AMENDMENT NO. 13 Page 12, line 13, insert between the word "appropriated" and the comma following it the words "out of any money in the Treasury not otherwise appropriated." This is a technical amendment to conform to language commonly used in provisions authorizing appropriations. AMENDMENT NO. 14 Page 12, line 17, through page 15, line 13, strike out subsections (g) through (k) and insert in lieu thereof the following: "(g) The certificate of claim issued by the Commissioner to any mortgagee in connection with the insurance of mortgages under this title shall be for an amount determined in accordance with subsections (e) and (f) of section 604 of this Act, except that any amount remaining after the payment of the full amount under the certificate of claim shall be retained by the Commissioner and credited to the Military Housing Insurance Fund. "(h) The provisions of section 207 (k) and section 207 (1) of this Act shall be applicable to mortgages insured under this title and to property acquired by the Commissioner hereunder, except that as applied to such mortgages and property (1) all references in such sections to the 'Housing Fund' shall be construed to refer to the 'Military Housing Insurance Fund', and (2) the reference to section 207 (k) to 'subsection (g)' shall be construed to refer to 'subsection (d)' of this section 803. "(i) The Commissioner shall also have power to insure under this title or titles II or VI any mortgage executed in connection with the sale by him of any property acquired under this title without regard to any limit as to eligibility, time or aggregate amount contained in this title or titles II or VI. "(j) Any contract of insurance executed by the Commissioner under this title shall be conclusive evidence of the eligibility of the mortgage for insurance, and the validity of any contract of insurance so executed shall be incontestable in the hands of an approved mortgagee from the date of the execution of such contract, except for fraud or misrepresentation on the part of such approved mortgagee. "(k) In order to assure an adequate market for mortgages insured under this title, the powers of the Federal National Mortgage Association and of any other Federal corporation or other Federal agency hereafter established, to purchase, service, or sell any mortgages, or partial interests therein, may be utilized in connection with mortgages insured under this title." The substitution of these sections would clarify and shorten the proposed bill, make certain technical corrections, and conform the provisions involved to existing language in the National Housing Act relating to rental housing. AMENDMENT NO. 15 Page 16, lines 3 through 13, strike out subsection (b) and insert in lieu thereof the following: "(b) Premium charges, adjusted premium charges, and appraisal and other fees, received on account of the insurance of any mortgage insured under this title, the receipts derived from any such mortgage or claim assigned to the Commissioner and from any property acquired by the Commissioner, and all earnings on the assets of the Military Housing Insurance Fund, shall be credited to the Military Housing Insurance Fund. The principal of and interest paid and to be paid on debentures issued in exchange for any mortgage or property insured under this title, cash adjustments, and expenses incurred in the handling of such mortgages or property and in the foreclosure and collection of mortgages and claims assigned to the Commissioner under this title, shall be charged to the Military Housing Insurance Fund." The subsection presently included in the bill is not sufficiently broad to cover the various problems which may arise in connection with the military housing insurance fund. The substitute provision is consistent with existing legislation and will, we believe, be adequate. AMENDMENT NO. 16 Page 17, line 3, add the following section 806: "SEC. 806. The second sentence of section 214 (a) of the National Housing Act, as amended, relating to housing in the Territory of Alaska, shall not apply to mortgages insured under this title on property in said Territory." This provision is necessary to assure that the provisions of section 214 (a) relating to the finding of acceptable risk in connection with housing in the Territory of Alaska shall not apply to mortgages insured under this title. Section 214 of the National Housing Act, added by the recent Alaska Housing Act, authorizes mortgages on property in Alaska to exceed by one-third the otherwise prescribed maximum amounts. AMENDMENT NO. 17 Page 17, line 3 and line 8, change the designations "SEC. 806" and "SEC. 807" to "SEC. 807" and "SEC. 808". This is a technical amendment. AMENDMENT NO. 18 Strike out sections 2 and 3 commencing on page 17 and insert in lieu thereof the following sections 2, 3, and 4: "SEC. 2. Sections 1 and 5 of the National Housing Act, as amended, are further amended by striking out the words 'titles II, III, VI and VII' each time they appear and inserting in lieu thereof the words 'titles II, III, VI, VII, and VIII'." "SEC. 3. Section 212 (a) of said Act, as amended, is further amended by striking out the words 'effective date of this section,' and inserting in lieu thereof the words 'effective date of this section, or under title VIII,'. "SEC. 4.1 Section 301 (a) of said Act, as amended, is further amended"(1) by striking out of paragraph (1) the words 'under title II, or title VI' and inserting in lieu thereof the words 'under title II, title VI, or title VIII'. "(2) by striking out the period and adding the following proviso at the end of paragraph (1) (E): ": Provided, That such aggregate amount paid by the Association shall not include any amount paid by it for a mortgage or mortgages which are insured under title VIII of this Act; and'." Section 2 of the bill contains technical errors and would not accomplish its intended purpose of authorizing the use of the secondary market facilities of FNMA for mortgages in excess of 50 percent of the eligible mortgage loans of a particular mortgagee. The substitute section 4 would effectively accomplish this purpose. Sections 2 and 3 as set forth above are of a technical nature to include appropriate references to the new title VIII in other provisions of the National Housing Act. As indicated in my testimony, this Agency does not believe that the provisions of section 3 of the substitute bill for amortization deductions are necessary or desirable in connection with this housing. We have accordingly recommended their deletion. AMENDMENT NO. 19 Page 20, line 6, change the designation "SEC. 4" to "SEC. 5". This is a technical amendment. 1 In the event of prior enactment of S. 712 now pending in the Senate the following should be substituted for secs. 3 and 4 of this bill : "SEC. 3. Section 212 (a) of said Act, as amended is further amended by striking out the words 'to May 31, 1949, and by inserting in lieu thereof the words 'to May 31, 1949, or under title VIII,'. "SEC. 4. Section 301 (a) of said Act, as amended, is further amended "(1) By striking out of paragraph (1) the words 'title VI,' and inserting in lieu thereof the words 'title VI, or title VIII,'; and "(2) by striking out of the proviso at the end of paragraph (1) (E) the words 'or section 608 (including section 608 pursuant to section 610)' and inserting in lieu thereof the words 'section 608 (including section 608 pursuant to section 610), or section 803,'." AMENDMENT NO. 20 Page 21, line 7, insert quotation marks after the period following the word "defense". A technical amendment. AMENDMENT NO. 21 Page 21, line 13, strike out the word "deleted" and insert in lieu thereof the word "repealed". This is a technical amendment. If we can be of any assistance in connection with these proposed amendments, please let me know. Sincerely yours, RAYMOND M. FOLEY, Administrator. Hon. BURNET R. MAYBANK, HOUSING AND HOME FINANCE AGENCY, Chairman, Senate Committee on Banking and Currency, United States Senate, Washington 25, D. C. MY DEAR SENATOR MAYBANK: This will supplement my letter of April 27 recommending certain technical and other amendments to the substitute measure for S. 1184, a bill to encourage construction of rental housing at or in areas adjacent to military and naval installations. It is recommended that this measure be further amended by adding the following new sentence at the end of line 23 on page 10: “If, during the time the mortgage is insured and before the mortgagee has reIceived the benefits of the insurance, the United States acquires, or commences eminent domain proceedings to acquire, all or a substantial part (as defined by the Commissioner) of the mortgaged property for the use of the National Military Establishment, the mortgagee may, at its election, within such time and in accordance with such regulations as the Commissioner may prescribe, receive the benefits of the insurance as provided in this subsection, notwithstanding the fact that the mortgage may not be in default." This amendment would assure that the holder of a mortgage insured under the bill would be entitled to the benefits of mortgage insurance in the event the United States acquired, by eminent domain proceedings or otherwise, all or a substantial part of the mortgaged property for the use of the National Military Establishment. There is no reason why mortgagees should be deprived of the benefits of mortgage insurance in such cases. Certain prospective mortgagees have already indicated that they will not finance housing construction under the provisions of the bill unless they are given the protection which would be afforded by this amendment. Accordingly, I believe that this amendment is desirable and would facilitate mortgage insurance operations under the bill. Sincerely yours, RAYMOND M. FOLEY, Administrator. STATEMENT OF FRANKLIN D. RICHARDS, COMMISSIONER, FEDERAL HOUSING ADMINISTRATION The CHAIRMAN. We are delighted to have you here with us, Mr. Richards. There seems to be only one issue here, as I can see it. The way I understood the sponsor of the bill, Mr. Wherry, he thought we could work out everything except the 90 and 95 percent. Mr. RICHARDS. I have a very short statement. If it is agreeable with you I will read it. The CHAIRMAN. It most certainly will be. Let me ask you this question: I am interested in the housing bill now in the House and also in S. 712 which is going to come up here shortly. Is it your opinion that construction costs are continuing to decline? Mr. RICHARDS. Yes, sir. The CHAIRMAN. You believe the decline will continue? You see nothing to change it? Mr. RICHARDS. No. The CHAIRMAN. Well, could you give any estimate as to what you think the decline has been in the last 12 months, put on a percentage basis? Mr. RICHARDS. We have cost indexes, data, accumulated monthly in every office throughout the country. The CHAIRMAN. I have seen those. Mr. RICHARDS. Since about last September there has been evidence of a decline in most offices. Those declines have generally been slight, but in most offices the decline has been evident. The CHAIRMAN. Each month continues to show a decline? Mr. RICHARDS. Yes; and each month indicates more offices reporting declines. I would estimate nationally-and of course that varies according to local situations-that since last September when the declines became more noticable that there has probably been 5 to 7 percent decline in our cost indexes. The CHAIRMAN. In other words, the decline in the cost of the completed house is catching up with the declines that have previously taken place in lumber. Mr. RICHARDS. That is right. The CHAIRMAN. And the available materials, such as soil pipe, and lead Mr. RICHARDS. That is right. The CHAIRMAN. And bricks. Mr. RICHARDS. Yes, sir. As a matter of fact, as you indicated, it takes some little time for those basic costs to be reflected in the completed structure. The CHAIRMAN. And they are being reflected every month now? Mr. RICHARDS. They are. The CHAIRMAN. Thank you very much. Mr. RICHARDS. Mr. Foley has already explained in a general way the provisions and objectives of S. 1184 and I assume, therefore, that the committee would like me, as Federal Housing Commissioner, to limit my remarks primarily to the amendments to the National Housing Act. The representatives of the Military Establishment have outlined the urgent housing needs of families at military and naval installations, and we are confident that such need exists. Under existing legislation there is no specific authority which permits the FHA to assist in the financing of housing to serve the personnel of military installations on any different basis than other housing not related to military personnel. Consequently, in analyzing proposed projects to provide housing for military personnel, the FHA cannot disregard the special risks involved by reason of the location and possible temporary nature of the military installations. The bill, as introduced and amendments thereto proposed by Mr. Foley, would amend the National Housing Act by provided for a new title establishing a system of mortgage insurance for rental housing to serve the personnel of military and naval installations on substantially the same basis as is now available under section 608 of title VI. In view of the special problems involved and the different risk charac |