6/15/71 HIGHLIGHTS Housing Consolidation and Simplification Act of 1971 Title I Revised National Housing Act Section 101 of the bill would recast the mortgage insurance programs contained in the National Housing Act into a completely new statutory framework - the Revised National Housing Act. The new authorization would reflect the experience gained over the past three decades with the mortgage insurance operations and would provide a statutory framework appropriate to the present orientation of these operations. In order to assure a smooth transition between the Acts, no specific effective date would be provided for the Revised National Housing Act. Instead, the Secretary would determine the effective date or dates for the provisions of the new Act and he would be directed to establish procedures for the orderly transfer of mortgage insurance operations from the old to the new Act. The proposed Revised National Housing Act would consolidate the confusing array of existing insurance programs into eight basic authorities, with relatively simple and flexible terms. The obsolete and overlapping provisions of existing law would be eliminated and the many provisions now scattered throughout the National Housing Act relating to similar subject matters would be brought together under appropriate headings. The consolidation should facilitate (1) public understanding and utilization of the mortgage insurance programs, (2) effective, prompt, and flexible administration of these programs by the Department of Housing and Urban Development, and (3) Congressional evaluation of the programs and decisions with respect to statutory amendments. 1 The Revised National Housing Act contains seven titles, with titles three to five providing the eight basic insuring authorities. Home mortgages would be insured under two authorities unsubsidized (section 401) and subsidized (section 402). Multifamily residential mortgages would also be divided between one unsubsidized (section 501) and one subsidized (section 502) authority. These four authorities would replace a large number of existing programs. Three existing programs covering hospitals, group practice facilities, nursing homes and intermediate care facilities would be provided for in one mortgage insurance program for health facilities (section 503). The existing land development program would be retained (section 505). One supplemental loan program (section 504) would consolidate three existing programs. The existing home improvement and mobile home program would be retained but in simplified form (title III). Title I of the proposed Act contains general provisions relating to the insurance programs, such as ones dealing with interest rates and maximum mortgage amounts. Title II contains provisions relating to insurance funds, insurance premiums and other fees. Title VI deals with insurance claims, and title VII contains miscellaneous provisions. Section 201 of the bill would revise the United States Housing Act of 1937, the program of assistance to local public housing agencies in the provision of housing for low-income families. The revised Act would: (1) modify and improve the public housing subsidy structure, (2) authorize a new home ownership program for low-income families served by the program, (3) make necessary modifications to financing and other authorities, and (4) eliminate obsolete provisions. Major Substantive Changes Title I (1) Financing Off-site Components The Secretary would be authorized to insure advances of mortgage funds during construction or rehabilitation to cover the cost of materials and components which are assembled and/or stored away from the construction site. This extension of insurance authority is expected to facilitate the financing of Operation Breakthrough type projects which require substantial off-site assembly of component units. (2) Flexible Maximum Mortgage Amounts (a) The various statutory dollar limitations on maximum mortgage amounts would be replaced by a uniform, flexible formula applicable (b) Statutory dollar limits on the size of a project mortgage (multi- (3) Interest Rates Temporary authority for Secretary to establish maximum interest rates to meet the mortgage market would be made permanent and extended to cover home improvement and mobile home loans. The Secretary would also be authorized to permit, on an experimental basis, parties to a mortgage transaction to determine the applicable interest rate provided that no discounts are charged. (4) Maximum Mortgage Maturities Specific limits on the length of the term of home mortgages and land development mortgages would be removed and maximum term would be established by the Secretary. (5) Increase in Maximum Home Improvement Loan Would be increased from $5000 to $6500 and per unit limit in multi-unit structure from $2500 to $3500. (6) Loan-to-value Ratio for Land Development Mortgage 80 Increased to conform to ratio in title VII new communities program. percent of the value of the land before development plus 90 percent of the estimated cost of development. (7) Mutual Mortgage Insurance Fund This fund would not be used for basic unsubsidized home mortgages insured under the Revised Act and consequently such mortgagors would not be entitled to receive periodic distributions of insurance premiums (as do those mortgagors in the basic home mortgage program under the National Housing Act. (8) Minimum Downpayment The minimum downpayment with regard to unsubsidized home mortgages would be in an amount equal to closing costs. The minimum downpayment for all subsidised mortgagors would be $200. (9) Rent Supplement Program Would be consolidated into the rental assistance program. The rental in twenty percent of the units in any project could be further subsidized to as low as 30 percent of the basic rental. Title II (1) Definition of Elderly Family Would permit a single person who is 50 years of age or older to be eligible for occupancy in public housing. (2) Modernization of Projects Would permit separate annual contributions contract to be entered into to cover cost of modernization. (3) Annual Contributions Would not have to be in fixed annual amounts over fixed period Not subject to maximum amount based on going Federal rate plus Would provide authority to pay contributions based on debt service requirements plus separate authority to make operating subsidy payments. (4) Operating Subsidy Payments - - Special annual $120 subsidies would be eliminated Not subject to any statutory maximum amount per project except Minimum rent equal to 20 percent of tenant's income (defined the same as in the private subsidy programs) (5) Leasing Would delete requirement that 30 percent of new contract authority be used for leased housing. (6) Homeownership Program Would authorize a homeownership program which provides up to full debt service subsidy with immediate transfer of title to individual homeowner or cooperative or other tenant organization. Homeowner contributes 20 percent of income toward mortgage payments plus utility allowance before receiving subsidy (income defined the same as in the private subsidy programs (7) Continued Occupancy Limits The requirement for the establishment of continued occupancy income limits would be deleted. May 1971 DETAILED CROSS REFERENCE TABLE SHOWING PROVISIONS OF NATIONAL HOUSING ACT ADOPTED, CHANGED, OR OMITTED FROM PROPOSED REVISED NATIONAL HOUSING ACT (S2049) DESCRIPTION Administrative provisions 1. Authorizes Secretary to exercise powers conferred by NHA 2. Authorizes Secretary to create agencies, accept voluntary services, and utilize Federal, State and other employees without regard to Federal laws relating to employment or compensation. 3. Authorizes Secretary to delegate his powers and make expenditures for rent, law books, paper, etc. without regard to laws governing the expenditure of public funds. 4. Requires "nonadministrative expenses" of FHA to be borne by insurance funds. 5. Limits nonadministrative expenses to 35 percent of insurance premiums and fees received in previous year. 6. Authorizes Secretary to sue and be sued. DISPOSITION IN REVISED NATIONAL HOUSING ACT RAHA) 3. No similar provision. This provision is obsolete. However, general authority to make expenditures to carry out purposes of RNHA contained in sec. 8. 4. Contained in sec. 201(d). 5. No similar provision. This provision is obsolete. 6. Contained in sec. 8. +When used in this context, the word "unnecessary" will indicate that the purpose of the particular provision of the NHA referred to can be achieved without a similar provision in the RNHA. *When used in this context, the word "contained" will indicate that the particular provision of the NHA referred to has been incorporated (in the same or differing language) into the RNHA without substantive changes, other than those specifically Micated. |