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December 9,
Dear Johns
Because of the meeting of the Federal Open Market
Coramittee, X am unable to attend the meeting this morning
to discuss measures to combat the inflationary effects of
mortgage credit, I have three suggestions whioh I think
should be considered:
1* fhere should be no further authorisation
of mortgage insuranee under Title VI of the National
Housing Act except for multiple-unit rental projects*
For such rental projects the maximum insured mortgage
should be 90 per cent of long-term stabilised value.
2 . Government insurance of mortgages for the
purchase of old houses, except by veterans, should
be suspended* Appraisals for insured or guaranteed
loans on both old and new houses should be made by
FHA, using the standards established for insuranee
under T i t l e II of the national Housing Act.
Mortgages should not be e l i g i b l e for insurance or
guarantee i f the t o t a l borrowing of the mortgagor
exceeds $9,000.
As far as possible, these changes should be made
by administrative regulation, but to the extent necessary. Congress should be asked to authorise changes in
present programs to apply for a temporary period.
3* The so-called "warehousing plan" for 61 loans
made by members of the Federal Home Loan Bank System
should not be adopted, and no other Government-financed
secondary markets for mortgages should be allowed to
Adoption of these three points would, I think, go far
toward restraining further Inflation i n the real estate market,
thereby helping to reduce inflationary pressures generally.
Sincerely yours.

The Honorable John W. Snyder,
Secretary of the Treasury,
Washington, D. C.