(2) by inserting ", AND URBAN RENEWAL" after "REDEVELOPMENT"" in the heading of title I;

(3) by inserting "and urban renewal projects" after the term "urban redevelopment projects" in each place where that term appears in title I; (4) by inserting "URBAN RENEWAL," after "REDEVELOPMENT," in the heading of title III;

(5) by inserting "urban renewal," after "urban redevelopment," in sections 301 and 303;

(6) by inserting "or urban renewal" after "urban redevelopment" in section 304;

(7) by inserting "as amended," after "(Public Law 171, Eighty-first Congress)," in sections 101, 301, and 304;

(8) by inserting " as amended," after "Housing Act of 1949," in the clause numbered "(1)" in section 304; and

(9) by inserting ", as amended," after "this Act" in sections 101, 301, and 304.

LOW-RENT PUBLIC HOUSING

SEC. 13. The United States Housing Act of 1937, as amended, is hereby amended by deleting section 10 (i) and inserting the following:

"(i) Notwithstanding the provisions of any other law, the Authority may, with respect to low-rent housing initiated after March 1, 1949, enter into new contracts for loans and annual contributions after July 1, 1954, for not to exceed thirty-five thousand additional dwelling units, which amount shall be increased by thirty-five thousand additional dwelling units on July 1 of the years 1955 and 1956, and may enter into such new contracts for preliminary loans in respect thereto as are consistent with the number of dwelling units for which contracts for annual contributions may be entered into hereunder: Provided, That the authority to enter into new contracts for loans and annual contributions with respect to each such thirty-five thousand additional dwelling units shall terminate two years after the first date on which such authority may be exercised under the foregoing provisions of this subsection: Provided further, That no such new contract for annual contributions for additional units shall be entered into except with respect to low-rent housing for a locality respecting which (1) the Housing and Home Finance Administrator has made the determination and certification relating to a workable program as prescribed in section 101 (c) of the Housing Act of 1949, as amended, or (2) there is being carried out a project covered by a Federal-aid contract executed, or prior approval granted, by the Housing and Home Finance Administrator under title I of the Housing Act of 1949, as amended, before the effective date of the Housing Act of 1954: Provided further, That no such new contract for annual contributions for additional units shall be entered into unless the governing body of the locality has, by resolution, approved such additional units: And provided further, That no such new contract for annual contributions for additional units shall be entered into unless the number of such additional units does not exceed the number of families of low income, eligible for admission to such units, which the Housing and Home Finance Administrator estimates will be displaced within the metropolitan or housing market area of such locality as a result of Federal, State or local governmental action."

HOME LOAN BANK BOARD

SEC. 14. The Federal Home Loan Bank Act, as amended, is hereby amended— (1) by striking section 6 (c) and inserting:

"(c) The original stock subscription for each institution eligible to become a member under section 4 shall be an amount equal to 1 per centum of the aggregate of the unpaid principal of the subscriber's home mortgage loans, or such higher per centum not exceeding 2 per centum as the Board shall by regulation prescribe, but not less than $500: Providid, That nothing herein shall permit a member to reduce the amount of stock held by it to below 2 per centum of the aggregate of the unpaid principal of its home mortgage loans as of the effective date of the Housing Amendments of 1955, but no such member shall be required to subscribe for additional stock until such time as the amount of stock held by it does not equal that required by such regulation. The Board shall from time to time adjust the amount of stock held by each member so that, as nearly as possible, such member shall at all times have invested in the stock of the Federal home loan bank at least an amount calculated in the manner provided in the

preceding sentence (but not less than $500). If the Board finds that the investment of any member in stock is greater than that required under this section or under regulation of the Board, upon application of such member, the bank shall pay such member for each share of stock in excess of the amount so required an amount equal to the par value of such stock, or, at the election of the bank, the whole or any part of the payments which would be so made shall be credited upon any indebtedness of the member to the bank. In either such event, stock equal in par value to the amount of the payment or credit, or both, as the case may be, shall be surrendered and canceled. No share of stock shall be surrendered and canceled if the effect of such surrender and cancellation would be to violate the provisions of section 10 (c) requiring the amount of stock held by such member to equal at least one-twelfth of the outstanding advances to such member.";

(2) by striking the first sentence of section 6 (i) and inserting: "Any member other than a Federal savings and loan association may withdraw from membership in a Federal home loan bank six months after filing with the Board written notice of intention so to do, and the Board may, after hearing, remove any member from membership, or deprive any nonmember borrower of the privilege of obtaining further advances, if, in the opinion of the Board, such member or nonmember borrower (i) has failed to comply with any provision of this Act or regulation of the Board made pursuant thereto, (ii) is insolvent: Provided, That any member of a bank which is a building and loan association, savings and loan association, cooperative bank or homestead association shall be deemed insolvent if the assets of such member are less than it obligations to its creditors and others, including the holders of its withdrawable accounts, or (iii) has a management or home-financing policy of a character inconsistent with sound and economical home-financing or with the purposes of this Act.";

(3) by repealing section 6 (1); and

(4) by striking the period at the end of section 7 (a) and inserting a colon and the following: "Provided, That the board may by regulation increase the number of elective directors of any Federal home loan bank having a district which includes five or more States to a number not exceeding twice the number of States comprising such district, but such additional elective directors shall be apportioned as nearly as may be practicable in the same manner and order as is provided for the apportionment of elective directors under subsections (c) and (d) hereof. The term 'States' as used in the preceding proviso shall mean the States of the Union and the District of Columbia.".

SEC. 15. The Home Owners' Loan Act of 1933, as amended, is hereby amended by striking the proviso at the end of the second paragraph of section 5 (c) and inserting: Provided, That no such loan, unless so insured or guaranteed, shall be made in excess of $2,500.".

SEC. 16. The National Housing Act, as amended, is hereby amended by striking section 403 (d) and inserting:

"(d) Any institution which applies after the effective date of the Housing Amendments of 1955 for insurance under this title shall pay, in the event its application is approved, an admission fee in such amount as the Corporation shall determine, taking into consideration the total cost of processing all insurance applications."

COMMUNITY FACILITIES ADMINISTRATION

SEC. 17. Section 702 of the Housing Act of 1954 is hereby amended to read as follows:

"SEC. 702. (a) In order (1) to encourage municipalities and other public agencies to maintain at all times a current and adequate reserve of planned public works and construction of which can rapidly be commenced, particularly when the national or local economic situation makes such action desirable, and (2) to help attain maximum economy and efficiency in the planning and construction of public works, the Administrator is hereby authorized to make advances to public agencies (notwithstanding the provisions of section 3648 of the Revised Statutes, as amended) to aid in financing the cost of engineering and architectural surveys, designs, plans, working drawings, specifications, or other action preliminary to and in preparation for the construction of public works: Provided, That the making of advances hereunder shall not in any way commit the Congress to appropriate funds to assist in financing the construction of any

public works so pinned: And provided further, That advances outstanding to public agencies in any one State shall at no time exceed 10 per centum of the aggregate then authorized to be appropriated to the revolving fund established pursuant to subsection (e) of this section.

"(b) No advance shall be made hereunder with respect to any individual project unless it is planned to be constructed within a reasonable period of time, unless it conforms to an overall State, local, or regional plan approved by a competent State, local, or regional authority, and unless the public agency formally contracts with the Federal Government to complete the plan preparation promptly and to repay such advance or part thereof when due. Subsequent to approval and prior to disbursement of any Federal funds for the purpose of advance planning, the applicant shall establish a separate planning account into which all Federal and applicant funds estimated to be required for plan preparation shall be placed.

"(c) Advances under this section to any public agency shall be repaid without interest by such agency when the construction of the public works is undertaken or started: Provided, That if the public agency undertakes to construct only a portion of a planned public work it shall repay such proportionate amount of the advances relating to the public work as the Administrator determines to be equitable: And provided further, That in the event repayment is not made promptly such unpaid sum shall bear interest at the rate of 4 per centum per annum from the date of the Government's demand for repayment to the date of payment thereof by the public agency.

“(d) The Administrator is authorized to prescribe rules and regulations to carry out the purpose of this section.

"(e) In order to provide moneys for advances in accordance with this section, the Administrator is hereby authorized to establish a revolving fund which shall comprise all moneys heretofore or hereafter appropriated pursuant to this section, together with all repayments and other receipts in connection with advances made under this section. There are hereby authorized to be appropriated to such revolving fund, in addition to the amount authorized by this section as originally enacted, the further amounts of $12,000,000 which may be made available to the revolving fund on or after July 1, 1956; $12,000,000 which may be made available to such fund on or after July 1, 1957; $14,000,000 which may be made available to such fund or or after July 1, 1958; and such additional sums which may be made available from year to year thereafter as may be estimated to be necessary to maintain not to exceed a total of $48,000,000 in undisbursed balances in the revolving fund and in advances outstanding for plans in preparation or for completed plans with respect to projects which, in the determination of the Administrator, can be expected to be undertaken within a reasonable period of time."

SEC. 18. Effective upon the date of enactment of this Act the basic rate of compensation of the Community Facilities Commissioner of the Housing and Home Finance Agency shall be the same as the basic rate of compensation established for the heads of the constituent agencies of the Housing and Home Finance Agency.

The CHAIRMAN. Our first witness is Mr. Cole, who has served on this committee with great distinction for a long time. He has made many friends here, and they are still his friends.

We are always glad to have your views and to have you call on us, Mr. Cole.

Mr. COLE. Thank you very much, Mr. Chairman.

STATEMENT OF ALBERT M. COLE, ADMINISTRATOR, HOUSING AND HOME FINANCE AGENCY, ACCOMPANIED BY NORMAN F. MASON, FEDERAL HOUSING ADMINISTRATION COMMISSIONER

Mr. COLE. Mr. Chairman, subject to your approval, I would suggest that I begin with the statement on H. R. 5827, commenting upon each section of it, and then at the termination of each section, that I ask each commissioner to present his statement. We find that this works

very satisfactorily, and then we can submit to questions at the completion of each agency's statement.

For instance, I have with me here now Mr. Norman Mason, Commissioner of FHA, and the first part of my statement is on the FHA amendments.

The CHAIRMAN. We will be glad to comply with your request.

Mr. COLE. Mr. Chairman and members of the committee, I appreciate the opportunity to appear before your committee, and to present the views of the Housing Agency on H. R. 5827, the "Housing Amendments of 1955."

The Federal Housing Commissioner, the Public Housing Commissioner, and the Chairman of the Home Loan Bank Board also have statements on the provisions of the bill relating to their respective operations. If it is agreeable to your committee, Mr. Chairman, I suggest that each of them be permitted to present his statement at the conclusion of the portion of my testimony relating to the operations of his constituent agency. We could then proceed with questions on that part of the bill before I proceed with testimony on other parts.

The CHAIRMAN. We will allow you to make your statement without interruption, if you so desire.

Mr. COLE. Very well.

The provisions of H. R. 5827 would furnish the legislation necessary for the continuation of several major programs of the Housing and Home Finance Agency. It would also make a number of essential changes in existing laws which would enable us to carry out, or carry out more effectively, the objectives of the Congress in present legislation. The bill would not provide for the undertaking of any new programs, which is very different, of course, from the legislation considered by this committee last year and enacted as the Housing Act of 1954. Current operations of our agency are directed toward putting into effect the several basic changes and new programs authorized in that comprehensive and major enactment of the Congress. As I will explain, our experience in connection with these operations has revealed the need for the corrective or supplemental provisions contained in the bill. However, I wish to emphasize that our experience under the Housing Act of 1954 gives every indication that it is sound, constructive legislation for carrying out its objectives, the provisions and improvement of housing, the elimination and prevention of slums, and the conservation and development of urban communities throughout the Nation. No need exists for changing the basic approaches taken to accomplish those objectives.

As the bill contains provisions relating to some of the more technical aspects of our program, I have furnished your committee with copies of a section-by-section analysis.

HOME LOAN INSURANCE

I should like, first, to comment briefly on the principal features of the bill relating to the operations of the FHA.

GENERAL MORTGAGE INSURANCE AUTHORIZATION

Earlier this year your committee recommended, and the Congress enacted, legislation increasing the FHA general mortgage insurance authorization by $12 billion. The report of your committee on that

legislation, House Joint Resolution 202, indicated that such increase was recommended to permit continuation of FHA mortgage insurance operations on a temporary basis until the Congress has an opportunity to consider an increase in sufficient amount to cover operations for the next fiscal year. H. R. 5827 would provide that increase. It would authorize FHA mortgage insurance up to the aggregate of outstanding insurance liability and commitments on June 30, 1955, plus $4 billion. The amount of unused authorization under existing legislation remaining on June 30, 1955, would be merged with the new additional authorization. As it is estimated that such unused amount will be over $600 millon, the actual increase in authorization provided by the bill would not exceed $3,400,000,000. This increase, plus the $112 billion increase granted earlier this year, would be within the amount prescribed for this purpose in the budget submitted by the President to the Congress in January.

Estimates of mortgage insurance operations during the 1956 fiscal year indicate a gross use of insurance authorization totaling about $7,400,000,000. After allowance for return of authorization through expiration of commitments, scheduled repayments on insured mortgages, and prepayments of such mortgages, the net use of insurance authorization for FHA mortgage insurance programs during that fiscal year is estimated at approximately $4 billion. I strongly urge your committee to make available that amount of insurance authorization.

EXTENSION OF FHA TITLE I HOME REPAIR AND MODERNIZATION

Title I of the National Housing Act, authorizing the FHA repair and modernization program, would expire under existing law on June 30 of this year. The bill would extend title I for 5 years, which is similar to the most recent extension of the title from March 1, 1950, to July 1, 1955.

The title I program of insurance for modernization and repair loans constitutes an integral part of the urban renewal program for neighborhood conservation and improvement which was adopted in the Housing Act of 1954. The continuation of the title I program is also important to the maintenance of a high level of general construction activity, improvement of individual properties in need of modernization or repair, and proper maintenance of the existing housing inventory of the Nation. All are vitally affected by the availability of adequate consumer credit for modernization and repair loans and the title I program has contributed significantly toward assuring that supply of credit.

Availability of FHA insurance for this type of credit encourages lenders to make the loans available to borrowers in smaller communities and to eligible borrowers in larger communities who might otherwise have difficulty in arranging loans. It should be recognized that, without such insurance, credit for home repair purposes would not be as readily available as consumer credit for other consumer durable goods, such as automobiles and appliances. In other fields, the dealer frequently receives credit support from the manufacturer. In the case of home repair loans, however, manufacturers of building products are each likely to have a relatively small financial interest in the repair or improvement job done by the local firm. Naturally, the manufacturer