Senator MILLIKIN. I so understood it. Mr. KREUTZ. I don't know that he intended by that recommendation to prevent Federal savings and loan associations from making certain types of guaranty loans to veterans for home improvements and home equipment, but that would be the effect of the insertion of the words "real estate." In the circumstances, we would protest the insertion of the words, because we think these associations which are doing such a substantial amount of this business should be estopped from engaging in that part of the business as well. That is all. Senator JOHNSON. Is Mr. W. M. Floyd, of the Veterans' Administration, present, or his representative? Does Mr. Floyd have someone here to testify for him? There seems to be no one present. Mr. ABNER H. FERGUSON. Senator, may I have just 2 minutes of your time? Senator JOHNSON. Yes, sir. STATEMENT OF ABNER H. FERGUSON, WASHINGTON MANAGER OF UNITED STATES SAVINGS AND LOAN LEAGUE Senator JOHNSON. You may proceed, Mr. Ferguson. Mr. FERGUSON. I am not scheduled to be here, because a gentleman spoke yesterday for the United States Savings and Loan League. I am the Washington attorney for the league. However, I wish to make a statement in view of the statement which was made by Mr. Addison in connection with the provision here which permits national banks, Federal savings and loan associations, and insurance companies to make any loan which is guaranteed under this act. Mr. Addison suggested an amendment which would limit operation to real-estate loans. Of course, we all know that real-estate loans mean loans which are secured by real estate. The insertion of the words "real estate" would prevent those 1,500 Federal savings and loan associations throughout the country from making loans for the repair and improvement of real estate, because they are not often secured by a mortgage. The inclusion of the words which Mr. Addison suggested would require those loans which were made to be secured by mortgage, which, in turn, would involve title search, recording fees, and so forth, whereas they are all character loans. Those associations which belong to the United States League, as well as the associations which belong to the National League, are associations which make about half of the real-estate loans on homes in this country. We do not feel that the committee wants to take away from these associations that field of operation which is directly in connection with loans which they make. As a matter of fact, we all thought that we had reached an agreement on that matter in some conferences which we had in connection with the American Legion prior to these hearings. thought that this provision of the bill was agreed to. We I merely want to show on the record that the United States Savings and Loan League does not feel that Mr. Addison's suggestion should be inserted in the language and thus restrict the loans solely to banks. Senator MILLIKIN. Do I understand that you are making loans of the nature which you are discussing? Mr. FERGUSON. We make loans for repairs, modernizations, and so forth. Senator MILLIKIN. Would that activity involve chattels or personal property of any kind? Mr. FERGUSON. No; just improvement loans. Senator JOHNSON. Is there anyone present representing Mr. Floyd? No one seems to answer. Does anyone else wish to make a statement? STATEMENT OF OLIVER WALKER, PRESIDENT, WALKER & DUNLOP, INC. Senator JOHNSON. You may proceed, Mr. Walker. Mr. WALKER. My name is Oliver Walker, Washington, D. C. I am president of Walker & Dunlop, Inc., mortgage bankers. We originate and underwrite mortgage and real-estate loans. In other words, our business consists of negotiating and consummating loans to home owners and veterans who desire to finance their property. In turn, we sell these loans to insurance companies, banks, trust funds, and building-and-loan associations. I have had over 15 years of experience in the practical negotiating and handling of this type of loan and in creating a permanent market for the sale of these loans. Therefore, I feel that I can speak with respect to what we term, in the mortgage business, the secondary market. Prior to the creation of the Federal Housing Administration and its system of unified appraisal throughout the whole country, there was no secondary market for mortgage loans. Since the creation of the FHA and The RFC Mortgage Company, there has been an active market for the sale of mortgage loans which were originated by local institutions. Before this time, the local institution required a commitment upon each loan from an institutional investor who held the note for permanent investment. Under the FHA unified appraisal system, it has become current practice for the originators and underwriters of mortgage loans to commit and consummate these loans before a commitment is secured from the permanent investor. These mortgage firms warehouse such loans with commercial banks and then resell them in the secondary market. Therefore, I am in favor of a unified appraisal system for GI loans, whereby an insurance company or bank in California, Massachusetts, or Michigan would be satisfied with the appraisal of a GI loan in South Carolina, Texas, or Minnesota and have confidence that the appraisal meets their standard requirements for mortgage loans. I am in favor of the transfer of the Home Loan Section to the FHA. This recommendation is based entirely upon their experience and record over the period of years which this Government agency has operated. I suggest the creation of a new title to the FHA Act for the exclusive handling of GI loans. For instance, we will call this section title VII, and it should be modeled along the same lines as title VI which was created for war housing. The standards, regulations, and administrative rules could be drawn to apply and fit the needs of the veterans in financing their homes and farms. The FHA have an organization with branch offices which covers the entire country, and I believe that they have facilities to operate in every county of the United States. This is a much broader and more comprehensive organization than any other Government department, and they have personnel already trained and equipped to handle these loans. The statement which has been made many times before Congress and in meetings to the effect that the FHA only covers one-third of the country needs clarification. When this statement was made, it was intended to state that the FHA could only, make loans on onethird of the homes in the United States. This condition exists due to the high standards which the FHA has required under title II. For the reason of high standards and subdivision requirements, it is true that only one-third of the existing homes are eligible for insurance under FHA title II. In creating a new title VII, the Congress could specify and fit the standards for veterans which would apply to all homes, and since the FHA covers the entire country geographically, the veterans would then have a unified appraisal system and facilities in every community and county. The investment of funds of most financial institutions are either 1egulated by National or State laws, and most institutions are permitted by law to invest their funds in FHA loans. Therefore, the transfer to this agency would make these loans eligible for investment by most banks, insurance companies, building and loan associations, and trust funds. The American Bankers Association have testified that their institutions have $170,000,000,000 in assets, the insurance companies have approximately $41,530,419,000 in assets, the mutual savings banks have approximately $17,000,000,000 in assets. It is only fair and equitable to the veterans for Congress to legislate so that all of the above institutions will be eligible to purchase and invest their funds in GI loans. If the above companies have authority and if the provisions of the act are drawn making these loans eligible for investment by all financial institutions, then an automatic demand will be created for these loans, and the originators and underwriters of these loans will compete with each other and, thereby, the veteran will be able to secure better terms and better advice at a lower cost. If the Congress does not decide to transfer the Home Loan Section of this bill to the FHA, then we recommend the creation of a home loan section within the Veterans' Administration similar to the FHA system which is a 100 percent guaranty. I believe that the experience of the Home Owners' Loan Corporation and the FHA in handling 100 percent guaranties has resulted and will result in the future in less loss to the Government than a partial guaranty which becomes a secondary lien. The Government is then in a position to liquidate any property resulting from default and foreclosure at a favorable time and market and at a loss considerably less than the payments which will be made under a partial and secondary guaranty. I thank you. Senator JOHNSON. We thank you, sir. Does anyone else desire to make a statement? If not, I declare the hearing closed. 、*t f Before doing so, however, I wish to ask permission of the other members of the committee to insert in the record any statements which may belatedly come in after the hearing is closed. (Whereupon, the subcommittee adjourned.) (The following communications were later received for the record :) WASHINGTON, D. C., October 12, 1945. Senator EDWIN C. JOHNSON, Senate Office Building: I am president of Capitol Radio Engineering Institute, Washington, D. C., president of National Council of Technical Schools, vice president of National Home Study Council, and member of the technical institute committee of Engineers Council for Professional Development. In all of these capacities I wish to protest the type of testimony submitted by certain representatives of the college groups against the use of correspondence courses in the training of veterans under Public Law 346. My own school has offered advanced homestudy courses in practical radio engineering since 1927. Its instruction material is used officially by the United States Navy, the United States Coast Guard, the United States Maritime Service, the Veterans' Administration under Public Law 16, and the Canadian Broadcasting Corporation. These Government agencies use our courses in the training of thousands of men because comparable specialized courses are not available through the extension divisions of the colleges and universities. In the action recently taken by Engineers Council for Professional Development, which is the accrediting agency for the engineering colleges, in the formation of a technical institute division to accredit the technical institutes, correspondence courses are eligible for accrediting on the same basis as residence courses and no distinction is made between private schools and those operating from public funds. The correspondence schools of this country have made sound practical vocational upgrading training available to millions of men and women over a period in excess of 50 years. Private technical schools did a magnificent job during the war for the military services. My own institute offers both correspondence and residence training and is now training veterans in its residence school. It is receiving many demands for home-study training under Public Law 346. I respectfully request that this telegram be placed in the record of the hearing on amendments to the GI bill and that you use your influence against dscrimination against the private correspondence schools and in favor of the thousands of veterans who wish to take this type of vocational training. E. H. RIETZKE, President, Capitol Radio Engineering Institute. The SENATE COMMITTEE ON FINANCE, REGULAR VETERANS ASSOCIATION, Washington 5, D. C., October 12, 1945. Senate Office Building, Washington, D. C. (Attention Mr. Ralph Frederick, Secretary.) GENTLEMEN: It was not possible for Commander William M. Flood to attend the hearings of your committee regarding amendments to that portion of the so-called GI bill of rights which has to do with loans to veterans. He will be out of town until Monday, October 15. Inasmuch as he could not attend the hearing personally, Commander Floyd asked me to write this letter to the committee, stating the stand of the Regular Veterans Association and requesting that it be made a part of the record of the hearing for the consideration of the committee. It is our opinion, based upon the many hundreds of letters we have received, that the loan proviisons of the GI bill cannot be made effective to a great many veterans who are in need of the funds but who cannot qualify for loan under the present laws and regulations. It was not the intent of the law to deny veterans the benefits of the loan privilege, but the manner in which this privilege has to be worked out under the law denies benefits to many veterans who e deserving but who do not have the security demanded by those to whom they apply for loans. We strongly recommend that H. R. 127, or its companion bill, H. R. 1176, be substituted for the loan privileges of the GI bill. I am enclosing a copy of H. R. 1176 for your consideration. The adjusted-service pay, properly administered, would provide all veterans of this war with the security that they deserve. By a simple method of showing their need for the funds provided by H. R. 1176, they could secure proportionate amounts necessary to carry them over or to 77877-45- -24 establish a business without the difficulty of applying through regular business channels and through business methods. It is requested that legislation be enacted to this effect and that this letter be made a part of the record of the hearing of your committee. We believe that, under any conditions, the veterans of the present war should be given the greatest consideration in rehabilitation, regardless of the demands of labor or any other considerations, in their return to civilian life with a security guaranteed by the National Government. Your courtesy in entering this opinion into the record will be highly appreciated. Very sincerely yours, VICTOR E. DEVEREAUX, Hon. EDWARD JOHNSON, ST. LOUIS UNIVERSITY SCHOOL OF MEDICINE, Washington, D. C. DEAR SENATOR JOHNSON: It pleased me greatly to have heard from Mr. Ralph Frederick, clerk of the Senate Finance Committee, that you are willing to accept for inclusion in the record of hearings on the GI bill a statement on behalf of the committee on postwar medical service of the American Medical Association. The committee on postwar medical service represents important organizations, both voluntary and official, engaged in health work, and all through the war has maintained active contacts with governmental and nongovernmental agencies in the furtherance of the war aims. One of the subcommittees has been interested for several years in veteran affairs and has cooperated actively with the Veterans' Administration in the diffusion of pertinent information and suggestions to the physicians and dentists of the country, to the hospital associations, to nursing organizations,to legislative bodies, to the governors of our States, and to many other agencies. The transactions of all the subcommittees of the committee are published in the Journal of the American Medical Association, though the committee is, strictly speaking, not a committee of the association. The subcommittee, which has been voted power to speak for the committee, will meet on October 19. After getting information about the hearings, our subcommittee attempted to call a meeting at an earlier date. It is unnecessary to tell you that physicians are not always able to shift important appointments on short notice and it was for this reason that I requested you to permit the inclusion of our report as an appendix to your hearings even though your hearings may be discontinued by the time our report is ready. I thank you very sincerely for the courtesy which you have shown us by expressing your readiness to receive our report. It may well be that our report will arrive on October 20 since it cannot leave Chicago before the evening of the 19th. I hope, however, that this slight delay over the period granted us may not prove too great an inconvenience to you. Assuring you on behalf of the groups interested in medical education that your efforts to better and to improve the benefits to our veterans, inclusive of our physician veterans, under the GI bill of rights are deeply appreciated by the medical profession, and with my personal thanks and regards, Very sincerely yours, ALPHONSE M. SCHWITALLA, S. J. UNITED STATES SENATE, Hon. WALTER F. GEORGE, United States Senator, Chairman, Senate Committee on Finance, Washington, D. C. MY DEAR SENATOR GEORGE: This is in reference to S. 866 which I sponsored in the hope that the provisions in the Servicemen's Readjustment Act that are proper to the subject would be extended on behalf of the widows of those who gave their lives in the war. The bill would amend title 1 of the act of 1944 by adding a section which provides that where one in service has died or dies as a result of personal injury sustained, or of disease contracted, or of injury or disease aggravated in line of |