munity on a nonprofit basis. The foundation also accepts for membership, coop eratives originally started for a profit motive which have been turned over to the tenant-owners and have become nonprofit in management.

2. Open 'membership.-No one should be excluded from membership because of race, creed, or color.

3. Location, site plan, apartment layout, specifications, and financial program. These important aspects should meet accepted standards.

4. Financial soundness.-A cooperative must be able to meet its obligations and provide adequate facilities for tenant-owners at reasonable cost. Books and reports must be open for inspection by members at stated intervals.

5. Approved operating budget.—The budget must be based on sound principles. Surplus, when earned, should be returned to members in the form of rent reduetion or dividends, or used for prepayment of the mortgage, after proper allowances have been made for repairs, replacements, and adequate contingency

reserves.

6. Democratic control.-Each member should have one vote regardless of the amount of stock owned. Responsibility for administration should be vested in the directors elected by the tenant-owners.

7. Neutrality. A cooperative should observe a strict policy of neutrality in politics, religion, and other extraneous matters on which members may hold varied opinions.

8. Educational program.-Provision should be made for the education of menbers in the responsibilities connected with ownership of a cooperative devel opment.

EXISTING COOPERATIVE DEVELOPMENTS

How can a prospective investor determine whether a specific cooperative has the approval of the United Housing Foundation?

Those projects which are members are approved-a list appears on paze 2 of this booklet. Some projects are completed, occupied, and have waiting lists: those with an asterisk beside their names are not completed and have available apartments for sale.

If a project is not a member, the United Housing Foundation would have to make a survey to determine whether or not it should be recommended.

MEMBERSHIP

Membership in the United Housing Foundation is made up of cooperative projects, trade unions, civic organizations, and some individual members. Members of the foundation annually elect the board of directors; the board exercises control over the foundation's work.

The advantages of joining the United Housing Foundation should be clear from a study of its purposes. An organization should not be encouraged to exist unless it has a definite purpose and there is evident need for it. No one can question that the cooperative movement in housing has come to stay or that as it perfects its operations, it will be an important factor not only in providing desirable housing at cost but in the redevelopment and growth of communities. The United Housing Foundation offers a platform and a program of joint action for all genuine cooperative projects.

AGENDA FOR THE FUTURE

As United Housing Foundation grows in importance, it hopes to give broad assistance in the:

Organization and development of affiliated cooperative housing projects. Creation of a lending fund to help finance cooperative enterprises.

Joint purchasing of supplies and materials needed in construction work, as well as the provision of trained personnel.

At present, all that the foundation can promise is to help cooperatives with their problems to the extent of its ability. There are many experienced people among the foundation's affiliated cooperatives or connected with their manage ment. The foundation can call upon them as well as upon its own officers and directors for help and advice for which no charge will be made.

Where continuing technical advice and service is required, it can be supplied through the foundation's affiliate, Community Services, Inc. This corporation will provide or suggest technical advice for fees which will be made as low as is consistent with fair compensation and a high quality of service. All of

the stock of Community Services, Inc., is owned by United Housing Foundation so that there is no profit motive.

Because the foundation is fortunate in having Abraham E. Kazan, who has successfully constructed and managed cooperative projects for many years, as president of Community Services, Inc., it expects to be able to build projects at a lower cost than the commercial builder ordinarily receives.

Mr. CAMPBELL. Thank you, sir.

The CHAIRMAN. The next witness is Mr. Weitzer, of the Jewish War Veterans.

Mr. Weitzer, do you prefer to read your statement or just have it placed in the record?

Mr. WEITZER. I think I would like to read it.

The CHAIRMAN. Go right ahead.

STATEMENT OF BERNARD WEITZER, NATIONAL LEGISLATIVE DIRECTOR, JEWISH WAR VETERANS OF THE UNITED STATES OF AMERICA

Mr. WEITZER. My name is Bernard Weitzer, national legislative director of the Jewish War Veterans of the United States of America. This is the oldest active war veterans' organization in the country.

I am grateful for the privilege of presenting to you, once again, the veiwpoint of the Jewish War Veterans of the United States of America on the housing program and particularly, to comment on the bill introduced by your chairman, S. 2938, as a step toward the solution of the problem.

There are some features which I should like to see changed in view of the resolution passed at our 58th annual convention held in Chicago, September 2 to 6, 1953. That resolution reaffirmed our support for the Housing Act of 1949 as amended by bills which went through your committee. I want to emphasize that characterization of such amendments. For we also passed, for the 3d or 4th time, a resolution at that convention, opposing legislative amendments by riders on appropriation bills-such riders as have wreaked havoc in the functioning of the Housing Act of 1949.

In accordance with our convention-approved resolution on housing, I respectfully request that you modify the President's authority to adjust interest rates on FHA and VA insured mortgages and to fix in the bill the rate for VA mortgages at a maximum of 4 percent, and the maximum for FHA mortgages at 412 percent.

It is easy enough for the big mortgage lenders and mortgage brokers to speak lightly of a one-half percent jump or a 1 percent jump or even bigger jumps in mortgage interest rates for veterans. Less than igarette money, they cheerfully call it, but it is a very serious matter for the veteran who may be earning only $50 of $60 or $70 a week. Each one-half percent interest jump on a $10,000 20-year mortgage means an increase of approximately $2.70 a month in the interest and mortization payments. On a $10,000 25-year mortgage, the onehalf percent interest jump comes to an increase of nearly $3 a month for interest and amortization payments.

Last year, we saw an increase in the interest rate on VA-guaranteed mortgages from 4 percent to 41⁄2 percent. Under the terms of this bill, the interest rate could be increased to 514 percent or 512 percent. You can readily see that this would mean the difference between the veteran being able to pay or not to pay the required amount.

Most veterans, like a very large segment of our overall population, are having a hard time living within their income. That is why our organization resolved in favor of a maximum rate of 4 percent on VA-guaranteed mortgages-fixed by Congress-which permitted so many hundreds of thousands of veterans to progress toward the ultimate ownership of their own homes.

I must similarly request that the Veterans' Administration retain its power to establish the limits on fees and charges for VA aided residential mortgage loans. Likewise, the weakening of the veterans preference provision for admission to low-rent public housing as provided in section 501 and the weakening of the preference for veterans in the sale of surplus homes as provided in section 801 should be stricken from the bill.

The language of the Housing Act of 1949 and previous acts should be permitted to remain intact and extended and reaffirmed in this bill. Failure to make this change would make a distinction unfavorable to veterans who have not yet had an opportunity to exercise the privilege accorded to their fellow veterans.

The Senate passed a bill, S. 2937, introduced by Senator Sparkman, which goes part of the way toward meeting the veterans' problem involved in admission to public housing. The bill, however, as passed. would deal with this problem only until August 1, 1954, whereas it should carry on for a period of at least 5 years.

The amendment proposed in sections 119 and 120 are a mixture of good and bad. The propsal for the increase to as much as $25 million in an FHA insured cooperative housing mortgage may be valuable in some instances, particularly in the builder-sponsored type of project. However, changing from a cost basis to a valuation basis in the amount of the mortgage will certainly cause difficulties in some cases The amount of the mortgage under the changed basis would often i reduced and therefore call for a higher down payment which is naturally an obstacle to the prospective cooperators. This can be sub stantiated by the former Assistant Commissioner for Cooperative Housing who has had frequent opportunities to compare the effet on the mortgage amounts of the change proposed.

Furthermore, in these two sections of S. 2938, it is proposed to ratify an appropriations bill rider which has been a serious factor in slow ing down the progress of cooperative housing. The original bl very clearly defined the need for helping cooperators to get together and organize cooperative housing projects. Practically all su à prospective cooperators find themselves frustrated by the complexties of real estate transactions and the problems which are comm to getting together and moving ahead with reasonable speed to progress toward the objective of a cooperative building project. Copetent, disinterested advice is essential, but the regular FHA fel staff, generally, has little knowledge about the opportunities afforded to cooperators by section 213. It was much easier for them to deal with the experienced contractors, builders, and real-estate men who talked their language and with whom they had had much experience. For the foregoing reason, section 213 provided for an Assistant Commissioner for Cooperative Housing and a staff to help cooperstors, directly, and even more to train FHA field employees to deal sympathetically and helpfully, with the cooperative projects brought

to their FHA regional field offices. That operation paid off in a dollars-and-cents return to the Government because the fees collected on the projects outran, by a considerable amount, the outlays for the Assistant Commissioner's office, staff, and the work done by the FHA employees in the field and at the home office. Nevertheless, an appropriations bill rider stalled the whole operation without giving your important committee an opportunity to study and discuss the subject and thereby, in my humble opinion, usurped a proper function of your committee. S. 2938 would appear to confirm such usurpation by abdication. In line with our 58th annual convention resolution, I respect fully ask that you remove this provision from S. 2938 eliminating the Assistant Commissioner for Cooperative Housing, and thereby carry out the original intent of section 213.

We are especially interested in cooperative housing because veterans have found cooperative housing a great help toward achieving homeownership at a low interest cost and a long amortization period.

In contradistinction to the readiness to buttress the Appropriations Committee rider regarding the Assistant Commissioner for Cooperating Housing, is the failure to include in S. 2938 a reaffirmation of the original provision of the National Housing Act of 1949 for 135,000 public housing units per annum and also the failure to include in S. 2938 authorization for the 35,000 public housing units per annum for each of the next 4 years which is recommended in President Eisenhower's housing message. In line with the housing resolution passed at our 58th annual convention, I respectfully request that you insert a section in S. 2938 affirming the goal of the Housing Act of 1949 for 135,000 public housing units per year and a section definitely authorizing the number of public housing units requested by President Eisenhower in his message. Your failure to do this will be an invitation to the Appropriations Committee, once again, to write housing legislation by riders on its appropriation bills.

In general, insofar as S. 2938 departs from the National Housing Act of 1949, I feel that our convention resolution would call for some opposition but there are many proposals in S. 2938 which are undoubtedly of good intention.

Section 101 of the bill increasing the amount and the time for repayment of property improvement and repair loans certainly belongs in the good-intentions category.

However, it is a mistake to suppose that anywhere in the near time future, this provision will have a marked effect either in improving rundown city areas or in providing any larger number of housing units for those who need them. The probable effect will be jacking up the rents so that current occupants will, in many cases, be forced nto even poorer quarters.

What is more, should there be any increased interest in such improvements and in the placement of loans under section 101, it would be necessary to have a new breed of FHA field employees to process such loans and a new group of contractors to do such work. Builders and contractors accustomed to work on complete new houses do not easily adjust either their thinking or their operation to go after such mprovement business and set themselves up to carry out the work ffectively or efficiently.

Section 221 of the bill, although fully entitled to be included in the good-intentions category, is admittedly of no use to that part of our population living in the highly populated metropolitan areas where high land costs admittedly make a $7,000 house impossible. People in such areas will certainly not be able to benefit from the provision of this section. It has not been made entirely clear just where a $7,000 house is feasible and whether a $7,000 house can be reasonably expected to outlast the 40-year mortgage term.

Bankers and lenders, thus far, have shown no hot desire to acquire such mortgages. That such $7,000 houses with 100-percent mortgages running for 40 years can meet the needs of those who are eligible for public housing is completely out of the question.

In some areas it is possible that there can be such houses available to meet the needs of the lower middle-income families-those whose monthly earnings range from about $275 to $325. That is based on the figures in exhibit 8, page 94, of the President's Advisory Committee Report of December 1953.

In considering the feasibility and the possibilities of this section. it is well to remember that it took mass production housebuilding methods in what was practically an assured housing market to put up the houses at Morrisville-near the Fairless works of United States Steel-at a sales price of 10,000 to $10,500 for a no-basement, 3-bedroom house with a living room, kitchen including a dining nook, 1 bathroom, and carport. A similar mass-building effort at Levittown, Long Island, produced a slightly less desirable house without a carport at a price range which started at $7,990 and in succeeding years, as building-materials costs and labor-building costs increased, moved first up to $8,990 and subsequently to $9,990.

It is doubtful that the ordinary moderate-sized speculative builder can match this performance even on low-priced land at the $7,000 level.

I offer these comments on sections 101 and 221 not in opposition to their intent, which I believe is good, but because there have been implications in testimony given by others that these sections will cut down markedly the need for public housing and will serve almost as a cure-all for slums. In some areas, the provisions of these sections can be helpful but they should not be overvalued.

It is a good idea to provide as in title III to aid bankers and other lenders, to set up their own association to insure a secondary market for mortgage loans. The opportunity to do so on their own initiative without Federal assistance, has not heretofore appealed to such lending institutions. However it is essential to keep FNMA in business for the indeterminate future and I believe that in order to avoid future large appropriations to enable FNMA to perform its functions as a secondary mortgage market, it would be desirable to carry out a program somewhat as follows:

1. Organize a corporation under the auspices of FNMA or FHA which would hold in escrow as many hundred million dollars worth of FHA and VA mortgages as are now held by FNMA and which cannot be promptly sold to lenders who would hold such mortgages permanently.

2. To have such a corporation issue debentures secured by the mortgages held in escrow to sell to the general public-such debentures