Senator CAPEHART. Of the 12,000 the average is about 50? Senator CAPEHART. And the largest one you know of is in St.. Petersburg, having 1,000 units? Mr. WILSON: Yes. There are many near military bases which will run 200 and 300. Senator CAPEHART. And the average cost for the park per unit for the land, etc., runs about $1,500? Mr. WILSON. $1,500 to $1,800. Yes, sir. This gives us a little bit more of a picture of the improvements. Here is an architect's rendering of a typical park. Senator CAPEHART. May I ask another question, Mr. Chairman? Senator SPARKMAN. Certainly. Senator CAPEHART. How long does the average unit remain in a park? Mr. WILSON. According to a survey we conducted last year, 20 months. Senator CAPEHART. The average is 20 months? Mr. WILSON. 18 to 20 months. You see, you will recall, Senator, we changed from the name "trailers" to "mobile housing" because we felt it was a more accurate description, just like the meat industry likes to use frankfurters instead of wieners. Senator CAPEHART. What is the average rental? Mr. WILSON. For a space it is about $25 to $30. Mr. WILSON. Yes, sir. Senator CAPEHART. Does that include utilities? Mr. WILSON. Yes, sir. Senator CAPEHART. That includes gas and electricity, and so forth? Mr. WILSON. Gas is usually provided by the owner of the unit with butane tanks. Senator CAPEHART. It includes electricity and a hooking on to the water facilities, and so forth? Mr. WILSON. With water. Yes, sir. In some parks the residents maintain their own lawns and in some cases the park maintains their lawns for them. Senator CAPEHART. What is your biggest problem involved in that business? Mr. WILSON. The biggest problem is financing the mobile home park. Senator CAPEHART. The biggest problem is financing the park itself? Mr. WILSON. Yes, sir. Senator CAPEHART. You do not mean the units? You are talking about the park itself? Mr. WILSON. Yes, sir. Most of the work was done by the committee last year in financing the units. Senator CAPEHART. If a park will cost $113,000, like the one you just spoke about, it is the financing of the park which is the big problem? Mr. WILSON. Yes, sir. He has difficulty in obtaining a loan. Mr. Van Selow has been through that problem and through that difficulty. That is why we brought him along to tell you about it. 62736--55- -36 In this picture so much of it is seen above ground, which is the privately owned unit, but when you actually start to build a park, in a way you are building a model subdivision. You have to have a complete sewage system. This one we colored in for the purpose of this to show the connection with a city system. In many cases, because they are outside a city area, they will have their own sanitation system complete, which adds to their cost. Then the man has to connect every one of these small ranch homes on wheels with a water system-the same thing and the same problems as if that man were building a subdivision for small homes. On top of that we have to put the electrical system in. All of that is a cost which goes underground. Most of our electrical systems today are underground, by the way. Senator CAPEHART. So what you do then really is have a camp which is a little bit like an apartment building, with 50 apartments in it. Mr. WILSON. Like a cooperative apartment building. They own their own apartments. Senator CAPEHART. They own their trailers, but someone else owns the parking facilities. Mr. WILSON. That is correct. Mr. LUCAS. These amendments, as I have indicated, relate to FHA insurance on the financing of real estate and improvements-clearly consistent with the FHA pattern of insurance activities. That there is need for more and better trailer parks is clear. That the industry itself is aware of the problem is evidenced from the fact that the park management division of MHMA reports that there are 12,000 such parks in the United States, of which that division has approved 5,500. Less than a thousand are gold-star parks, meaning that they rate 95 points out of a possible 100. Finally, may I point out that many leaders in the financial fraternity who specialize in retail financing are enthusiastic in their enthusiastic in their endorsement of these amendments. Once it became known that the MHMA was proposing amendments intended to authorize FHA to insure loans for mobile home parks, many bankers financing mobile homes at retail communicated with us to express their endorsement of the need of these amendments. These endorsements have come from large and small banks, from national as well as State banks, from finance companies and discount houses, and from various parts of the country. I do not want to burden you or the record with lengthy quotations, but I ask your indulgence to quote a line or two from a few representative letters: From the Albany Discount Corp., Albany, N. Y.: In my area we have many parks which are marginal due to one reason only. That reason is lack of adequate park financing. I find that park owners have to build their parks out of park earnings. There is no mortgage money available due to lack of Government participation. From Southeastern Fund, Columbia, S. C., which does business allover the Southeastern part of the country: The one segment of this industry which has been slow to keep pace with the improvements experienced in the other segments has been mobile-home parks and courts. *** We believed that more persons interested in real-estate development would construct parks or courts if reasonable medium- to long-term financing was available. From Denver, serving the Mountain States, comes a letter from the Citizens Savings Bank: We have financed hundreds of mobile homes and in addition to the military personnel, we now find our customers engaged in road-construction occupations, dam-construction workers, and oilfield employees. All of these occupations necessitate the moving of the person and his family from time to time and they have found that mobile home living is expedient in their moving from city to city. They are not forced to sell a house and therefore their mobile home becomes a wise investment. We understand that your association is endeavoring to have an amendment of titie II of the National Housing Act authorizing FHA to insure mobile parks. A very great requisite of mobile home living is a comfortable, sanitary, modern trailer park where they can park their trailer. Most of the trailer parks are in a deplorable condition because the park owner is unable to adequately finance needed improvements in the form of sewer, sidewalks and patios, power connections and needed landscaping. In my opinion, mobile-home owners are entitled to the same consideration and treatment as those persons who rent a unit in a multiple dwelling. FHA Title II insurance would make it possible for park operators to finance the cost of their parks and its improvements by interesting large investors with adequate capital. Two of the largest financing companies in the country have written. One, the Commercial Credit Co., Baltimore, writes: From our investigation and surveys it is quite apparent there is a need for additional mobile homes parks throughout the country. We further understand that your association is endeavoring to secure an amendment to title II, National Housing Act, authorizing FHA to insure mobile parks. We certainly recommend their entering this field--as above mentioned, our surveys show a need for more modern mobile parks. And the other, Universal C. I. T. Credit Corp., New York, says: In the writer's opinion, the adoption of the above proposed amendment would help enormously toward the attainment of this desirable objective and I am glad to record my endorsement of your recommendation that this amendment be adopted. Here is an extract from an extremely thoughtful letter from Pullman Trust & Savings Bank, Chicago: I think the idea is excellent. Mobile homes and the parks in which they must locate, are as essential to our economy and national defense as are the construction workers who build our ever-expanding lines of communication, power and other public works projects, and atomic-energy plants and other defense installations. Anyone who fairly estimates our future expansion nationally, and our need for defense installations, and who carefully analyzes and recognizes the elements inherent in these construction operations, must face the fact that they will require a tremendous, somewhat fluid, force of workers who can move with some celerity from community to community. If adequate facilities are not provided, then our whole future expansion and construction of defense facilities will be needlessly slowed down. Actually, as Americans who do things, we would not nationally tolerate such a slowdown. What would happen is that we would slam-bang our way through, letting the law and human decency blink at the fact of sloppy parks for mobile homes, illegal usages of property, etc. Such sloppiness and illegality breeds a sort of extra-legal financing operation, which is always terribly expensive. It may mean that no financing as such can be secured, and pure capital funds have to be used for the entire cost of the trailer park; or it may be that the operators of the parks will resort to high interest rate and high commission sources of scarce funds; in either event, the cost soars, and must be passed on to occupants of the mobile homes, and in turn passed on by them into our costs of construction, and thus finally paid, well padded all down the line, by all of us as taxpayers. Added to this, of course, is the deterioration of the communities in which such parks are located. There are now enough instances of well-built and well-managed mobile home parks to provide sound bases for design, construction, and operations' programs which will provide reasonable insurance against loss of funds invested or loaned to such facilities. It is a good time to present the whole problem to the Federal Housing Administration as a normal function of that body. From Pioneer Finance Co., Detroit, comes this: During the 18 years in which we have been in the business of financing mobile homes we have observed the steadily growing acceptance on the part of the public of the idea of the mobile home as a permanent home. During this period of 18 years the mobile-homes manufacturers have steadily improved their product to the point where as of now they represent by far the greatest value in the history of the industry. They, also, compare very favorably in value with other forms of housing. We have noticed during our 18 years' experience in this business that trailerpark development, nationally speaking, has not developed proportionately. *** For the above reasons we are heartily in favor of the efforts of the Association to extend title II financing to mobile-homes parks and wish you every success. Senator CAPEHART. How many years do you have in mind for the mortgages? Mr. LUCAS. The same terms that now exist with respect to FHA. That is the maximum. Senator CAPEHART. You mean maybe 20 or 25 years? Mr. WELSH. Twenty or under. Mr. LUCAS. Twenty or under. It is a discretionary power with FHA, as I understand it. Senator CAPEHART. If it were 20 years on an average $1,500 cost it would be about $75 per year, plus the interest? Mr. LUCAS. That is correct. The following two paragraphs come from the Michigan National Bank, Grand Rapids, which, incidentally, has financed mobile homes on a national scale: As a bank interested in the mobile-home industry, we have made somewhat of a study of the park situation. It is for this reason that we have somewhat of a definite viewpoint on the immediate need for funds to assist in the building and rehabilitation of good mobile home parks. To acquire more information and experience in this field, we have during the past 3 years extended loans to 4 substantial park operators in amounts aggregating in excess of $500,000 with 2 of the parks borrowing approximately $150,000 each to complete their improvements. To date our experience with this type of loan has been most satisfactory. It is our opinion that a mortgage loan of a reasonable amount made to a responsible park owner of property in a good location will prove to be a sound financial venture for a bank or insurance company. For this reason we are pleased to go on record as recommending that loans properly made on trailer parks be included and insured under title II of FHA in a manner similar to the procedure now available for financing multiple-family residences and apartment projects under the FHA-insured mortgage program. From Peoples National Bank of Grand Rapids: We have been acquainted with mobile-home industry since 1935 and have been amazed at the growth of the industry, in spite of the poor parking facilities which are offered trailerites. Finance assistance by FHA will do much to improve living conditions for thousands of good Americans throughout the United States. We sincerely hope you are successful. The four minor amendments we are recommending, which would appropriately fit in after section 4 of S. 1800, are appended to this statement, as is a rewrite of the applicable sections of the National Housing Act, as amended, showing how those sections would read if the amendments were adopted. The first amendment makes it clear that the real estate on which an insurance mortgage is authorized under section 207 (a) (1) and on which there is to be constructed buildings includes real estate upon which there is to be constructed facilities for trailer-coach mobile dwellings. The second amendment includes space in a trailer court or park within the section 207 (a) (6) definition of "rental housing.” The third amendment merely makes it clear that the value of completed-physical-improvements limitation, referred to in section 207 (c) (2), will, in the case of trailer parks, not be measured by the same standards applicable to ordinary residential structures, that is, to buildings installed on real estate. Much of the improvement in a trailer park will be underground, such as sewer, light, and water utilities, and surface, such as grading, landscaping, and roadways, with only a small amount of the value represented by such structures as office, recreational, laundry, or toilet facilities. The fourth amendment contains the dollar limitation on the mortgage. Present limitations in section 207 (c) (3) are on rooms and dwelling units. This fourth amendment limits the mortgage in the case of trailer parks to a maximum of $1,000 per space or $300,000 per mortgage. Incidentally, a bill covering these amendments to the National Housing Act (H. R. 6164) is pending in the House Banking and Currency Committee. In the light of the place the mobile home occupies in the Nation's housing picture, the need of more and better parks, the adaptability of this type of insurance to FHA's normal activities, and the willingness of the financial fraternity to participate in solving the problem, I earnestly recommend to your committee favorable consideration of these amendments. Senator SPARKMAN. Without objection, the amendments proposed by the Mobile Homes Manufacturers Association will be made a part of the record at this point. (The amendments referred to follow :) PROPOSED MOBILE HOMES MANUFACTURING ASSOCIATION AMENDMENTS (1) After the words "residential use" and before the semicolon in section 207. (a) (1) (B) insert "or upon which there is located or to be constructed facilities for trailer coach mobile dwellings." (2) Replace the period with a comma at the end of section 207.(a)(6) and add: "or space in a trailer court or park properly arranged and equipped to accommodate trailer coach mobile dwellings." (3) After the words "of this section" and before the comma in the first proviso of section 207. (c) (2) insert "or a mortgage on a trailer court or park." (4) After the words "per family unit)" and before the colon immediately preceding the proviso in section 207. (c) (3) insert: "or not to exceed $1,000 per space or $300,000 per mortgage for trailer courts or parks." HOW CERTAIN NATIONAL HOUSING ACT SECTIONS WOULD READ AFTER MOBILE HOMES MANUFACTURING ASSOCIATION AMENDMENTS SEC. 207. (a) (1) The term "mortgage" means a first mortgage on real estate in fee simple, or on the interest of either the lessor or lessee thereof (A) under a lease for not less than ninety-nine years which is renewable or (B) under a lease having a period of not less than fifty years to run from the date the mortgage was executed, upon which there is located or upon which there is to be constructed a building or buildings designed principally for residential use or upon which there is located or to be constructed facilities for trailer coach mobile dwelling; and the term "first mortgage' means such classes of first liens as are commonly given to secure advances (including but not being limited to advances during construction) on, or the unpaid purchase price of, real estate under the laws of the State in which the real estate is located, together with |