to make a good American family and give it something to live for, you have to provide a start. An income of three or four thousand dollars a year, doesn't permit the purchase of an average house.

Mr. MUMMA. It is a case of having so much money to distribute every payday. Which do you think would get the money first, the home or the automobile?

Mr. VANIK. I think people would choose a house. When we make it possible for them to buy a home that way. I don't think we have any problems, and I think we can count on them paying it back because every day they live in a home they improve it.

Mr. MUMMA. That is possible now, Mr. Vanik, but when a house costs so much to build, you have to have a little more than a note to acquire it.

I don't know how this is in every district, but in the districts I know, a man really needs an automobile to get to work.

Mr. VANIK. He needs a house to live in first.

Mr. MUMMA. I realize that, too.

Mr. VANIK. First he needs the job. Then the house and the car comes next, I think.

Mr. MCDONOUGH. Mr. Chairman.

Mr. BROWN. Mr. McDonough.

Mr. MCDONOUGH. Mr. Haverstick, does your association have any record of the time that elapses from the time that the builder has a house built and it is sold? What is the average period of time?

Mr. HAVERSTICK. For an individual house it is a relatively short period of time, but in relation to a project operation, when you have to acquire land, go through the zoning boards and other necessary functions of local government, perhaps FHA or VA, from the time the builder gets the notion until he actually gets into production, let alone completion of houses, our experience has proven that it runs in the neighborhood of about 6 months.

Mr. MCDONOUGH. Are there many builders building houses without any positive assurance of sales within 6 months?

Mr. HAVERSTICK. Actually, I think our builders today are building a little closer to the belt, so to speak, than they have been in some previous years. They are selling most of their houses from models, rather than building a huge inventory of housing and then hoping there is a market when they complete them. That isn't true in every instance, but it is becoming more generally true.

Mr. MCDONOUGH. It is your opinion that this is becoming a buyers’ market instead of a sellers' market?

Mr. HAVERSTICK. I think we have been operating in a buyers' market for perhaps close to 18 months. We have to do a real job of selling and merchandising today.

A moment ago you talked about the automobile industry. We are definitely in competition in a sense with the automobile industry, certainly for the same dollars that are used for financing. If a man is overloaded by payments for an automobile, he many times won't qualify for the purchase of a house.

Mr. BROWN. Are there any further questions, gentlemen?

Mr. O'HARA. Mr. Chairman.

Mr. BROWN. Are there any further questions, gentlemen?
Mr. O'HARA. Mr. Chairman.

Mr. BROWN. Mr. O'Hara.

Mr. O'HARA. Do you feel repercussions from the extension of consumer credit into the field of foreign travel such as Carribean cruises and trips to Europe?

Mr. HAVERSTICK. Well, we are in competition, I think, with all types of expenditures by the consumer, including those.

Mr. O'HARA. I mean specifically, have you had instances in which you found would-be purchasers of homes unable to finance such acquisition of residential properties because of previous commitments to pay back the money borrowed for cruises?

Mr. HAVERSTICK. I am not certain that I could specifically cite such an instance, but I do know that there is a greater percentage of persons turned down for credit reasons when they apply for a mortgage on a house than has been our experience in the past several years. Whether this could be attributed to that specific point or not, I don't know, but I am convinced that we have a problem in that direction. I don't think it is a major one, but it does exist, I am sure, in some instances.

Mr. O'HARA. Every time I see these large advertisements on "Go to Europe and pay $5 down" or to the Caribbean, I wonder if that use of consumer credit is not having very serious repercussions on the ability of people to buy homes.

Mr. HAVERSTICK. It must have some bearing on it.

Mr. O'HARA. Thank you very much.

Mr. TALLE. Mr. Chairman.

Mr. BROWN. Dr. Talle.

Mr. TALLE. Mr. Witness, I would like some practical education from you this morning.

Let us say that a man is 65 years old, he has money enough for a reasonable downpayment on a house, and then he hopes that through amortization he can pay the remainder, but ordinarily those plans encompass 20 or 25 years, don't they?

Mr. HAVERSTICK. Yes, sir.

Mr. TALLE. At the age of 65 that really doesn't help him, does it? Mr. HAVERSTICK. I don't think that it would be too helpful; no. However, if some person, a relative, perhaps, could help finance the downpayment, or perhaps that relative could go on the mortgage, a cosigner on the mortgage

Mr. TALLE. That is exactly the point I was coming to.

you

Do know of a number of instances in which some younger person, say a relative or friend, joins with a person of 65, or near that age, to assume the responsibility of those payments?

Mr. HAVERSTICK. I can't specifically say I know of an instance. where this has happened, although I know that it does happen. I would like to have you check the article in Nation's Business, which gives a very comprehensive story and report on this very problem we are speaking of. It points out some programs that are going on in various parts of the country that are meeting the need.

Mr. TALLE. Don't you personally believe that that would be a workable method?

Mr. HAVERSTICK. Oh, yes; I am convinced that it would be workable. I think that is the proper approach to take in this instance.

Mr. TALLE. Certainly, without it a man at the age of 65, and even 60 or perhaps a younger man than that, would not be able to avail himself of the amortization plan.

Mr. HAVERSTICK. I understand that is true; yes, sir. I am not a banker, I am a home builder, and I am not familiar with banking procedures in that respect, but I do know that mortgage bankers frown upon persons of that age buying property and having a long-term amortization program for repayment.

Mr. TALLE. Thank you, Mr. Chairman.

Mr. HOLLAND. Mr. Chairman.

Mr. BROWN. Mr. Holland.

Mr. HOLLAND. Mr. Haverstick, do you find that in most cases the reason why a person doesn't buy a home is that they can't get the downpayment?

Mr. HAVERSTICK. They can't get the downpayment?

Mr. HOLLAND. Yes, sir; they don't have the downpayment, if they have a family.

Mr. HAVERSTICK. Well, I suppose that there are instances when persons don't buy because they can't qualify; don't have the downpayment. I am certain that is true in some cases. But the present trend of homeownership is moving up at a very rapid rate in this country, and it would indicate that more people are in a position to buy, or do accumulate the downpayment and are able to buy housing. Of course the income level of the American people continues to move up at a very rapid rate, and they have money available as their income moves up, for accumulating down payment for new housing.

Mr. HOLLAND. Don't you think that if a man has a good employment record, that that should be considered in arranging the down payment?

What I have in mind is this: I come from a very large industrial district where people have families with 3, 4, and 5 children, and they make good money and they pay as high as $70 and $75 a month for rent, but they just have never been able to get ahead those two or three or four thousand dollars for a down payment.

Do you think that if we were to take the GI bill and let them come under it, in some way, could not a man's employment record be taken into consideration? For instance, if a man has worked 15 or 20 years for a corporation and has never lost any time and has shown that he is a good worker, I do not think he is a bad financial risk.

Mr. HAVERSTICK. I think that the man who has an excellent record and who has a good record of employment is in many cases perhaps a better risk than perhaps a man who might have the downpayment and doesn't have those qualities.

Mr. HOLLAND. I know of a lot of families in that position. We had a forum, for your information, in Pittsburgh, in my district, where this was discussed, and I was surprised to hear men get up and tell me how much money they made some of them averaged around $4,400 a year-but they had 4 children or 5 children, and they just can't get that two or three thousand dollars to put down, though they pay their bills as they go along, and I might add they don't take any trips to Europe. And they are very anxious to be

come homeowners.

Mr. MUMMA. I think any real-estate man who could get a fellow with $500 today, he would be perfectly willing to sell him a house. Mr. HOLLAND. I wish it was true.

Mr. MUMMA. Isn't that true, Mr. Real Estate Man?

Mr. HAVERSTICK. I don't think so exactly.

Mr. MUMMA. What market are you in?

Mr. HAVERSTICK. I am in Dayton, Ohio, and we have generally built from-in the from $11,000 to $14,000 class.

Mr. MUMMA. In most ads in my territory, that is the big print: "No downpayment."

Mr. HAVERSTICK. No downpayment, GI.

Mr. MUMMA. They don't put necessarily. The employment record is the principal basis for credit today.

Mr. HAVERSTICK. I am not familiar with that type of a program that is going on. Of course, I don't doubt but what, under conventional financing plans, if builders have the capitalization, they can take a second mortgage on property for the amount of the downpayment. That could be possibly the case.

Mr. MUMMA. Well, the point, no downpayment is the come-on. When they get you in the office and start to ask you the other questions, the matter of a good employment record, how much you owe on your car, and all that, then it is different, but there are a lot of houses in my territory sold. I happen to be in a position to know that it is true.

Mr. HOLLAND. I don't know of anyone in my district who can do that. I think Mr. Haverstick made one statement here that is very important, and that is the falling off of building today. There is also a falling off in the building of automobiles. If there are not some arrangements made for credit, I think we will be in a tailspin in no time.

Mr. HAVERSTICK. Of course, the problem is one in which, regardless of any attempt to curtail credit in any way at all, it doesn't make any difference how little it may be, and it may not necessarily be directed at the home-building industry, it will affect it every single time. And, of course, that condition exists at the moment.

Mr. BROWN. Do you favor the Rains bill to extend the GI bill of rights?

Mr. HAVERSTICK. Yes, sir.

Mr. BROWN. What do you think of section 202 of the Rains bill, to use the national service life-insurance funds to purchase VA-guaranteed mortgages?

Mr. HAVERSTICK. Well, I think that any method by which you could get more funds into the mortgage field is important. Whether this is the best way to do it or whether there are other ways to do it, I am not certain. We have not yet completed a thorough study of that approach. We do have under consideration a study along that line at the moment. We are just in the beginning stages here of a meeting of our board of directors, and that subject will be discussed during this meeting.

Mr. BROWN. We are glad to have your testimony, gentlemen. You may be excused.

Mr. HAVERSTICK. Thank you very much, Mr. Chairman and members of the committee.

We appreciate the opportunity to testify and we want to again extend to you an invitation to come over to our National Housing Center on L Street and see our fine new home.

Mr. BROWN. Thank you.

I have a statement, submitted to the committee by the United States Savings and Loan League. Without objection, it will be included in the record.

STATEMENT OF UNITED STATES SAVINGS & LOAN LEAGUE1

The United States Savings & Loan League is submittting a statement for the information of the committee instead of having a witness at the hearings because it recognizes the committee's time problem and because the bill, H. R. 10157, in most part does not directly affect the operations of savings and loan associations. It is nonetheless true that the savings and loan associations and cooperative banks which now make approximately 37 percent of all home loans have a substantial general interest in all proposals which would affect the housing market and the flow of home mortgage funds and the terms on which loans are made. Ours is essentially a conventional loan activity; some 77 percent of the mortgages held by savings and loan associations are carried entirely at the association's own risk with no insurance or guaranty by a Federal agency. Approximately 19 percent of our loans are guaranteed by the Veterans' Administration and some 4 percent are insured by the Federal Housing Administration. Despite the unique emphasis on conventional lending, we are in a situation where any changes in the statutes governing the guaranty or insurance of loans by Government agencies affect the overall mortgage lending situation and thus affect our operations. Therefore, we wish to present to the committee the careful views of leaders of our business about the various housing programs whose extension, expansion, or substantial modification have been proposed in bills before the committee.

This statement consists of two parts, the first of which is comments of a general nature on the overall housing measures and secondly, specific comments and suggested amendments that deal with savings and loan association operation.

PART I

Parity for property improvement loans

Should section 101, subsection (b) (1) of H. R. 10157 be enacted lifting the maximum amount of an FHA-insured property improvement loan on a singlefamily structure, or the maximum loan for a new structure under this section, to $3,500, the savings and loan associations respectfully submit that a like change should be made in the permissible size of uninsured property improvement loans which a Federal savings and loan association makes. We are submitting as an addendum to this statement such an amendment to section 5 of the Home Owners' Loan Act of 1933, which is the statute governing Federal associations. We request the earnest consideration of the committee for such an amendment, inasmuch as uninsured property improvement loans constitute no contingent liability for the Federal Government and serve equally as well as insured property improvement loans to implement the program for substantial rehabilitation of homes of our people which is receiving special emphasis this year. Mortgage financing

The league's position on FHA is contained in the attached legislative program for 1956. While the FHA provisions of H. R. 10157 and also of H. R. 9537 (the

1 The United States Savings & Loan League, founded in 1892, has in its membership 4.200 savings and loan associations, building and loan associations, and cooperative banks, representing approximately 90 percent of the Nation's savings and loan assets. The positions taken in this statement are derived from policies adopted by the league's board of directors, executive committee, and legislative committee at a joint conference January 23-24. The league's principal officers are Walter H. Dreier (Evansville, Ind.), president; Roy Marr (Memphis, Tenn.), vice president; Henry A. Bubb (Topeka, Kans.), legislative committee chairman; Norman Strunk (Chicago, IL), executive vice president; and Stephen Slipher (Washington, D. C.), manager of the league's Washington office.