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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.

In addition, I recommend the following technical amendments:
Page 2, line 16, change the word “meaning” to “means”.

Page 3, lines 9 and 10, strike out the words out of any money in the Treasury not otherwise appropriated,”.

Page 5, line 12, change the word “installations” to "installation”.

Page 12, lines 9 and 10, strike out the words “out of any money in the Treasury not otherwise appropriated”.

Page 13, line 10, change the word “title” to “titles”.

Page 17, line 10, change "title VII” to “title VIII” and strike out the period before the quotation marks. Page 17, line 23, insert "Sec. 2,” between the quotation marks and the word

As I indicated in my testimony, I have been authorized by the Director of the Bureau of the Budget to state that the objectives of this bill are in accord with the program of the President. Sincerely yours,


Administrator. Mr. RICHARDS. I have a very brief statement, Mr. Chairman.

The CHAIRMAN. Identify yourself for the purposes of the record, Mr. Richards.




Mr. RICHARDS. I am Franklin D. Richards, Commissioner, Federal Housing Administration.

Mr. Foley has explained in a general way the provisions and objectives of H. R. 4491 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 Federal Housing Administration 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 Federal Housing Administration cannot disregard the special risks involved by reason of the location and possible temporary nature of the military installations.

The bill would amend the National Housing Act by providing 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 characteristics presented by such housing, an entirely new insurance fund is proposed for the operation of this new title.

The primary difference between the mortgage insurance proposed under this new title VIII and that available under section 608 is that the bill does not require the Commissioner to make a determination of acceptable risk. In lieu of such a determination, this bill would permit the Commissioner to accept a certification from the Military Establishment that the housing is necessary, that such installation is deemed to be a permanent part of the Military Establishment, and that there is no present intention to curtail substantially the activities at such installations.

Since the need for the housing and all information in regard to the permanency of the military installation are matters peculiarly within the knowledge of the military, I believe the Federal Housing Administration should not be required to make a determination of acceptable risk, but should be permitted to accept such certification as determination of the need for the housing and the probability of the permanency of the installation.

The Federal Housing Administration, nevertheless, would require the proposed project to demonstrate a rental income sufficient to pay operating and debt-service charges, and would also require the project to meet sound standards of construction, design, and livability. I might add, for the record, that we would expect the certification to establish that the military and civilian personnel for whom the particular project was intended is able to pay the required rent.

As heretofore stated, the mortgage insurance under this proposed new title is substantially the same as is now available under section 608 of title VI. The bill provides a mortgage limitation of $5,000,000 and not to exceed 90 percent of the Commissioner's estimate of the replacement cost and not to exceed $8,100 per family unit for such part of such property or project as may be attributable to dwelling use. These provisions are comparable to the existing limitations provided in section 608 and from our experience in mortgage insurance under section 608, I believe such mortgage amounts should be adequate to interest builders and private capital in the production of such projects. The maximum interest rate is fixed at 4 percent. I am in complete agreement with the amendments suggested by Mr. Foley.

During the last few months there have been a few proposed housing projects for military personnel presented to Federal Housing Administration offices where the military reservations and the proposed projects were within or in close proximity to metropolitan areas. few instances, the Federal Housing Administration found that such proposed projects could be accepted for mortgage insurance under section 608 of title VI and indicated willingness to provide mortgage insurance. Acceptability was based on the facts that it was reasonably certain that the military installation would be permanent and also because of the location, the housing would appeal not only to the military group, but also to other users in the area.

it unlikely that any proposed projects to be located on military reservations can be financed inasmuch as they involve a leasehold interest from the Government and the lease contains a right of revocation by the Government in the event of the declaration of a national emergency. The existence of such a right of revocation which, I understand, is required under existing law, has proved an obstacle to mortgage participation.


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Also in several cases there has been the additional problem of adequate utilities. The only utilities available were those located on the military installation and there was question as to the authority of the military to assure continuity of such utilities for the term of the proposed mortgage.

Provisions are included in the bill, which I understand were proposed by the Military Establishment designed to remove the lease and, utility obstacles. These provisions would permit the leasing of the land for a housing project, without reserving the right to revoke, and also would authorize the furnishing of the utilities and related services located on the military installation for the term of the mortgage. Such proposals are particularly important and necessary to full participation by the Federal Housing Administration in the program contemplated by this bill.

I do not believe the Federal Housing Administration can be of material assistance in providing housing for the needs of the military without specific statutory authority of the character contemplated by this proposed new title. The bill with the amendments suggested by Mr. Foley would, in my opinion, offer a satisfactory and workable means to enable the Federal Housing Administration to assist in the financing of a portion of the housing needed for military and naval installations.

The CHAIRMAN. Where is the greatest need for these installations, Mr. Richards?

Mr. RICHARDS. Mr. Chairman, I think the need is pretty well scattered throughout the country—at least inquiries have been submitted to us with reference to projects in almost all parts of the country.

The CHAIRMAN. In many instances, they will be in isolated locations, far removed from centers of population, will they not?

Mr. RICHARDS. I would think so.

The CHAIRMAN. Do you feel that you can build those houses for $8.100?

Mr. RICHARDS. Well, we have insured in excess of a billion dollars of section 608 loans in all parts of the country, and the maximum mortgage amount has been $8,100. Now, that means 90 percent of a $9,000 cost, and in the greater percentage of cases, that cost includes the value of the land; and in many of these instances, undoubtedly, they will be built on leases where they do not have to include the value of the land and the land is presumably to be leased as a nominal rent.

So even in the so-called high-cost areas, such as New York, Cleveland, Chicago, there has been very large participation in the section 608 program with a maximum mortgage amount of $8,100. Therefore, in my opinion, the $8,100 maximum mortgage which represents a cost of $9,000 is a workable amount. It has been demonstrated to be so over a period of years.

The CHAIRMAN. What is the comparative cost of building in isolated locations as compared to cities? Mr. RICHARDS. Well, there may be some slight increase in some

However, I presume you would have to pick out the particular

If there is difficulty in transportation, conceivably that would add to the cost. There might be some difficulty in getting workmen into the area. However, I think the greater number of these projects that will be built in isolated areas would be produced by larger contractors and builders who have their own organization, and who would bring in their own labor.

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I do not anticipate any particular difficulty in getting financing with an $8,100 mortgage. As a matter of fact, although that has been the maximum, our commitments have not averaged the maximum. They are under the maximum by several hundred dollars

The CHAIRMAN. I think that with the stipulation provided by this act we will achieve the result we seek to obtain.

Mr. RICHARDS. I think this bill will be of material assistance in producing a substantial volume of housing accommodations for the Military Establishment. I do not think it is the complete answer, but I think it will be of material assistance. The CHAIRMAN. Are there further questions? Mr. NICHOLSON. Mr. ChairmanThe CHAIRMAN. Mr. Nicholson.

Mr. NICHOLSON. Do you agree, Mr. Richards, that we need 120,000 units for the Army, Navy, Marine Corps, and so forth?

Mr. RICHARDS. We have not made any independent survey of the need, Mr. Nicholson. I know that there is need in many parts of the country regarding which submissions have been made to us. As to the total number, however, we are not in a position to testify.

Mr. NICHOLSON. You are only going to build these in permanent camps?

Mr. RICHARDS. The certification that the Military Establishment would give us would indicate that there is no indication of temporary status.

Mr. NICHOLSON. Suppose, in order to get the check-up on it, you would have to get from the military where they intend to build these houses?

Mr. RICHARDS. I think the Military Establishment has made a thorough survey, and I recall that at the session at which they testified, they had a map indicating where the camps were and where the need existed.

Mr. NICHOLSON. Of course, you are not a military man, are you? Mr. RICHARDS. No, sir. Mr. Nicholson. It is difficult to say that they need 120,000 units when this war may be over in a year or two? What are they going to do with the houses, if that occurs, with these units constructed in locations far away from the populated centers which could otherwise assimilate these units? It would be just like the barracks erected in the Army camps.

Mr. RICHARDS. Well, the bill contemplates that certification will only be made in areas where there is an indication that the need will be, to a considerable extent, permanent. Also, there are many areas that are not isolated, where housing facilities are needed, and this bill would make it possible for Federal Housing Administration to provide a considerable volume of housing that otherwise would not be available in those areas.

Mr. DEANE. Will you yield, Mr. Nicholson?
Mr. NicholSON. Yes.

Mr. DEANE. You were inquiring about the needs for the number of units indicated by Mr. Richards. Since these hearings began, I made a brief study and asked for a survey of two rather outstanding military establishments in North Carolina, and for the record, Mr. Chairman, I would like to give these facts, submitted to me by a gentleman who was invited to appear before the committee but could not, Mr. Jack H. Brown of Greensboro, N. C.

The CHAIRMAN. Do they have independent statements?
Mr. DEANE. No, sir. He wrote me a personal letter.

The CHAIRMAN. It may be incorporated. Do you wish to incorporate the letter in the record at the conclusion of the testimony?

Mr. DEANE. I would like to.
The CHAIRMAN. Without objection, that may be done.

Mr. DEANE. He goes on to say that he talked with the post commander at Fort Bragg, and within the last few months they held a meeting at Fayetteville, which is in close proximity. The meeting was for the purpose of doing something to alleviate the housing problems at Fort Bragg, and he goes on to say that the figures show that 2,000 families are not properly housed in the area, and that there would be a need for at least 2,000 units in Fort Bragg.

Going on into a more isolated area, but at a permanent Marine installation, at Cherry Point, there is an equal serious housing problem which can only be solved by the passing of the legislation similar to the bill under consideration. Cherry Point is half-way between New Bern and Morehead City, or about 19 miles from each city. There are approximately 3,500 civilian employees and they commute not only from New Bern and Morehead City, but from other spots further distant in adjoining counties.

Cherry Point estimates can adequately absorb 1,000 units. That means 3,000 units at two camps in North Carolina. That may give some idea to substantiate the figures indicated by Mr. Richards.

The CHAIRMAN. Without objection, the letter may be included in the record. (The letter referred to is as follows:)


Greensboro, N. C., May 19, 1949, Congressman C. B. DEANE,

House of Representatives, Washington, D. C. DEAR MR. DEANE: I thank you for your invitation to appear before the Banking and Currency Committee in support of the military housing bill introduced by you.

As I wired you yesterday afternoon, a previous engagement prevents my appearance. If it were even remotely possible I could appear, I certainly would because I am strongly in favor of your proposal.

It is true that I have reasonable knowledge of the housing situation as it affects the Fort Bragg, N. C., area, Cherry Point, and Camp Lejeune, N. C., because for the past few years I have, with clients and associates, made every effort to help solve the housing problems. Frankly, with the exception of Camp Lejeune the problems are even more acute than they were 2 or 3 years ago.

During the past few months I have been in conversation with deputy commanders of the three bases discussing their individual housing problems. I know them to be very serious in the Fort Bragg area and on a proportionate basis equally as serious at Cherry Point, N. C.

I have within the past month conferred with Col. R. C. Mallonee, deputy post commander, at Fort Bragg. Colonel Mallonee has in his conversations with me and by correspondence consistently pointed out the serious housing condition that exists at Fort Bragg. In fact, approximately 6 months ago they had a mass meeting in Fayetteville, N. C., at which approximately 600 people were in attendance. The meeting was for the purpose of doing something to alleviate the housing problems at Fort Bragg. 'î'o my knowledge very little, if anything, has been done since the meeting.

Fort Bragg has exactly 232 permanent quarters on the post. Of these units 124 are occupied by officers' families and 108 by families of the first three graders. There exists on the post an additional 1,599 units that are occupied by officers' families and enlisted men's families. These units are converted barracks, temporary housing built under the Lanham Act and providing inadequate housing as you would expect in this type unit. These 1,599 temporary units are temporary in every respect. There are 1,970 families of Fort Bragg civilian employees of

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