of the former bill, which fixed the maximum interest rate for such mortgages at 31⁄2 percent, has been revised in section 604 (b) of the present bill by increasing such rate to 4 percent.

That is a subject which is of great interest. The possibilities of mutual and cooperative home ownership I think are only beginning to be realized and I think can be expanded to be a tremendously important force in housing.

The reason we feel at this point that the 90-percent provision is probably better than the 95, is that we do not have yet the experience necessary in the handling of that sort of thing, nor have there been enough projects of the sort developed in the country to give us the same basis for applying economic soundness which is inherent in all this act, as distinguished from an emergency provision.

It is therefore our belief that the whole situation would probably be better served by beginning at the lower percentage and developing our experience to determine the factors that are necessary, for instance, in the setting up of a charter, the determination of equities and so on. The experience that we now have is in connection with the individual home or the individual borrower, as developed over generations of common use, and billions of dollars' worth of insurance operation.

We believe that these changes are advisable in the interest of economic soundness and will promote wider interest and participation by private lenders throughout the country.

Mutual ownership projects we believe present very large possibilities for contribution to the solution of the housing problem, but they have not yet been given sufficient trial and testing to develop the best methods of setting them up, the type of charter provisions best suited to the purpose, and the best protective measures for the interest of participants.

We believe, therefore, that this development experience will be most constructively gained if the equity requirements is maintained on the same basis as other rental projects for low-income families at least during the development of the required experience.

Section 405 of the former bill provided that debentures issued in payment of insurance contracts in connection with such 90 or 95 percent mortgages should be dated as of the date of default rather than as of the date of commencement of foreclosure, and that certain other special benefits in calculating the amount of debentures upon assignment of defaulted mortgages should be available only to the holders of such mortgages.

Under section 605 of the present bill these special benefits have been eliminated or made applicable to all mortgages insured under section 207. We believe that special benefits for the holders of such 90percent mortgages are unnecessary as an inducement to lenders and that their elimination will tend to simplify our procedure.

Section 406 of the former bill provided that the powers of the Federal National Mortgage Association could be utilized in making such insured mortgages and authorized the Association to make preliminary advances to assist in the formulation of projects of the character described in connection therewith. This section has been omitted from the present bill.

Since the Federal National Mortgage Association already has authority under title III of the National Housing Act to make such insured loans; it is believed that this section is unnecessary.

I have only a few brief comments on S. 287, which is somewhat similar to the provisions contained in section 602 (b) of S. 866.

S. 287 would amend the maturity provisions with respect to FHA insured home mortgages to permit a maximum maturity of 32 years in any case where the mortgagor is the occupant of the property and has served in the armed forces during World War II.

Under present law the maximum term is 20 years, except that it may be up to 25 years in the case of single-family, new construction, owner-occupied homes where the mortgage loan does not exceed $5,400 and the mortgagor has established a 10-percent cash equity.

S. 287 would appear to make the 32-year maturity available on mortgages in amounts up to $16,000, which is the maximum insurable under section 203; also, such maturity would be applicable to mortgages on existing construction which may have a relatively short useful life, and to income-producing properties, such as dwellings designed for two, three, or four families, where one of the units is occupied by the veteran owner.

In section 602 (b) of S. 866, a somewhat similar provision in connection with mortgages for families of lower income provides for a maximum maturity of 30 years but is limited to new construction, single-family, owner-occupied dwellings on which the mortgage does not exceed $5,000.

I believe the provisions of section 602 (b) of S. 866 are preferable to those of S. 287 and would accomplish substantially the same objective. Therefore S. 287 would not appear to be necessary.

I think the senior Senator from Florida has already fairly well covered the points that I would make and if there is no objection I will merely file this paper on that.

I have two other things that I would like to state to you, one in connection with the over-all agency.

Because of the abbreviation of my presentation I should point out that we would suggest an amendment that would remove the Secretary of the Treasury or his designee from the proposed coordinating council, simply because the Treasury does not have any direct housing activities.

The purpose of the inclusion no doubt is to provide for coordination of the housing policy with the over-all fiscal policy of the Government-a purpose that we think might be more appropriately and equally as readily done by having the Secretary of the Treasury on one of the advisory committees rather than directly within the Coordinating Council.

Because I have been brief and because much of what I have to say was included in the written presentation, I would like to make a concluding statement and I would like to read it.

In conclusion, there is one general thought which I believe that all of the various groups interested in housing should recognize.

As our housing problems have become more acute, they have become the subject of increasing attention and discussion. On the whole, I think the resulting debate has been instructive and valuable. I do not think that any of these groups would desire to slip into a habit of controversy that impairs ability to arrive at decisions. The right of full and free debate on public issues imposes a corresponding duty to exercise self-restraint, lest debate degenerate into bickering while important public problems go unanswered.

I recognize that necessarily there are differences of opinion as to the precise methods and details which are needed to reach the objective of a decent home and a suitable living environment for every American family. I cannot believe that there is any disagreement as to that objective. We cannot afford the kind of compromise which sacrifices principles or objectives. But there must be a reconciliation of differing opinions in order to arrive at decisions which will permit us to move forward.

Of course, the bill is not perfect, and I seriously doubt that anything short of operating experience can make it or any other major legislation approach perfection. In my belief, the bill is consistent with the general philosophy of housing which I expressed to you today.

In the light of that belief, I think it would be a wholesome thing to enact substantially such legislation as this which takes the important step of treating housing as the single broad problem which it is, rather than as, a recurring item in a wide variety of matters that otherwise appear to be unrelated. I believe it would make it possible for this Nation to start forward now with the kind of a housing program which has long been needed and which all citizens may view with justified hope.

I thank you very much, Senators, and I should add that in view of the shortness of the time I have not been able to get the usual clearances on this testimony.

Senator ROBERTSON. Senator, I would like to ask a question. I would like to ask this question: In arriving at the matching formula of $2 of Federal money for $1 of local money, was it assumed that the Federal Government was twice as able as the localities to finance these desirable projects in better and low-cost housing?

Mr. FOLEY. Generally speaking and on the average, I would say yes, Senator. I will supply a statement on that.

(The statement follows:)

STATEMENT ON THE 2-TO-1 MATCHING FORMULA

The 2-to-1 matching formula of S. 866 embodies the recommendation of the Taft Postwar Subcommittee on Housing and Urban Redevelopment in its report of August 1, 1945. In working out a formula of this nature, there is always a certain amount of arbitrary best judgment involved, no matter what figures are finally arrived at.

The Taft subcommittee formula is probably the most workable and fairest formula, taking into consideration the national interest in a decent living environment for our American families, the inability of most States and localities to find in their tax systems the revenues necessary to undertake by themselves programs of this nature, and the expert opinion of those most familiar with local fiscal conditions and resources as to what realistically can be required from our communities if the program is to work.

I this connection, two special factors are to be noted: First, the provisions with respect to the amount of Federal contribution is a maximum, but with respect to the local contribution, a minimum. It therefore has the necessary flexibility to take care of those communities or projects where a larger local contribution is appropriate, without at the same time making it impossible for those communities who are worse off to receive Federal help. Secondly, not all the necessary local expenditures made in connection with a project, particularly in the nature of public works, may obtain credit for the purpose of the 2-to-1 matching requirement. These additional local expenditures may frequently have to be of a substantial nature, and when added to the types of local expenditures that can receive credit for the 2-to-1 matching requirement, may, therefore, mean a substantially different ratio of sharing of total public costs than is indicated by the statutory formula taken by itself.

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Senator ROBERTSON. Would you give us some estimate of what you think the expense is going to be under this bill?

Mr. FOLEY. I am afraid I cannot offhand, but I will be glad to file with you, Senator.

(The statement follows:)

Financing under S. 866-The maximum cost to the Federal Government of programs provided for by the bill is shown in the columns which are headed "Annual contributions"

1 In outstanding insurance and commitments to insure. 2 To establish insurance fund; funds to be supplied through Reconstruction Finance Corporation. 3 Loan funds to be obtained through issuance of obligation by National Housing Administrator. Loans must be repaid within 5 years except that $250,000,000 may be used for definitive loans repayable within 45 years. The $250,000,000 definitive loans authorization consists of an initial authorization of $50,000,000, increasing by a like amount at the beginning of the second, third, fourth, and fifth years after enactment, respectively.

4 Annual contributions under any contract limited to periods not exceeding 45 years.

Loan funds to be supplied by Reconstruction Finance Corporation. Authorizations consists of $25,000,000 initial authorization, with additional authorizations of $50,000,000, $75,000,000, and $100,000,000 for second, third, and fourth years, respectively.

Maximum total amount payable annually during each of the 10 years next succeeding third year after enactment.

Senator ROBERTSON. I think that would be interesting.
Senator BUCK. Any other questions?

Senator TAYLOR. Yes, Mr. Chairman, I would like to ask a question.
Senator BUCK. Senator Taylor.

Senator TAYLOR. Mr. Foley, do the administrative provisions of the Taft housing bill represent the Budget Bureau's views, the President's views, or your own views?

Mr. FOLEY. As I have stated-insofar as I have expressed myself upon them-the views expressed represent my personal views growing out of my experience.

As I indicated at the conclusion, because of the brief time we have been allowed, we have not had the opportunity for the usual clearances. Senator TAYLOR. Mr. Chairman, I do not want to take up time; we are supposed to adjourn now, but I do have a few questions I should like to ask for some information.

Senator BUCK. We will take the time.

Senator TAYLOR. I do not know much about housing. I have never owned a new house in my life. In fact I have never owned a house in my life. I am paying on two of them at the present time so I do have a little knowledge of it from that point of view.

Could you give us the number of privately financed rental units completed in 1946 to rent for above $60 and from $52 to $60, from $40 to $50, and below $40? Could you give us those figures?

Mr. FOLEY. I could provide you with them, Senator. I could not, of course, hope to

Senator TAYLOR. How soon could you get them?

Mr. FOLEY. Within a short time. Within, I would say, a couple of days; they would be estimates, probably.

You are probably quoting from a list of questions that you have already sent me in a letter I received last evening; is that correct? Senator TAYLOR. Yes.

Mr. FOLEY. I have not had any opportunity since to develop that information but will be very happy to.

Senator BUCK. Will you see that the Senator gets those figures? Mr. FOLEY. I will, sir; so far as I will be able to provide them. Senator TAYLOR. That will be fine.

Senator Buck. Thank you, Mr. Foley.

(The following was later received for the record:)

Hon. RAYMOND M. FOLEY,
Administrator, National Housing Agency,

MARCH 17, 1947.

Social Security Building, Washington, D. C.

DEAR MR. FOLEY: We are very anxious to obtain from you immediately the following facts:

1. Please give the number of privately financed rental units completed in 1947 to rent for (a) above $60, (b) $50 to $60, (c) $40 to $50, (d) below $40. 2. Please give the same information regarding rental units started in 1946.

3. Please give the same information regarding construction permits granted for the first 2 months of 1947.

4. Please give the number of rental units under $50 per month which are likely to be built under present law in 1948.

5. Please give the number of rental units which you anticipate that the Taft bill as introduced, if enacted at once, could provide in 1947.

6. Please give the number of rental units which you anticipate that the Taft bill as introduced, if enacted at once, could provide in 1948.

7. If the Taft bill is enacted at once and appropriations are granted, how long, in your opinion, would it take for large-scale public and private rental housing to get under way?

8. Do you agree with the proposal for financing cooperative housing contained in the Taft bill?

9. How do you justify a 90-percent mortgage for individually owned homes in planned communities made possible through group action when you support a 95-percent mortgage for individual homes in scattered lots?

10. What is there in the Taft-Wagner-Ellender bill that will provide rental housing for the income group slightly above the public housing group?

11. Do you agree with the opinion that an emergency no longer exists and that the housing crisis will be substantially alleviated in the coming year?

12. How fast do you feel that the present doubling up of families can be relieved

in the coming year if the present Taft bill is passed?

I would appreciate a reply from you in writing at the soonest possible moment so that I can have this information available during the current hearings of the Banking and Currency Committee on housing.

Sincerely yours,

GLEN H. TAYLOR.