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• 1/5/58


Copies uelivered by Daiger to Senator Hagner
and Congressman oteagaXl.


P&gs and line references &re to "Conference Coiaisitte© friat*1 of
December 23, 1937*

Halts to July 1, 194-2f the authority of t\m FHA to Insure 90 per cent
loans* th® Hous© bill contains no such limitation, {Page 6, line 12*)
RECOidMIiATIOfls That the Senate amendment be rejected,
ALTERNATIVES Extension of authority to cover at least & five-year program and preferably ten years, - See Memorandum Ho. 1»
2. TEEM OF 90 FEE CENT lAAttM The Senate asiendment provides that
90 psr cent loans (but not 80 per cent loans) m&y be amortized over 25
y#«irg* Th© t®rm in tht House bill is 20 ye&r^p &g la the eadlatlng Xaw
governing SO per cent loans. (Pag© 6, line 17 et eecj.)
RjeCOMHESDATIOHs Th&t the Sen&t© aaendment be rejected. Acceptance of the «m©adm@nt would (a) create a sharp sad incongruous disparity
betwe©& the term of 90 per cent lo&as tai the term of 30 per eent loans
ikad (b) enaae & greater realstaac© than wo-uld otherwise b© @acount©r©d
in obtaiaiixg acceptance of the 90 per cent mortgage on th© pmrt of lending
3. FAKM DMJUIHGSt Both the House bill and the Senate amendment
make provision for rural as w ® H fcf urban mortgages to M v e the benefits
of FHA insurance, (P&g® 9, line 24,)
RECOU^ENDATIONs Timt the Senate &aendis©i*t (by Senator La Follett®)
be ret&in^d instead of the provision in the House bill.
U* HOUSING BOB COOPERATIVE SOCIETIES! The Senate omn<!ffl<mt provides for the insurant© of mortgages on large-scale projects held by
cooperative societies as legal agents of oro@r occupants• The House
bill contains no such provision. (Page 25, line© 17-18.)
That the Senate amendment (by Sea&tor Shipgtead)
be retained.
IHSUFANCE OF LA£GE-SCiO*E LOANS: The Senate amendment provides
that, ia the event of default on mortgages covering large-scale houaiag
projects, FHA debentures shall b© issued for 95 p«r cent of the unpaid
principal and a certificate of claim be given for the remainder* The
House bill provldm for the Igsu&nce of FBA debentures in the full amount
of the unpaid principal. (Page 30, line 18,}

REGOlfflfflEATION: That the House provision b s rejected and the
Senate amendment be revised to ^rovid© for the issuance of debentures
for 9B p#r cent of the unpfcid princip&l, together with & certificate
of claim for the reminder, and that the mortgagee be given the option
of (a) accepting such debentures and certificate or (b) foreclosing
the mortgage* paying the costs of foreclosure. M i receiving FHA debentures tmd a certificate of claim in the manner provided in Section £id«
See MenoranriuJB Ho, 2.
6, PBI¥AILIHG fUGSx The Senate antadmeat requires the go-c&lled
prevailing wag© for construction of propertied on which mortgages are
insured b y the FHA, The House bill ja&kes ao auch requirement. (P&g© 4
lint 6»)
HKCOMMifUDATIOll: That the Senate siSieadaeat ( * &©s&tor
be. rejected, - See Memorandum No. 3*
&uthoris5e& theee assoeifetions to orij;,in«t© loans on day mortgagea injured
under the N&tion&l Roueing Act, Th© House bill authorises the association®
to originate only the large-scale loan* under Section 207. (P&ge 43» line !?•}
&BCOKitHK/ATIOM: That both the Senate &.3aendm*mt md the House bill
be revised to provici® th&t th© aesociations Nty originate iofens under £#ction 207fendSection 210, which cover the larg@-ge&l« endffiiodie-gizeloang
respectively,, There ie ao lack of direct-lending facilities for Mortgages
up to 116,000^ which are covered by Section 203.
I, BONK; Of MATIOK/L MORTGAGE ^S&0CIATI0H8j The Senate amendment
provides that tiies^ associations Bay Lseue bonde agaiaet FHA insured
mortgagee to the extent of 15 times their capitisl and surplus. The
corresponding figure ia the House bill is £0* (P&ge ,7, line !•)
That th<* Senate bnendment be rejected and
the provision in the House bill bo retained, - See Memorandum $o, 4 .

prlaelptJL m

to t r y

to aaiiiajTagi ^*

1# production la UM it*-

surface of |Q par c#»t sortg* pat m haur** viiuau ay t o *6 t WJ,
h«r*by mrkiaf th« j«rcliB»# of such
l i ^ t uadsr I
I# lo««cdet >nort,pt~€ upon « do^s p»9«Rit of 13 par ccat*
l a t h « b i l l fes «iag^Bd#d by MM 8 M
.;.€ IMMMM
c«at aortg-r*
?&uthorisedt but
iiadUstlott tfc»t w i l d —arit—ty H4t. papo#MtlM Md i n Itrg^-sc^le i f f I J
ttwttm tM®mimra>nt, . i
aria«ti«i to
thtis* i o r t § ^ M MMU N l i f i i t M l i July 1 # 194$*
&n/ baildin^ coapA.nla« 9r&.oX%*d %& i
rmttiM l a M
• LMMOM fi#ld m
»« t o
pit^X tmA d®v@lop s» ^ f M i S f t t t a l for BbJ I
14 ftt
i llwtt imi mm
r aeA«t« Thus, tlM diiTiealt
of fHMif Ik
Mrf&nisff'tioji fcoa^thsr f-3r c btirlnItot pffcrr t*o or tb

Hi aajr ba n i l •£ tui;.t ttiad.^.-t, 1

^re, lib t th#

l M of K) :*#r east acrtg&£«e * M l i b^ txoi aarely a
^f<ta.rey i » t i
. one* fhm #?in
irol^ae of

• •. . ' •


l i c t i o a «?o«id n o t

turs* issued taud^r faction 207 (th# I&rg* «eftle houaing section)
to 95^ of ta* u»p&i3 b&l&nee of tna f i'ljpf would seriously Impede
the raicing if fy&dt .for large-ae&le operations* bath i s the rental
housing field end the sawll-houae field*
l£ ihis fi^iura ««ra Jti;£#4 mt 96 par MKtg ®&& t f llH p r o option *#r» |lTMI to th» mortgagee to ioraeloae UM
own Axpsniaay ae provided i n •xitftlng !«.*, th«»
tooth t&e MMdA and. .i0«.^« psroviadLoan c«n
without AiMMOPtftAg tbe priYUte flMUMiSf i f UMM JUor^i «<MI1«
tionc* lfi» r e l a t i v e l y &SJ&11 •diiimrmiic^p iMMW^i b«ttr«eit i p
of 2 |>s>iB.t® Mfcfl a ^ftaeJLty of $ gK»iatit a l ^ b t ba ju#t ettM^i I t
^r^p^nt tbte diffei^nce between i w^rjr l l f g t v-^lufte ftf • —
•ai i 6oftpioratlT«ljF iiifcll v^lussa* 'FurttK-moret th&t uiff«r«nee of
3 j»int« l a toe ajaoaat raeoverabl© -gss lfergf—#c^X© lo«4&» CMltf
a prejiKlioial affvet oa t^js iaonda ieMNMi fef national i o r t g a g s 4
kis^ <*a$k lo^afe* Thtt itttli MMIM HWfifirt I
higher r ^ t e i f lnWrfit Ifcift ntl14 N M ( H
« t & , i f coui*®©, & eo.Axe«panilingXy tlirtliff m t e of
th&a «oul«s otter^JM be rv^aired on I^rg^-fc^I© l i m i «

tht option pravisioji ^bsajUl m %BMtf%ai ifliff M
ia line 21, ^i^^ J R# f i l l i f l
la the tVCSi i f I
in aocordttiicd witli rdl#g ana regui*;tiion,a to
ftfiribeti b$ thm &&mlmU&%r&torP proeetMl a t pr
In 8#©U.SII 210 aad f i i i l f i U i IhMMftti • • tiit
*aortgag«e* i a line 2Jg pfeg# 30# llMPi

IMI Iaui«rte4 tha *;:ortin "ttpoa aacignaient of

the word "aactioa" ia Una 9* page | 2 | tb^r© thoaid
Bfftfi HytB &migm®®^ if UM aortgage."

U 3

vhich r& rulr«i that &ny «ortg*fr«
caatr&ct ieeued pursu*.at to fi tie I I of this KetlonAl
Hauaing Act &haii contain tho frtratiiaf lagl llattM is fetal !• th©
suoets&fuX operation of t w A#t« This Is the cXfcut* ordinarily provided in XegieXetion dealing ;^itb pubXife-eonetraction or pufeiioly*
f i n ^roceae of dttandaiai -.ud >4»pil>| •
iu «&ch of th« thousands of Xoe«litiea ";h@re a«m are
or ex^eet ta be e&g&ged. In th« construction »f housing, would l a pod* sad delay th^ eontlim&ac* or rerasptioa of M*atmttioa «ctivl»
tl«i W i l l such titaa eg tb« BtftrtMMll of Labor WA* «ble l# hola publie
htiitirlng* tnd eos« to & d#ci slots as to tlM prt^aiXing «?&g^ in a l l ol th*
craft* *md £r&4©$ ^ngfeged in th© buli.iiag of housaa la way particular
bl ath«r ^ordt*, th«r«. i t t f not M 9£i»t IMy official d«t«rM
of wfet lae flirfHMm *feg^# ^r-€ la tae building of
nor« to tho ptl&t, ilia
couXc not function if 1% M M i'e;;ulrev-. to ia.clua^ tUa
f t clause In i t s aortgfcgo-iniur&jace contract** fM M
l M
tracts t t i not ntfi witJl tae oper*tive buiXd«f«rBf or ^iih the frilllUtt
&-ubcofiir«ctor»9 but *ith tha pi'-i^atfe Xiodiai lnsti*
th&t « fk the mortgog® lo«us» Taatt latti tatliMH sim|d.y
Me «
a*ka XitM tinder tat f'!& iet-u^ If tho fmiidity of th*
contract dta^Miai on the jife.ya@Rt sf th© porfriratllcon true tor s y fttti uuboostrntetorft - © aatitf
is pl&i&Xy beyond th& function^ the control or tht k
of private lending I n s t i t u t i o n ,




look* toward UM fora«tiea ol6
S&tion&l tfortgft&tt Association* by priv»t« e&pit&l> & d *«rtr*r*X
of tfa« provisions in tbo £<minietr«tlon b i l l , &g intro<2uc«dt bed
thft •utttarifting ti» IS to 1 ratio of
of bonds to capital tM a«e*ft»&ry *-s *
to ff«H i t s bomis 4t & v^


la order to eov«r »Xj>«nti«0 ?*-»c isfck* & f»lr profit*


« fflfllitttfi t i i l flMfettife»'tly no lUMMM^UltlMMI will be* tiMMM
private c&pitfiX*
only fe
mad ctk»h, Investors in th« bonds ar» aseur&d &a «xtr&oridinarily hl^:h d«gr«e of prot6Ctio&*
I t i s true th»t # OR m ratio of 1.5 to lf • i«.tion«i
»*oei&tion foraed *ith $50^000.000 ttf FFCIbnds *j
to ratiso $750 f 000.000 through the M l i i f bonds* la
of «oa»Wttction activity itti ULpXojra&at.
i s ®n «oor»9tt8 diff«raac# -b@tw#©m 17)0.000.000
on & 10 to 1