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CONTENTS

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Memorandum, reasons for not restricting construction to military

installations-

National Association of Home Builders, Thomas P. Coogan, vice presi-

dent, statement.-
National Association of Real Estate Boards, Calvin K. Snyder, secre-

tary of the Realtors' Washington Committee, statement-

Symington, W. Stuart, Secretary of the Air Force:

Housing requirements for military and civilian personnel of

Army, Navy, and Air Force installations

Memorandum on Alaskan military housing

Tobey, Charles W., a United States Senator from the State of New

Hampshire:

Schedule of monthly percentage of distribution, etc.

Senate Report No. 772, Eightieth Congress, first session.

Treasury Department, report on S. 1184.-

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HOUSING IN MILITARY AREAS

WEDNESDAY, APRIL 27, 1949

UNITED STATES SENATE,
COMMITTEE ON BANKING AND CURRENCY,

Washington, D.C. The committee met at 10 a. m., in room 301, Senate Office Building, Senator Burnet R. Maybank (chairman) presiding.

Present: Senators Maybank, Fulbright, Sparkman, Tobey, Capehart, Cain, and Bricker.

Also present: Senator Wherry.
The CHAIRMAN. The committee will come to order.
Our first witness on this bill, S. 1184, will be Senator Wherry.

Senator Wherry, I know you have a lot to do, so you may go ahead and proceed in your own way.

a

STATEMENT OF HON. KENNETH S. WHERRY, A UNITED STATES

SENATOR FROM THE STATE OF NEBRASKA

Senator WHERRY. I want to thank you, Mr. Chairman, for the opportunity to appear here and explain and also support Senate bill 1184. I would like to say at the outset that the original bill, S. 1184, was introduced on February 21; that later, on April 11, a substitute bill, or a bill in the nature of a substitute, was introduced, and I now offer the substitute for the original bill.

(The amended bill, in the nature of a substitute, and the original bill, S. 1184, are as follows:)

a

[S. 1184, 81st Cong., 1st sess.] AMENDMENT (In the nature of a substitute) intended to be proposed by Mr. Wherry (for

himself, Mr. Tydings, and Mr. Maybank) to the bill (s. 1184) to encourage construction of rental housing at or in areas adjacent to military and naval installations, viz: Strike out all after the enacting clause and insert the following:

That the National Housing Act, as amended, is amended by adding at the end thereof a new title as follows:

"TITLE VII–MILITARY HOUSING INSURANCE

“SEC. 801. As used in this title

“(a) The term 'mortgage' means a first mortgage on real estate, in fee simple, or on a leasehold (1) under a lease for not less than ninety-nine years which is renewable; or (2) under a lease for a period of not less than fifty years to run from the date the mortgage was executed; and the term 'first mortgage' means such classes of first liens as are commonly given to secure advances on, or the unpaid purchase price of, real estate, under the laws of the State in which the real estate is located, together with the credit instruments, if any, secured thereby.

(b) The term 'mortgagee' includes the original lender under a mortgage, and his successors and assigns approved by the Commissioner; and the term 'mort

1

gagor' includes the original borrower under a mortgage, his successors and assigns.

"(c) The term 'maturity date' means the date on which the mortgage indebtedness would be extinguished if paid in accordance with periodic payments provided for in the mortgage.

“(d) The term 'rental housing' means housing, the occupancy of which is permitted by the owner thereof in consideration of the payment of agreed charges, whether or not by the termination of the agreement, such payment over a period of time will entitle the occupant to the ownership of the premises.

“(e) The term 'military' includes Army, Navy, Marine Corps, and Air Force.

“(f) The term 'State includes the several States and Alaska, Hawaii, Puerto Rico, the District of Columbia, and the Virgin Islands.

"SEC. 802. There is hereby created a Military Housing Insurance Fund which shall be used by the Commissioner as a revolving fund for carrying out the provisions of this title, and mortgages insured under this title shall be known and referred to as military housina insured mortgages: General expenses of operation of the Federal Housing Administration under this title may be charged to the Military Housing Insurance Fund.

"SEC. 803. (a) In order to assist in relieving the acute shortage of housing which now exists at or in areas adjacent to military installations because of uncertainty as to the permanency of such installations and to increase the supply of rental housing accommodations available to military and civilian personnel at such installations, the Commissioner is authorized, upon application of the mortgagee, to insure any mortgage which is eligible for insurance as hereinafter provided, and, upon such terms as the Commissioner may prescribe, to make commitments for so insuring such mortgages prior to the date of their execution or disbursement thereon: Provided, That the aggregate amount of principal obligations of all mortgages insured under this title shall not exceed $500,000,000 except that with the approval of the President such aggregate amount may be increased to not to exceed $1,000,000,000 : Provided further, That no mortgage shall be insured under this title after July 1, 1950, except (A) pursuant to a commitment to insure issued on or before such date, or (B) a mortgage given to refinance an existing mortgage insured under this title and which does not exceed the original principal amount and unexpired term of such existing mortgage.

“(h) To be eligible for insurance under this title a mortgage shall meet the following conditions:

“(1) The mortgaged property shall be held by a mortgagor approved by the Commissioner. The Commissioner may, in his discretion, require such mortgagor to be regulated or restricted as to rents or sales, charges, capital structure, rate of return, and methods of operation. The Commissioner may make such contracts with, and acquire for not to exceed $100 stock or interest in any such mortgagor, as the Commissioner may deem necessary to render effective such restriction or regulation. Such stock or interest shall be paid for out of the Military Housing Insurance Fund, and shall be redeemed by the mortgagor at part upon the termination of all obligations of the Commissioner under the insurance.

“(2) The mortgaged property shall be designed for rent for residential use by civilian or military personnel of the Army, Navy, Marine Corps, or Air Force (including Government contractors' employees) assigned to duty at the military installation at or in the area of which such property is constructed. Preference or priority of opportunity in the occupancy of the mortgaged property for such personnel and their immediate families shall be provided under such regulations and procedures as may be prescribed by the Commissioner. No mortgage shall be insuued unless the Secretary of the Army, Navy, or Air Force, as the case may be, shall have certified to the Commissioner that the mortgaged property is necessary to provide adequate housing for such personnel, that such installation is deemed to be a permanent part of the Military Establishment, and that there is no present intention to substantially curtail activities at such installation. (3) The mortgage shall involve a principal obligation in an amount

“(A) not to exceed $5,000,000; and

“(B) not to exceed 9.5 per centum of the amount which the Commissioner estimates will be the necessary current cost of the completed property or project, including the land; the proposed physical improvements; utilities within the boundaries of the property or project; architect fees; taxes and

interest accruing during construction; and other miscellaneous charges incidental to construction and approved by the Commissioner; and

“(C) not to exceed an average of $9,000 per family unit for such part of such property or project as may be attributable to dwelling use: Provided, That the Commissioner may, if he finds at any time that it is not feasible within the limitation of the maximum mortgage amount herein set forth to construct dwellings in the Territory of Alaska without sacrifice of sound standards of construction, design, or livability, prescribe by regulation or otherwise higher maximum mortgage amounts not to exceed 3313 per centum

over the maximum mortgage amount herein set forth. The mortgage shall provide for complete amortization by periodic payment within such terms as the Commissioner shall prescribe, and shall bear interest (exclusive of premium charges for insurance) at not to exceed 4 per centum per annum of the amount of the principal obligation outstanding at any time. The Commissioner may consent to the release of a part or parts of the mortgaged property from the lien of the mortgage upon such terms and conditions as he may prescribe and the mortgage may provide for such release.

"(c) The Commissioner is authorized to fix a premium charge for the insurance of mortgages under this title but in the case of any mortgage such charge shall not be less than an amount equivalent to one-half of 1 per centum per annum nor more than an amount equivalent to 112 per centum per annum of the amount of the principal obligation of the mortgage outstanding at any time, without taking into account delinquent payments or prepayments. Such premium charges shall be payable by the mortgagee, either in cash, or in debentures issued by the Commissioner under this title at par plus accrued interest, in such manner as may be prescribed by the Commissioner: Provided, That the Commissioner may require the payment of one or more such premium charges at the time the mortgage is insured, at such discount rate as he may prescribe not in excess of the interest rate specified in the mortgage. If the Commissioner finds, upon the presentation of a mortgage for insurance and the tender of the initial premium charge and such other charges as the Commissioner may require that the mortgage complies with the provisions of this title, such mortgage may be accepted for insurance by endorsement or otherwise as the Commissioner may prescribe. In the event that the principal obligation of any mortgage accepted for insurance under this title is paid in full prior to the maturity date, the Commissioner is further authorized in his discretion to require the payment by the mortgagee of an adjusted premium charge in such amount as the Commissioner determines to be equitable but not in excess of the aggregate amount of the premium charges that the mortgagee would otherwise have been required to pay if the mortgage had continued to be insured under this title until such maturity date; and in the event that the principal obligation is paid in full as herein set forth, the Commissioner is authorized to refund to the mortgagee for the account of the mortgagor all, or such portion as he shall determine to be equitable, of the current unearned premium charges theretofore paid.

"(d) The failure of the mortgagor to make any payment due under or provided to be paid by the terms of a mortgage insured under this title shall be considered a default under such mortgage, and, if such default continues for a period of thirty days, the mortgagee shall be entitled to receive the benefits of the insurance as hereinafter provided, upon assignment, transfer, and delivery to the Commissioner, within a period and in accordance with rules and regulations to be prescribed by the Commissioner of (1) all rights and interest arising under the mortgage so in default; (2) all claims of the mortgagee against the mortgagors or others, arising out of the mortgage transaction; (3) all policies of title or other insurance or surety bonds or other guaranties and any and all claims thereunder; (4) any balance of the mortgage loan not advanced to the mortgagor ; (5) any cash or property held by the mortgagee, or to which it is entitled, as deposits made for the account of the mortgagor and which have not been applied in reduction of the principal of the mortgage indebtedness; and (6) all records, documents, books, papers, and accounts relating to the mortgage transaction. Upon such assignment, transfer, and delivery the obligation of the mortgagee to pay the premium charges for mortgage insurance shall cease, and the Commission shall, subject to the cash adjustment provided for in subsection (e) of this section, issue to the mortgagee debentures having a total face value equal to the value of the mortgage, and a certificate of claim as hereinafter provided. For the purposes of this subsection, the value of the mortgage shall

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