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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 operate* 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.
@FedFRASER