FHA Mortgage Insurance Increase
Senate Joint Resolution 89 — Public Law 87-38, approved May 25, 1961
This measure amends section 217 of the National Housing Act to increase by $1 billion the mortgage insurance authorization of the Federal Housing Administration. Section 217 contains the mortgage insurance authorization for all FHA programs, except title I home repair and improvement program and title VIII military housing program. At the present rate of use it is estimated by the Federal Housing Commissioner that available authorization for FHA mortgage insurance will be exhausted before the end of May 1961. At the same rate of use, $1 billion in additional authorization will be sufficient to enable new FHA mortgage activity to continue until about July 15, 1961, or until a general housing bill has been enacted.
Housing Act of 1961
S. 1922 — Public Law 87-70, approved June 30, 1961
Major provisions of the omnibus housing measure authorizing $4.9 billion in new funds are:
Title I — New Housing Programs
Authorizes a 35-year, low-interest-rate mortgage loan program for moderate-income families in sales housing with a down payment of 3 percent of the first $13,500, plus 10 percent of $13,500 up to a maximum mortgage of $15,000; also provides for a 40 year maximum mortgage and permits discretionary inclusion of settlement costs in the down payment requirement for hardship cases; for existing construction a 30-year maximum maturity applies. Made no change in the 40-year term now in existing law for displaced families. The low interest rate mortgage loan program for moderate-income families limited to 2 years; no time limit in the case of displaced families.
Market-rate program for rental housing.— Bases loan ratio upon 90 percent of replacement cost of new construction. Term of the mortgage can be prescribed by the Commissioner at 5 percent but grants him discretionary authority to increase maximum to 6 percent if he finds it necessary to meet the mortgage market; program terminates July 1, 1963, for moderate income families, with no termination date for displaced families.
Below-market-rate program for rental housing.— Authorizes FHA to insure mortgages at below market rate with a partial or no insurance premium and liberalized features for payment of insurance claims. Program limited to nonprofit organizations, limited-dividend corporations, cooperatives, and public bodies or agencies which certify they are not receiving financial assistance from the United States exclusively for public housing. Maximum loan ratio is 100 percent of the Commissioner's estimate of replacement cost, except in case of rehabilitation it is the sum of the repair cost and the Commissioner's estimate of value before rehabilitation. Program for moderate income families terminates July 1, 1965, but continues after that date for displaced families.
Home improvement and rehabilitation loans.— Loans may not exceed 20 years, or three-fourths of the economic life of the property, whichever is less; rate of interest cannot exceed 6 percent; loans on structures less than 10 years old must involve major structural changes or correct defects not known at the time of completion of the structure; applies to urban renewal areas as well as other areas; authorizes FNMA to purchase these loans.
Title II — Housing for Elderly and Low-Income Families
For elderly.— Broadens eligibility to include public bodies, agencies, and consumer cooperatives; permits 100-percent loans; increases the elderly housing direct loan authorization from $50 to $125 million and eliminates the specific dollar limitation on the portion which can be used for related facilities.
Public housing.— Removes requirement that disabled persons be at least 50 years of age. Permits payment of an additional annual Federal contribution of up to $120 a year for each elderly family provided it is required to avoid a deficit in low-rent projects; authorizes approximately 100,000 units which is the remainder contained in the Housing Act of 1949.
Demonstration programs.— Authorizes $5 million in grants to public or private bodies or agencies to develop and demonstrate new or improved means of providing housing for low-income persons and families.
Title III — Urban Renewal and Planning
Urban renewal.— Increases the grant authorization by $2 billion (to $4 billion); permits a locality of 50,000 or less (150,000 or less in case of a community located in a depressed area) to obtain a three-fourths Federal grant on the same basis as the regular two-thirds, a i.e., without having to assume the cost of planning, etc.; authorizes the Administrator to use up to $25 million for mass transportation demonstration projects; authorizes SBA to make loans under the disaster loan program to a small business which has suffered substantial economic injury as a result of its displacement by federally aided urban renewal or highway construction program or any other construction program if Federal funds are used; increases from $125 million to $150 million the authorization for disaster loans to provide funds for displaced businesses; increases from 20 percent to 30 percent the amount of grant authorization which may be used for nonresidential purposes.
Urban planning assistance.—Increases authorization from $20 million to $75 million; changes the amount of grant from one-half to two-thirds of the estimated cost of the work; extends planning to include transportation facilities.
Title IV — College Housing
Increases the loan authorization by $1.2 billion through fiscal 1964.
Title V — Community Facilities
Public facility and mass transportation loans.— Increases the loan authorization by $500 million and provides that $50 million of the amount be made available for mass transportation loans.
Planning advances.— Increases by $10 million the amounts which may be appropriated to the revolving fund for planning advances.
Title VI — Amendments to National Housing Act
FNMA.— Increases special assistance authorization by $1.5 billion, including transfers.
FHA insurance programs.— Extends the home repair and improvement program for 4 years until October 1, 1965; removes dollar ceilings on FHA's insurance authorization and provides that loans and mortgages may be insured until October 1, 1965, except for certain programs that have different termination dates; increases nursing home mortgages from 75 percent to 90 percent of value.
Title VII — Open-Space Land
Authorizes $50 million in grants to help finance the acquisition of title to, or other permanent interests in, open-space land; limits grants in most cases to 20 percent of total acquisition cost, except in cases of public bodies where it can be increased to 30 percent.
Title VIII — Farm Housing
Extends the program for 4 years until June 30, 1965; authorizes an additional $200 million in addition to the unused balance of approximately $235 million of the $450 million previously authorized for the period ending June 30, 1961.
Farm housing research.— Authorizes $250,000 a year for 4 years to carry out a program of research, study, and analysis of farm housing.
Title IX — Miscellaneous
Voluntary home mortgage credit program.— Extends this program to October 1, 1965.
Hospital construction.— Extends to June 30, 1962, the authority granted for loans and grants to public and nonprofit agencies for hospital construction under the Defense Housing and Community Facilities and Services Act of 1951, where applications were filed before June 30, 1953, and denied solely because of lack of funds; authorizes $7,500,000 for each of the additional years.
Veterans' Home Loans
H.R. 5723 — Public Law 87-84, approved July 6, 1961
Extended direct and guaranteed home loan programs for World War II veterans to July 26, 1967, and for Korean conflict veterans to February 1, 1975; authorized an additional $1.2 billion for direct loan program through fiscal 1967.
Insured Mortgages—Extend Authority
S. 2876 — Public Law 87-623, approved August 31, 1962
Amends the National Housing Act to extend to October 1, 1963, the authority of the Commissioner of FHA to insure mortgages for housing for essential civilian employees of the armed services, National Aeronautics and Space Administration, the Atomic Energy Commission, and housing in defense impacted areas.
Present authority expires October 1, 1962.
Savings Association Loans on Apartment Houses
H.R. 13044 — Public Law 87-779, approved October 9, 1962
Authorized federally insured savings and loan associations to invest more of their assets in apartment buildings.Existing law requires these associations to include apartment loans with certain other loans in a group which cannot exceed 20 percent of their assets.
This act allowed the Federal Home Loan Bank Board to authorize them to invest up to 15 percent of their assets in apartment loans.
Senior Citizens Housing Act
H.R. 12628 — Public Law 87-723, approved September 28, 1962
Raised the ceiling on the Government's low-interest rental housing loans to private nonprofit corporations, consumer cooperatives, and certain public agencies, and initiates loans and loan insurance for housing in rural areas. The loan ceiling is raised to $225 million from $125 million.
The new program for rural areas authorizes $50 million for loans to private nonprofit corporations, consumer cooperatives, and public agencies to build rental housing for the elderly and related facilities such as dining halls and infirmaries. Regulations will be essentially the same as for the existing program of housing for the elderly, with interest rates averaging about 3 1/2 percent and maturities ranging up to 50 years.
The new plan which will be administered by the Farmers' Home Administration includes a $50 million loan fund to help elderly persons purchase an existing home or housing site.
The act also authorized Government insurance of private loans up to $100,000 each for constructing rental housing and related facilities, and increases to $1,000 from $500 the limit on Government grants to rural homeowners for house repairs necessary for health and safety.
S. 384 — Passed Senate May 28; pending in House Veterans' Affairs Committee
Increases from $80 to $135 maximum monthly rental of servicemen's dwelling which are subject to the protective provisions of the Soldiers' and Sailors' Civil Relief Act and prohibits eviction of dependents of military personnel where monthly rental does not exceed $135.
Essential Housing Mortgages
S. 1952 — Public Law 88-127, approved September 23, 1963
Extends section 809 of the National Housing Act—sales housing for essential civilian employees of the armed services, NASA, and AEC—for 2 years from October 1, 1963, to October 1, 1965.
Broadens section 809 to cover housing for essential civilian employees of NASA and AEC at any NASA or AEC research and development installation.
Extends section 810 of the National Housing Act—primarily rental housing, single-family, and multifamily for military personnel and essential civilian employees of the armed services—for 2 years from October 1, 1963, to October 1, 1965.
Broadens section 810 to cover housing for essential employees of NASA and AEC.
Establishment of the section 809 program was necessary because in some instances homes built for essential civilian employees of the armed services, NASA, and AEC in communities near or adjacent to research or development installations of these agencies were considered to be above and beyond those needed for those normal economic growth of the communities. In the opinion of FHA, homes built in excess of the normal growth of the communities do not meet the test of economic soundness required by the statute as a prerequisite of FHA mortgage insurance. Section 809 permits the economic soundness test to be waived in such cases in order that essential civilian employees of these agencies may obtain decent and adequate sales housing.
Similarly, section 810 was established in order to provide decent and adequate sales and rental housing for personnel and civilian employees of the armed services near or adjacent to any military installation where adequate housing did not exist and where the FHA believes that the economic soundness prerequisite of the regular programs could not be met.
Housing for the Elderly
House Joint Resolution 724 — Public Law 88-158, approved October 24, 1963
Authorizes an additional $50 million for loans to nonprofit corporations and consumer cooperatives to provide housing for the elderly. Under existing law, $225 million is authorized for the program, of which $150 million has been appropriated and committed. Budget requests for fiscal 1964 included $125 million for this program. The $50 million authorized by this resolution supplements the remaining $75 million authorized under existing law to meet this request.
Section 202 of the 1959 Housing Act authorized this new program of direct loans to provide housing for elderly people designed to meet their special needs at rents which they can afford. The interest rate on these loans, currently 3 5/8 percent, is set by a formula which reflects the cost of money to the Government—and the term may be as long as 50 years. Eligible sponsors are limited to nonprofit corporations, consumer cooperatives, and certain public bodies. Financing provided by this program makes it possible to provide housing which rents for approximately $20 a month less per dwelling unit than projects financed through regular private sources.
Mortgage Insurance Authority
House Joint Resolution 467 — Public Law 88-54, approved June 29, 1963
Extended for 1 year, to June 30, 1964, FHA's general authority to insure mortgages covering one- to four-family dwellings and mortgages covering multifamily housing which are executed by private profit-making mortgagors.
Originally this liberal mortgage insurance for sales and rental housing was limited to families displaced by urban renewal or other Government activity, and was made available for low and moderate income families generally by the Housing Act of 1961.