urban renewal areas, or areas of federally assisted concentrated code enforcement. The loan amounts for section 203 (k) or 220 (h) loans may be increased up to 45 percent in high-cost areas.

Title I loans may be up to $5,000 in amount and have terms up to 84 months. The maximum permissible financing charge on the first $2,500 of such a loan is $5.50 discount per year per $100 of the original face amount of the loan, and $4.50 per year per $100 on the remainder of the loan.

Rental housing (sec. 207 and sec. 220)

Under its regular rental housing program (sec. 207), FHA insures mortgages financing the construction or rehabilitation of rental housing. A mortgage can be up to $20 million if a private mortgagor, and up to $50 million if a public mortgagor. The amount of a mortgage is further limited by the number of bedrooms per family unit in the project. For a walkup project the limit is $9,000 per unit with no bedroom, $12,500 with one bedroom, $15,000 with two, $18,500 with three, and $21,000 with four or more. For an elevator project, the amounts are $10,500 with no bedroom, $15,000 with one, $18,000 with two, $22,500 with three, and $25,500 with four or more. Dollar limits per unit may be increased up to 45 percent in high cost areas. Ratio of loan to property value is 90 percent with additional limitations for rehabilitated properties.

The minimum cash investment required is 3 percent of the total cost of a project. Under authority expiring on October 1, 1969, the maximum insurable interest rate is established by the Secretary of HUD as necessary to meet the mortgage market. The current maximum rate is 71/2 percent. A mortgage insurance premium of one-half of 1 percent is charged by FHA.

A project under this program must be economically sound and must consist of at least eight dwelling units. Cost certification and adherence to labor standards are required of the sponsors.

Rental housing is provided for urban renewal and federally assisted concentrated code enforcement areas under FHA's section 220 urban renewal housing program. The housing can be either new or rehabilitated. This program essentially follows the section 207 limitations except that the ratio of loan to value is based on replacement cost rather than value on completion.

Mobile home courts (sec. 207)

Mortgages financing the construction or rehabilitation of mobile home courts with 50 or more spaces can be insured under section 207 of the National Housing Act. The amount of a mortgage cannot exceed $500,000 or $1,800 per space, except that in areas where cost levels so require, the limit per space can be increased up to 45 percent. In the case of new construction the amount of the mortgage is further limited to 90 percent of estimated value of the property after completion of improvements. In the case of rehabilitation the limit is 90 percent of estimated value after rehabilitation subject to certain further limitations. The life of the mortgage can be up to 39 years, or not appreciably in excess of three-fourths of the remaining economic life, whichever is less. The current maximum interest rate is 712 percent.

At the end of March 1969, 21 mortgages had been insured for new mobile home courts.

Cooperative housing (sec. 213)

Under section 213 of the National Housing Act, FHA insures mortgages on cooperative housing projects of five or more dwelling units. The projects must belong to and provide housing for members of nonprofit cooperative corporations. They may be either management-type or sales-type projects.

The amounts and terms of cooperative housing mortgages vary with the type of cooperative being financed. Mortgage loans on salestype cooperatives are insured, however, only when they involve new construction. Each home is released from the blanket mortgage when the project has been completed and the home is sold. Each member can then take title to one of the homes and finance its purchase with a single mortgage insured by FHA.

Management-type cooperatives may obtain insured loans supplemental to the mortgage financing the project. The supplemental loans may be used to finance improvements, repairs, or the purchase of community facilities. They may also be used to finance a cooperative's purchase and resale of membership which involve an increase in equity.

Housing in urban renewal and code enforcement areas (sec. 220)

Mortgages financing new or rehabilitated homes located in urban renewal areas and in areas with programs of federally assisted concentrated code enforcement are insured by FHA. The mortgage terms under this program are more liberal than those under the FHA regular home mortgage section 203 program.

The dollar limit on a mortgage covering a single family home is $30.000. The amount of the mortgage also cannot exceed 97 percent of the replacement cost of the property up to $15,000, 90 percent of the replacement cost which exceeds $15,000 up to $20,000, and 80 percent of replacement cost in excess of $20,000. Where the property is not new construction, the limits upon the amount of the mortgage are based upon estimated cost of repair and rehabilitation and the estimated value of the property before rehabilitation rather than replacement cost. In the case of a veteran purchasing his home the downpayment can be as low as $200 where the replacement cost of the property does not exceed $15,000.

The interest rate maximum is 71/2 percent and one-half of 1 percent insurance premium is charged. The term of a mortgage cannot exceed 30 years except that under certain circumstances it can be up to 35 years.

Low- and moderate-income housing (sec. 221)

Under the section 221 program mortgages financing low-cost homes for families displaced from their homes through governmental action and for families of low and moderate income are insured under more liberal terms than the regular section 203 program. The mortgage on an individual home cannot exceed $15,000 in amount ($17,500 in highcost areas). For families of five or more persons the foregoing mortgage amounts can be increased by $2,500. The ratio of the loan to property value can be 100 percent for an owner-occupant, except that in the case of a home not constructed under FHA or VA inspection

and completed less than a year the ratio is 90 percent. The minimum cash investment is $200 for a displaced family and 3 percent of acquisition cost for other families. The current interest rate ceiling is 715 percent, and one-half of 1 percent mortgage insurance premium is charged. In the case of displaced families the term of the mortgage can be up to 40 years. For other families, it is generally 30 years.

Rent supplement program (sec. 221(d)(3))

FHA administers the rent supplement program initiated by the Housing and Urban Development Act of 1965. Under this program, low-income individuals and families who are either elderly, handicapped, displaced by Government action, occupants of substandard housing, or are occupants or former occupants of homes damaged by disaster are eligible for admission to FHA market rate section 221 (d) (3) new or rehabilitated housing which is assisted by rent supplement payments. The housing is owned by private nonprofit, limited distribution, or cooperative mortgagors. The housing owner enters into a contract with the Secretary of HUD for Federal rent supplement payments. The contracts have a term up to 40 years. To be eligible for admission to housing assisted with rent supplements the individual or family income must be within the maximum admission limit established for public housing in the area.

The rent supplement payments for any dwelling unit cannot exceed the amount by which the fair market rental for the unit exceeds one-fourth of the tenant's income. When the tenant can pay the full rent he may continue to live in the same unit without a rent supplement payment.

Of the funds approved in appropriation acts for the rent supplement program, there may be made available on an experimental basis (1) 5 percent for housing financed with FHA-insured mortgages bearing a below-market interest rate (3 percent per annum); and (2) 5 percent for housing for the elderly financed with a direct Federal loan or under the FHA mortgage insurance program for rental housing for the elderly. State or locally aided housing which is approved for rent supplements prior to completion of its construction or rehabilitation may have the benefits of rent supplements. Also, up to 20 percent of the units in a project financed under the interest reduction payment program authorized by section 236, infra, may be occupied by tenants receiving rent supplement benefits.

Under the Housing and Urban Development Act of 1965 the maximum annual rent supplement payments which may be contracted for are limited to aggregate amounts approved in appropriation acts. An aggregate contract authorization amount of $72 million has been authorized by appropriation acts.

At the end of April 1969, rent supplement reservations had been made for annual rent supplement payments totaling $70,744,000 for 851 projects containing 61,309 dwelling units.

Low- and moderate-income rental housing (sec. 221(d) (3) BMIR and MIR) Rental housing is provided for low- and moderate-income families under FHA's section 221 (d) (3) below market interest rate program. Under this program FHA insures mortgages financing new or rehabilitated housing. The amount of a mortgage cannot exceed $12.5 mil

lion. As under the regular rental housing program, the mortgages are further limited in amount by the number of bedrooms and according to whether the structure has elevators.

For public agencies, cooperatives, and nonprofit sponsors, mortgages on new construction may not exceed the replacement cost of the project; on rehabilitation projects, the estimated cost of rehabilitation plus the value of the project before rehabilitation; or if refinancing is involved, the estimated cost of rehabilitation plus the amount required to refinance outstanding indebtedness. Further limiting factors are income limits established by FHA and debt service consideration.

The mortgage bears interest at the market rate until construction is completed, then it is lowered to 3 percent upon final insurance endorsement. The FHA insurance premium is waived where the mortgage bears the below-market rate of interest.

Housing is also provided under the section 221(d) (3) program with mortgages financed at market rates of interest. Any mortgagor approved by the Commissioner is eligible for a market rate mortgage but under the below-market program the mortgagor must be a public agency (except those that obtain their funds exclusively for public housing from the Federal Government), a cooperative, a private nonprofit corporation or association, or a builder-seller or limited distribution mortgagor.

By the end of March 1969, FHA had insured mortgages financing

Rehabilitation housing for low-income families (sec. 221(h))

The 1966 Demonstration Cities and Metropolitan Development Act authorized the section 221 (h) program of homeownership for lowincome families with the assistance of FHA mortgage insurance. Under the program, FHA insures mortgages executed by nonprofit organizations to finance the purchase and rehabilitation of deteriorating or substandard housing. Mortgages bearing below-market interest rates are also insured, financing the resale of the housing to individuals and families having incomes below the maximum income permitted for those eligible for rent supplements under the rent supplement program. The mortgage of a nonprofit organization may have a mortgage amount up to the appraised value of the property when purchased, plus the estimated cost of the proposed rehabilitation. It bears interest at the market rate up until final endorsement of the mortgage for insurance, then 3 percent. FHA determines its maturity.

The mortgage of a home purchaser can be an amount equal to that portion of the unpaid balance of the mortgage of the nonprofit corporation selling the housing which is allocable to the individual dwelling involved. The term can be up to 25 years if the purchaser is unable

to make the monthly payments required by a shorter term. The interest rate on the mortgage may be as low as 1 percent with periodic adjustments between 1 and 3 percent to reflect changes in the homeowner's income. A minimum downpayment of $200 is required which may be applied to closing costs or prepaid expenses. The mortgage given by a low-income purchaser must contain a provision that if the mortgagor does not continue to occupy the property the interest rate will increase to the highest mortgage interest rate permitted by FHA at the time of insurance. However, the increase in interest rate will not be applicable if the property is sold to the nonprofit organization from whom the home was originally purchased, a local housing authority, or another low-income purchaser approved by the FHA.

It is estimated that there will be close to 5,000 units rehabilitated under this program by the end of fiscal year 1969. Section 235(j) of the National Housing Act (as enacted by the Housing and Urban Development Act of 1968) includes a provision similar to the 221 (h) program. It is expected that with the greater flexibilities of the section 235 program production under the 221 (h) program will start to decrease in 1970 as the utilization of section 235 (j) increases, and no new commitments will be made under the 221 (h) program in 1970. Conversion of BMIR housing to condominium or cooperative ownership by lower income families (sec. 221(i) and 221(j))

The Housing and Urban Development Act of 1968 added provisions to section 221 (subsecs. (i) and (j)) to permit section 221 (d) (3) below market interest rate rental housing projects to be converted to condominium or cooperative ownership. Mortgages financing the purchase of the individual units can be insured by FHA. The dwelling units can be purchased by persons whose income is within the 221 (d) (3) below market interest rate housing limits, and at prices not exceeding the appraised value of the property involved. The interest rate will be determined by the Secretary, but cannot be less than the below market rate and will be increased to reflect increases in the mortgagor's income or upon termination of the mortgagor's occupancy of the unit otherwise than through sale to an approved nonprofit purchaser or a low or moderate income purchaser whose income is within the 221(d) (3) limits.

Servicemen's housing (sec. 222)

Servicemen can obtain or assume insured home mortgages under the same terms as those under the section 203 regular homeownership program. However, the mortgage insurance premium is paid by the Department of Defense (or Department of Transportation for Coast Guard personnel) as long as the serviceman is in active duty status during this period of ownership and occupancy of the home. If a serviceman dies on active duty, the mortgage insurance premium will be paid for 2 years beyond the date of his death, or until his widow disposes of the home or remarries, whichever occurs first.

Housing in older declining areas (sec. 223(e))

The Housing and Urban Development Act of 1968 authorized FHA to insure mortgages financing the purchase, repair, rehabilitation, or construction of property in older, declining urban areas even though