General Housing

It is my general understanding that there is some doubt as to whether the Veterans' Administration has legislative authority to establish such standards in connection with its guaranty of GI loans.

Presumably, it is therefore intended to impose reasonable construction standards in connection with secondary market purchases of these loans, so that lenders who desire assurance of this outlet for their GI mortgage loans would voluntarily require these reasonable construction standards., This seems an altogether sound and essential safeguard in connection with a Government-sponsored secondary market operation.

This title of the bill would provide for carrying out this Government-sponsored secondary market operation through a new corporation established in the Housing and Home Finance Agency, and would provide for the liquidation of the Federal National Mortgage Association. In part, I assume that this provision grew out of various indications of a desire on the part of the Congress to liquidate the Federal National Mortgage Association and to discontinue this type of operation in the Reconstruction Finance Corporation.

I believe that it is sound policy to centralize in the housing agency, rather than to disperse among various other agencies of the Government, general supervision of those functions and activities which involve governmental aids for the provision of urban housing.

At the same time, I have recognized that this particular operation is a matter of considerable importance to the current operations of the home-building industry. The result would be that if Ì, as the AdI, ministrator, were charged with the responsibility for carrying out this program, I would desire to make such arrangements for its administration as would assure the continuation, without interruption, of the present secondary market facilities for FHA-insured mortgage loans. At the same time, it would be essential that immediate provision be made to permit the purchase of GI guaranteed loans where necessary. It therefore seems to me that it would be desirable for us to undertake to carry out this operation initially at least by utilizing the present experience and facilities of the Reconstruction Finance Corporation on a reimbursable basis. This would avoid any unnecessary interruption in present activities or undue delay in undertaking newly authorized secondary market operations in connection with GI guaranteed home loans.

Next, as to Title III-Housing Research.

Title III of the pending bill would authorize the Housing and Home Finance Administrator to undertake a program of technical housing research aimed primarily at cooperating with and assisting the housing industry in achieving improved methods of production and consequently in achieving reduced costs.

In my judgment, such a program would present one of the most promising avenues toward progress on the core of the housing problem-the fact that today, as in the past, new houses even of minimum standards cost too much for too large a segment of American families. It follows equally that progress in bringing the costs of housing down to within the reach of a much wider percentage of the population is essential to achieving and sustaining the high rate of housing production which the Nation's housing needs require.

In appraising the need for a technical research program of this kind, I believe we must keep clearly in mind the nature of the hous

ing industry-the fact that it is comprised of tens of thousands of builders, subcontractors, architects, materials distributors and materials producers. These tens of thousands of firms generally specialize on individual links in the complex chain of housing production. The one common characteristic of most of them is that they constitute small business institutions without sufficient individaul resources to undertake independent programs of technical research.

I am not saying that there has not been progress and improvement in housing production methods. Clearly there has been progress, but it has been scattered and sporadic and it has not been sufficient to accomplish the over-all reduction in housing costs which is the real need. The reason for this is that no single firm or group of firms has had either the resources or a sufficiently broad stake in the industry as a whole to undertake the kind of broad-scale technical research needed to modernize and improve the whole process of house production. As a result, the housing industry has been at a disadvantage technically in comparison with other basic American industries which contain many large firms with ample resources to undertake intensive research programs and to accomplish the technical advances and expanding productivity that have become the hallmark of American industrial progress in the eyes of the world.

Because of these circumstances, there is increasing agreement that if real progress in reducing housing costs through technical advances. is to be achieved, the Federal Government must take the leadership in the necessary technical research.

I am thoroughly convinced that a coordinated program of technical research to develop better and more economical construction methods, to encourage the use of new materials, and to achieve efficiency and economy in all phases of the housing industry offers perhaps the greatest possibilities for the progressive reduction of housing costs and expansion of the private housing market.

This title does not contemplate the duplication of research activities now going forward publicly and privately. Rather, it is intended, in cooperation with industry, to map out the needs, to supplement the research going on elsewhere, to fill in the gaps, and to coordinate and integrate these activities and disseminate the practical results of that research.

The title also provides that in carrying out the program, the Administrator shall utilize to the fullest extent feasible the available facilities of other Federal agencies. To facilitate close coordination, provision is also made for the Secretary of Commerce to be represented on the National Housing Council in the Housing and Home Finance Agency. This is desirable since that Department has important facilities in the National Bureau of Standards.

I believe that such a program, at a relatively modest cost to the Federal Government, would pay dividends many times over in the form of a progressive lowering of housing costs and a progressive broadening of the housing industry's effective market. The actual cost of the program would be determined by the Congress through the regular appropriation process.

Next, Title IV-Rental Housing Aids for Families of Moderate Income and Veterans.

Mortgage investment aids; veterans' cooperatives; yield insurance.

It is my general understanding that there is some doubt as to whether the Veterans' Administration has legislative authority to establish such standards in connection with its guaranty of GI loans.

Presumably, it is therefore intended to impose reasonable construction standards in connection with secondary market purchases of these loans, so that lenders who desire assurance of this outlet for their GI mortgage loans would voluntarily require these reasonable construction standards., This seems an altogether sound and essential safeguard in connection with a Government-sponsored secondary market operation.

This title of the bill would provide for carrying out this Government-sponsored secondary market operation through a new corporation established in the Housing and Home Finance Agency, and would provide for the liquidation of the Federal National Mortgage Association. In part, I assume that this provision grew out of various indications of a desire on the part of the Congress to liquidate the Federal National Mortgage Association and to discontinue this type of operation in the Reconstruction Finance Corporation.

I believe that it is sound policy to centralize in the housing agency, rather than to disperse among various other agencies of the Government, general supervision of those functions and activities which involve governmental aids for the provision of urban housing.

At the same time, I have recognized that this particular operation is a matter of considerable importance to the current operations of the home-building industry. The result would be that if Ì, as the Administrator, were charged with the responsibility for carrying out this program, I would desire to make such arrangements for its administration as would assure the continuation, without interruption, of the present secondary market facilities for FHA-insured mortgage loans. At the same time, it would be essential that immediate provision be made to permit the purchase of GI guaranteed loans where necessary. It therefore seems to me that it would be desirable for us to undertake to carry out this operation initially at least by utilizing the present experience and facilities of the Reconstruction Finance Corporation on a reimbursable basis. This would avoid any unnecessary interruption in present activities or undue delay in undertaking newly authorized secondary market operations in connection with GI guaranteed home loans.

Next, as to Title III-Housing Research.

Title III of the pending bill would authorize the Housing and Home Finance Administrator to undertake a program of technical housing research aimed primarily at cooperating with and assisting the housing industry in achieving improved methods of production and consequently in achieving reduced costs.

In my judgment, such a program would present one of the most promising avenues toward progress on the core of the housing problem-the fact that today, as in the past, new houses even of minimum standards cost too much for too large a segment of American families. It follows equally that progress in bringing the costs of housing down to within the reach of a much wider percentage of the population is essential to achieving and sustaining the high rate of housing production which the Nation's housing needs require.

In appraising the need for a technical research program of this kind, I believe we must keep clearly in mind the nature of the hous

ing industry-the fact that it is comprised of tens of thousands of builders, subcontractors, architects, materials distributors and materials producers. These tens of thousands of firms generally specialize on individual links in the complex chain of housing production. The one common characteristic of most of them is that they constitute small business institutions without sufficient individaul resources to undertake independent programs of technical research.

I am not saying that there has not been progress and improvement in housing production methods. Clearly there has been progress, but it has been scattered and sporadic and it has not been sufficient to accomplish the over-all reduction in housing costs which is the real need. The reason for this is that no single firm or group of firms has had either the resources or a sufficiently broad stake in the industry as a whole to undertake the kind of broad-scale technical research needed to modernize and improve the whole process of house production. As a result, the housing industry has been at a disadvantage technically in comparison with other basic American industries which contain many large firms with ample resources to undertake intensive research programs and to accomplish the technical advances and expanding productivity that have become the hallmark of American industrial progress in the eyes of the world.

Because of these circumstances, there is increasing agreement that if real progress in reducing housing costs through technical advances is to be achieved, the Federal Government must take the leadership in the necessary technical research.