Housing Act of 1956

Present: Messrs. Spence (presiding), Brown, Rains, Multer, O'Hara, Mrs. Sullivan, Messrs. Fountain, Wolcott, Talle, Kilburn, McDonough, Widnall, Betts, McVey, Hiestand, Nicholson, and Bolton. The CHAIRMAN. The committee will be in order.

We will consider H. R. 10157. There have been many bills introduced, including the administration bill, H. R. 9537. We will be glad to have the help of all of those who are interested in the subject so that we may cover the field of housing as thoroughly as possible. (The bill is as follows:)

[H. R. 10157, 84th Cong., 2d sess.]

A BILL To extend and amend laws relating to the provision and improvement of housing and the conservation and development of urban communities, and for other purposes Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That this Act may be cited as the "Housing Act of 1956".

TITLE I-FHA INSURANCE PROGRAMS

PROPERTY IMPROVEMENT LOANS

SEC. 101. (a) Section 2 (a) of the National Housing Act is amended by striking out "September 30, 1956" and inserting in lieu thereof "September 30, 1958". (b) Section 2 (b) of such Act is amended

(b) by striking out "made for the purpose of financing the alteration, repair, or improvement of existing structures exceeds $2,500, or for the purpose of financing the construction of new structures exceeds $3,000" and inserting in lieu thereof "exceeds $3,500";

(2) by striking out "three years" and inserting in lieu thereof "five years"; and

(3) by striking out "$10,000" and inserting in lieu thereof "$15,000 nor an average amount of $2,500 per family unit."

(c) Section 2 (b) of such Act is further amended by striking out "Provided, That" and inserting in lieu thereof the following: "Provided, That any such obligation with respect to which insurance is granted under this section on or after the date of the enactment of this proviso shall bear interest, and insurance premium charges, not exceeding (A) an amount, with respect to so much of the obligation as does not exceed $1,000, equivalent to $5 discount per $100 of original face amount of a one-year note payable in equal monthly installments, plus (B) an amount, with respect to any portion of the obligation in excess of $1,000, equivalent to $4 discount per $100 of original face amount of such a note: Provided further, That."

HAZARD INSURANCE ON FHA-ACQUIRED PROPERTIES

SEC. 102. Title I of the National Housing Act is amended by adding at the end thereof the following new section:

"HAZARD INSURANCE ON FHA-ACQUIRED PROPERTIES

"SEC. 10. (a) Notwithstanding any other provision of law, the Commissioner is authorized to establish a Fire and Hazard Loss Fund which shall be available to provide such fire and hazard risk coverage as the Commissioner, in his discretion, may determine to be appropriate with respect to real property acquired and held by him under the provisions of this Act. For the purpose of operating such fund, the Commissioner is authorized in the name of the fund to transfer moneys and require payment of premiums or charges from any one or more of the several insurance funds established by this Act and from the account established pursuant to section 2 (f) of this Act, in such amounts and in such manner, including repayments of such moneys, as the Commissioner in his discretion shall determine. In carrying out the authority created by this section, the Commissioner and the Fire and Hazard Loss Fund shall be exempt from all taxation, assessments, levies, or license fees now or hereafter imposed by the United States or any Territory or possession thereof, or by any State, county, municipality, or local taxing authority. Moneys in the Fire and Hazard Loss Fund not needed for current operations of the fund shall be deposited with the Treasurer of the United States to the credit of the fund or invested in bonds or other obligations of, or in bonds or other obligations guaranteed as to principal and interest by, the United States or in bonds or other obligations which are lawful investments for fiduciary, trust, and public funds of the United States. "(b) Notwithstanding the provisions of subsection (a), the Commissioner is authorized to purchase such other insurance protection as he may in his discretion determine, and he may further provide for reinsurance of any risk assumed by the Fire and Hazard Loss Fund."

RENTAL HOUSING INSURANCE

SEC. 103. (a) Section 207 (c) (2) of the National Housing Act is amended by striking out "80 per centum" and inserting in lieu thereof "90 per centum". (b) Section 207 (c) (3) of such Act is amended to read as follows:

"(3) not to exceed, for such part of such property or project as may be attributable to dwelling use, $2,250 per room (or $8,100 per family unit if the number of rooms in such property or project is less than four per family unit) or not to exceed $1,000 per space or $300,000 per mortgage for trailer courts or parks: Provided, That as to projects to consist of elevator type structures, the Commissioner may, in his discretion, increase the dollar amount limitation of $2,250 per room to not to exceed $2,700 per room and the dollar amount limitation of $8,100 per family unit to not to exceed $8,400 per family unit, as the case may be, to compensate for the higher costs incident to the construction of elevator type structures of sound standards of construction and design; except that the Commissioner may, by regulation, increase any of the foregoing dollar amount limitations per room by not to exceed $1,000 per room in any geographical area where he finds that cost levels so require."

(c) Section 207 (c) of such Act is further amended by striking out the unnumbered paragraph immediately following paragraph (3).

COOPERATVE HOUSING INSURANCE

SEC. 104. (a) Section 213 (a) of the National Housing Act is amended(1) by striking out "or" at the end of paragraph (1);

(2) by inserting "or" at the end of paragraph (2);

(3) by adding after paragraph (2) the following new paragraph: “(3) a mortgagor, aproved by the Commissioner, which (A) has certified to the Commissioner, as a condition of obtaining the insurance of a mortgage under this section, that upon completion of the property or project covered by such mortgage it intends to sell such property or project to a nonprofit corporation or nonprofit trust of the character described in paragraph (1) of this subsection at the actual cost of such property or project as certified pursuant to section 227 of this Act and will faithfully and diligently make and carry out all reasonable efforts to consummate such sale, and (B) shall

be regulated or restricted by the Commissioner as to rents, charges, capital structure, rate of return, and methods of operation during any period while it holds the mortgaged property or project; and for such purpose the Commissioner may make such contracts with, and acquire for not to exceed $100 such stock or interest in, any such mortgagor as the Commissioner may deem necessary to render effective such restriction or regulation, such stock or interest to be paid for out of the Housing Fund and to be redeemed by such mortgagor at par upon the sale of such property or project to such nonprofit corporation or nonprofit trust;"; and

(4) by adding "referred to in paragraphs (1) and (2) of this subsection" after "which corporations or trusts".

(b) Section 213 (b) (2) of such Act is amended by inserting immediately after "$8,900" a semicolon and the following: "except that the Commissioner may, by regulation, increase any of the foregoing dollar amount limitations per room contained in this paragraph by not to exceed $1,000 per room in any geographical area where he finds that cost levels so require: Provided further, That in the case of a mortgagor of the character described in paragraph (3) of subsection (a) the mortgage shall involve a principal obligation in an amount not to exceed 85 per centum of the amount which the Commissioner estimates will be the replacement cost of the property or project when the proposed physical improvements are completed: Provided further, That upon the sale of a property or project by a mortgagor of the character described in paragraph (3) of subsection (a) to a nonprofit cooperative ownership housing corporation or trust within 2 years after the completion of such property or project, the mortgage given to finance such sale shall involve a principal obligation in an amount not to exceed the maximum amount computed in accordance with this subsection without regard to the preceding proviso".

"(h) In the event that a mortgagor of the character described in paragraph (3) of subsection (a) obtains an insured mortgage loan pursuant to this section and fails to sell the property or project covered by such mortgage to a nonprofit housing corporation or nonprofit housing trust of the character described in paragraph (1) of subsection (a) hereof, such mortgagor shall not thereafter be eligible by reason of such paragraph (3) for insurance of any additional mortgage loans pursuant to this section."

(d) Paragraph (a) of section 227 of such Act is amended by inserting after “subsection (a) thereof” the following: "or with respect to any property or project of a mortgagor of the character described in paragraph (3) of subsection (a) thereof".

GENERAL MORTGAGE INSURANCE AUTHORIZATION

SEC. 105. Section 217 of the National Housing Act is amended

(1) by striking out "July 1, 1955" and inserting in lieu thereof "July 1, 1956";

(2) by striking out "$4,000,000,000" and inserting in lieu thereof "$3,000,000,000"; and

(3) by striking out "section 2" each place it appears and inserting in lieu thereof "section 2 and section 803".

SPONSOR'S RETURN

SEC. 106. Section 220 (d) (3) (B) (ii) of the National Housing Act is amended by inserting after "Commissioner" in the parenthetical phrase a comma and the following: “and, if the mortgagor is also the builder as defined by the Commissioner, shall include an allowance for builder's and sponsor's services, profit, and risk of 10 per centum of all of the foregoing items unless the Commissioner, after certification that such allowance is unreasonable, shall by regulation prescribe a lesser percentage".

RELOCATION HOUSING INSURANCE

SEC. 107. Section 221 (d) of the National Housing Act is amended

(1) by striking out “$7,600" and "$8,600" wherever they appear in paragraphs (2) and (3) and inserting in lieu thereof "$8,600" and "$9,600", respectively;

(2) by striking out "95 per centum of" in paragraphs (2) and (3); (3) by striking out the first proviso in paragraph (2) and inserting in lieu thereof the following: "Provided, That the mortgagor shall be the owner and occupant of the property at the time of the insurance and shall have paid on account of the property at least $150 in cash or its equivalent (which amount may include amounts to cover settlement costs and initial payments for taxes, hazard insurance, mortgage insurance premium, and other prepaid expenses)"; and

(4) by striking out "thirty years" in paragraph (4) and inserting in lieu thereof "thirty-five years (or, in the discretion of the Commissioner, not to exceed forty years where such longer maturity is necessary to enable low-income families to realize the benefits of this section)".

APPROVAL OF COST CERTIFICATIONS

SEC. 108. Section 227 of the National Housing Act is amended

(1) by inserting after the first sentence the following new sentence: "Upon the Commissioner's approval of the mortgagor's certification as required hereunder, such certification shall be final and incontestable, except for fraud or material misrepresentation on the part of the mortgagor."; and

(2) by inserting after "legal expenses," each place it appears in paragraph (c) the following: "such allocations of general overhead items as are acceptable to the Commissioner,".

TITLE II-SECONDARY MORTGAGE MARKET

FEDERAL NATIONAL MORTGAGE ASSOCIATION

SEC. 201. (a) Section 302 (b) of the National Housing Act is amended--(1) by striking out "and (2)" and inserting in lieu thereof "(2)”; (2) by striking out "if (i)" and inserting in lieu thereof "if"; and (3) by striking out "or (ii) the original principal obligation thereof exceeds or exceeded $15,000 for each family residence or dwelling unit covered by the mortgage" and inserting in lieu thereof "; and (3) the Association may not purchase any mortgage, except a mortgage insured under section 803 or a mortgage covering property located in Alaska, Guam, or Hawaii, if the original principal obligation thereof exceeds or exceeded $15,000 for each family residence or dwelling unit covered by the mortgage”. (b) The first sentence of section 303 (b) of such Act is amended to read as follows: "The Association shall accumulate funds for its capital surplus account from private sources by requiring each mortgage seller to make payments of nonrefundable capital contributions equal to not more than 2 per centum of the unpaid principal amount of mortgages therein involved in purchases or contracts for purchases between such seller and the Association."

(c) (1) Section 304 (a) of such Act is amended by adding at the end thereof the following new sentence: "Notwithstanding the preceding provisions of this subsection, advance commitments to purchase mortgages in secondary market operations under this section shall be issued at prices which are sufficient to facilitate advanced planning of home construction, but which are sufficiently below the price then offered by the Association for immediate purchase to prevent excessive sales to the Association pursuant to such commitments."

(2) Section 304 (d) of such Act is amended to read as follows: "The Association may not purchase participations in its operations under this section." (d) The second sentence of section 305 (b) of such Act is amended to read as follows: "Subject to the provisions of this section, the prices to be paid by the Association for mortgages purchased in its operations under this section (including mortgages purchased under subsections (e), (f), and (g) shall be established from time to time by the Association; except that in no event shall any such mortgage be purchased at less than 100 per centum of the unpaid principal amount thereof at the time of purchase, with adjustments for interest and any comparable items, during the period beginning on the date of the enactment of the Housing Act of 1956 and ending June 30, 1957.”

(e) Section 305 (c) of such Act is amended by striking out “$200,000,000" and inserting in lieu thereof “$400,000,000”.

« Previous Continue »

Books

Housing Act of 1956: Hearings Before ... , 84-2 on H.R. 10157, May 7 ... 25 ...