defeat the purpose of the legislation to provide adequate low rental housing for military personnel.

It is therefore recommended that there be inserted after line 14, page 41, of section 201 of the bill the following:

"Notwithstanding the provisions of this section, mortgages insured under title VIII of the National Housing Act shall bear interest (exclusive of premium charges for insurance) at not to exceed 42 per centum per annum of the amount of the principle obligation outstanding at any time.

Experience indicates that the Government financed secondary mortgage market is essential to the successful operation of any military housing program. There is no question that such would even more so be the case in respect to continued use of the title VIII program herein proposed. The proposed Housing Act of 1954 contemplates the recharting of the Federal National Mortgage Association, substituting private financing for Federal funds. In order to provide adequate financing at reasonable interest rates and thus assure the feasibility and workability of this proposed program, it is recommended that there be added to section 306 of the proposed Housing Act of 1954 the following:

"Notwithstanding subsections (a) and (b) of this section, the Association is authorized to enter into advance commitment contracts to purchase, and to purchase mortgages with respect to which the Federal Housing Commissioner has issued a commitment to insure or a statement of eligibility under title VIII of the National Housing Act, as amended. Any advance commitment contract under this subsection shall provide for purchase in the amount of the insurance commitment. However, no mortgage may be purchased for an amount exceeding the principle balance thereof, plus accrued interest, at the time of purchase."

The proposed Housing Act of 1954 contemplates the extension of title VIII for a period of 1 year. In order to permit sufficient time to properly determine the need for military housing and to permit adequate planning and processing, it is recommended that section 126 of the proposed Housing Act of 1954 be amended to read as follows:

"Section 803 (a) of the said Act, as amended, is amended by striking out "And provided further, That no mortgage shall be insured under this title after July 1, 1954, except (A) pursuant to a commitment to insure issued on or before such date, or (B) a mortgage given to refinance an existing mortgage insured under this title and which does not exceed the original principle amount and unexpired term of such existing mortgage."

The 1-year limitation in the act is present due to the custom that has grown up in this type of legislation which follows the pattern set in title VI, section 608, as well as title IX. The limitation as applied to the military program should be removed for the following reasons:

1. Military programing and development of bases required more than 1 year due to the contingencies of the availability of public works funds to complete the base structures.

2. The development of a housing project normally requires more than 1-year of planning, engineering, and legalwork.

3. The military program requires that the plans be developed and paid for from appropriated funds and reimbursed from construction or mortgage funds at the closing. The military departments cannot conscientiously spend appropriated funds in the processing period left in any year for such if you make it reasonably certain that a commitment could not be obtained prior to the automatic expiration of the insuring authority.

4. Removal of the automatic cutoff date will not cause increased numbers of projects but will develop better projects in that adequate time may be given to planning and development to ensure the military will receive the best housing for the rent dollar.

5. The limitations proposed in the bill adequately limit the Government insurance risk. Consequently, there would appear to be no real benefit gained by continuing the yearly cutoff on the Wherry program.

It is recommended that the provision for a cost certification, added to section 803 (b) of the National Housing Act by section 10 (b) of Public Law 94, 83d Congress, be eliminated. This provision requires the mortgagor under a title VIII FHA-insured mortgage to agree to certify either (a) that the amount of the actual cost to him of the physical improvements on the property equaled or exceeded the proceeds of the mortgage, or (b) the amount by which the proceeds of the mortgage loan exceeded the actual cost of the physical improvements. In the latter case, the mortgagor would be required to agree to repay to the

mortgagee, within 60 days after the certification, any excess of the amount of
the mortgage loan over the actual cost of the improvements.

Under the bid procedures which the Department of Defense is presently follow-
ing in respect to the award of title VIII certificates of need, the requirement for
a cost certification is needless. It is our recommendation that this provision
be eliminated from title VIII.

Title VIII was designed to provide housing for military personnel under the
private enterprise system and in keeping with the private-enterprise system we
deem it essential to make provision for and create incentive for efficient, well
organized know-how in the planning, construction, and management of said
housing. The sponsor is required under the present statute to give a firm bid
price for the providing of the said housing and further is required to put forth
his private funds to augment any deficiencies in the amounts allowed for in
said bid to complete and provide the housing. When a sponsoring organization
is a successful bidder under the bid procedure, he is, generally speaking, receiving
less mortgage money than the maximum mortgage the FHA is willing to insure.
All of this constitutes the normal calculated risk of the sponsor under the private
enterprise system. The present statute further provides that in the event the
sponsor is successful in completing his project at something less than the amount
of the mortgage, which is predicated on his bid, he is required to return same
within 60 days. The association takes the stand that this final statutory
requirement is inequitable and defeats the private-enterprise system of com-
petitive bidding.

Mortgagees are not particularly interested in acceleration and mortgage pay-
ments through this method. They are primarily interested in money invested
in order to receive the return. The military departments, on the other hand,
receive no reduction in rent due to the efficiency of the builder. Consequently,
whether he makes or loses money in the project is of no particular practical
importance to the prospective tenants, to the mortgagee, or the FHA.

Effect of increased interest rates on average Wherry housing mortgage of $8,100

STATEMENT OF MRS. JENCY PRICE HOUSER, NATIONAL ORGANIZER FOR PERMANENT
HOUSING DESIGNED FOR OCCUPANCY BY SINGLE PERSONS

Mr. Chairman, my name is Mrs. Jency Price Houser, national organizer for
Residence at Ease Association and the Cause of Permanent Housing Designed
for Occupancy by Single Persons.

We have been active in the development of mutual housing plans on a national
basis but principally in Detroit, Mich., and Washington, D. C., for the purpose
of providing permanent housing designed for occupancy by single persons.

We are coming back to Congress for assistance after having advocated the
passing of paragraph (g) of section 213 of the National Housing Act in 1950.
Now, we wish to support enactment of section 119 of H. R. 7839 (Cooperative
Housing, section 213 of the former act), with regard to which we have the
following two suggestions to make:

1. In connection with section 213, Management Type Projects, there is an administrative requirement under FHA that needs an amendment, because FHA requires that a commitment may not be issued pursuant to a certificate of eligibility until 90 percent of the cooperators have been obtained and their required subscription prices have been fully paid. This seems to us to be too costly, delaying the obtaining of a sponsor for this type of building. Moreover, it seems to be a great handicap since the lining up of would-be tenants before any financing or building can be started has led to much misunderstanding and violent criticism on the part of those who are accustomed to projects being built under section 207, which allows for buildings to be sponsored first and the tenants found afterward. Even officials have considered it a misrepresentation to act on this part of the legislation, which requires 90 percent of the cooperators before a certificate of eligibility can be obtained, and it has become quite an imputation of wrongdoing that there are prospective tenants but no building.

It is therefore recommended that section 213 be amended to provide for the issuance of the commitment to a sponsoring group, in the same manner and with the same provisions as are permitted under section 207, but providing means for a special trust.

2. Our second suggestion is that paragraph (g) of section 213 of the National Housing Act of 1950 should be expanded into a whole section, embodying the provisions under section 207 and the special trust. Section 213 (g) reads as follows:

"Nothing in this act shall be construed to prevent the insurance of a mortgage under this section covering a housing project designed for occupancy by single persons, and dwelling units in such a project shall constitute family units within the meaning of this section."

There should be provided a means, through the special trust, of making use of private investment capital for long-term loans at low interest rates for financing the development of housing projects designed for single people as members of nonprofit organizations. This trust should make possible the investment of private capital through the same type of guaranty as has been so successfully used in the mortgage-insurance system of the Federal Housing Administration. The trust should also be so designed as to make this program a self-sustaining program, similar to the FHA, with adequate protection to the Government by a specific insurance fund reserve for possible losses, to be built up by an annual premium charge of one-quarter of 1 percent of the outstanding loan balance paid by the borrowers, and by additional protection against possible losses, in the form of a cushion of private capital supplied by the borrowers through the purchase of units in the trust, in an amount equal to 20 percent of the original principal amount of the loan. The Government should supply the initial capital through the purchase by the Secretary of the Treasury of up to $10 million of capital stock in the trust, or encourage private individuals to do so. However, when the privately subscribed share capital reaches $5 million, the Government stock would be retired, dollar for dollar, as additional private share capital was paid in. The $10 million of capital initially supplied by the Government would thus be replaced with $15 million of privately subscribed share capital. (This private share capital could be supplied by beneficiaries or others, including States or municipalities.)

The total amount of obligation which the trust should issue and have outstanding at any one time should be limited to $100 million, all of which would be private investment. Of this maximum authorization, $10 million should become available by July 1, 1954.

This program should use essentially the same form of organization as is used in the case of the Federal home-loan banks. It would combine the best features gained in the course of more than 15 years' experience with the FHA and the Federal home-loan banks-two of our successful means of Government assistance to private enterprise in housing.

Secondly, we suggest it should provide for the necessary technical assistance and advice in the organization of self-help housing trusts and similar nonprofit organizations, and for the planning, financing, development, construction, and operation of the various housing projects.

Thirdly, we feel strongly that it should make limited financial assistance, in the form of preliminary advances of funds, available to soundly organized self-help housing trusts and similar nonprofit organizations to enable them to develop specific plans for their housing projects.

As far as we know, ours is the only organization devoting itself to paragraph (g) of section 213 of the Housing Act of 1950, and we are making strenuous efforts against heavy odds to promulgate this program, which is so much needed by at least 2 million persons.

An analysis of this need and of our efforts to meet it is in a separate document submitted herewith.

HOUSING DESIGNED FOR SINGLE PEOPLE THE NEEDS OF 2 MILLION

There are at least 2 million American citizens for whom we believe that housing should be specially designed; and some of them are already in dire need of it. These people are very worthwhile citizens, and yet are pushed around by circumstances to an unsuspected extent, especially as they get older.

We are referring to the single women in America who are over the age of 30 or so; institutions like the YWCA take care of those who are below that age. It quite often happens that, as a single woman gets near the retiring age, she is asked to leave accommodations where she has lived, possibly for many years. So as to be modest and within range of possibility, and also to allay any thought of our trying to take on more than we can fulfill, only 4 percent of the need is what we are expecting to help, which is 1 person in 25.

The needs of single people have been curiously omitted from housing debates. We think that there should be housing specially designed for those having passed the age of 30, and so designed that the tenant may expect to continue living there in old age. There are definite points where housing designed for single people must differ from housing designed for families, and we have spent time, energy, thought, and money in developing a model design to meet the needs of such people.

We were forced to consider the housing of single people from a national standpoint. A local project was too small to interest those with big money. Even from a national standpoint it is proving difficult; but it would have been impossible from a local standpoint only. Legislative people as a whole are not interested unless something has a national aspect, because it must touch their own constituents. An architect is interested when his work may be reproduced often enough for him to receive sufficient remuneration for the expense of providing the first plan on a nonprofit basis. The same is true with regard to organization, legislation, contracting, financing, and all other phases of development.

The persons for whom we are catering are women living alone, many of whom have spent their lives working conscientiously outside the home, or women whose husbands have died and whose children are on their own (or would be if they were not obliged to live together for lack of just such housing as that which we are aiming at providing), or widows who have never had any children. Single men and women often occupy houses or apartments which could serve for whole families just in need of such accommodation.

Privacy and undisputed ownership, even though their tenancy is limited to one room, will be deeply appreciated by the tenants and do much to lessen the strain which, in later life, might lead to unbalance and possibly becoming a ward of the State. One room is all that is essential for a single person's happiness, if it is the kind of room we mean to provide, and it is all that is wise for an aged person to be responsible for. There will be a healthful sense of security in being sure of one's own place permanently. There is safety in company for person and property, and there are also certain big advantages which the tenants will appreciate as they become old. A great deal of research has been undertaken on the kind of housing best suited to single people.

Much research has also been done on methods of financing, and the founders of the project originally expected that a sponsor would be forthcoming to supply the equity needed for getting a mortgage insured by the Federal Housing Administration. It was not found easy, however, to obtain such sponsors. The middle-income housing act which was voted on in the spring of 1950 and lost by 3 votes, originally provided for the setting-up of a giant revolving fund which would, of course, have provided money with which to build, and rapidly. The trust fund plan we propose would build upon a sounder and more mutual foundation, we think.

One of the original features of this project is that of lining up the prsopective tenants before a building is started. This is in accordance with section 213 of the National Housing Act of 1950, but unfortunately doing this has led to much misunderstanding and violent criticism on the part of those who are accustomed to projects being built under section 207, which allows for buildings 44022-54-52

to be sponsored first and the tenants found afterward. It has even led to officials stating that a sponsor has no place in the plan. Hence the preference for section 207.

This is a very modest effort to set forth the values of the cause of housing for single people, which was born in a spirit of self-helpfulness and brought up through the unselfish devotion of many who contributed services with either no reward or at most very little. If the same effort had been paid for on a normal commercial scale, it would have cost many times as much as all the actual cash made available.

Ours is a plan to meet new needs, in the same way as the return of a large number of veterans from the First World War presented a new social problem to the Nation and led to the present highly developed DAV association and Veterans' Administration.

Statistics show that there are more single people in the country than there have ever been-that they will increase in numbers-and that some 20 years of life expectancy have been added to them. We believe we are, so far, the pioneers of housing specially designed for this group of citizens.

Hon. JESSE P. WOLCOTT,

NATIONAL FARMERS UNION, Washington 5, D. C., March 15, 1954.

Chairman, House Committee on Banking and Currency,

House Office Building, Washington, D. C.

DEAR CONGRESSMAN WOLCOTT: Enclosed are copies of a statement in support of H. R. 7902 introduced by Congressman Robert E. Jones, Jr., Eighth District, Alabama, and referred to your committee on February 16.

We urge that this bill which extends the authorities of title V of the Housing Act of 1949 be given favorable consideration.

I request that the enclosed statement of Mr. James G. Patton be inserted in the record of your hearings.

Sincerely yours,

JOHN A. BAKER, Assistant to the President.

FINANCING FARM HOMES-STATEMENT OF JAMES G. PATTON, PRESIDENT, NATIONAL

FARMERS UNION

For decades there has been a growing realization of the importance of housing to the health and the social and material well-being of people and a recognition that the public interest requires special ways and means of enabling low-income groups to gain access to better housing facilities. For the most part, however, inadequate housing has been associated with city or urban dwellers from the public point of view. This apparently is just as true today as it was when major attention was first focused on the problem of providing adequate housing in the early thirties. Little thought is being given to the rural housing situation now. The administration's program is deficient in the substantial neglect of the whole problem of rural housing. Yet the fact is that farm dwellings in general are inferior to those of urban families.

A far greater percentage of farm families live in substandard homes than do urban families. Nationwide, 1 out of every 5 farm families live in a house so dilapidated that it needs to be completely replaced or have major repairs. contrast, only about 1 out of 20 urban homes are so classified.

In

The Farmers Union recognized the need for financial assistance to both farm and city dwellers when the Housing Act of 1949 was passed by the Congress. The need still exists for further assistance to low income families, with particular emphasis on the low income families on the farms of the Nation. The rural families who need housing credit of the type heretofore available through the Farmers Home Administration, pursuant to title V of the Housing Act of 1949 can be divided into three groups.

The first group is that of capable young farmers with little accumulated money or other resources who are finding it more and more difficult to meet the increasing capital requirements of farming. The increasing cost of operating essentials such as machinery, fertilizer, insecticides, and fuel, plus the lack of housing credit on terms geared to the income from farming, means that most of these families are destined to spend their most productive years in grossly inadequate homes.