Senator BULKLEY. The regional offices do not have any adjusters that contact the borrowers?

Mr. DELANO. That is right, Senator. There is one exception, and that is in Detroit. That was due to the fact that the State office at that particular point was swamped. We put a few people in from the regional office because the Detroit office is right in the city of Detroit. Now, that was not a matter of definite policy or of organization. It was a matter of emergency. That is the only place, I think, where that was done.

Senator BULKLEY. The Cincinnati regional office and the Atlanta regional office, and the rest of the regional offices would not have adjusters who contact the borrowers?

Mr. DELANO. No.

Senator FLETCHER. Mr. Chairman, may I ask a question there? I understood Mr. Fahey to say that when a case reached the regional office for decision as to foreclosure that the regional office decided whether to foreclose or not. Is there any appeal from the regional office in that case to your board here?

Mr. FAHEY. There could be, Senator, but that situation would seldom arise, because it is the State office which recommends the foreclosure, you see.

Senator FLETCHER. I understand that, but my question is as to whether that has to be passed on here or not.

Mr. DELANO. If I might explain the exact way that that is handled, Senator. The recommendation for foreclosure comes up to the regional office. We have there a very close contact with the general manager's office in Washington. Now, the question of foreclosure around the country in the depth of a depression like this is a national question.

It is not only a local question, but it has to be passed upon with the whole economic situation in mind. It is a social as well as an economic problem. So that we keep a very close control over the numbers of foreclosures that are taking place in the regions, and at the present time they are limited strictly to those cases of chiselers and of abandonments. We have some cases where people have left their homes, and for protection we have to foreclose them. We have a few cases of where people have evolved the theory that if they have a Government loan they do not have to pay on it, which is a paternal situation, and we are trying to disabuse them on that particular theory, and we move in on those people pretty heavily. But the control of the foreclosure situation rests in Washington, although the details are usually worked out in those regional offices.

There is one point I should like to make concerning the question of handling the matter direct from the States to Washington, and that is that we find we have to step the organization down by small steps. It cannot be done in one great step. In other words, we cannot run an army with a general staff direct to the company commanders. We have to have some majors and colonels and brigadiers in between, and that question of stepping down authority is a very fundamental principle in organization. You have got to break it down by small steps. If you try to break it down in too large a jump you will find instances of all sorts of things that are not properly filtered through and have to be carried back.

122165-35-8

The proper stepping down of an organization is a very fundamental principle in the organization, and it is a thing that has to be done. In every large organization in the world the acid test in its proper functioning comes through its proper stepping down. We find in the Army and in the Navy they have to step down their authority. And that is the fundamental theory of the regional authority.

Senator STEIWER. The chairman of the subcommittee asks for a further break-down so as to include the 6 months' delinquencies. I wonder, Mr. Chairman, when that is furnished if it cannot be placed in the record immediately following the table which Mr. Fahey has presented here, so that it will all be in the record at one point where it can be consulted conveniently.

Mr. FAHEY. We will be glad to furnish it.

Senator BULKLEY. How much of a job would it be to get that information?

Mr. DELANO. Respecting the 6 months' delinquencies?
Senator BULKLEY. Yes.

Mr. DELANO. I do not think it would be a very difficult job. I believe we can give that information to you within a reasonable time. It is a special accounting matter, and I do not carry it in my head. I do not know just how long it would take. Do I understand that we are to get that information and furnish it to the committee?

Senator STEIWER. I do not know what the chairman of the subcommittee thinks about that, but for myself I should like to have it. Senator BULKLEY. Yes; I should like to have it also, and I think it should be furnished for the record.

Mr. DELANO. Then I understand the committee wants the information for delinquencies of 6 months?

Mr. FAHEY. Six months or more.

Mr. DELANO. Not just 6 months, but 6 months or more?

Senator BULKLEY. Yes; 6 months or more. Of course that is already included in this table which Mr. Fahey has just furnished the committee.

Mr. DELANO. It is in the table showing the delinquencies of 90 days and more, Senator.

Senator STEIWER. I wish to ask a further question, because I am not entirely familiar with the record. Has the Board furnished either to the Senate committee or to the House committee the total loans by States as of any recent date?

Mr. FAHEY. Oh, yes.

Senator STEIWER. That is in the record now?

Mr. FAHEY. Yes; I think it is in the record already. In any event we can give it to you right here.

Senator BANKHEAD. Mr. Fahey, there is one further matter which is not relevant to what we are discussing right now, but I am leaving, and I want to find out about it. Some time ago quite a number of employees in the State organization were released to practice economy, and I have no objection to that. What I do want to find out about it is who selected the employees to be released?

Mr. FAHEY. That was done in the case of the State offices on the recommendation of State and district managers. They went over their lists of employees and they recommended the release of those

who were least efficient. Now, that, I think, was handled in most of the State offices by the State manager, the State counsel, and the State appraiser. I think they acted together in cases and reviewed them.

Senator BANKHEAD. The State counsel and the State appraiser made the selection for the release?

Mr. FAHEY. I think so; yes.

Mr. DELANO. Mr. Fahey, I did not catch the first part of your

statement.

Mr. FAHEY. In the matter of release in the State organizations the recommendations were made by the State managers, but my recollection is that in most cases those separations were passed upon by a committee representing the State manager and his employment director, and the State counsel and the State appraiser. That is my recollection.

Mr. DELANO. Yes; that is right. We recognize the State manager as the operating unit in the State.

Senator BANKHEAD. The employees who were released were released on his recommendation?

Mr. DELANO. They were released on his recommendation; yes. There is a personnel officer in each region, you understand, Senator, whose job is supervision of personnel. He is in constant communication and consultation with these State managers, but he does not have anything in the nature of power over them. It is a staff job; not a line job.

Senator BANKHEAD. What connection did he have with the selection of the employees to be released?

Mr. DELANO. He did not have any connection except as he might be called on for advice. That is all. The thing rested on the shoulders of the State organization.

Senator BANKHEAD. Of the State manager?

Mr. DELANO. Of the State manager.

Senator BANK HEAD. That is what I wanted to find out.

Mr. FAHEY. In releasing these employees where releases were necessary we tried to take into consideration not only the efficiency of the employee but the economic condition of the employee's family and attempted to be as just as possible in making those separations. Here in Washington, for example, where separations were necessary, we did not take alone the recommendations of the heads of the divisions, but we set up a committee of review to advise with reference to these other factors so that there would be no injustice in the separations. Senator BANKHEAD. All right, sir.

Mr. FAHEY. Of course, you realize that this personnel matter is a very, very human problem and one of enormous importance.

Senator BANKHEAD. I wanted to find out who did the job. That was what I was after.

Mr. FAHEY. You can set up any kind of an organization you please and have the most attractive chart that it is possible to draw of an organization, but in the last analysis its efficient operation depends upon the personnel.

Senator STEIWER. I wanted to pursue briefly the question of the servicing of the loan. Let us take the San Francisco regional office as an example, because I assume the distances there probably are

about as great as they might be at any place in the country. What States are under the jurisdiction of that regional office?

Mr. FAHEY. Oregon, Washington, Idaho, Montana, Wyoming, Utah, Arizona, Nevada, and California.

Senator STEIWER. It is practically the whole territory west of the Rocky Mountains?

Mr. FAHEY. That is right. Of course in the States in that group the total number of loans and volume of business is comparatively small. California represents the large bulk of it, of course.

Senator STFIWER. I want to inquire into the question of supervision of collections. From San Francisco to Butte, I should say, would be in excess of 1,000 miles. I have forgotten the mileage, but it is a long ways. It is not possible, is it, for the agency at San Francisco to have any knowledge of any individual cases up in Montana or northern Idaho?

Mr. FAHEY. No; except so far as the record goes. So far as the file shows. You have to depend upon your State and district offices for the intimate knowledge of the situation.

Senator STEIWER. From San Francisco to eastern Montana would be, I think, in excess of 1,000 miles. From the city of Washington to eastern Montana would be something like 2,000 miles. I have been a little disturbed by the thought that collections could not successfully be supervised at so long a range as a thousand miles or 800 miles or even 500 miles, and it was for that reason I asked you a while ago what your experience in that regard had been. In my own State from the Portland office it might be 300 miles or 400 miles or 500 miles to the property covered by the loan. I have felt that that might be too far for the supervision of an efficient collecting system.

Mr. FAHEY. Well, of course, that has to be carried on through the local agent and representatives and corporations. You have to depend upon them to get into small localities.

Senator STEIWER. What is your system of local servicing supervision?

Mr. FAHEY. When we get down to the smaller places we have to depend upon a local counsel or local appraisers; either one or the other.

Senator STEIWER. That is to say, if your loan is quite remote from the State office, from the State agents, the matter would then be referred in its final analysis, if the borrower were delinquent and behind, we will say more than 90 days, or possibly 6 months, to some local representative?

Mr. FAHEY. Yes.

Senator STEIWER. How much authority would that local representative have?

Mr. FAHEY. Well, that local authority would act under the instructions of the State manager.

Senator BULKLEY. I think we will ask Mr. Fahey's indulgence and let Representative O'Connor introduce his party here at this time, because some of them have to leave.

STATEMENT OF HON. JOHN J. O'CONNOR, A REPRESENTATIVE IN CONGRESS FROM THE SIXTEENTH CONGRESSIONAL DISTRICT OF NEW YORK

Representative O'CONNOR. Mr. Chairman and members of the committee, I was anxious to get on the floor of the House, and so I asked to be heard at this time.

When this bill was before the House I expressed some interest in the provision on page 15, line 16, and so forth, in reference to the Federal Housing Administration insuring loans up to 20 percent on alterations, repairs to apartment houses, hotels, hospitals, and so forth. We thought that in the metropolitan centers altering these old tenements and so forth would do a great deal of good toward putting men to work. Of course we get very little relief in the cities from any of this legislation. I do not believe any home owners' loan is made in my district, and of course the provision of loans up to $2,000 has no effect in the sections where there are large tenements and apartments. These large tenements and apartments, which are just as much the homes of our people as the little bungalow out in the rural section, have been neglected and have had no avenues through which they might obtain loans.

Some men from New York who are interested in these tenements and in alterations and repairs to them are here, and they are anxious to speak to the committee and possibly make some suggestions as to the way this provision might be made more workable with respect to them. When the committee is ready I should like to have them hear Mr. Sander, from New York, who is the spokesman for this committee.

Senator BULKLEY. The committee will be glad to hear Mr. Sander.

STATEMENT OF CHARLES F. SANDER, ADVISER TO THE WAYS AND MEANS COMMITTEE OF THE COUNCIL OF REAL ESTATE ASSOCIATIONS, NEW YORK CITY

Mr. SANDER. Mr. Chairman and gentlemen of the committee, it was my privilege to have drawn the articles of a proposed multipledwelling rehabilitation loan bureau and recommendations for consideration in connection with the National Housing Act, section 2, as amended by section 22, now before the Seventy-fourth Congress, first session, and I am acquainted with the conditions which prevail in New York with reference to multiple dwellings.

Senator BULKLEY. Mr. Sander, will you state your name for the record?

Mr. SANDER. Charles F. Sander.

Senator BULKLEY. Are you from New York City?

Mr. SANDER. I am from New York City. I am adviser to the ways and means committee of the Council of Real Estate Associations, which is a 41-membership organization, representing 121,000 owners of properties, taking in multiple dwellings and small homes in the city of New York.

In the course of our survey, gentlemen of the committee, we visited all the slum-area districts and we visited outside of the slumarea districts. We investigated the houses which come under the