90TH CONGRESS HOUSE OF REPRESENTATIVES 2d Session REPORT No. 1170 AUTHORIZING THE EXPENDITURE OF CERTAIN FUNDS FOR THE EXPENSES OF THE COMMITTEE ON UNAMERICAN ACTIVITIES MARCH 13, 1968.-Ordered to be printed Mr. FRIEDEL, from the Committee on House Administration, REPORT [To accompany H. Res. 1042] The Committee on House Administration, to whom was referred the resolution (H. Res. 1042) having considered the same, report favorably thereon with an amendment and recommend that the resolution do pass. On page 1, line 5, delete "$425,000" and add "$375,000". 90TH CONGRESS HOUSE OF REPRESENTATIVES 2d Session { No. 1171 REPORT VETERANS' ADMINISTRATION HOUSING LAW MARCH 13, 1968.-Committed to the Committee of the Whole House on the State of the Union and ordered to be printed Mr. TEAGUE of Texas, from the Committee on Veterans' Affairs, submitted the following REPORT [To accompany H.R. 10477] The Committee on Veterans' Affairs, to whom was referred the bill (H.R. 10477) to amend title 38 of the United States Code so as to increase the amount of home loan guaranty entitlement from $7,500 to $10,000, and for other purposes, having considered the same, report favorably thereon with an amendment and recommend that the bill, as amended, do pass. The amendment is as follows: Strike out all after the enacting clause and insert the following: That (a) section 1810(c) of title 38, United States Code, is amended by striking out "$7,500" and inserting in lieu thereof "$10,000". (b) Paragraph (2) of section 1811(d) of such title is amended by striking out "$7,500" each time it occurs and inserting in lieu thereof "$10,000". SEC. 2. (a) Section 1810(b) of title 38, United States Code, is amended(1) by amending paragraph (5) thereof to read as follows: "(5) the loan to be paid by the veteran for such property or for the cost of construction, repairs, or alterations, does not exceed the reasonable value thereof as determined by the Administrator; and," and (2) by adding at the end thereof the following new sentence: "After the reasonable value of any property, construction, repairs, or alterations is determined under paragraph (5), the Administrator shall, as soon as possible thereafter, notify the veteran concerned of such determination." (b) Section 1822 (a) of such title is amended by striking out "section 1810, 1812, 1813, or 1818 of this title, or made under section 1811 or 1818" and inserting in lieu thereof "section 1812 or 1813". SEC. 3. Paragraph (1) of section 1803 (c) of title 38, United States Code, is amended by striking out "; except that such rate shall in no event exceed that in effect under the provisions of section 203(b) (5) of the National Housing Act". SEC. 4. (a) Chapter 37 of title 38, United States Code, is amended by adding at the end thereof the following new section: 85-081 O "§ 1827. Expenditures to correct or compensate for structural defects in mortgaged homes "(a) The Administrator is authorized, with respect to any property improved by a one- to four-family dwelling inspected during construction by the Veterans' Administration or the Federal Housing Administration which he finds to have structural defects seriously affecting the livability of the property, to make expenditures for (1) correcting such defects, (2) paying the claims of the owner of the property arising from such defects, or (3) acquiring title to the property; except that such authority of the Administrator shall exist only (A) if the owner requests assistance under this section not later than four years (or such shorter time as the Administrator may prescribe) after the mortgage loan was made, guaranteed, or insured, and (B) if the property is encumbered by a mortgage which is made, guaranteed, or insured under this chapter after the date of enactment of this section. "(b) The Administrator shall by regulation prescribe the terms and conditions under which expenditures and payments may be made under the provisions of this section, and his decisions regarding such expenditures or payments, and the terms and conditions under which the same are approved or disapproved, shall be final and conclusive, and shall not be subject to judicial review. "(c) The Administrator is authorized to make expenditures for the purposes of this section from the funds established pursuant to sections 1823 and 1824 of this title, as applicable." (b) The analysis of chapter 37 of title 38, United States Code, is amended by adding at the end thereof the following: 1827. Expenditures to correct or compensate for structural defects in mortgaged homes." Amend the title so as to read: An Act to amend chapter 37 of title 38 of the United States Code to liberalize the guaranty entitlement and reasonable value requirement for home loans, to remove certain requirements with respect to the interest rates on loans subject to such chapter, and to authorize aid on account of structural defects in property purchased with assistance under such chapter. BACKGROUND OF THE BILL The Subcommittee on Housing on February 5, 8, 19, 20, and 27, held hearings on housing measures pending before the committee. Testimony was received from the veterans' organizations, the Veterans' Administration, and representatives of homebuilding, lending, and real estate industries. All interested parties were given full opportunity to testify and express their points of view. During the course of the hearing testimony was received on all features of the loan guaranty program but particular attention was given to the need for an increase in the amount of the Veterans' Administration guaranty and for greater flexibility in setting the interest rate. INCREASING GUARANTY When the $7,500 maximum guaranty for home loans was approved in 1950, the average amount of home loans was $7,800 and most home loans were guaranteed for the maximum 60 percent of the loan amount, within the $7,500 ceiling. The 60-percent limitation was the factor which governed the amount of guaranty on most home loans until 1958, when the average loan amount was nearly $13,000. Since then, the $7,500 limitation has applied on most home loan guaranties and the average percentage of guaranty has declined. For example, the average loan amount in 1966 was $16,500 and the $7,500 guaranty afforded only 45 percent protection. The following table sets out the percentage distribution of 1967 home loans by purchase price gradations: At the close of 1967, the average price paid by veterans and servicemen for homes financed with guaranteed loans was $17,605, or about twice the average price in 1950, when the present $7,500 home loan guaranty was first authorized. The output of guaranteed home loans over the whole life of the veterans' housing program can be summarized as follows: In the early years of 1946 and 1947 there were large volumes of loans guaranteed-over 400,000 in 1946 and nearly 500,000 in 1947. Those 2 years were followed by a period of substantial decline249,000 loans guaranteed in 1948 and 173,000 in 1949. The next 5 years, from 1950 through 1954, inclusive, were relatively good years, during each of which 300,000 to 400,000 loans were guaranteed. Then, the program reached its peak in 1955, with 650,000 loans guaranteed in that year, followed by 500,000 in 1956. In 1957, volume fell back to the 300,000 level and since that time, except for 2 years, VA never reached 200,000 home loans guaranteed per year. The exceptions were 1959 and 1967, in both of which the level topped 200,000 by small margins. The VA estimates that, cumulatively, approximately one-third of the veterans who have been eligible for VA loans have obtained such loans. The rate of participation, so to speak, has been the greatest for the World War II veteran category, better than 40 percent of whom have obtained guaranteed or direct loans. Somewhat more than onefourth of Korean conflict veterans have participated in the program. Although eligible only since March 3, 1966, about 3 percent of the post-Korean veterans have already used VA loan benefits. INTEREST RATES Behind the facade of the statistics on the overall housing program, though, there was one particularly noteworthy development indicative of the severity of the credit shortage in 1966. This was the fact that loan applications for World War II and Korean conflict veterans declined by more than 40 percent from the number received in 1965. The VA had expected a decline of only 8 to 10 percent in application receipts due to the effect of the phase-out formula on the duration of the eligibility of these veterans. Thus, the percentage decline was four times that anticipated and tight money alone probably was responsible for a decline of about 30 percent. When periods of tight money have set in, and interest rates have increased substantially, the VA housing program has been hit hard and, |