I am very happy to have with me Mr. George B. Nesbitt, the Urban Renewal Administration's intergroup-relations officer.

The urban renewal program, like the other Housing and Home Finance Agency programs, is making real progress in helping to achieve decent homes and better living environments for all American families. We believe that our careful concern for the effects of urban renewal activities upon minority families as well as the similar concern of many very competent and sincere local public agencies engaged in this program-helps make for this progress.

The urban renewal program must work toward the national housing objective in a distinctive manner, for the urban renewal program is neither directly a housing program, nor is it a direct Federal-action program. It is, instead, a program for the prevention and elimination of slums and blight through financial and technical assistance to local undertakings, conceived and carried out by local public agencies. Moreover, the actual redevelopment of cleared land is usually carried through by private builders. These builders purchase or lease the land from the local public agencies. The rehabilitation of houses is undertaken by private owners. The Urban Renewal Administration does not directly deal with either.

While each project must and does improve the living environment, the reuse of the project area cannot always include housing, for the law requires that the reuse be consistent with the general community plan as it applies to the area. Moreover, while some rehabilitationtype renewal projects involve little or no demolition of shelter, the local renewal program as a whole cannot move ahead without some larger scale destruction of wornout dwellings and displacement of families.

Early in the program it was realized that urban renewal activities must take fully into account the large numbers of Negro and other minority families, with limited opportunities in the housing market, living in the very areas most in need of renewal. We have, therefore, stressed policies and practices designed to help assure equal treatment and opportunity for all citizens in the conduct of the program.

Under one of our most important requirements, local public agencies must carry out their projects so as not to reduce the supply of housing available to minority groups in the community. Proposed projects likely to result in a substantial reduction of housing available to them can be undertaken only if standard housing in replacement of the loss is provided elsewhere in the community. Moreover, in this situation, representative leadership of the affected minority group must be afforded adequate opportunity for consultation during the planning of the project.

In addition, official urban renewal plans cannot contain provisions racially restrictive of use or occupancy in the project area. Before

the disposition of land in project areas, any restrictive covenants based on race or creed must be removed. Morever, disposition documents must prohibit the establishment of any agreement or other instrument restricting use of the land on such basis.

In administering the familiar section 105 (c) standards for relocation of all families displaced by projects, we require that information as to their rehousing needs and rehousing resources be collected, analyzed, and reported by color. Special analyses of any problems anticipated in rehousing minority-group families are also required. Where new housing is needed, the local agency must indicate the steps being taken to achieve it. The intent of these requirements, based on recognition of the character of the housing market, is to assure that displaced minority families can be offered rehousing accommodations meeting the standards provided by law.

Administrator Mason has emphasized his intention to take further steps to assure that the interests of all Americans are protected as urban renewal is carried forward. He has also asked each HHFA constituent Commissioner independently to review operations with a view to improving participation for all our citizens in the housing market.

As Commissioner of the Urban Renewal Administration, I have promptly met this request. We are reexamining our operations and policies in detail. While we are proud of our accomplishments in this area, we are convinced that more can be done.

For example, we certainly agree with the Administrator that the workable program requirements can be strengthened especially to help avoid the hampering of its objectives by overcrowding and restricted living space. Measures more certainly assuring that project boundaries are determined on the basis of housing conditions and natural geographic features rather than racial considerations are under examination. We are seeking means for achieving more rehabilitation in racial transition areas suitable for such treatment. More adequate measures for assuring citizens, including minority group representation, a voice in the development of local renewal programs are of active concern. We are endeavoring also to devise better arrangements for cooperation with local and State agencies working to eliminate race tensions and discrimination in housing.

The last 2 years have seen an ever-broadening use of our intergroup-relations service, both inside the agency and in the field. We recently initiated action to increase the use of FHA and PHA intergroup-relations specialists, stationed in the field, to assist HHFA regional administrators with urban renewal matters. Our constant canvass of locality experience for constructive approaches to the racial-minority aspects of urban renewal has led to a recently released

technical publication on this subject. Stories about more of these challenging examples are in preparation.

Before I conclude, let me highlight for you what our records show to be some of the racial-minority characteristics of family residence in project areas, rehousing results, and occupancy in reuse housing, as we move ahead with the urban renewal program.

Many of our first projects were located in areas in which heavy nonwhite residence coincided with the need for clearance and development. However, the nonwhite percentage of all families in advancedproject areas has steadily decreased. It was 64.6 percent in March. 1953 but had fallen to 55.5 percent at year end 1958.

Moreover, our records on the rehousing of displaced families indicate that local public agencies are increasingly able to report larger percentages of nonwhite families relocated into standard housing. In the 27 months ending in December 1957, 71.1 percent of the relocated nonwhite families were rehoused in standard housing, both public and private, as against 64.4 percent through September 1955. In the same period, 7 of every 10 nonwhite families were rehoused in private housing as against less than 5 of every 10 such families, relocated through September 1955.

Although the urban renewal program is not a direct housing program, as I have said, the extent of nonwhite access to new housing developed in federally aided renewal areas is increasingly favorable. In March of this year, nonwhite occupancy existed or could be expected in 40 of a total of 46 projects in continental United States where housing construction was either completed or underway.

It is our observation that the continuing experience of each locality with urban renewal tends to bring about a better definition of the problem of racially restricted housing opportunities and better understanding of its effects upon the whole community. This understanding occurs among important and responsible people in the community, able and obligated to make forward-looking decisions in the best interests of the whole community with respect to racial and other aspects of community renewal.

In the urban renewal program we are constantly working to reinforce and accelerate the growth of this understanding. By improving our policies, guidance, and technical help, we are also striving to assure that all Americans will have an equal opportunity to share in the better cities of tomorrow.

Thank you very much, Mr. Chairman and members of the Commission.

I have supporting documents to file with the Commission which will be available at the end of the meeting.

Chairman HANNAH. Thank you very much, Mr. Steiner.

Mr. MASON. Now we would like to hear from Mr. Stanley Baughman, who is the President of the Federal National Mortgage Association, which is also a part of the Housing and Home Finance Agency.

TESTIMONY OF J. STANLEY BAUGHMAN, PRESIDENT, FEDERAL NATIONAL MORTGAGE ASSOCIATION

Mr. BAUGHMAN. Mr. Chairman and members of the Commission, the Federal National Mortgage Association is a business-type corporation that purchases and sells residential mortgages of the types that have previously been insured by the Federal Housing Commissioner or guaranteed by the Administrator of Veterans' Affairs.

All of FNMA's purchases and sales are conducted with financial institutions that are lenders or investors. Individual homeowners, who are the mortgagor-borrowers, are not parties to any of such purchases or sales of the mortgages.

The requirements that are prescribed in connection with FNMA's acquisition of mortgages provide for analysis of the mortgage security against uniform objective standards. Limitations in respect to race, color, creed, or national origin, whether in favor of minorities or majorities, could have no proper place among such requirements. When a mortgage that has been created by a local lending institution has been purchased by FNMA, it may be concluded that the mortgage has met the criteria of the insuring or guaranteeing agency of Government, FHA or VA, and also the purchasing criteria of FNMA.

In that connection, the Association has adopted a positive position with respect to race restrictions imposed upon titles-a position similar to that taken by the FHA and VA. FNMA declines to purchase any mortgage if the title-evidence review, made at the time the mortgage is delivered, discloses that any such restriction has been created and filed of record subsequent to February 15, 1950.

At the time applications are made for FNMA's commitments or when mortgages are delivered for purchase, most mortgage files do not contain any information which would point to or identify the mortgagor's race, color, creed, or national origin. Also, when title to a property covered by an Association-owned mortgage is transferred by the original mortgagor to some other home purchaser, FNMA does not and could not control the transaction. In no case does the Association initially or at any time thereafter make any effort to procure the particular type of data that would be required to provide identification of the homeowner. This is in line with FNMA's position that every qualified American citizen should have equal right and opportunity to seek the benefits provided by this federally sponsored corporation.

Chairman HANNAH. Thank you, Mr. Baughman.

Mr. MASON. Mr. Chairman, there is just one more of us. This is Mr. Joseph B. Graves, Jr., who is the Executive Secretary of the Voluntary Home Mortgage Credit Program. This is a program supported by the Housing and Home Finance Agency and actually run by private lenders.

TESTIMONY OF JOSEPH B. GRAVES, JR., EXECUTIVE SECRETARY, VOLUNTEER HOME MORTGAGE CREDIT PROGRAM

Mr. GRAVES. Mr. Chairman and members of the Commission; I appreciate the opportunity to appear before your Commission today to discuss the Voluntary Home Mortgage Credit Program.

The VHMCP, without cost to applicants, helps make mortgage money available to people in small communities and for minority groups in any area who cannot obtain FHA-insured or VA-guaranteed loans on terms as favorable as are generally available to others in the same locality. Remoteness from the centers of mortgage capital has always created difficulty in providing adequate mortgage funds for home buyers in small towns and cities. Difficulty has also frequently attended the efforts of members of minority groups, even in larger places, to obtain the consideration generally available to other homeloan borrowers. Created by the Housing Act of 1954 at the instance of the mortgage-investing institutions of the country, the VHMCP provides a practicable method to help overcome these difficulties.

The VHMCP has a committee form of organization. The program is operated by a national committee, with the Housing and Home Finance Agency Administrator as Chairman and five regional committees. The membership of these groups consists of two representatives of each of the five principal types of mortgage-lending institutions, of the real-estate industry, of the home-building industry and of the retail lumber industry. Each of these members is appointed by the HHFA Administrator and serves voluntarily, without compensation. Advisory members from Government agencies associated with the field of mortgage finance are also appointed to the national and regional committees.

The regional committees are operating committees charged with carrying out the policies set by the National Committee. Each committee has a small staff headed by an executive secretary, a Government official appointed by the HHFA Administrator upon the recommendation of committee members.

All loans made under the program are made by private lenders with their own investment funds. An individual member of a minority group who is unable to obtain an FHA-insured or VA-guaranteed loan from local sources or a builder seeking commitments for Government

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