[8th Annual Report, Housing and Home Finance Agency 1954]
[From the U.S. Government Publishing Office, www.gpo.gov]
ANNUAL REPORT
HOUSING
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and HOME FINANCE AGENCY 1954
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Office of the Administrator
Home Loan Bank Board
Federal Housing Administration
Public Housing Administration
Federal National Mortgage Association
Community Facilities Administration
Urban Renewal Administration
Albert
293904
DATE DUE
HOUSING AND
Office
Home Loan Bank Board
101 Indiana Avenue NW.
Walter W. McAllister, Cl William K. Divers, Memb Ira A. Dixon, Member
Federal Housing Admini 811 Vermont Avenue NW Norman P. Mason, Com
Public Housing Admini
1201 Connecticut Avenue Charles E. Slusser, Commi
Federal National Mortgag 811 Vermont Avenue NW.
J. Stanley Baughman, President
GAYLORD
Community Facilities Administration 1626 K Street NW.
John C. Hazeltine, Commissioner
Urban Renewal Administration 811 Vermont Avenue NW.
James W. Follin, Commissioner
8th
ANNUAL REPORT
«> HOUSING AND HOME FINANCE AGENCY
PART I
Office of the Administrator, page 1
PART II
Home Loan Bank Board, page 41
PART III
Federal Housing Administration, page 81
PART IV
Public Housing Administration, page 347
PART V
Federal National Mortgage Association, page 401
PART VI
Community Facilities Administration, page 431
PART VII
Urban Renewal Administration, page 447
UNITED STATES GOVERNMENT PRINTING OFFICE, WASHINGTON: 1955
For sale by the Superintendent of Documents, U. S. Government Printing Office Washington 25, D. C. - Price $1.50
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LETTER OF TRANSMITTAL
My Dear Mr. President: I have the honor to transmit herewith the Eighth Annual Report of the Housing and Home Finance Agency covering the housing activities of the Federal Government for the calendar year 1954.
In this Eighth Annual Report, the Housing and Home Finance Agency records the activities and accomplishments of the Office of the Administrator; the four constituent agencies—the Home Loan Bank Board, the Federal Housing Administration, the Public Housing Administration, and the Federal National Mortgage Association; and the two constituent units—the Community Facilities Administration and the Urban Renewal Administration.
Respectfully yours,
Albert M. Cole,
Administrator.
The President,
* The White House,
Washington 25, D. C.
ii
TABLE OF CONTENTS
Page
Chronology of Significant Events in Housing, 1954_________________ xvii
Organization and Functions of the Housing and Home Finance Agency_ xxi
PART I—OFFICE OF THE ADMINISTRATOR________________________________ i
Section 1. 1954 IN REVIEW_____________________________________ 3
Salient Developments in the HHFA__________________________ 3
A Year of Progress___________________________________ 3
Urban Renewal______________________________________.. 3
Home Financing___________________________________________5
Housing Investigations________________________________ 6
Housing Research________________________________________ 7
Other Developments______.____________________________ 8
Housing in the Economy______________________________________ 9
General_________________________________________________ 9
Housing Production_____________________________________ 10
Building Materials and Labor___________________________ 11
Prices, Wages, and Construction Costs__________________ 13
Home Financing_________________________________________ 15
Section 2. HOUSING SUPPLY AND NEEDS_______________________ 22
A Mid-decade Review____________________;__________________ 22
The Prospect________________________________________________ 25
Section 3. ORGANIZATION AND ACTIVITIES OF THE
OFFICE OF THE ADMINISTRATOR___________________________________ 27
Organizational Changes___________________________________ 27
Staff Activities.___________________________________________ 27
General________________________________________________ 27
Urban Renewal Coordination_____________________________ 29
International Housing Activities______________________ 30
Racial Relations_______________________________________ 31
Defense Housing________________________________________ 32
Section 4. NATIONAL VOLUNTARY MORTGAGE CREDIT EXTENSION COMMITTEE_____________________________________________ 37
PART II—HOME LOAN BANK BOARD________________________________________ 41
Section 1. HOME LOAN BANK BOARD_________________________________ 43
Creation of Board___________________________________________ 43
Activities and Responsibilities_____________________________ 43
Federal Savings and Loan Advisory Council___________________ 44
Voluntary Home Mortgage Credit Program______________________ 45
Legislation_________________________________________________ 45
Administrative Expenses_____________________________________ 46
Section 2. FEDERAL HOME LOAN BANK SYSTEM________________________ 48
Introductio n_____________________________________________ 48
Purpose of the System___________________________;________ 48
General Com ments_________________________________________ 48
Capital Str ucture__________________________________________ 49
Legal Reserve_________________________________________ 49
iii
293904
TABLE OF CONTENTS
PART II—HOME LOAN BANK BOARD—Continued
Section 2. FEDERAL HOME LOAN BANK SYSTEM—Con. Page
Investment Securities_____________________________________ 50
Liquidity Reserves----------------------------------------- 50
Advances to Members________________________________________ 51
Interest Rates on Advances_________________________________ 52
Delinquent Advances---------------------------------------- 52
Member Institutions________________________________________ 52
Consolidated Obligations___________________________________ 54
Interbank Deposits_________________________________________ 55
Dividends of Banks_______________________________________ 55
Comparative Balance Sheet__________________________________ 55
Income and Expenses______________________________________ 55
Supervision of Banks_______________________________________ 56
Examinations of Banks_____________________________________ 57
Management of Banks________________________________________ 57
Section 3. FEDERAL SAVINGS AND LOAN INSURANCE
CORPORATION__________________________________________________ 65
Introduction_______________________________________________ 65
Insurance Coverage_________________________________________ 65
Membership_________________________________________________ 66
Insurance Protection for the Investor______________________ 66
Insurance Settlements______________________________________ 67
Condition of the Corporation_______________________________ 67
Operations of the Corporation______________________________ 69
Assets and Liabilities of Insured Associations_____________ 69
Section 4. FEDERAL SAVINGS AND LOAN SYSTEM.____________________ 76
Introduction_______________________________________________ 76
Savings and Lending Features_______________________________ 76
Granting of Charters and Branches__________________________ 77
Number and Assets of Federal Associations__________________ 78
Savings Activity___________________________________________ 79
Lending Activity___________________________________________ 79
Liquidity and Reserves_____________________________________ 80
PARFIII-FEDERAL HOUSING ADMINISTRATION___________________________ 81
The FHA Program________________________________________________ 83
Section 1. GENERAL REVIEW______________________________________ 86
FHA in the New Housing Program_____________________________ 86
Property Improvement Loans_____________________________ 87
Home Mortgage Insurance________________________________ 87
Rental Housing_________________________________________ 87
Cooperative Housing____________________________________ 89
Urban Renewal__________________________________________ 89
Veterans’, Military, and Defense Housing Insurance___ 90
Miscellaneous Provisions_______________________________ 91
Investigations of FHA______________________________________ 92
Objectives and Policies in 1954____________________________ 94
Home Mortgage Insurance________________________________ 95
Multifamily Projects___________________________________ 96
Property Improvement Loans_____________________________ 98
Urban Renewal__________________________________________ 98
Technical Standards___________________________________ 99
iv
TABLE OF CONTENTS
PART III—FEDERAL HOUSING ADMINISTRATION—Continued
Section I. GENERAL REVIEW—Continued Page
Housing Market Analyses.._____________________________ 100
Housing of Minority Groups___________________________ 101
Organization and Personnel_______________________________ 101
Volume of Insurance________________________________________ 107
Property Management______________________________________ 110
Financial Position_______________________________________ 111
FHA Debentures_________________________________________ 112
Section 2. VOLUME OF MORTGAGE AND LOAN INSURANCE
OPERATIONS_________________________________________________ 113
Summary of Operations__________________________________ 113
Combined Insurance Activity__________________________ 113
FHA Influence in Residential Financing during 1954___ 117
FHA Workload_________________________________________ 121
Volume of Insurance Written______________________________ 122
Home Mortgages_______________________________________ 122
Project Mortgages____________________________________ 128
Property Improvement Loans___________________________ 131
State Distribution of FHA Insurance______________________ 133
All Programs_________________________________________ 133
Home Mortgages, 1954_________________________________ 137
Home Mortgages, Cumulative___________________________ 139
Project Mortgages____________________________________ 141
Property Improvement Loans___________________________ 144
Lending Institution Activity_____________________________ 148
Home Mortgage Financing in 1954______________________ 148
Mortgagee Home Financing Activity by State Location of property---------------------------------------------- 152
Home Mortgages Held in Portfolio_____________________ 152
Purchases and Sales of Home Mortgages________________ 154
Project Mortgages Financed and Held__________________ 157
Purchases and Sales of Project Mortgages_____________ 159
Property Improvement Loan Financing in 1954__________ 162
Terminations, Defaults, and Claims Paid_______ __________ 164
Home Mortgages_______________________________________ 165
Project Mortgages___________________________________ 173
Title I Claims Paid_________________________________ 180
Section 3. CHARACTERISTICS OF MORTGAGE AND LOAN
TRANSACTIONS INSURED IN 1954________________________________ 184
Characteristics of Section 203 Home Mortgage
Transactions_____________________________________________ 185
Typical Transaction, 1954____________________________ 186
Trends of Characteristics____________________________ 188
Mortgage Characteristics_____________________________ 191
Property Value Characteristics_______________________ 195
Size of House________________________________________ 215
Total Transaction Requirements______________________ 225
Mortgagor’s Income and Housing Expense_______________ 229
Total Monthly Mortgage Payment_____________________ 237
Characteristics of Section 8 Home Mortgage Transactions_ 241
Characteristics of Project Mortgage Transactions_________ 245
Characteristics of Property Improvement Loans____________ 262
v
TABLE OF CONTENTS
PART III—FEDERAL HOUSING ADMINISTRATION—Continued
Section 4. ACTUARIAL ANALYSIS OF INSURING OPERA- Page
TIONS____________________________________________________ 270
Analysis of Reserves of Insurance Funds---------------- 271
Nature of Reserve Liabilities---------------------- 271
Valuation of Reserve Liabilities-------------------- 273
Reserve Factors_____-------------------------------- 274
Financial Status of Mortgage Funds------------------ 277
Financial Status of Title I Insurance Fund---------- 281
Analysis of Termination Experience--------------------- 282
Life Expectancy______________.---------------------- 282
Mortgage Survivors and Mortgage Termination Rates--- 283
Termination Rates for Various Types of Terminations- 284
Section 5. ACCOUNTS AND FINANCE---------------------------- 288
Combined Funds----------------------------------------- 288
Title I: Property Improvement Loans-------------------- 297
Title I Insurance Fund--------------------------------- 299
Title I Housing Insurance Fund_________________________ 304
Title II: Mutual Mortgage Insurance Fund--------------- 309
Title II: Housing Insurance Fund----------------------- 318
Title II: Section 220 Housing Insurance Fund----------- 325
Title II: Section 221 Housing Insurance Fund----------- 325
Title II: Servicemen’s Mortgage Insurance Fund--------- 326
Title VI: War Housing Insurance Fund------------------- 326
Title VII: Housing Investment Insurance Fund----------- 334
Title VIII: Military Housing Insurance Fund____________ 337
Title IX: National Defense Housing Insurance Fund------ 340
Administrative Expense Account------------------------- 345
PART IV—PUBLIC HOUSING ADMINISTRATION-------------------------- 347
Introductory Statement-_ ---------------------------------- 349
Section 1. LOW-RENT PUBLIC HOUSING_________________________ 350
How the Low-rent Program Y orks________________________ 351
Development____________________________________________ 354
Physical Standards and Technical Studies--------------- 356
Managing Low-rent Housing------------------------------ 357
Section 2. CURRENT PROGRESS IN THE FINANCING OF
LOW-RENT PUBLIC HOUSING__________________________________ 364
Objectives and Methods of Financing-------------------- 364
Temporary Notes________________________________________ 364
Sales of New Housing Authority Bonds in 1954----------- 365
Maintenance of Competition in Sale of Bonds------------ 366
Use of Premiums Received at Sale of Bonds-------------- 367
Refunding of Old Bonds Held by PHA--------------------- 367
Status of Financing and Reduction of PHA Borrowing From
Treasury_____________________________________________ 368
Section 3. WAR AND EMERGENCY HOUSING_______________________ 370
Disposition Activities--------------------------------- 371
Management___________________________________________ 374
Military Clearances------------------------------------ 374
Section 4. ADMINISTRATION________________________________ 376
vi
TABLE OF CONTENTS
PART V—FEDERAL NATIONAL MORTGAGE ASSOCIATION 401
Section 1. ORIGIN AND PURPOSE___________________________ 403
Overall FNMA Objectives______________________________ 403
General Scope of Operation______________ _ _ ___ 404
Section 2. ACTIVITY________________________406
FNMA Financing_______________________________________ 406
Purchasing Program_______________________________________ 409
Mortgage Sales Program_______________________________ 416
Other Liquidation________________________________________ 420
Status of Purchasing Authority____________________ 420
Sections. ADMINISTRATION_____________________________________422
Management___________________________________________ 422
Operations________________________________________ 422
PART VI—COMMUNITY FACILITIES ADMINISTRATION-__ 431
Section 1. INTRODUCTION_____________________________________ 433
Section 2. ACTIVE OPERATING PROGRAMS_________________________434
College Housing Program__________________________________ 434
Public Facility Loans____________________________________ 436
Defense Community Facilities Program_____________________ 436
Reserve of Planned Public Works__________________________ 437
School Construction Program______________________________ 438
Section3. PROGRAMS IN LIQUIDATION___________________________441
Prefabricated Housing Loans______________________________ 441
Disaster Relief Program__________________________________ 442
Advance Planning of Non-Federal Public Works_____________ 443
Maintenance and Disposition of War Public Works__________ 445
Alaska Housing Loans_____________________________________ 446
PART VII—URBAN RENEWAL ADMINISTRATION_______________________ 447
Section 1. OBJECTIVES AND METHODS___________________________ 449
Introduction_____________________________________________ 449
Federal Urban Renewal Aids Under the Housing Act of 1954_ 449
Urban Renewal Projects___________________________________ 451
The Workable Program____________________ _ • _ 453
Section 2. ACTIVITY__________________________________________454
Operations_______________________________________________ 454
Procedures and Publications______________________________ 457
State Legislation and Litigation_________________________ 457
APPENDIXES:
A. STATISTICAL AND FISCAL TABLES____________________________ 467
B. EXECUTIVE MESSAGES AND FEDERAL LEGISLATION AFFECTING HOUSING IN 1954________________________________ 489
C. PUBLICATIONS OF THE HHFA________________________________ 519
Office of the Administrator___________________________ 519
Home Loan Bank Board_________________________________ 520
Federal Housing Administration________________________ 521
Public Housing Administration_________________________ 522
Federal National Mortgage Association_________________ 522
Urban Renewal Administration____________ _ __ 522
D. ORGANIZATION OF OFFICE OF THE ADMINISTRATOR^ 523
vii
TABLE OF CONTENTS
CHARTS AND TABLES
Chart Page
1 Housing and Home Finance Agency—organization chart__________ xxii
2 Permanent nonfarm dwelling units started___________________________ 9
3 New dwelling units authorized in selected standard metropolitan areas_________________________________________________________________ 11
4 Residential construction costs (Boeckh Index)_____________________ 14
5 Nonfarm mortgage recordings of $20,000 or less____________________ 17
6 Home mortgage debt outstanding—1- to 4-family homes_______________ 18
7 Nonfarm real estate foreclosures__________________________________ 20
8 Housing Starts and Nonfarm Population Gains_______________________ 23
9 Housing and Home Finance Agency—Office of the Administrator— organization chart____________________________________________________ 28
10 Voluntary Home Mortgage Credit Program—Regional committee boundaries and headquarters cities______________________________________ 36
11 Federal Home Loan Bank Districts___________________________________ 47
12 Number and assets of member institutions of the Federal Home Loan Bank System_____________________________________________________ 53
13 Source and distribution of cumulative gross income of the Federal Savings and Loan Insurance Corporation_______________________________ 68
14 Assets of insured and uninsured savings and loan associations___ 70
15 Number and assets of Federal Savings and Loan Associations______ 78
16 Federal Housing Administration Organizational Chart_______________ 102
17 FHA insuring office basic organizational chart____________________ 104
18 Jurisdiction of field offices—FHA_________________________________ 105
19 Volume of insurance written, 1934-54______________________________ 114
20 Private nonfarm dwelling units started, FHA and total, 1935-54____ 121
21 Home mortgages insured by FHA, 1935-54____________________________ 123
22 Project mortgages insured by FHA, 1935-54_________________________ 130
23 Mortgages and loans insured under all sections, 1954______________ 134
24 Originations and holdings of FHA home mortgages by type of institution, 1954_________________________________________________________ 152
25 Purchases and sales of FHA home mortgages by type of institution, 1954_________________________________________________________________ 155
26 Originations and holdings of FHA project mortgages by type of institution, 1954____________________________________________________ 159
27 Purchases and sales of FHA project mortgages by type of institution, 1954_________________________________________________________ 161
28 Institutions originating property improvement loans and receiving claim payments, 1950 reserve, 1950-1954------------------------------ 163
29 Termination rates of FHA home mortgages by years, 1935-54_______ 168
30 Defaults of FHA home mortgages, 1950-54------------------------- 171
31 Insured property improvement loans outstanding and claims paid by
FHA, 1934-54___________________________________________________ 181
32 Payments made prior to default of loan—claims paid on property improvement loans, 1954________________________________________________ 183
33 Characteristics of FHA mortgages, homes, and mortgagors—singlefamily home mortgages, Sec. 203, 1940-54------------------------ 189
34 Amount of mortgage—single-family home mortgages, Sec. 203, 1954— 192
35 FHA estimate of value—Single-family home mortgages, Sec. 203, 1954_________________________________________________________________ 195
36 Calculated area in square feet—single-family home mortgages, Sec. 203, 1954_______________________________________________________ 222
viii
TABLE OF CONTENTS
Chart pa&e
37 Mortgagor’s effective annual income—single-family home mortgages, Sec. 203, 1954_______________________________________________________ 230
38 Mortgage payment and housing expense as a percent of income by mortgagor’s income—single-family home mortgages, Sec. 203, 1954_________________________________________________________________ 236
39 Range of housing expense by monthly income—single-family home mortgages, Sec. 203, 1954____________________________________________ 239
40 Total monthly mortgage payment—single-family home mortgages, Sec. 203, 1954__________________________________________________ 240
41 Trend of characteristics of rental projects, 1935-54______________ 247
42 Projects and dwelling units by type of project, 1954—commitments issued on project mortgages_____________________________________ 249
43 Size of dwelling unit by type of project, 1954—distribution of units covered by commitments issued___________________________________ 252
44 Average mortgage per unit by type of project, 1954—distribution of units covered by commitments issued_____________________________ 255
45 Monthly rental or charges by type of project, 1954—distribution of units covered by commitments issued_____________________________ 259
46 Type of improvements financed by FHA insured property improvement loans, 1954________________________________________________ 265
47 Active dwelling units under jurisdiction of PHA, by program, at end of each year, 1937-54_______________________________________ 348
48 Population of places with Housing Act 1949 projects under annual contributions contract, as of Dec. 31, 1954_____________________ 352
49 Housing Act 1949 projects under annual contributions contract, by
size, as of Dec. 31, 1954____________________________________ 353
50 Average size of units in Housing Act 1949 projects under annual contributions contract, as of Dec. 31, 1954_____________________ 355
51 Housing Act 1949 dwelling units under construction and completed, June 1950-December 1954_________________________________________ 358
52 Housing Act of 1949 projects started and completed, 1949-54_______ 359
53 Housing Act 1949 program units—started and completed, 1949-54__ 359
54 Housing Act 1949 new program only, August 1949-December 1954__ 361
55 Emergency program units subject to disposition and disposed of, 1946-54______________________________________________________________ 370
56 Public war housing (Lanham constructed) current workload and
removals, by type of disposition, as of Dec. 31, 1954________ 372
57 PHA fulltime employment, December 1943-December 1954____________ 377
58 Organization and function chart of the Federal National Mortgage Association__________________________________________________________ 402
Table
1 Permanent nonfarm dwelling units started___________________________ 11
2 Production of building materials in 1954 and 1953___________________ 13
3 Indexes of wholesale prices of selected building materials__________ 13
4 Boeckh indexes of residential construction costs____________________ 15
5 Estimated amount of nonfarm residential mortgage debt outstanding______________________________________________________________ 19
6 Condition and plumbing facilities of occupied nonfarm housing: 1950_ 24
7 Condition of nonfarm housing by age of head of family: 1950_________ 24
8 Income in 1949 of nonfarm households by age of head_________________ 25
ix
TABLE OF CONTENTS
Table Page
9 FHA Title IX Activity_________________________________________________ 34
10 FNMA defense housing activity_________________________________________ 34
11 Federal Home Loan Banks—Summary of lending operations, 1932-54_________________________________________-_______________ 61
12 Federal Home Loan Banks—Schedule of interest rates on new advances and interest rates paid on members’ time deposits, Dec. 31, 1954___________________________________________________ 62
13 Federal Home Loan Banks—Comparative consolidated statement
of condition as of Dec. 31, 1954, and Dec. 31, 1953--------- 63
14 Federal Home Loan Banks—Comparative consolidated statement of operations for the calendar years 1954 and 1953----------------- 64
15 Federal Savings and Loan Insurance Corporation—Number and assets of insured savings and loan associations, by type, Dec. 31, 1954, and Dec. 31, 1953_________________________________________ 72
16 Federal Savings and Loan Insurance Corporation—Statement of
condition as of Dec. 31, 1954, and Dec. 31, 1953--------74
17 Federal Savings and Loan Insurance Corporation—Statement of operations for the calendar years 1954 and 1953----------------- 75
18 Mortgages and loans insured by FHA, 1934-54_________________________ 115
19 FHA insurance written by title and section, 1953, 1954, and 1934-54. 116
20 Status of FHA insurance written, as of December 31, 1954------------ 118
21 Nonfarm dwelling units started under FHA programs compared with total for United States, 1935-54-------------------------------- 120
22 Home mortgages insured by FHA, 1935-54------------------------ 124
23 Disposition of home-mortgage applications, Sec. 203, selected years.. 126
24 Project mortgages insured by FHA, 1935-54_________________129
25 Property improvement loans insured and claims paid by FHA, 1934-54_________________________________________________________ 132
26 Volume of FHA-insured mortgages and loans, by State location of property, 1954_______________________________________,__________ 135
27 Volume of FHA-insured mortgages and loans, by State location of property, 1934-54_______________________________________________ 136
28 Volume of FHA-insured home mortgages, by State location, 1954- 137
29 Dwelling units securing FHA-insured home mortgages, by State location, 1954__________________________________________________ 138
30 Volume of FHA-insured home mortgages, by State location, 1935-54. 140
31 Volume of FHA-insured multifamily housing mortgages, by State location, 1954 and 1935-54-------------------------------------- 142
32 Dwelling units securing FHA-insured multifamily housing mortgages, by State location, 1954 and 1935-54----------------------------- 143
33 Volume of FHA-insured property improvement loans by State location of property, 1954______________________________________ 144
34 Volume of FHA-insured property improvement loans and claims paid, by State location, 1935-54________________________________ 145
35 Property improvement loans insured in selected metropolitan areas, 1954 and 1934-54________________________________________________ 147
36 Financing and holding of FHA-insured mortgages and loans, 1954.. 149
37 Financing FHA-insured home mortgages by type of institution, 1954____________________________________________________________ 150
38 Type of financing institution by States, single-family home mortgages, Sec. 203, 1954__________________________________________________ 151
39 Holdings of FHA-insured home mortgages as of Dec. 31, 1954---- 153
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TABLE OF CONTENTS
Table Page
40 Purchase and sale of FHA-insured home mortgages by type of institution, 1954_____________________________________________________________ 156
41 Financing of FHA-insured multifamily housing mortgages by type
of institution, 1954_______________________________________________ 157
42 Holdings of FHA-insured multifamily housing mortgages by type
of institution, 1954____________________________________________ 158
43 Purchase and sale of FHA-insured multifamily housing mortgages by type of institution, 1954___________________________________________ 160
44 Origination of FHA-insured property improvement loans by type of
institution, 1954 and 1950 reserves_____________________________ 162
45 Claims paid on FHA-insured property improvement loans by type
of institution, 1954 and 1950 reserves__________________________ 164
46 Origination of FHA-insured property improvement loans by type of institution, selected years_____________________________________ 164
47 Disposition of FHA-insured home mortgages, 1935-54___________________ 166
48 Termination of FHA-insured home mortgages, 1935-54___________________ 167
49 Default status of FHA-insured home mortgages, 1939-54________________ 170
50 Terminations and default status of FHA-insured home mortgages, by
States, as of Dec. 31, 1954_____________________________________ 172
51 Disposition of FHA-insured project mortgages, 1935-54________________ 174
52 Disposition of FHA-acquired projects and project mortgages, Dec.
31, 1954_______________________________________________x________ 175
53 Terminations of FHA-insured multifamily housing mortgages, 1935-54________________________________________________________________ 177
54 Terminations and default status of FHA-insured multifamily housing mortgages, by State location, as of Dec. 31, 1954______________________ 178
55 Status of FHA-insured project mortgages in force, Dec. 31, 1954____ 179
56 Property improvement loans outstanding and claims paid by FHA, 1934-54________________________________________________________________ 181
57 Number of payments received prior to default by term of property improvement loans, 1954________________________________________________ 183
58 Structures and dwelling units in 1- to 4-family homes, Sec. 203, se-
lected years____________________________________________________ 185
59 Characteristics of mortgages, homes, and mortgagors for single-family
home transactions, Sec. 203, selected years_____________________ 186
60 Amount of mortgage for single-family homes, Sec. 203, selected years__________________________________________________________________ 191
61 Ratio of loan to value of single-family homes, Sec. 203, selected years__________________________________________________________________ 193
62 Ratio of loan to value by property value of single-family homes, Sec. 203, 1954______________________________________________________________ 194
63 Property value of single-family homes, Sec. 203, selected years___ 196
64 Property value by States—New 1-family homes, Section 203, 1954__ 197
65 Property value by States—Existing 1-family homes, Sec. 203, 1954__ 198
66 Transaction characteristics by property value and by States, new
1-family homes, Sec. 203, 1954__________________________________ 201
67 Transaction characteristics by property value and by States, existing
1-family homes, Sec. 203, 1954__________________________________ 202
68 Property characteristics by property value and by States, new
1-family homes, Sec. 203, 1954__________________________________ 205
69 Property characteristics by property value and by States, existing 1-family homes, Sec. 203, 1954_________________________________________ 206
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TABLE OF CONTENTS
Table Page
70 Financial characteristics by property value and by States, new
1-family homes, Sec. 203, 1954------------------------------------- 210
71 Financial characteristics by property value and by States, existing 1-family homes, Section 203, 1954--------------------------------- 211
72 Calculated area by property value of single-family homes, Sec. 203, 1954____________________________________________________________________ 214
73 Number of rooms by property value and by States, new 1-family homes, Sec. 203, 1954--------------------------------------------------- 217
74 Number of rooms by property value and by States, existing 1-family homes, Sec. 203, 1954--------------------------------------------------- 218
75 Number of bedrooms by property value and by States, new 1-family homes, Sec. 203, 1954--------------------------------------------------- 219
76 Number of bedrooms by property value and by States, existing 1-
I family homes, Sec. 203, 1954---------------------------------------- 220
77 Calculated area of single-family homes, Sec. 203, selected years---- 221
78 Number of rooms by calculated area of single-family homes, Sec. 203, 1954______________________________________________________________________ 223
79 Property characteristics by calculated area of single-family homes, i. 4 Sec. 203, 1954_________________________________________________________ 224
80 Amount of mortgage by total requirements for single-family home purchase transactions, Sec. 203, 1954------------------------------------- 227
81 Transaction characteristics by total requirements for single-family homes, Sec. 203, 1954____________________________________________ 228
82 Income of single-family home mortgagors, Sec. 203, selected years. _ 231
83 Mortgagor’s monthly income by States new 1-family homes, Sec. 203, 1954____________________________________________________________________ 232
84 Mortgagor’s monthly income by States existing 1-family homes, Sec. 203, 1954_______________________________________________________________ 233
85 Transaction and property characteristics by income of single-family home mortgagors, Sec. 203, 1954----------------------------------------- 234
86 Financial characteristics by income of single-family home mortgagors, Sec. 203, 1954__________________________________________________________ 235
87 Housing expense by income of single-family home mortgagors, Sec.
203, 1954_________________________________________________________ 238
88 Monthly mortgage payment for single-family homes, Sec. 203, selected years____________________________________________________________ 240
89 Characteristics by property value of single-family homes, Sec. 8, 1954____________________________________________________________________ 243
90 Characteristics by income of single-family home mortgagors, Sec.
8, 1954___________________________________________________________ 245
91 Characteristics of multifamily housing transactions, by sections, 1954____________________________________________________________________ 246
92 Characteristics of mortgages and projects in rental project transactions, by years, 1935-54------------------------------------------------ 248
93 Type of structure for multifamily housing, by section, 1954--------- 249
94 Size of project for multifamily housing, by section, 1954----------- 250
95 Size of dwelling units for multifamily housing, by section, 1954---- 252
96 Total amount of mortgage for multifamily housing, by section 1954. 253
97 Amount of mortgage allocable to dwellings for multifamily housing, by section, 1954-------------------------------------------------------- 254
98 Ratio of amount of mortgage to replacement cost for multifamily housing, by section, 1954----------------------------------------------- 256
99 Monthly rental or charges for multifamily housing, by section, 1954. 258
xii
TABLE OF CONTENTS
Table Page
100 Transaction characteristics by income of management-type cooperative project members, 1954___________________________________________ 260
101 Transaction characteristics by income of sales-type cooperative project members, 1954___________________________________________ 260
102 Sale price by income of sales-type cooperative project members, 1954_ 261
103 Amount of property improvement loans, selected years______________ 262
104 Term of property improvement loans, selected years________________ 263
105 Type of improvement by type of property for property improvement loans, 1954_____________________________________________________ 264
106 Amount of property improvement loans by type of property, 1954__ 265
107 Amount of property improvement loans by type of improvement,
1954---------------------------------------------------------- 266
108 Type of improvement insured by FHA, by State location of property, 1954----------------------------------------------------------------- 268
109 Type of improvement by type of property for claims paid on property improvement loans, 1954______________________________________________ 269
110 Calendar year reserve factors per $1,000 of original face amount of insurance in force for typical home and project mortgages insured under three FHA insurance funds______________________________________ 275
111 Standard rates of title transfer and insurance loss per $1,000 of original face amount of insurance in force for typical home and project mortgages insured under three FHA insurance funds during the unfavorable phase of the title transfer cycle________________________ 276
112 Outstanding balance of insurance in force, earned surplus, and estimated reserve requirements in the insurance funds of the Federal Housing Administration_______________________________________________ 278
113 Earned surplus and estimated reserve requirements in the insurance funds of the Federal Housing Administration, as of Dec. 31, 1952-54______________________________________________________________ 280
114 Annual termination rates for 1- to 4-family home mortgages based on aggregate termination experience for Sec. 203 mortgages insured from 1935 through 1949, 1950, 1951, or 1952 and exposed to policy anniversaries in 1950, 1951, 1952, or 1953 or price termination dates, respectively_________________________________________________________ 287
115 Dwelling units owned or supervised by the Public Housing Administration, by program, as of Dec. 31, 1954_____________________________ 379
116 Active projects and dwelling units owned or supervised by the Public Housing Administration, by State and other areas, as of Dec. 31, 1954________________________________________________________ 380
117 Disposition responsibility of the Public Housing Administration: total number of dwelling units and number disposed of, by program, type of structure and accommodation, and method of disposition, as of Dec. 31, 1954__________________________________________________ 381
118 Public Housing Administration program under the Housing Act of
1949: Number of presently active dwelling units processed through stages, by State, as of Dec. 31, 1954_________________________ 382
119 Public Housing Administration program under the Housing Act of 1949: reservations issued, places with approved preliminary plans, and projects processed through selected progress stages, by State, as of Dec. 31, 1954__________________________________________________ 383
120 Public housing units completed for occupancy 1935 to 1954________ 384
121 Combined balance sheet of Public Housing Administration, as of
June 30, 1954_________________________________________________ 385
xiii
TABLE OF CONTENTS
Table Page
122 Combined statement of equity of the United States Government in
Public Housing Administration programs, as of June 30, 1954____ 387
123 Combined statement of deficit of Public Housing Administration programs, as of June 30, 1954_________________________________________ 388
124 Combined statement of income and expenses of Public Housing Administration for the fiscal year ended June 30, 1954________________ 389
125 Combined statement of sources and application of funds of Public Housing Administration programs for the fiscal year ended June 30, 1954------------------------------------------------------------------ 390
126 Statement of development costs, financing and annual contribution commitments, locally owned projects, as of June 30, 1954, United
States Housing Act program_____________________________________ 391
127 Statement of development costs and loans for locally owned projects
by States, as of June 30, 1954, United States Housing Act______ 392
128 Statement of annual contributions by States for fiscal year ended
June 30, 1954, and cumulative and maximum annual contributions payable under contracts as June 30, 1954, United States Housing
Act program__________________.___________:_____„_______________ 394
129 Statement of income and expenses per unit month of availability for fully active federally owned projects in the United States Housing
Act program, for the fiscal year ended June 30, 1954___________ 395
130 Statement of accrued annual contributions for locally owned projects eligible for contributions in fiscal year ended June 30, 1954, United States Housing Act program____________________________________________ 396
131 Statement of operating receipts, operating expenditures and residual receipts for locally owned projects eligible for annual contributions in fiscal year ended June 30, 1954, United States Housing Act program--------------------------------------------------------------- 397
132 Public Housing Administration statement and expenses per unit month of availability for fully active family dwelling projects in
war housing program, for the fiscal year ended June 30, 1954___ 398
133 Public Housing Administration statement of administrative expenses by object and source of funds for the fiscal year ended June 30, 1954------------------------------------------------------------------ 399
134 Federal National Mortgage Association purchases and sales—FHA-insured mortgages 1938-54—VA-guaranteed mortgages 1948-54. . 417
135 Federal National Mortgage Association sales______________________ 419
136 Federal National Mortgage Association home financing activity during 1954 and at end of 1954___________________________________________ 424
137 Federal National Mortgage Association participation in defense, military and disaster housing program during 1954 and at end of 1954. 425
138 Federal National Mortgage Association financing activity by months: 1954------------------------------------------------------------------ 426
139 Federal National Mortgage Association refinancing operations by calendar years: 1938-54_______________________________________________ 427
140 Federal National Mortgage Association sales and purchases by months:. 1953-54________________________________________________________ 428
141 Applications received and approved under the college housing program 435
142 School construction program________________________________________ 439
143 Number of projects under Titles II, III and IV of the school construction program____________________________________________________________ 440
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TABLE OF CONTENTS
1 able Page
14.4 Status of prefabricated housing program___________________________ 442
145 Status of first and second advance planning programs____ __________ 444
146 Status of World War II public works projects on hand, December 31, 1954______________________________________ _____________________ 445
147 Status of Alaska housing program________________ __________________ 446
148 Urban Renewal Administration, Project approvals under Title I, Housing Act of 1949, as amended_________________________________ 458
149 Urban Renewal Administration, Financial assistance under Title I, Housing Act of 1949, as amended_________________________________ 459
150 Urban renewal project directory____________________________________ 460
A-l Permanent nonfarm dwelling units started: 1920-54__________________ 467
A-2 Permanent privately owned nonfarm dwelling units started, 1920-54______________________________________________________________ 468
A-3 FHA and VA starts compared with total permanent privately-owned nonfarm starts: 1935-54___________________________________ 469
A-4 Nonfarm permanent housing starts compared with net gain in nonfarm population in continental United States: 1910-54___________ 470
A-5 Dollar value of new construction put in place: 1915-54_____________ 471
A-6 Total new construction put in place compared with the gross national product: 1929-54_______________________________________ 472
A-7 New private construction compared with the gross private domestic investment: 1929-54_____________________________________________ 473
A-8 Estimated construction cost of permanent nonfarm dwelling units started: 1925-54________________________________________________ 474
A-9 Boeckh indexes of dwelling units construction cost: 1914-54________ 475
A-10 Average hourly earnings and average v, eekly hours in building construction by type of employing contractor: 1940-54______________ 476
A-ll Indexes of wholesale prices of selected building materials and other commodities: 1949-54____________________________________________ 477
A-l 2 Indexes of output of selected construction materials: 1947-54____ 477
A--13 Estimated mortgage debt on 1- to 4-family nonfarm homes, showing type of mortgagee: 1925-54______________________________________ 478
A-14 Estimated mortgage debt on 1- to 4-family nonfarm homes, showing
FHA and VA components: 1925-54_____________________ __________ 479
A-15 FHA and VA home loans compared with total recordings: 1939-54.. 480
A-16 Number of nonfarm real estate foreclosures: 1926-54_______________ 480
A 17 Number of Dwelling Units by Nonfarm and Rural Farm Location, by Region, and by Occupancy: 1940-50.___________________________ 481
A-1.8 Occupied dwelling units, by location and tenure: 1890-1950_______ 481
A-19 Personal consumption expenditures_________________________________ 482
A-20 Production worker employment______________________________________ 483
A-21 Labor requirements for new'construction __ _______________________ 484
A-22 Household formation trend: 1890-1954______________________________ 484
A-23 Number of persons per room: occupied nonfarm and farm dwelling units; nonfarm dwelling units by color of occupants, 1940 and 1950_____________________________________________________________________ 485
A-24 Estimated number of married couples with and without own household: 1910-54__________________________________________________________ 485
A-25 Expenditures for property repairs, improvements, and additions, by purpose and class: January to May 1954_____________________ 486
A-26 Mobility of civilian population: 1948-54____________ . ________ __ 487
A-27 Housing and Home Finance Agency programs in the Federal budget__________________________________________________________ 487
xv
CHRONOLOGY OF SIGNIFICANT EVENTS IN HOUSING—1954
1-18 PHA’s reorganization plan became effective, streamlining administration and operations within agency.
1-20 Industrial Defense Committee was established in the Office of Defense Mobilization with HHFA a member of the committee.
2-1 FNMA raised its mortgage sales price on 4 percent and 4% percent FHA-insured and VA-guaranteed mortgages by two points, effective as of close of business on January 29.
2-3 Home Owners’ Loan Corporation dissolved pursuant to provisions contained in Section 21 of Public Law 94, 83d Congress, approved June 30, 1953.
3-9 PHA repaid $24.3 million to the United States Treasury borrowed for the financing of low-rent public housing.
3-11 FHA paid $16.5 million to the United States Treasury as the final installment on a total payment of approximately $85.9 million. The total represents repayment of $65.5 million advanced by the Treasury to provide operating capital and establish FHA insurance funds, plus $20.4 million interest.
3-31 FHA issued a call for redemption on July 1 of all its callable debentures in the total amount of $67.3 million.
4-7 PHA announced repayment of $76.9 million borrowed from the Treasury and reloaned to local housing authorities.
4-12 HHFA Administrator ordered an investigation into FHA. The President authorized the HHFA Administrator to impound all FHA files and records on Title I and Section 608.
William F. McKenna was appointed Deputy HHFA Administrator in charge of the investigation into FHA.
Guy T. O. Hollyday resigned as FHA Commissioner.
4-13 Norman P. Mason was appointed Acting FHA Commissioner.
4-23 The Senate authorized the Senate Committee on Banking and Currency to investigate housing with the major purpose of developing legislative safeguards in the administration of Federal housing programs.
4-30 Division of Housing Research (HHFA) was terminated in accordance with the requirement of the Independent Offices Appropriation Act of 1954.
5-17 Recommendations were submitted to the Senate Committee on Banking and Currency designed to prevent abuses of FHA programs and to augment safeguards provided in pending legislation.
6-11 PHA repaid to the United States Treasury $99 million borrowed for the financing of low-rent public housing.
6-27 Federal Savings and Loan Insurance Corporation celebrated 20th anniversary of its creation. Corporation now insures the safety of the accounts of more than 12 million persons in insured associations up to a maximum of $10,000 per account.
6-28 The top policy-making structure of FHA reorganized to streamline procedures and permit more effective public service.
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HOUSING AND HOME FINANCE AGENCY
7-1 FNMA acquired from RFC 15,035 mortgages with unpaid balances aggregating $64 million, that were originally held by the RFC Mortgage Company. FNMA was also assigned the task of liquidating for the Secretary of the Treasury four Defense Homes Corporation loans with unpaid balances of $42 million.
7-23 A statement of policy was issued to FHA field offices on the handling of applications from sponsors of Section 608 projects under investigation.
8-2 The President signed the Housing Act of 1954.
8-11 Membership of the National Voluntary Mortgage Credit Extension Committee, provided for in the recently enacted Housing Act of 1954, was announced by the Administrator. The committee held its first meeting on August 13 in Washington.
8-13 An additional $25 billion released by the President for loans to educational institutions for the construction of student and family housing at colleges and universities.
8-16 The first general meeting of FHA insuring office directors since the end of the war convened in Washington for a 2-day session to discuss national housing policies, the Housing Act of 1954, and FHA operations.
8-24 The District of Columbia Redevelopment Land Agency converted Southwest Project “C” to the provisions of the Housing Act of 1954, thus making it the first urban renewal project in the country.
8-25 FHA Commissioner announced the appointment of an industry advisory committee to study the Title I program.
8-26 Interdepartmental Committee on Migratory Labor established by the President with the Housing Administrator a member.
9-1 Ira A. Dixon became Member of the Home Loan Bank Board.
9-4 T Administrator announced the appointment of a 21-member Advisory Committee on Urban Renewal to advise with the Agency with respect to the new urban renewal program authorized by the Housing Act of 1954. The committee to hold its first meeting on September 9 in Washington.
9-8 Federal Civil Defense Administrator, in his Delegation No. 2, placed in the Housing Administrator responsibilities in regard to housing and certain community facilities under civil defense programs.
9-13 Administrator released the final report of William F. McKenna on the investigation of irregularities in FHA.
9-14 The President authorized FNMA to set up a $10 million revolving fund to purchase FHA-insured and VA-guaranteed loans on housing for disaster victims.
9-28 FHA Commissioner called for redemption on January 1, 1955, all callable debentures, totaling $19.4 million.
Defense Mobilization Order IV-1 established the Manpower Policy Committee in the Office of Defense Mobilization with the Housing and Home Finance Agency a member of the committee.
9-30 FHA field office directors were authorized to refuse to do business with persons or firms that have violated specific statutes or regulations, as provided in Section 512 of the National Housing Act.
10-1 The Administrator established in his office a central Compliance Division to serve him and the heads of the HHFA constituents.
10-2 HHFA published circular “How Localities Can Develop a Workable Program for Urban Renewal” so they can qualify for Federal financial aid for such programs under the Housing Act of 1954.
10-13 Administrator announced emergency action to speed processing of FHA applications. This action was made possible by an “emergency appor-
xviii
CHRONOLOGY—1954
tionment” of FHA funds for fiscal year 1955, worked out between Administrator’s office and the Director of the United States Bureau of the Budget. Earlier FHA had authorized the temporary use of fee appraisers.
10-16 Administrator announced that organizational meetings have been scheduled for the 16 regional subcommittees of the National Voluntary Mortgage Credit Extension Committee.
10-26 Administrator announced that action has been taken to recover windfalls totaling nearly $7 million in five multifamily housing projects financed under Section 608 of the National Housing Act which expired in 1950.
11-1 FNMA started operations under its new charter provided by the Housing Act of 1954.
11-4 The President authorized FNMA to provide financial assistance to the extent of $15 million to help provide housing on the island of Guam.
11-17 Administrator approved the workable program of Clarksville, Tenn., the first in the country to be approved.
11 -23 Administrator announced approval of the first urban planning assistance grant to the Rhode Island Redevelopment Council.
11-26 Defense Mobilization Order 1-14 assigned to the Housing Administrator responsibility for the development and administration of preparedness meas ures relating to housing and those community facilities for which the Agency has responsibility.
12-9 An advisory conference on Housing for Minority Families, called by the Administrator, met in Washington.
12-20 Administrator announced that procedures had been developed under which communities with slum clearance and urban redevelopment projects could proceed with applications for public housing and FHA low-cost private housing under the Housing Act of 1954.
12-23 Reorganization Order No. 1 issued under authority given to the HHFA Administrator in the Independent Offices Appropriation Act, 1955. Important organization moves announced in the Order were: the establishment of two new constituent units, Community Facilities Administration and Urban Renewal Administration; reorganization of field office operations under HHFA; decentralization of field activities of the Urban Renewal Administration to HHFA regional offices; establishment of Advisory Board for Agency Policy Coordination.
xix
ORGANIZATION AND FUNCTIONS OF THE HOUSING AND HOME FINANCE AGENCY
Organization and Structure
The Housing and Home Finance Agency is the permanent Federal agency established to carry out the principal housing and home financing functions of the Federal Government. It was created under Reorganization Plan No. 3, on July 27, 1947, succeeding the National Housing Agency, in which housing and related operations had been consolidated on a temporary basis during World War II.
At the end of 1954, the Housing and Home Finance Agency consisted of the Office of the Administrator, 4 constituent agencies—the Home Loan Bank Board, the Federal Housing Administration, the Public Housing Administration, and the Federal National Mortgage Association, and 2 constituent units—the Community Facilities Administration and the Urban Renewal Administration. These 2 units were established by the Administrator’s Reorganization Order No. 1, on December 23, 1954, to carry out certain responsibilities formerly administered by divisions within the Office of the Administrator.
Reorganization Order No. 1 also established an Advisory Board, composed of the HHFA Administrator and the heads of constituent agencies and units, which advises the Administrator on major policies. In addition, the National Housing Council, of which the HHFA Administrator is chairman, is established by law for similar purposes on a Government-wide basis and includes the heads, or their designees, of the Veterans’ Administration and the Departments of Agriculture, Commerce, Labor, Defense, and Health, Education, and Welfare, along with key HHFA officials.
xxi
HOUSING AND HOME FINANCE AGENCY
HOUSING AND HOME FINANCE AGENCY
j I
ADVISORY BOARD I NATIONAL VOLUNTARY |
FOR AGENCY POLICY --------- .n!.IM,CTDflTnR -------------------1 MORTGAGE CREDIT I
COORDINATION THE ADMINISTRAT0R । EXTENSION COMMITTEE I
| I
___________________ ___________________________________ I_____________________________J COMMUNITY FACILITIES___________________________________URBAN RENEWAL
ADMINISTRATION ADMINISTRATION
HOME LOAN FEDERAL HOUSING PUBLIC HOUSING FEDERAL NATIONAL
BANK BOARD ADMINISTRATION ADMINISTRATION MORTGAGE ASSOCIATION
December 31,1954
CHART 1
xxii
ORGANIZATION AND FUNCTIONS
Functions and Programs
Offi ce of the Administrator
The Office of the Administrator is directly responsible for (1) general supervision and coordination of the constituent agencies and direction and supervision of the constituent units; (2) central contact on housing with the Congress, the President and executive agencies, and the public; (3) under the Housing Act of 1954, approval of workable programs developed by local communities for the prevention and elimination of slum and blight conditions (required to establish eligibility for certain aids for urban renewal and for low-rent housing), certification of the maximum number of dwellings required for relocation of families displaced by governmental action, and determinations that certain statutory relocation requirements have been met; (4) determination of policies governing the management and disposition of federally owned World War II and veterans emergency housing; (5) administration of private defense housing programming-in critical defense-housing areas provided under Public Law 139, 82d Congress; and (6) cooperation with local and Federal agencies in disaster housing relief.
The HHFA Administrator is Chairman of the National Voluntary Mortgage Credit Extension Committee, composed of representatives of private lenders, builders, and members of real estate boards. The National Committee and its 16 regional committees are established to help obtain private mortgage credit for FHA-insured and VA-guaranteed loans in areas or communities where there may be a shortage of local capital for, or inadequate facilities for access to, such loans. This assistance is available to minority groups in any area where financing for such housing is not available on reasonable terms. The Office of the Administrator provides staff assistance and office accommodations to the staff of the National Committee and regional committees. The national and regional committees are also required to study and review the demand and supply of funds for residential-mortgage loans in the various regions of the country.
The HHFA Administrator is also Chairman of the Board of Directors of the Federal National Mortgage Association.
In the field, the HHFA Administrator is represented by regional administrators located in New York, N. Y.; Philadelphia, Pa.; Atlanta, Ga.; Chicago, Ill.; Fort Worth, Tex.; and San Francisco, Calif.1
i HHFA functions and programs for Puerto Rico and the Virgin Islands are conducted through field offices located in San Juan, P. R., and vicinity.
xxiii
HOUSING AND HOME FINANCE AGENCY
HHFA Constituent Agencies
1. The Home Loan Bank Board, a bipartisan board of three members, directs the operations of the Federal Home Loan Bank System and the Federal Savings and Loan Insurance Corporation, which were established to encourage home ownership and sound home financing, to promote thrift and to protect the savings of small investors. The Board is responsible also for the supervision of Federal savings and loan associations.
The Federal Home Loan Bank System, with 11 district Federal Home Loan Banks, provides a nationwide credit reserve for its member thrift and home-financing institutions, chiefly savings and loan associations and similar organizations. The district Banks are owned 100 percent by their member associations.
The Federal Savings and Loan Insurance Corporation insures investors in member savings and loan associations against loss up to $10,000. Federal savings and loan associations are required to be insured. State-chartered associations may become insured upon application and approval. All insured institutions are subject to examination by the Home Loan Bank Board and all are members of their district Federal Home Loan Banks.
2. The Federal Housing Administration, headed by a commissioner, was established in 1934 by the National Housing Act. FHA does not lend money or construct properties, but operates mortgage and loan insurance programs provided in the Act.
Title 1, Section 2, of the Act, as amended, authorizes FHA to insure qualified lending institutions against loss within prescribed limits on loans to finance alterations, repairs, and improvements in connection with existing structures and the building of new nonresidential structures. FHA liability is limited to 90 percent of loss on individual loans and to 10 percent of all Title I loans made by the institution.
Title II, Section 203, authorizes the insurance of mortgage loans made by approved lending institutions for the construction, purchase, and refinancing of 1- to 4-family dwelling properties. Section 207 authorizes the insurance of mortgages on multifamily rental housing projects. Section 213 authorizes the insurance of mortgages financing cooperative housing projects, and further authorizes the FHA to provide technical assistance in the organization of cooperatives and in the planning, construction, and operation of their housing projects. Section 220 authorizes the insurance of mortgage loans for rehabilitation of existing housing and construction of new housing in slum clearance and urban renewal areas. Section 221 authorizes the insurance of mortgages on low-cost housing for families displaced by slum clearance or other government actions. Section 222 authorizes the xxiv
ORGANIZATION AND FUNCTIONS
insurance of mortgages on 1- to 4-family homes for servicemen in the armed forces. Section 223 authorizes the insurance of mortgages for the purchase from the government of certain types of federally-owned housing, and the insurance of mortgages financing the sale of veterans’ housing owned by State or local governments.
Title VII provides for the insurance, under prescribed limits, of a minimum annual return or yield and a minimum annual amortization of the mortgage-free investments in rental housing for families of moderate income.
Under Title VIII, FHA is authorized to insure mortgages financing rental housing for civilian and military personnel at permanent military installations and for personnel of permanent Atomic Energy Commission installations.
Title IX provides for FHA insurance of mortgages on housing programmed by the HHFA Administrator for areas designated by the President as critical defense housing areas. No commitment for mortgage insurance on new construction was authorized after June 30, 1954, except that the President has stand-by authority until July 1, 1955, to authorize the use of Title IX for Federal aid in the provision of defense housing during certain periods or for specific projects.
On mortgages insured by the FHA under any of its programs, the mortgage amount may be higher with respect to properties located in Alaska, Guam, or Hawaii.
3. The Public Housing Administration, headed by a commissioner, is responsible for the administration of the low-rent public housing program under the United States Housing Act of 1937, as amended. Under this program, the Federal Government provides financial aid to local housing authorities for the construction and operation of housing limited to occupancy by low-income families unable to afford decent private housing in the locality.
The Public Housing Administration is given responsibility under the Housing Act of 1950 for the federally owned farm labor camps built during the 1930’s and formerly administered by the United States Department of Agriculture. PHA is authorized to lease or dispose of the facilities to local public agencies for use as low-rent housing for agricultural workers and their families.
The Public Housing Administration is also responsible for the management and disposition, in accordance with policies prescribed by the HHFA Administrator, of federally owned World War II and veterans’ emergency housing built under the Lanham Act, and defense housing supplied directly by the Federal Government under Public Law 139.
4. Federal National Mortgage Association, headed by a president,
XXV
HOUSING AND HOME FINANCE AGENCY
under the Housing Act of 1954, was rechartered and established in the Federal Government as a secondary market facility for home mortgages and financed to the maximum extent feasible by capital provided by private investors. FNMA is specifically authorized to (a) provide supplementary assistance to the secondary market for b HA-insured and VA-guaranteed home mortgages by providing a degree of liquidity for mortgage investments, thereby improving the distribution of investment capital available for home mortgage financing? (^) provide special assistance when and to the extent determined by the President of the United States for the financing of selected types of mortgages designed to provide housing of acceptable standards at full economic costs for segments of the national population unable to obtain housing under established financing programs, and of home mortgages generally for the purpose of retarding or stopping a decline in mortgage lending and home building activities which threaten materially the stability of a high level national economv; and (c) manage and liquidate the existing FNMA portfolio acquired by purchase or which may be acquired pursuant to commitment contracts entered into prior to November 1, 1954.
Under the new FNMA charter, private funds are to be gradually substituted for Federal investment in the capitalization of FNMA and its mortgage portfolio and provide financing for the purchase of mortgages as a part of the Association’s secondary market operations.
HHFA Constituent Units
1. The Community Facilities Administration is responsible for the administration of the following programs: loans to educational institutions of higher learning to finance student and faculty housing; public facility loans to State and local governments to finance construction of needed public works; loans arid grants to local governments for construction of community facilities in critical defense housing areas, authorized under Public Law 139, 82d Congress; supervision and disposition of securities held by HHFA in connection with the foregoing programs; under agreement with the Commissioner of Education, performance of all technical functions incident to the construction of school facilities for which Federal aid is provided by the United States Office of Education; advances to State and local governments for a reserve of planned public works; and management and liquidation of certain programs whose legislative authority has terminated, including prefabricated housing loans, two previous advance planning programs, war public works under the Lanham Act, and Alaska housing.
2. The Urban Renewal Administration is responsible for (a) the expanded program of slum clearance and urban renewal authorized in the Housing Act of 1949, as amended in 1954, under which planning
xxvi
ORGANIZATION AND FUNCTIONS
advances, loans, and grants are made to localities for projects to clear and redevelop slums and to rehabilitate and improve blighted areas to prevent slums; and (6) the earlier program of slum clearance and urban redevelopment originally authorized in the Housing Act of 1949. Under authority of Section 314 of the Housing Act of 1954, the Urban Renewal Administration makes grants to aid localities in developing, testing and reporting on improved techniques for preventing and eliminating slums and urban blight; under Section 701 of the Housing Act of 1954, it makes grants to State planning agencies for planning assistance to municipalities of less than 25,000 population, and to State, metropolitan, and regional planning agencies for similar work in metropolitan and regional areas; under Section 101 of the Housing Act of 1949, as amended, it provides an Urban Renewal Service for assistance to localities in the preparation and development of their urban renewal plans and programs.
HHFA Personnel
During the calendar year 1954, the Housing and Home Finance Agency operated with an average staff of 10,666 employees, as compared with 11,764 in the preceding year. The following figures show the actual fulltime employment within HHFA at the beginning and end of the calendar year:
Jan. 1, 1954 Dec. 31, 1954
Office of the Administrator 1 667 477 5, 251 4,096 548 717 527 5,282 3,320 581
Home Loan Bank Board .
Federal Housing Administration...
Public Housing Administration. ..
Federal National Mortgage Association .. .
Total
11,039 10,427
1 Includes employees of the 2 constituent units, Community Facilities Administration and Urban Renewal Administration.
Major Personnel Changes
The year witnessed changes in the top officials of the Housing and Home Finance Agency. The following major appointments were made:
William F. McKenna, Deputy Administrator, Housing and Home
Finance Agency, in charge of the investigation into the Federal Housing Administration, on April 12, 1954.
Norman P. Mason, Acting Commissioner, Federal Housing Administration, on April 13, 1954; sworn in as FHA Commissioner on August 9, 1954.
Ira A. Dixon, Member, Home Loan Bank Board, on September 1, 1954.
Arthur W. Viner, Executive Secretary, National Voluntary Mortgage Credit Program, on October 14, 1954.
xxvii
PART I
Eighth Annual Report
HOUSING AND HOME FINANCE AGENCY
Covering the Activities of the
OFFICE OF THE ADMINISTRATOR
SECTION 1
1954 IN REVIEW
Salient Developments in the HHFA
A Year of Progress
The year 1954 was one of significant progress in the field of Federal housing activities. In the Housing Act of 1954, Congress enacted the President’s program substantially as he had requested it, giving effect to the comprehensive revision and expansion of housing policies and programs as they had been developed by the President’s Advisory Committee and the Housing Administrator, Albert M. Cole. By this Act, the coordinated resources of both Government and private industry were brought to bear on our major housing problems.
The most basic development of 1954 was adoption of the new and broadened approach to the problem of urban blight embodied in the “workable program” concept. This approach recognizes that the physical clearance of hopelessly blighted areas can be fully effective only if, at the same time, steps are taken to preserve good areas and rehabilitate declining areas.
Further advances were also made in the field of home financing through the provision of special mortgage insurance assistance for urban renewal activities, and the adoption of measures to increase the flow of mortgage funds to undersupplied areas and to most minority needs. Other important forward steps during the year included formulation of requirements designed to prevent abuses of Government housing aids, and a general improvement and strengthening of housing-legislation. AU in all, 1954 saw significant refinements of Federal housing programs which better equip them for a multipronged attack on our housing problems.
Urban Renewal
Despite the fact that the American family, on the average, has the highest standard of living in the world, many still live either in slums or in declining neighborhoods which will one day become shims if no action is taken. A major advance toward getting decent homes for all our families was made by the enactment of the Housing Act of 1954. Working from recommendations which came from the intensive study
3
HOUSING AND HOME FINANCE AGENCY
of Federal housing programs made by the President’s Advisory Committee in 1953 and from the “shirt sleeve” conferences held by the Housing and Home Finance Administrator with all groups interested in housing, the Housing Act of 1954 provided the statutory base for several new programs and for the modification of existing programs to arouse a unified attack on urban blight. As a result new emphasis has been placed on the prevention of slums, primarily through private enterprise and local initiative and action.
Basic to the new approach is the concept of the “workable program.” This was clearly stated by the President in his message transmitting to Congress the recommendations now embodied in the Housing Act of 1954:
In order to clear our slums and blighted areas and to improve our communities, we must eliminate the causes of slums and blight. This is essentially a problem for our cities. However, Federal assistance is justified for communities which face up to the problem of neighborhood decay and undertake long-range programs directed to its prevention.
The seven fundamental components of a workable program are adequate codes and ordinances, a comprehensive community plan, neighborhood analyses, proper administrative organization, provision for financing, housing for displaced families, and community-wide citizen participation. Aid in the preparation of a workable program is provided by the HHFA regional offices and the Urban Renewal Administration.
When a workable program has been certified by the Housing and Home Finance Administrator, the locality is eligibile to receive assistance under the broader Federal urban renewal programs provided for through the Housing Act of 1954. This assistance includes the program of loans and grants for the physical clearance and redevelopment of slum areas and other urban renewal activities under the Urban Renewal Administration, financial assistance for low-rent public housing under the program of the Public Housing Administration, and newly authorized FHA mortgage insurance for new or rehabilitated housing in urban renewal areas and relocation housing for displaced persons. The new Act also authorized PHA to enter into annual Contributions contracts for an additional 35,000 public low-rent units under conditions which insure their close coordination with other urban renewal measures.
To encourage private financing of the rehabilitation of existing dwellings as well as the construction of new dwellings in connection with slum clearance and urban renewal undertakings new FHA mortgage insurance programs were authorized. A new Section 220 of the National Housing Act provides assistance for rehabilitation or construction of units in slum clearance or urban renewal areas. This includes redevelopment areas where Federal aid contracts were approved
4
OFFICE OF THE ADMINISTRATOR
or executed under the Housing Act of 1949 as well as urban renewal areas in localities which have received approval of their workable programs as provided for in the Housing Act of 1954. Both homes and apartments may be assisted under this program. In addition, a new Section 221 was added to the National Housing Act to provide FHA mortgage insurance for low-cost housing for families displaced as the result of governmental action in a community which has a workable program approved by the Housing Administrator or in a community where there is being carried out a slum clearance project covered by a Federal aid contract executed or approved prior to the effective date of the Housing Act of 1954. Eligible displaced families include those which are required to move because of any form of governmental action, such as land acquisition by a public body, closing or vacating of dwellings by public officials, or the eviction of families from public housing because of high incomes. This section provides assistance for rehabilitation and construction of both homes and apartments, and financing of home purchase for displaced families.
Home Financing
Constant problems in the housing market in recent years have been the lack of sufficient mortgage money in small and remote communities which do not have adequate local capital or institutional facilities, and also the lack of money in adequate volume to meet the housing needs of minority groups. To encourage more private funds for FHA-insured and VA-guaranteed mortgages in these cases, the Voluntary Home Mortgage Credit Program was established during 1954. This consists of a national committee and 16 regional committees composed of representatives of the private mortgage lending industry. The Housing and Home Finance Administrator is chairman of the national committee. In its operation, the regional committees accept applications from prospective buyers who have been unable to obtain financing on reasonable terms. These applications are then forwarded to lenders who have previously agreed to participate in the Voluntary Home Mortgage Credit Program and indicated an interest in making loans in a given area. The lender may approve or reject any loan application as he sees fit. It is hoped that this program may ultimately make it possible to dispense with direct Government aid in areas which are not now adequately supplied with mortgage funds.
In a related step, the Federal National Mortgage Association was reconstituted with a view to the gradual substitution of private funds for Government capital in its secondary market operations. This is to be done by requiring a capital subscription as a condition for each FNMA purchase under its secondary market role. In addition to this responsibility, FNMA provides special assistance to particular
350920—56----3
5
HOUSING AND HOME FINANCE AGENCY
areas or housing programs when the President determines such aid is needed, and the Association is also responsible for the management and liquidation of the mortgage portfolio built up under its previous operations.
In another development, FHA credit terms were simplified and liberalized. In its Section 203 program, the maximum loan amount was increased from $16,000 to $20,000, the loan-to-value ratio for new homes was increased to 95 percent of the first $9,000 and 75 percent of the balance, and the maximum maturity was raised to 30 years or three-fourths of the remaining economic life of the home, whichever is less. In the case of existing homes, the loan-to-value ratio was raised to 90 percent of the first $9,000 and 75 percent of the balance. These changes resulted in a substantial increase in the number of home mortgage applications received by FHA in the latter part of the year, particularly in the case of existing homes.
Housing Investigations
On April 12, 1954, following many months of investigation by the Housing and Home Finance Agency and the Department of Justice with the cooperation of the Internal Revenue Service, and after conferring with the President about the situation, HHFA Administrator Cole announced that serious abuses of FHA programs had been brought to light. With Presidential authorization to impound FHA files, the Housing Administrator immediately launched an intensive investigation under his personal direction, headed by Mr. William F. McKenna, who was named as Deputy Administrator for this special purpose. Following these disclosures, a public investigation was undertaken by the Senate Banking and Currency Committee.
The major abuses had occurred under the Section 608 rental housing program and under the Title I property improvement loan program. Section 608, under which FHA insured rental housing project mortgages on liberal terms, had been added to the National Housing Act to help provide housing during World War II and later was extended to meet the critical housing shortage which existed after the the war. No new applications were accepted after March 1, 1950. In total, nearly 464,000 rental units in 7,031 projects were built under this program. The investigations produced extensive detailed evidence that in a great many cases the proceeds of the mortgage exceeded all costs of the project, leaving a balance which the builder or sponsor pocketed as a “windfall” profit. This was made possible primarily by excessive cost estimates reflecting maladministration by FHA and often outright misrepresentation by the project sponsor.
Intensive studies were also made of activities under Title I of the National Housing Act, under which FHA insures loans made for
6
OFFICE OF THE ADMINISTRATOR
alteration, repair and improvement of homes and other structures. These confirmed earlier reports of widespread irregularities involving fraudulent misrepresentation by unscrupulous home repair operators and, in many cases, laxity in examining the loan on the part of lenders.
Action was promptly taken to correct the weaknesses revealed by the investigations. The FHA was reorganized by the newly appointed Commissioner, Norman P. Mason. All key officials were replaced and administrative steps were undertaken to assure the integrity and sound administration of FHA’s programs. Also, legal measures were undertaken to punish violations of the law and to recover wherever possible windfall profits. At the same time, the Housing Administrator recommended several amendments to the Housing Act of 1954, then pending before Congress, designed to prevent misuse of Government programs. To bar recurrence of “windfalls” where multifamily housing is financed under FHA-insured mortgages, the National Housing Act was amended to require that the amount of the mortgage shall be reduced, if actual costs are less than anticipated costs and less than estimated value, to an amount conforming to the percentage of estimated value or replacement cost which was used in establishing the FHA commitment for the mortgage. For example, where FHA makes a commitment before construction to insure a mortgage on a rental housing project for 80 percent of its estimated value of $1 million, and the subsequent construction and other allowable costs of the project actually are $900,000, the amount of the mortgage would be reduced to 80 percent of $900,000. To remedy the abuses of the Title I property improvement loan program, the law was amended to provide for FHA insurance on only 90 percent of the loss on each loan. Also, the types of work which may be done under these loans were limited to items which would substantially protect or improve the basic livability or utility of properties.
The investigations demonstrated the need for maintaining a larger and coordinated investigative staff which would serve the Administrator and all of the constituents. As a result, on October 1, 1954, the Administrator established in his office a central Compliance Division to advise him and his principal staff members on policies and operations of the Agency and to maintain surveillance over Agency program operations through planned investigative and inspection activities.
Housing Research
In April 1954, the program of housing research was brought to a close. This activity had its inception in the Housing Act of 1948 which authorized research on building code improvements and standardized dimensions methods of assembly for home building materials
7
HOUSING AND HOME FINANCE AGENCY
and equipment. Under the Housing Act of 1949 the scope was expanded to permit a comprehensive research approach to the interrelated technical, economic and social aspects of the problem of improved housing at lower costs. Basically, through investigations of the many items and activities that contributed directly or indirectly to costs, the program sought ways by which industry and Government cooperatively could reduce the real cost of housing to the average family at the same time that comfort and convenience of living was improved. Thus through a broadening of the market base by the inclusion of lower income families, a high annual volume of home building could be maintained.
In addition, the program sought to stimulate the interest and understanding of various segments of the building industry as well as that at colleges and universities in the benefits to be achieved from an integrated approach to housing research. Many of the activities initiated under the research program have been continued by various industry organizations. Housing research has become an essential part of the home building process.
In total, the research operation cost approximately $4.3 million, of which nearly half represented commitments for research performed under contract by educational institutions, nonprofit laboratories and by other Federal agencies. In all, 89 such contract projects were undertaken and publications have been released by the Agency on 61 of these.
In several cases where the lack of time, personnel, or funds made it impossible for the Agency to disseminate the result of projects, the findings were deemed of sufficient importance to have other agencies of Government or universities undertake publication. In addition to administering the contract research program, staff personnel undertook independent investigations, particularly of the results of scattered research which required interpretation to be of practical use in the building industry.
By April 30, 1954, all significant results of the research program had been either released by publication or were digested, cataloged, and preserved for future reference and needs. However, inquiries and requests for information continued to be received throughout the year and in several cases unpublished research reports were made available upon request to other agencies as being significant in research that they were undertaking.
Other Developments
Further progress was made during 1954 in the field of urban planning. In addition to the workable program approach to the problem of urban blight, the Administrator was authorized to provide
8
OFFICE OF THE ADMINISTRATOR
new assistance to local, regional, and state planning to help assure efficient and proper development of communities. The Urban Renewal Administration was given the authority to make “demonstration” grants to encourage cities in developing methods and techniques for the prevention and elimination of slum conditions. Also, provision was made for the building up of a reserve of planned public works by a third advance planning program. Under this, the Admin-istrator was authorized to resume the making of advances to states, their agencies and political subdivisions for the planning of public works other than housing which conform to an overall State, local, or regional plan. In addition, $2 million was appropriated to a revolving fund for public facility loans by the Administrator to states, municipalities, and public agencies.
Housing in the Economy
General
During 1954, the construction of nonfarm dwelling units reached the second highest level in our history—a total of 1.2 million, making it the sixth consecutive year in which starts have topped the 1-million mark. In all, about 9.5 million homes have been added to our nonfarm housing supply through new construction since the end of World War II. As a result, about 1 out of every 5 dwelling units in the inventory at the end of 1954 had been built since 1945. While the postwar level of production has been well above that of any other like
PERMANENT NONFARM DWELLING UNITS STARTED
2.0i-------------------- -----------------------120
TOTAL STARTS, PRIVATE STARTS, -
g ANNUALLY, 1920-1954 MONTHLY, 1950-1954 g
t— (Seasonally adjusted at annual rates) I—
i “+ 5^2: । I A A i
F+7T---------------------------------------------1
pill 111 11111111 I 11 I I 111 111111 I 111 11 I I liiiiiliiiiiliiiiihiinl.IiiiiiIhiiiIiiiiiIhiiiIiiiiiIq
1920 *25 ‘30 ’35 '40 '45 '50 '54. H1950+1951-Fl952+l953+l954d
Source: U.S. Department of Labor
CHART 2
9
HOUSING AND HOME FINANCE AGENCY
period in our history, it has still been slightly exceeded by the net increase in the number of nonfarm households. Only in recent years, in fact, has it been possible to make significant progress toward replacing the many substandard dwelling units that still remain in the housing supply.
The 1954 volume was achieved in spite of reduced levels of activity in some parts of the economy and was an important force in the general economic recovery which got underway in the latter part of the year. An important factor underlying the strength in home building was the ready availability of mortgage credit on liberal terms in most parts of the country. The pressure of new savings formation and repayments on existing debt, coupled with a slackened demand for credit from other parts of the economy, induced lenders to seek outlets for their funds through mortgage loans. This bolstered both the supply and demand side of the new housing market, by providing ample financing commitments to builders and by making it possible to offer the homes for sale with low down payments and long amortization periods. These conditions were reflected most strikingly in the rapid rise of VA-guaranteed loans, and in particular the 30-year no-downpayment loans possible under that program.
While housing starts continued strong at the end of the year, and new homes were finding ready markets in most places, some concern was felt about the strength of underlying demand factors. In particular, net new household formation had been declining for several years, and in 1954 equalled only about two-thirds of new housing production. However, a significant part of the 1954 production went to offset the elimination from the supply of marginal units pressed into service to meet the critical housing shortage of the immediate postwar years. Hence, it appeared at the end of the year that except in rental housing in some areas, vacancies had not risen to significant proportions. It was also apparent that population shifts, the ability and desire of families to improve their housing conditions, and the formation of new households were still generating a demand for a continuing high level of new home production into 1955.
Housing Production
The total of 1,220,400 nonfarm dwelling units started in 1954 was a gain of one-tenth over the previous year. Actually, starts had trailed behind 1953 levels during the first 5 months of the year, but then went ahead and in the fourth quarter were 28 percent greater than in the same period of the year before. This upsurge made 1954 the second highest homebuilding year on record, exceeded only by 1950. In general, it was the gain in private 1-family starts which produced /this level. On the other hand, publicly owned units started were the
OFFICE OF THE ADMINISTRATOR
lowest since 1948, and private units in 2-family and multifamily structures were the lowest since 1947.
TABLE 1
Permanent nonfarm dwelling units started
Year Total Type of financing Type of structure
Private Public 1-family 2- and multifamily
1945 209, 300 208,100 1, 200 184,600 24, 700
1946 ... 670^ 500 662,500 8,000 590 000 80 500
1947 849,000 845,600 3,400 740,200 108,800
1948 93L 600 913; 500 18,100 766,600 168,000
1949 1,025^ 100 988, 800 36,300 794,300 230 800
1950 L 396' 000 1,352i 200 43,800 1,154,100 241,900
1951 L 09L 300 L 020; 100 71,200 900 100 191 200
1952 L 127i 000 1,068, 500 58,500 942, 500 184, 500
1953 1/103; 800 L 068; 300 35,500 937,800 166,000
1954 i; 220; 400 L 20i; 700 18,700 1,077,900 142,500
Source: U. S. Department of Labor.
Reflecting the ease in the money market, VA-aided housing starts rose rapidly during the year to a total of 307,000. This was 26 percent of all private starts as compared to 15 percent in the previous year.
NEW DWELLING UNITS
AUTHORIZED IN SELECTED S.M.A.’s
STANDARD
METROPOLITAN AREA
1954, PERCENT CHANGE FROM 1953
-IO 0 +10 +20 +30 +40 +50 +60
Denver
Seattle
Atlanta
Detroit
San Francisco
Indianapolis
New York-Northeast N.J.
Cleveland
Chicago
Milwaukee
Baltimore —
Los Angeles
Total U.S. Starts
Washington, DC.
Miami
Boston |M1| I I I I I
Source: U.S. Department of Labor
CHART 3
11
HOUSING AND HOME FINANCE AGENCY
FHA-aided starts rose somewhat to 276,300 for the year, but the FHA proportion of all private starts, 23 percent, was slightly less than in the preceding year. In all, approximately half of the private units started in 1954 were under the FHA or VA program, the highest ratio since 1950.
In considering national figures, it must be kept in mind that activity in individual areas may vary widely from the national trend. For example, the gain in homebuilding activity between 1953 and 1954 in Denver was some five times the national increase, while on the other hand some areas, including even the “growth” city of Miami showed declines.
Some characteristics of new homes put under construction in 1954 were revealed by a Bureau of Labor Statistics survey of 1-family homes started during the first quarter. This survey showed that on the average these homes had 1,140 square feet of floor area, a gain of 5 percent over the average indicated by a 1951 study. Two-thirds of the homes in the 1954 survey had 3 or more bedrooms, and the median price was $12,300. This price varied regionally from a high of $13,800 in the Northwest to a low of $10,800 in the South, while the North Central median was $13,100. In the West it was $12,600.
In dollar volume, 1954 homebuilding activity reached an all-time high of $13.8 billion, a gain of 7 percent over the previous peak reached in 1950. In total, new construction activity amounted to $37.2 billion in 1954, making the eighth consecutive year in which total construction outlays set a new record high.
Building Materials and Labor
Building materials supplies in general were fully adequate for 1954’s high volume of construction activity. In total, materials output was only fractionally below the peak reached in 1950, though in spite of this, stocks of some items, such as softwood lumber, hardwood flooring, cement, and some heating and plumbing equipment, were drawn down during the year.
The labor requirements generated by 1954 homebuilding activity amounted to an estimated 1,072,000 full-time workers, a gain of 16 percent over the previous year. However, these requirements were still about one-tenth below the peak reached in 1950 and were met without serious difficulty in most parts of the country.
12
OFFICE OF THE ADMINISTRATOR
TABLE 2
Production of building materials in 1954 and 1953
Material Unit 1954 1953 Percent change, 1954 from 1953
Softwood lumber . Million board feet 29, 636 31 072 —5
Hardwood flooring Million board feet 1,145 1,005 +14
Softwood plywood Million square feet 3,825 3 704 +3
Wood doors Thousand 7,472 7,858 —5
Window sash (wood) Thousand pair 11,054 11 419 —3
Door and window frames (wood) Thousand 5, 791 5 072 +14
Brick Million 6 153 5 875 +5
Portlani cement. _ .. . Thousand barrels 271 287 264 022 +3
Gypsum board... Million square feet 4, 690 3’ 757 +25
Gypsum lath Million square feet 2, 240 2 435 —8
Asphalt prepared roofing Thousand squares 58 648 56* 703 +3
Nails .... ._ Thousand tons ’ 567 ’ 529 +7
Reinforcing bars. _ _ Thousand tons 1 751 1 849 —5
Cast iron soil pipe and fittings . Thousand tons 744 ’ 677 +10
Lavatories _ Thousands 3,067 2 840 +8
Water closets Thousands 3, 349 3,017 +11
Warm air furnaces L. _ _ Thousands 1,130 997 +•13
1 Shipments.
Sources: U. S. Departments of Interior and Commerce, Trade Associations.
Prices, Wages, and Construction Cost
Prices.—Prices of building materials remained relatively stable through 1954. The Bureau of Labor Statistics index of wholesale prices of all building materials advanced three-tenths of an index point, standing at 120.2 for 1954 compared with 119.9 for 1953. Lower prices for lumber, plywood, and wood millwork were slightly offset by advances in prices of other materials, notably structural clay products and building paper and boards. Details appear in the accompanying table.
TABLE 3
Indexes of wholesale prices of selected building materials
[1947-49=100]
:: ■! Material 1954 1953 Percent change, 1954 from 1953
All building materials Lumber 120.2 117.4 119.9 119.3 (») —2
Softwood plywood . 107.2 110. 7 —3
Mill work. . . . 130. 6 131. 5 —1
Pre oared naint. • ■ - 112.8 111: 1 +2
Paint materials _ 96.4 96. 2 (!)
Plumbing equipment ... 118.4 116.0 +2
Heating equipment _ ... _ 114. 5 114.8 (1)
Structuralday products _ 133. 2 128.1 +4
Concrete components.. . .. ... _ 121.1 117 4 +3
Gypsum products. _ 122.1 121.0 +1
Insulation materials 109. 7 107. 9 4-2
Building paper and board 127. 8 ’ 121.4 +5
1 Less than one-half of 1 percent.
Source: U. S. Department of Labor.
T3
HOUSING AND HOME FINANCE AGENCY
Wage Rates, Hours, and Earnings.—Scales of hourly wage rates in the building trades, as reported by the Bureau of Labor Statistics, advanced 10 cents an hour between July 1, 1953, and July 1, 1954. Similar increases were 12 cents and 15 cents, respectively, in the 2 preceding 12-month periods. At mid-1954, union scales were reported as averaging $2.99 an hour for journeymen and $2.05 for helpers and laborers, or $2.80 for all employees of both categories.
Actual hourly earnings of workers employed in building construction, including onsite and offsite workers, union and nonunion, straight-time and overtime, were reported for 1954 by the Bureau of Labor Statistics as having averaged $2.60, an increase of 12 cents or 5 percent over the comparable figure of $2.48 for 1953. Average hours worked per week by these employees were similarly reported as 36.2, a decrease of 2 percent from 37.0 hours per week in 1953. Their average weekly earnings in 1954 were $94.21, an increase of $2.45 or 3 percent over $91.76 in 1953.
Residential Construction Costs.—The Boeckh index of residential construction costs for 1954 stood at 120.3, a decrease of approximately 1 percent from the figure for 1953, and the first decline in the annual index since 1949. Most of the year’s decrease occurred in the four months from February through May. In each of those months, and for the first time since 1952, the index stood below 120. Beginning in May, however, the index started edging upward again,
RESIDENTIAL CONSTRUCTION COSTS (Boeckh Index)
I50i--------------------------—— ----------------------------------.150
ANNUALLY, 1920-1954 MONTHLY, 1950-1954
o 125-----------------------------—— - 125
? J y^' 2
a> ioo------------------------r-— ————————ioo "
sj- / O>
O) / t
rl 75-------------------------/------- --------------------------------75 T
2 . / 3
x 50 y-------------- --------------------------------50 „
uj xy*' uj
Q Q
E 25---------------------------------- -------------------------*------25 -
Qi II I 11 111 111111 1111111 111 I II 1111111 I liiiiiliiiiiliiiiiliiiiiliiiiilniiiliiiiiliiiiiliiiiiliiiiil Iq
1920 25 '30 '35 '40 '45 ’50 '54 IH95O4-I95l4-I952-|-I9534-I954d
Source: U. S. Department of Commerce.
CHART 4
14
OFFICE OF THE ADMINISTRATOR
and an unbroken succession of small month-by-month increases brought it to 121.1 in December. The range between high month and low month in 1954, as reflected in the index, was 2.0 index points or less than 2 percent, thus continuing and in fact improving upon the record of the preceding 2 years with respect to general stability of residential construction costs. Details of the movement of the index are shown in the accompanying table.
TABLE 4
Boeckh indexes of residential construction costs [1947-49=100]
Month
January... February.
March____
April____
May______
June_____
July_____
August___
September October... November. December.
Monthly data
Annual data
1954 1953 Year Index Percent change from previous year Percent variation from low to high during year
120.4 120.1 1954 120.3 -1 2
119.5 120.1 1953 121. 2 +2 2
119.6 120.3 1952 119.1 +3 2
119.1 120.4 1951 116.0 +8 3
119.5 120.8 1950 107. 7 +5 11
120.0 121.5 1949 102.1 —3 6
120.7 122.4 1948 104.8 +12 6
120.7 122.1 1947 93. 2 4-21 18
120.8 121. 9 1946 77.0 4-io 16
121.0 121.4 1945 70.1 +7 5
121.0 121.5 1944 65. 4 +9 10
121.1 121.3 1943 60.2 4-5 5
1942 57. 6 4-5 5
1941 54. 6 +8 5
1940 50. 5 +3 8
1939 48.9 +2 1
Source: U. 8. Department of Commerce.
In contrast with residential construction costs, the Boeckh index of the cost of building apartments, hotels, and office buildings showed a 1-percent increase in 1954, rising to 126.8, the highest yearly average on record for that type of construction.
The Boeckh indexes measure in each case the cost of constructing identical buildings; and while from this strictly comparable standpoint the cost of residential construction was slightly less in 1954 than 1953, the homes that were built in 1954 cost more—differences in size, type, design, materials, equipment and amenities accounting for the increase. The Bureau of Labor Statistics, basing its estimates essentially on building permit valuations, has reported that the average construction cost of all permanent non-farm dwelling units started in 1954 for private account was $10,225 per dwelling unit, an increase over 1953 of $700 or slightly more than 7 percent.
Home Financing
The Mortgage Market Situation.—Through most of 1954 an easing supply of loanable funds facilitated the ready availability of
15
HOUSING AND HOME FINANCE AGENCY
mortgage loans on liberal terms. The net inflow of savings to lending institutions was at a historically high level, slightly above the previous year. Concurrently, a significant decline took place in net cash borrowing by the Federal Government. Offsetting influences were a moderate year to year increase in the expansion of outstanding State and local government and private corporate debt and a larger increase in the annual increment to outstanding mortgage debt. The net effect of these developments was that the interest yields on long term obligations at market prices declined significantly during the first quarter of the year and did not show any tendency to rise until the last quarter.
An easing general money situation was reflected in the mortgage market in a relatively good supply of VA-guaranteed and FHA-insured loans at liberal terms. For example, no-downpayment loans as a proportion of total VA-guaranteed loans made monthly rose from 13 percent at the beginning of the year to 37 percent at the end of the year. The more liberal financing terms for FHA-insured loans, authorized in August by the Housing Act of 1954, also became available in the market as a result of the relatively ample supply of funds. While easing mortgage market conditions prevailed during approximately the first three quarters of the year, reported secondary market discounts on insured and guaranteed loans gradually decreased, and terms at which conventional mortgage loans were available probably became easier, although there are no specific data on the latter point.
Toward the end of the year, there was some tightening in the money market situation as the economic recovery gained momentum and the demand for investment funds from sources outside of the mortgage market increased. A number of large lenders began to restrict their mortgage lending activities with respect to loans of the most liberal terms, and discounts on insured and guaranteed loans, which had been declining during the first three quarters of the year, either leveled off or began to rise again. Despite this, mortgage funds were still in relatively good supply at the end of the year, and moreover there appeared to be an unusually large backlog of outstanding financing commitments covering units yet to be started.
Volume of Mortgage Lending.—The ample supply of mortgage money and the liberal terms at which loans were made available to borrowers during most of the year supported an active housing market and resulted in a record total of about $23 billion in nonfarm mortgage recordings of $20,000 or less in 1954, an increase of 16 percent from the previous year. The proportion of the mortgage lending accounted for by the Government mortgage insurance and guaranty programs was about the same in 1954 as in 1953, although the pro-
16
OFFICE OF THE ADMINISTRATOR
NONFARM MORTGAGE RECORDINGS OF $20,000 OR LESS
251---------------------------------------------
CD tr 2 0---------------------------------------——
< —
O --Il-1 '
Q |5 --------------------------------
o
W ] Q ------------------- rq. _
O
-I __
flD 5 F~j FF
Jnnnnnrilll II II II II II II II II II
1939 ‘40 '41 '42 '43 ’44 '45 '46 '47 '48 ‘49 '50 '51 '52 '53 '54
Source: Home Loan Bank Board
CHART 5
portion of FHA insured declined whereas the proportion of VA-guaranteed increased. As was pointed out earlier in connection with housing starts however, the proportion started under FHA and VA inspections increased from 39 percent in 1953 to 49 percent in 1954.
Year Percent of total non-farm private units started Percent of dollar amount of total non-farm recordings of $20,000 or less
Under FHA Under VA FHA plus VA FHA-insured home loans V A-guaranteed home loans FHA plus VA
1953 24 15 39 12 15 27
1954- 23 26 49 8 19 27
Sources: Home Loan Bank Board, Federal Housing Administration, Veterans’ Administration, U. S. Department of Labor.
As in the previous year, the savings and loan associations were by far the largest source of home mortgage money, accounting for 36 percent of the total amount of mortgages recorded in 1954. The miscellaneous group of lenders (mortgage companies, etc.) and commercial banks recorded the next largest volumes of mortgages of $20,000 or less. The amounts and distributions of such recordings by each type of lender in 1954 and in 1953 are as follows:
17
HOUSING AND HOME FINANCE AGENCY
Type of lender Amount in millions (1954) Percent increase from 1953 Percent of total
1954 1953
Savings and loan associations 8,312 1,768 4,239 1, 501 2,882 4,272 13 19 15 13 1 40 36 8 18 6 13 19 37 8 19 7 14 15
Insurance companies
Commercial banks
Mutual savings banks .
Individuals
Miscellaneous
Total
22,974 16 100 100
Source: Home Loan Bank Board.
Net Increases in Outstanding Mortgage Debt.—The total net increase in outstanding mortgage debt on 1- to 4-family nonfarm homes—net of repayments—was $9.6 billion during 1954, bringing the total of such debt outstanding to $75.9 billion at the end of the year. In addition, the estimated total mortgages outstanding on multifamily housing at the end of the year made for a total mortgage debt of about $86 billion on nonfarm housing at the end of 1954.
FHA-insured mortgage- balances outstanding at the end of 1954 totaled $16.9 billion, including $12.8 billion on 1- to 4-family homes and $4.1 billion in project mortgages. The total of mortgage debt insured by FHA or partially guaranteed by VA outstanding at the end of the year was $35.8 billion or nearly 42 percent of the total residential nonfarm mortgage debt. The comparable proportion of
HOME MORTGAGE DEBT OUTSTANDING 1- TO 4-FAMILY NONFARM HOMES
80
(O cr
3 60
o a
O 40 cn z o
£ 20
0
1925 '30 '35 '40 '45 '50 '54
END OF YEAR EST
Sources: Home Loan Bank Board.Federal Housing Administration, Veterans Administration.
CHART 6
18
CONVENTIONAL
^*:‘**ii^*it*:*:*:*x*x<*
OFFICE OF THE ADMINISTRATOR
1- to 4-family mortgage debt underwritten by the Government was 41.9 percent, and for the multifamily housing mortgage debt 39.4 percent.
The net increases in nonfarm residential mortgage debt in 1954, as well as the estimated amounts and distribution of such debt outstanding at the end of 1954, are shown in the following table.
TABLE 5
Estimated amount of nonfarm residential mortgage debt outstanding [Dollar amounts In billions]
Type of holder Total debt FHA-insured VA-guar-anteed Conventional
Total Total amount outstanding—Dec. 31,1954
$86.0 $16.9 $18.9 $50.3
Savings and loan associations .
26.1 18.9 14.2 13.2 2.4 11.1 1.2 6.1 4.2 3.9 0.8 0.7 4.7 4.6 3.4 4.2 1.6 0.4 20.3 8.1 6.6 5.1
Life insurance companies _
Commercial banks
Mutual savings banks _ _
FNMA
Individuals and others 10.0
Total
Percent distribution of amount outstanding on Dec. 31, 1954
100 100 100 100
Savings and loan associations
30 22 17 15 3 13 7 36 25 23 5 4 25 25 18 22 9 2 40 16 13 10
Life insurance companies
Commercial banks _
Mutual savings banks
FNMA .
Individuals and others.. . 20
Total _ .
Net dollar increase during 1954
$10. 0 $0.8 $2.8 $6.4
Savings and loan associations
4.3 2.0 1.3 1.9 (*) 0.6 0.1 0.1 0.3 0.4 0.2 (-0.3) 0.8 1.1 0.3 1.1 (-0. 2) (-0.2) 3.4 0.8 0.7 0.4
Life insurance companies .
Commercial banks'....
Mutual savings banks
FNMA ....
Individuals and others.._ .. 1.1
1 Less than $50 million.
Note.—Caution should be exercised in using the data for the “Individuals and others” category since information sources for this category are most fragmentary. The data on life insurance company holdings of conventional loans are preliminary. Sum of component figures may not equal the indicated total due to rounding.
Sources: Home Loan Bank Board, Federal Reserve Board, Institute of Life Insurance, Federal National Mortgage Association, Federal Housing Administration, Veterans’ Administration.
The largest net increase in mortgage holdings, $4.3 billion, was registered by the savings and loan associations and was almost equivalent to their total net inflow of savings. The mutual savings banks expanded their aggregate mortgage portfolio by $1.9 billion, an amount about equal to their net savings inflow. The mutual savings banks obtained funds in addition to their net savings inflow by net sales of about $400 million of Federal Government bonds.
19
HOUSING AND HOME FINANCE AGENCY
The insurance companies increased their mortgage loan holdings by $2.0 billion while reducing the amount of government bonds held by $800 million in order to make investments in mortgages and other securities in excess of their growth of assets. It is noteworthy that in 1954 the insurance companies increased their holdings of government-insured or guaranteed loans by $1.2 billion in 1954, as against a comparable increase of $0.5 billion in 1953. Commercial banks, whose time deposits increased by some $3 billion over the year, expanded their mortgage holdings by $1.3 billion in 1954, compared with only about $0.7 billion in 1953.
NONFARM REAL ESTATE FORECLOSURES
3OO |------------------------—-------------
1 ) • 1 '- ‘
ASAN FRANCISCO / I_________________VtTo--INDIANAPOLIS^ UlNClNN^^ V^U'W'
f \ / / l*ANS Q \ I / ’^V
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L \ r In mlx. I — _________ yy----5—^^ncj»6REEN*,
XLOS*™\ / texaH ark 7E 7
I / / L ® /miss N-A. \ f
I___\ I little f \ 4. 7
\ / ’ R0CK I \ \.
I _______ ITa \ [ /
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® FEDERAL HOME LOAN BANK \ J___ 7 'V \
• BRANCH \^Z |
47
DISTRICT 2 INCLUDES PUERTO RICO AND VIRGIN ISLANDS DISTRICT II INCLUDES ALASKA, HAWAII AND GUAM
V-
< I u
SECTION 2
FEDERAL HOME LOAN BANK SYSTEM
Introduction
On December 31, 1954, the Federal Home Loan Bank System consisted of 11 regional Banks together with their 4,234 members. These Banks were created by an Act of the Congress, approved July 22, 1932. The Act provided for not less than 8 nor more than 12 bank districts and defined eligible members of a Federal Home Loan Bank as any building and loan association, savings and loan association, cooperative bank, homestead association, insurance company, or savings bank. However, no institution shall be eligible if its financial condition is such that advances may not safely be made or the character of its management or its home-financing policy are inconsistent with sound and economical home financing.
Purpose of the System
The 11 Banks are located in key cities throughout the country and each Bank is authorized to accept deposits from and to make both secured and unsecured advances to its member institutions.
The Banks were designed to serve as a national reserve credit system for savings institutions specializing in home mortgage finance. In addition, the System assists its members in maintaining a sound perspective on any distortions in the economy and potential sources of future difficulty. Through adjustments in the degree of participation of each Bank in security issues, as well as through the medium of interbank deposits, regional variations in the credit requirements of member institutions can be dealt with effectively.
General Comments
The consolidated assets of the Federal Home Loan Banks on December 31, 1954, amounted to a record high of $1,560,645,000, an increase of $173,128,000 or 12.5 percent over the previous year-end record established a year earlier. New year-end records were also established for investment holdings, deposits held for members, and capital stock.
During 1954, both advances made and repayments received established new calendar-year records. However, since repayments ex-
48
HOME LOAN BANK BOARD
ceeded the total advances made by $84,077,000, the resulting balance outstanding at year’s end of $867,478,000 was second to the previous year-end high established on December 31, 1953.
Capital Structure i
The capital stock outstanding on December 31, 1954, of all Banks was held by their respective member institutions. Each member is required to own stock in its Bank in a minimum amount equal to 2 percent of the aggregate of the unpaid amount of such member’s home mortgage loans and similar obligations, but not less than $500. A borrowing member must own stock in an amount equal to at least one-twelfth of the principal amount of advances it owes the Bank, but not less than the minimum requirement.
Earned surplus is divided into a legal reserve, established in accordance with Section 16 of the Federal Home Loan Bank Act, as amended; a reserve for contingencies, established voluntarily by some of the banks; and undivided profits.
The following tabulation reflects the capital structure of the Banks as of the close of 1954 and 1953 and the changes during the calendar year 1954:
Dec. 31,1954 Dec. 31, 1953 Increase for 1954
Capital stock: Subscribed by members $438, 001, 800 97,450 $368, 609,800 86,150 $69,392,000 11,300
Less—unpaid subscriptions
Total paid-in capital .
437,904,350 368, 523, 650 69,380, 700
Surplus: Legal reserve
22,124, 470 3,194, 637 15,525, 479 19, 602, 070 3,158, 763 14, 754, 643 2, 522, 400 35,874 770,836
Reserve for contingencies Undivided profits
Total surplus _
40,844, 586 37, 515,476 3,329,110
Total capita]
478, 748, 936 406, 039,126 72, 709, 810
Legal Reserve
As indicated in the preceding tabulation, the Federal Home Loan Banks transferred a total of $2,522,400 to this reserve during the calendar year 1954. The amount of this reserve is equal to 5.1 percent of the total paid-in capital as of December 31, 1954. Each Federal Home Loan Bank is required by Section 16 of the Federal Home Loan Bank Act to transfer 20 percent of its net earnings to a reserve account semi-annually until such reserve is equal to the Bank’s paid-in capital, after which 5 percent of the net earnings must be so transferred. During 1954 this reserve increased 12.9 percent over the preceding year-end total.
49
HOUSING AND HOME FINANCE AGENCY
The legal reserve of all Banks is invested in direct obligations of the United States and equals 3.5 percent of the par value of investment securities held by all Banks as of December 31, 1954.
Investment Securities
During 1954 the Banks purchased United States Government obligations at an approximate cost of $1,444,792,000, while sales and maturities approximated $1,190,807,000. The face value of all investment securities owned by the Banks on December 31, 1954, aggregated $641,024,000, as compared with $387,640,000 on December 31, 1953, an increase of 65.4 percent. The weighted average yield on cost of securities owned at December 31, 1954, amounted to 1.92 percent as contrasted to 2.17 percent at December 31, 1953.
The investment securities were distributed as follows:
Par value Book value
TJ. S. Treasury bills $30,800,000 $30, 730, 626
U. S. Certificates of indebtedness 400,000 400,000
U. S. Treasury notes:
Special series 262,600, 000 262, 600, 000
Marketable 45,399, 000 45, 418, 966
U. S. Treasury Bonds 291,425,000 291', 67L 715
U. S. Savings Bonds 10, 400, 000 10, 400, 000
Total investments ... 641,024,000 641, 221,307
Liquidity Reserves
Each Federal Home Loan Bank, as required by Section 11(g) of the Act, shall at all times have at least an amount equal to the current deposits received from its members invested in (1) obligations of the United States, (2) deposits in banks or trust companies, and (3) in advances with a maturity of 1 year or less. As of December 31, 1954, amounts invested under these 3 classifications exceeded these deposits by $538,109,623.
In order to insure a greater degree of liquidity, the regulations require each Bank to maintain a liquidity reserve at least equal to 20 percent of the total of its paid-in capital and its liability on members’ deposits. This reserve includes $50,000,000 in 2 percent Treasury Special Series Notes and the remainder in cash on deposit and obligations with maturities not in excess of or which can be redeemed within 13 months and securities acquired from dealers under a repurchase agreement.
These reserves, together with working funds provided in an amount deemed adequate, enable the Banks to meet the requirements of their members until funds are obtained through a public sale of consolidated Federal Home Loan Bank obligations.
50
HOME LOAN BANK BOARD
The securities apportioned to the liquidity reserve must be those not needed for compliance with the requirements of Section 16 of the Act.
Advances to Members
The following tabulation reflects the number of borrowers by types and the amount of advances outstanding to each group on December 31, 1954:
Type of Institution Borrowers Advances outstanding
Number Percent Amount Percent
Savings and loan associations:
Federally chartered 772 40.2 $518,934,906 59.8
State-chartered:
Insured by FSLIC 809 42.1 17.7 314,882, 597 29,934, 727 36.3 3.5
Not insured by FSLIC 1 341
Total savings and loan associations 1,922 1 100.0 863,752,230 3,725,875 99.6 0.4
Insurance company _
Total . 1,923 100.0 867,478,105 100.0
1 Includes 1 nonmember borrower with advances of $28,750.
During the calendar year 1954, as shown in Table 11, advances totaling $734,248,943 were made and repayments aggregating $818,325,856 were received which resulted in a net decrease of $84,076,913 from the advances outstanding at December 31, 1953. The number of borrowers at the year end represented 45.4 percent of the total number of members of all Banks and is a decrease of 224 from the number at December 31, 1953.
On December 31, 1954, advances outstanding were distributed as follows:
Secured___
Unsecured.
$571, 945, 618
295, 532, 487
867, 478, 105
Short-term (1 year or less)-----------------$612,327,773
Long-term (up to 10 years)________________ 255,150,332
867, 478, 105
The amount of secured advances represented the borrowings of 1,129 members and 1 nonmember mortgagee, and $255,150,332 thereof consisted of amortized loans for terms of more than 1 year but not more than 10 years, the balance of $316,795,286 matures within one year. These secured advances were collateralized by 195,128 home mortgages, the unpaid balances of which aggregated $1,165,005,936, United States Government obligations having a par value of $77,826,000 and other eligible collateral having a face value of $1,700,000. The face value of all such collateral amounted to $1,244,531,936 or 217.6 percent of the secured advances outstanding, to which collateral the Banks
51
HOUSING AND HOME FINANCE AGENCY
had assigned a loan value of $884,930,437. On August 2, 1954, the Federal Home Loan Bank Act was amended whereby home mortgages up to $35,000, instead of $20,000, may be accepted as collateral security for an advance, if otherwise eligible.
Unsecured advances for terms of one year or less were held by 978 member institutions and were equal to 34.1 percent of the total advances outstanding. Each Bank held a statutory lien on its capital stock owned by each member-borrower irrespective of whether the advances were secured or unsecured. Such stock on December 31, 1954, amounted to $218,875,000.
Interest Rates on Advances
The Federal Home Loan Banks are authorized by the Board to establish rates on advances within the maximum limit prescribed by the Board. At the present time the Banks may provide for a contract interest rate not exceeding 6 percent per annum.
During the year 8 Banks authorized decreases in rates from those prevailing at December 31, 1953, while 3 Banks made no change in their effective rates. On December 31, 1953, rates ranged from 2.75 to 3.5 percent on secured advances and 2.75 to 3.0 percent on unsecured advances. On December 31, 1954, as shown in Table 12, the respective rates ranged from 2.25 to 3.5 percent and 2.5 to 2.75 percent per annum.
Delinquent Advances
On December 31, 1954, none of the advances outstanding was more than 30 days past due, except advances totaling $6,300,000 and interest thereon of $834,849 represented by notes from the Long Beach Federal Savings and Loan Association, Long Beach, California.
This borrower is involved in litigation with the Bank, and the U. S. Court of Appeals has directed the U. S. District Court to deliver to the Bank collateral for the indebtedness which the District Court has impounded. The original litigation was started in 1948 due in part to the merger of the Federal Home Loan Bank of Los Angeles with the Federal Home Loan Bank of Portland, under the name of the Federal Home Loan Bank of San Francisco, and to the appointment of a conservator for the Long Beach Federal Savings and Loan Association.
Member Institutions
As of December 31, 1954, there were 4,234 member institutions of the Federal Home Loan Bank System. Their aggregate resources at that date, based on the latest estimates, amounted to $30,678,000,000
52
HOME LOAN BANK BOARD
NUMBER AND ASSETS OF MEMBER INSTITUTIONS OF THE FEDERAL HOME LOAN BANK SYSTEM
NUMBER IN THOUSANDS BILLIONS OF DOLLARS
l6| 11 Z713 2
LEGEND
1O ASSETS
12 --- NUMBER (BILLIONS OF DOLLARS) ----"" -- ~ 24
(THOUSANDS)^
8------------------------r---- --- ---- ---- —16
—■—SB--!! "H U Ji F H 8
o| M I M I B...J M H m I H I w IW I Io
1935 1940 1945 1949 1950 1951 1952 1953 1954
CHART 12
reflecting an increase during 1954 of $4,953,000,000 or 19.3 percent. The number of member institutions increased from 4,134 to 4,234 during 1954 or 2.4 percent. This net increase of 100 members during 1954 represented the largest gain in members since 1937 in which year the Banks had a net increase of 172 members.
At the close of 1954 the average size of all member institutions of the Bank System was $7,245,600, an increase of 16.4 percent during the year and 96.9 percent during the past 5 years. The average size of Federal savings and loan associations was $10,229,000, as compared with $6,466,000 and $2,321,000 for State-chartered savings and loan associations insured by the Federal Savings and Loan Insurance Corporation and State-chartered savings and loan associations not so insured.
The Federal Home Loan Bank Act, as amended, requires that the Home Loan Bank Board by regulation prescribe a standard of liquidity for member institutions within the limits set forth in the Act. The present regulation requires each member to maintain a ratio of at least 6 percent in cash and United States Government obligations to its share capital.
At December 31, 1954, the ratio of liquid assets to share capital of member institutions amounted to 15 percent. In perspective, it
350920—56----6
53
HOUSING AND HOME FINANCE AGENCY
may be noted that this is considerably under liquidity ratios as high as 39 percent reported during the World War II period of limited mortgage investment opportunities, but it is above the prewar level of about 8 percent.
Changes in the composition of the System’s membership during 1954 are summarized as follows:
[Dollar amounts in millions]
Type of Institution Dec. 31, 1954 Dec. 31, 1953 Net change
Number Assets Number Assets Number Assets
All member institutions Savings and loan associations Federally chartered State-chartered: Insured by FSLIC Not insured by FSLIC Savings banks Insurance companies 4,234 $30,678 4,134 $25, 725 +100 +$4,953
4,209 30,168 4,108 25,216 +101 +4,952
1,640 1,793 776 16,775 11,592 1,801 1,604 1,700 804 14,039 9,459 1,718 +36 +93 -28 +2,736 +2,133 +83
22 3 474 36 23 3 475 34 -1 -1 +2
Consolidated Obligations
Consolidated Federal Home Loan Bank obligations outstanding at the beginning of the calendar year 1954 totaled $413,500,000. These consisted of 4 series of notes maturing February 15, March 15, April 15, and May 17, 1954. The first 3 of these series aggregating $309,-500,000 were paid off at maturity without any portion thereof being refunded. The May 17 maturity of $104,000,000 was refunded in full on that date when 2 series of notes were issued in the aggregate amount of $115,000,000. In order to satisfy the demand of members of the Federal Home Loan Banks for additional funds during 1954, including the refunding operation referred to, the Board issued consolidated notes as follows:
1.15%, Series E-1954 Notes, dated 5-17-54, due 9-15-54__________$55, 000, 000
1.30%, Series A-1955 Notes, dated 5-17-54, due 1-17-55----------- 60, 000, 000
1.25%, Series B-1955 Notes, dated 9-15-54, due 3-15-55_________ 119, 000, 000
1.375%, Series C-1955 Notes, dated 11-15-54, due 2-15-55---------- 94, 000, 000
Total issued during year------------------------------------- 328, 000, 000
The last 3 issues aggregating $273,000,000 were still outstanding at December 31, 1954, of which $1,000,000 par value had been purchased in the open market and was held by 1 Federal Home Loan Bank. From date of first issuance on May 10, 1937, through December 31, 1954, consolidated obligations including debentures, bonds, and notes, were issued in the total amount of $4,777,250,000 of which $4,504,250,000 were retired, leaving a balance of $273,000,000 outstanding on the latter date.
54
HOME LOAN BANK BOARD
The Board’s regulations provide that consolidated bonds shall not be issued in excess of 12 times the total paid-in capital stock and legal reserves of all Federal Home Loan Banks.
Interbank Deposits
Section 11 of the Federal Home Loan Bank Act, as amended, provides for interbank deposits, the medium by which excess funds in 1 Bank are transferred to another Federal Home Loan Bank in need thereof. From the beginning of operations through December 31, 1954, interbank deposits, all on a voluntary basis, had been made in the total amount of $717,700,000. Interbank deposits made during the calendar year 1954 amounted to $87,500,000 and repayments thereof during the same period totaled $83,000,000, which left a balance of $13,500,000 outstanding at the year end, after taking into consideration the $9,000,000 outstanding at the beginning of the year. The Board establishes the interest rate on interbank deposits and such rates are generally determined on the basis of the average cost of all consolidated obligations outstanding, plus one-tenth of 1 percent per annum. As of December 31, 1954, the effective rate was 1.47 percent.
Dividends of Banks
Dividend declarations by the Banks during the calendar year 1954, were at rates ranging from 1.5 percent to 2.5 percent per annum and totaled $8,921,628. Aggregate dividends, declared from the beginning of operations through December 31, 1954, amounted to $67,-571,811. Dividend payments for the year 1954 equaled 70.74 percent of the 1954 net income, while dividends since the beginning of operations equal but 61.43 percent of the cumulative net income.
The average rate of earnings for the individual Banks, after setting aside the required addition to Legal Reserve, ranged from 1.95 percent to 2.85 percent for 1954 as compared with 1.79 to 2.79 percent for the calendar year 1953. The weighted average dividend rate, on an annual basis, for 1954 and 1953 was 2.146 percent and 2.149 percent, respectively.
Comparative Balance Sheet
A comparative consolidated statement of condition of the 11 Federal Home Loan Banks as of December 31, 1954, and December 31, 1953, is contained in Table 13 of this report.
Income and Expenses
Gross operating income of the 11 Federal Home Loan Banks, as will be seen from the consolidated statement of income and expense
55
HOUSING AND HOME FINANCE AGENCY
of the Banks presented in Table 14, increased by 6.7 percent during the year, advancing from $29,278,645 in 1953 to $31,229,726 in 1954. This was due principally to an increase in the income from securities, which represented 39.77 percent of total operating income in contrast to 32.12 percent in 1953. In 1954 interest on advances was equal to 60.15 percent of gross income as compared with 67.86 percent in 1953.
Operating expenses during 1954 totaled $19,105,200 and represented a 1.9 percent increase over the 1953 total. While there was no material change between 1953 and 1954 in the total operating expenses, the large change in two expense items—interest on consolidated obligations which decreased from $7,938,938 to $3,905,053 and interest on members’ deposits which increased from $8,264,922 to $12,664,718—indicates a significant trend in two major fields of Bank operations.
Net income of the Banks for the calendar year 1954 amounted to $12,611,997 and represented a rate of earnings on average paid-in capital, after statutory reserve requirements, of 2.45 percent as compared with $10,706,892 and 2.46 percent for 1953. Cumulative net income of the Banks from the date of their organization through December 31, 1954, amounted to $109,990,790.
The following tabulation reflects the disposition of the net income for 1954 and the cumulative net income through December 31, 1954:
Calendar year 1954 Oct. 1932 to Dec. 31, 1954
Amount Percent Amount Percent
Dividends paid: U. S. Government $26,176,170 41,395,640 23.80 37.63
Members. $8,921,628 70. 74
Total dividends 8,921,628 70.74 67, 571,810 61.43
Retirement fund, prior service Retirement fund, special payments 370,828 2.94 1,025,950 548,444 22,124, 470 .93 . 50
Legal reserve ... 2, 522, 399 20.00 20.12
Contingent reserve 35,874 .28 3,194, 637 2.90
Undivided profits 761,268 6.04 15, 525,479 14.12
Total net income 12,611,997 100.00 109,990, 790 100.00
Supervision of Bonks
Pursuant to the provisions of the Federal Home Loan Bank Act, as amended, the Home Loan Bank Board, in supervising the operations of the Federal Home Loan Banks, requires each Bank to submit for its approval an annual budget covering the estimated controllable expenses to be incurred. All dividend declarations by the boards of directors of the Banks are subject to the approval of the Home Loan Bank Board, as are the appointments and salaries of all officers and
56
HOME LOAN BANK BOARD
attorneys of the Banks, bylaw amendments, leases for banking quarters, with some exceptions purchases and sales of investment securities; and the range of interest rates on advances, members’ deposits, and interbank deposits.
It is the policy of the Home Loan Bank Board to permit each Bank to operate under the direction of its regional board of directors, within certain limitations, insofar as may be permitted by the laws relating to such operations. In keeping with this policy, each Bank is permitted to establish lines of credit for its member institutions, make advances to them and select and fix the compensation of all employees other than officers and attorneys.
Examinations of Banks
Each Federal Home Loan Bank is examined at least annually, as required by Section 20 of the Federal Home Loan Bank Act, as amended, by examiners attached to the staff of the Director of Audits of the Home Loan Bank Board. Also, pursuant to the provisions of the Government Corporation Control Act, the internal operations of the Home Loan Bank Board and its constituent units are subject to an annual audit by representatives of the General Accounting Office. Since the Act further requires the General Accounting Office to use to the fullest extent deemed practical reports of examinations made of Government corporations pursuant to law, such Office has confined its activities largely to periodic surveys and analyses of examinations and audits made by the staff of the Board’s Director of Audits. Examiners appointed by the Board are subject to the same requirements, responsibilities, and penalties as are applicable to examiners under the National Bank Act and the Federal Reserve Act.
Management of Banks
As provided under Section 7 of the Federal Home Loan Bank Act, as amended, the management of each Federal Home Loan Bank is vested in a board of 12 directors, all of whom are citizens of the United States and bona fide residents of the district in which the Bank is located. Four of such directors are appointed by the Home Loan Bank Board for terms of 4 years and 8 are electecl by the member institutions for terms of 2 years. The terms of the appointed directors are arranged to permit the expiration of but one term each year. The terms of half of the elected directors expire annually. Annual elections of directors are conducted by the Home Loan Bank Board in accordance with its prescribed regulations. A list of directors and officers as of December 31, 1954, follows:
57
HOUSING AND HOME FINANCE AGENCY
FEDERAL HOME LOAN BANKS
Directors and Officers as of December 31, 1954
Boston
DIRECTORS
William J. Pape (appointed).
Rockwell C. Tenney (appointed).
Milton A. Barrettt (at large).
Ralph R. Crosby (at large).
Ralph E. Ellis (class A).
James E. Bent (class A).
Norman E. Rand (class B).
William J. D. Ratcliff (class B).
Walter H. Washburn (class C).
OFFICERS
Herbert N. Faulkner, president.
Lawrence E. Donovan, vice president and treasurer.
Paul H. Heywood, vice president and secretary.
Beatrice E. Holland, assistant secretary.
New York
directors
James Bruce (appointed).
Francis V. D. Lloyd (appointed).
Eustace Seligman (appointed).
George MacDonald* (appointed).
Ernest A. Minierf (at large).
Everett C. Sherbourne (at large).
Arthur E. Knapp (class A).
George L. Bliss (class A).
Leonard E. Rautenberg (class B).
Thomas S. Craig (class B).
Robert R. Lally (class C).
T. E. Hamilton (class C).
OFFICERS
M. K. M. Murphy, president.
Denton C. Lyon, vice president and secretary.
Michael Zarrilli, treasurer.
Joseph F. X. O’Sullivan, assistant secretary.
Pittsburgh
directors
Dr. Charles S. Tippetts (appointed).
Arthur B. Koontz (appointed).
Walter B. Gibbons (appointed).
Ernest T. Trigg* (appointed). Alexander Salvatori (at large). Fred A. Werner (at large). C. Elwood Knapp (class A). Norman E. Clarkf (class A). Charles Warner (class B).
N. F. Braun (class B).
James W. Turtle (class C). Francis E. McGill (class C).
OFFICERS
G. R. Parker, president.
Harold L. Tweedy, vice president. William M. Stout, vice president. Dale Park, treasurer.
Warren Sutton, secretary.
Greensboro directors
Horace S. Haworth* (appointed). Raymond D. Knight (appointed). J. Grayson Luttrell (appointed). W. P. Bowers (appointed).
Frank Muller, Jr. (at large).
Marion M. Hewell (at large).
Wilfred H. Blanz (class A).
Wallace O. DuVallf (class A).
D. R. Fonville (class B).
George E. Comer (class B).
A. C. Blount (class C).
Robert L. Green (class C).
OFFICERS
J. M. Sink, Jr., president-secretary.
John A. Fogarty, vice president-assist-ant secretary.
John E. Snow, Jr., vice president-assist-ant treasurer.
James T. Spence, treasurer.
Cincinnati directors
W. D. Gradison (appointed).
Dr. Howard L. Bevis* (appointed). Frazer D. LeBus (appointed).
Frank K. Vaughn (appointed).
W. B. Furgerson (at large).
W. Megrue Brockf (at large). Allen C. Knowles (class A).
* Chairman.
fVice chairman.
58
HOME LOAN BANK BOARD
Directors and Officers as of December 31, 1954—Continued
Ernest D. Heppert (class A). E. A. Covington (class B). John C. Mindermann (class B). R. A. Stevens (class C).
Eric L. Schulte (class C).
OFFICERS
Walter D. Shultz, president.
W. E. Julius, vice president-treasurer. J. W. Whittaker, vice president.
E. T. Berry, secretary.
Indianapolis
DIRECTORS
Dr. Herman B. Wells* (appointed). Charles T. Fisher, Jr. (appointed). E. Kirk McKinney (appointed). Harold A. Fitzgerald (appointed). Fermor S. Cannonf (at large). Arthur H. Deitsch (at large). Laurence H. Cook (class A). George L. Young (class A). Harold H. Sherman (class B). Harold F. Harrison (class B). Bryon L. Jones (class C).
J. Albert Jackson (class C).
OFFICERS
Fred T. Greene, president and secretary. Fermor S. Cannon, vice president.
G. E. Ohmart, vice president and treasurer.
Sylvia F. Brown, assistant secretary. Caroline F. White, assistant treasurer.
Chicago directors
Edwin A. Locke, Jr. (appointed). Cornelius T. Young (appointed). Cola G. Parker* (appointed). Charles R. Jonesf (at large).
Myron H. Fox (at large). John P. Domeier (class A). Robert J. Pittelkow (class A). Austin J. Waldron (class B). Earl S. Straight (class B). E. G. Holzweg (class C).
Robert L. Hirschinger (class C).
OFFICERS
John E. Stipp, president.
Allan Anderson, vice president.
Ralph Menard, secretary and treasurer.
Des Moines
DIRECTORS
Paul E. Vardeman (appointed).
John D. Adams* (appointed).
L. A. Rossman (appointed).
Thomas Greenshields (at large).
James M. Camp (at large).
N. T. Patersonf (class A).
Clayton C. Cross (class A).
Preston A. Richardson (class B).
Einer P. Juel (class B).
Andrew Madsen (class C).
Ronald F. Bartholomew (class C).
OFFICERS
Robert J. Richardson, president.
W. H. Lohman, vice president-treasurer.
J. M. Martin, secretary.
A. E. Mueller, assistant treasurer.
Little Rock
DIRECTORS
Claude H. Roberts (appointed).
T. J. Butler (appointed).
Gordon H. Campbell (appointed).
Gail Whitcomb* (appointed).
C. Roy Smith (at large).
W. P. Gulleyf (at large).
Thomas S. Walker (class A).
Curtis M. Hennesy (class A).
A. H. Jerry Knippa (class B).
Mandeville P. Arnoult, Jr. (class B).
Robert T. Love (class C).
Louis D. Ross (class C).
OFFICERS
J. Curran Conway, president and secretary.
Ennis M. Oakes, vice president.
W. F. Tarvin, treasurer.
Lucile W. Newby, assistant secretary.
* Chairman.
fVice chairman.
59
HOUSING AND HOME FINANCE AGENCY
Directors and Officers as of December 31, 1954—Continued
Topeka directors
Joseph A. Uhl, Jr. (appointed). Harrington Wimberlyf (appointed). Walter R. Raecke (appointed).
Henry A. Bubb* (appointed).
A. J. Bromfield (at large). Ben G. Phlegar (at large). Cleo C. Ingle (class A). Gladys Forsyth (class A). Marion T. Rigdon (class B). James S. Gormley (class B). F. E. Myers (class C). Doris E. Soden (class C).
OFFICERS
C. A. Sterling, president and secretary. R. H. Burton, vice president and treasurer.
San Francisco directors
Harold B. Starkey (appointed). Archibald B. Young (appointed).
C. W. Leaphart (appointed).
Frank S. McWilliams* (appointed).
C. N. Bloomfield (at large).
M. L. Dye (at large).
Joe Crailf (class A).
Gerrit Vander Ende (class A).
Alfred F. Kerr (class B).
R. J. Fremou (class B).
Kirk Reynolds (class C).
O. R. Baum (class C).
OFFICERS
J. Alston Adams, president and secretary.
A. C. Newell, vice president.
James W. McBride, vice president.
William N. Purmort, assistant vice president.
Joseph H. Cowan, assistant vice president.
Ray E. Humphrey, treasurer.
L. F. Nolan, assistant treasurer.
E. M. Jenness, assistant secretary.
E. E. Pearson, assistant secretary.
* Chairman.
tVice chairman.
60
HOME LOAN BANK BOARD
TABLE 11
Federal Home Loan Banks—Summary of lending operations
Boston_____________________________________________
New York___________________________________________
Pittsburgh_________________________________________
Greensboro_________________________________________
Cincinnati_________________________________________
Indianapolis_______________________________________
Chicago____________________________________________
Des Moines_________________________________________
Little Rock________________________________________
Topeka_____________________________________________
San Francisco______________________________________
Total, year:
1954____________________________________
1953___________________________________________
1952________________________________
1951________________________
1950________________________________
1949________________________ . .
1948________________________________
1947________________________
1946____________________________________
1945________________________ .. ..
1944_____________________________ .
1943________________________ .
1942__________________ _ .
1941________________________ .
1940_____________________________ . •
1939___________________________________________
1938________________________________
1937____________________________________ ...
1936________________________________
1935___________________________________________
1934____________________________________
1933___________________________________________
1932___________________________________________
Grand total__________________________________
Advances Repayments Balance outstanding end of year
$35, 900,000. 00 $41, 531,883. 00 $54,871,872.00
51, 685, 966. 69 85, 772, 536. 26 49, 576,698.45
51,050,600. 00 60,309,447.00 84,847,000. 00
102, 671, 250. 00 122,402,390. 60 123,364, 749.15
37, 706,000.00 50, 586, 720.00 45, 788,905. 00
27,897,125. 00 27,397,498. 65 52,380, 281. 41
99,850,084. 02 95,974,765.10 156,174,130. 92
46, 777,683. 00 60,843, 213.83 65,956, 707. 69
38,191, 500.00 34, 550, 569.00 45, 701,880. 00
24, 089, 500.00 22, 818, 775.00 30,108, 640.00
218, 429, 233. 81 216,138,057. 65 158, 707, 239.96
734, 248, 942. 52 818,325,856.09 867,478,104. 58
727, 516, 617. 72 640,150,130. 87 951,555,018.15
585, 813, 271. 68 527, 561, 507. 80 864,188, 531. 30
422, 977,074.15 432, 997,024. 55 805,936, 767.42
674, 756, 649. 69 292, 229,081. 73 815,956, 717.82
255, 662, 641. 50 337, 249, 580.83 433,429,149.86
359, 612, 776. 74 280,168,873. 35 515,016,089.19
351,079, 350. 99 208, 961,931. 93 435, 572,185.80
329, 231,890. 68 230, 649, 366. 93 293,454, 766. 74
277, 748, 276.84 213, 438,982. 95 194,872,242.99
239, 254, 221.89 218, 759,089. 74 130, 562, 949.10
156,925, 588. 93 176,070,303. 60 110,067, 816. 95
99.461,876.19 189, 695, 394.41 129, 212, 531. 62
157, 600, 420.85 139, 646,335.38 219,446,049.84
134, 212,165. 93 114,033,192. 20 201,491, 964. 37
94, 780,586. 64 112,310,034.15 181,312,990.64
81,958,343.39 83,153, 601. 22 198,842,438.15
123, 251,172. 91 68,440, 498.13 200,037, 695. 98
93, 257,057. 50 50, 715, 704. 66 145, 227,021. 20
59,130,068. 56 43,046, 971. 39 102,685, 668.36
38, 675, 566.12 37, 515, 249. 30 86, 602, 571.19
90,032,164.49 5,427, 410.12 85, 442, 254. 37
837, 500.00 — 837, 500.00
6,088,024, 225. 91 5, 220, 546,121. 33 —
61
HOUSING AND HOME FINANCE AGENCY
62
TABLE 12
Federal Home Loan Banks.—Schedule of interest rates on new advances and interest rates paid on members’ time deposits, Dec. 31, 1954
Boston New Pitts- Greens- Cincin- Indian- rbjpQ_„ Des Little rn„„olrQ San
Boston York burgh boro naU apolig Chicago MoInes Rock Topeka Franciseo
Percent Percent Percent Percent Percent Percent Percent Percent Percent Percent Percent
Advances to members:
Only one rate in effect---------------- 2.5 ________________________ 2.75 2.75 . . 2.75 2.75 3.0
Secured advances:
Not exceeding 1 year_______________________ 2.5 2.25 2.75 _____________ 2.5 2.75
1 year to 5 years_________________________________________ 3.0 _________________ 2.75
5 years to 10 years_______________________________________ 3.5 _______________ 3.0.
1 year to 10 years_________________________ 2.75 ______________________________________ 3.6 ....—— ————
Unsecured advances: 1 year or less____________ 2.5 2.50 2.75 ____________ 2.5 2.75 ... ———
Time deposits:
On deposits remaining:
30 days or longer..----------------- 1.25 1.5 1.5 1.75 1.5 2.0 1.5 2.0 _______ 1.5 »1.0-2.5
60 days or longer___________________________________________________________________________ 1.5
Certificates of deposit: (1 year)______ 2.0 _________ 2.0 _________________________ 1.75 .........._____ ...„..... 1. 75
1 Paid on the time portion, representing 70 percent of a combination time-demand deposit account.
HOME LOAN BANK BOARD
TABLE 13
Federal Home Loan Banks.—Comparative consolidated statement of condition as of dates indicated
Dec. 31, 1954 Dec. 31, 1953
ASSETS Cash: On hand and in banks $30, 622,335. 92 16,130, 729.86 $29,040, 623. 63 15, 378, 582.18
Treasurer of the United States
Total cash
46, 753,065. 78 641, 221,307. 58 44,419, 205. 81 387, 337,017. 28
Investments—U. S. Treasury obligations
Advances outstanding: Secured .
571,945, 617. 58 295, 532,487.00 637,407,110.15 314,147,908.00
Unsecured __
Total advances outstanding
867,478,104. 58 5,098, 210.82 80,804. 23 14,195. 92 951,555,018.15 4,046,879. 49 147,467. 23 11,966.04
Accrued interest receivable _ __
Deferred charges
Other assets...
Total assets
1, 560,645, 688. 91 1, 387, 517, 554.00
LIABILITIES Deposits: Members—Time.. . _
680,114, 563.19 121,914,326. 56 436, 650. 00 470,554, 262. 72 87,891, 513.64 233,325.00
Members—Demand..
Applicants for membership ... __ ...
Total deposits _.
802,492, 539. 75 2,793,047.10 20,487. 69 4, 590, 678. 53 272,000,000.00 558, 679,101.36 5,578,065.47 8,792. 56 3, 712,468.92 413, 500,000.00
Accrued interest payable .
Accounts payable .
Dividends payable
Consolidated obligations (net)1 _
Total liabilities .
1,081,896, 753.07 981, 478,428.31
CAPITAL Capital stock: Total paid in on subscriptions
437, 904,350. 00 368, 523,650.00
Surplus—Earned: Legal reserve _
22,124,469.92 3,194,636.89 15,525,479.03 19, 602,070. 53 3,158, 762. 58 14, 754, 642. 58
Reserve for contingencies Undivided profits _
Total earned surplus .
40,844, 585.84 37, 515,475.69
Total capital
478, 748, 935.84 406,039,125.69
Total liabilities and capital
1, 560,645, 688.91 1,387, 517, 554.00
1 Consolidated Federal Home Loan Bank obligations issued by the Home Loan Bank Board and now outstanding are the joint and several obligations of all Federal Home Loan Banks. The amounts shown represent the total unmatured obligations less amounts, if any, acquired in the open market and held by one or more Federal Home Loan Banks.
63
HOUSING AND HOME FINANCE AGENCY
TABLE 14
Federal Home Loan Banks.—Comparative consolidated statement of income and expense for the calendar years indicated
Calendar year 1954 Calendar year 1953
Amount Percent Amount Percent
Earned operating income: Interest on advances Interest on securities $18, 785, 747. 20 12,420,851.20 23,127. 60 60.15 39. 77 0.08 $19,867,803. 57 9,404,480. 77 6,360.35 67.86 32.12 0.02
Miscellaneous
Total operating income Operating expenses: Compensation Travel ___
31,229,726.00 100.00 29, 278, 644.69 100.00
1, 237, 586.22 118,185.16 505,930. 67 3,905,053.48 210,863.98 66,397.18 12, 664,718.19 8,165.18 388,300.00 Percent of operating income 3.96 0.38 1.62 12.51 0.68 0. 21 40. 55 0.03 1.24 1,184, 709.32 117, 594.99 450,800.98 7,938,938.33 332,922. 62 62,307. 50 8,264,922.28 6,146.25 381, 600.00 Percent of operating income 4.05 0.40 1.54 27.12 1.14 0.21 28.23 0.02 1.30
Other administrative expenses Interest on consolidated obligations Concessions on consolidated obligations Paid through Office of Fiscal Agent Interest on members’ deposits GAO audit expense Assessment for expenses of HLBB i Total operating expenses Net operating income.. Nonoperating income: Profit—Sales of securities Assessment credit for prior years Furniture and equipment sales Miscellaneous.
19,105,200.06 61.18 18, 739,942. 27 64.01
12,124,525. 94 38.82 10, 538, 702.42 35.99
467,141. 56 100,000.00 3,018. 70 175.28 Percent of total income 1.47 0.31 0.01 176,452.48 100,000.00 5,679.63 929.32 Percent of total income 0.60 0.34 0.02
Total nonoperating income Nonoperating charges: Loss—Sales of securities Furniture and equipment purchased Membership fees—Savings and Loan Foundation
570,335. 54 1.79 283,061.43 0. 96
9,422.76 43,899.09 29, 542. 67 0.03 0.14 0.09 71,064.97 43,807.04 0.24 0.15
Total nonoperating charges Net income
82,864. 52 0.26 114,872.01 0. 39
12,611,996.96 39.66 10,706,891.84 36. 22
64
SECTION 3
FEDERAL SAVINGS AND LOAN INSURANCE CORPORATION
Introduction
The creation of the Federal Savings and Loan Insurance Corporation in 1934 represented a new venture in the application of the insurance principle to the savings and loan business. Through the premiums paid by the insured members and the earnings realized on the invested assets, a common central fund is created that may be diverted to any institution where serious difficulty is encountered. After 20% years of operation, the American public has become fully aware of the advantages of insurance of savings and now regards such protection as an essential part of the Nation’s financial structure.
Important safeguards provided by the Corporation are: (1) The authority to act promptly in order to restore insured associations in financial difficulty to normal operation, and (2) the ability to make prompt payment to the savers in insured associations in liquidation. The Corporation’s ability to meet its insurance obligations is further strengthened by its continuing authority to borrow up to $750,000,000 from the United States Treasury.
Nearly 13,800,000 savers were receiving the advantages of insurance through the Corporation in the savings and loan associations which had qualified for insurance at the end of 1954. Each account holder was insured against loss on his savings account up to $10,000.
Insurance Coverage
On December 31, 1954, the membership of the Corporation numbered 3,433. Of these, 1,793 were State-chartered for which insurance is optional and 1,640 Federally chartered for which insurance is mandatory. All insured institutions, irrespective of their type, are members of the Federal Home Loan Bank System, which provides an important source of reserve funds.
Insured associations, which hold 90 percent of the assets of all savings and loan associations in the country, are located in every State in the United States, the District of Columbia, Puerto Rico, Alaska, Hawaii, and Guam. A detailed breakdown, by States and Federal Home Loan Bank Districts, of the number and assets of
65
HOUSING AND HOME FINANCE AGENCY
insured associations at the end of 1954 and 1953 will be found in Table 15.
Membership
Eligibility requirements.—The Corporation follows the standards of qualification established by the insurance law (Title IV of the National Housing Act, as amended) in determining whether an applicant institution is eligible for insurance. In brief, an institution, to become insured, must not only have unimpaired capital, but must also give positive proof of safe financial policies and management.
The Corporation may reject the application of an institution if it finds that the character of the management of the applicant or its home-financing policy are inconsistent with economical home financing or with the purposes of insurance.
Admissions and terminations.—During 1954, insurance of accounts was extended to 141 additional associations—110 State-chartered and 31 Federal associations. Twelve associations terminated their insurance because of merger or consolidation, leaving a net gain of 129 insured associations for the year. Insured institutions, with the exception of Federal associations, have the right of terminating their insurance, provided they meet certain legal requirements. Also under the provisions of the insurance law, the Corporation has the right to cancel the insurance of an institution for violation of the law or the rules and regulations of the Corporation. Wherever difficulties have appeared, it has been possible to develop corrective programs without resorting to the termination of insurance.
The following tabulation reflects the number of insurance admissions and terminations during the years 1947 to 1954:
Year Admissions Terminations Year-end total
1947 . 49 9 2,536
1948 _ _ - 87 7 2,616
1949 148 8 2, 756
1950 _ 111 7 2, 860
1951 _ 164 4 3,020
1952 -- 157 5 3,172
1953 . 143 11 3,304
1954 141 12 3,433
Insurance Protection for the Investor
The Corporation has broad authority in the event that an insured association becomes involved in financial difficulties and the appropriate State or Federal supervisory authority determines that conditions warranting the declaration of default exist. Specifically, the Corporation may prevent a default or may act to restore an institution in default to normal operation by making a contribution, by
66
HOME LOAN BANK BOARD
purchasing some or all of the insured association’s assets or, where applicable, by making a loan. If determination is made to liquidate the institution, the Corporation will make payment of the insured accounts to the savers in cash or in savings accounts in sound insured associations. In the event accounts are paid in shares of another insured institution, the Home Loan Bank Board determines that the association is in a position to pay promptly, and no more cash is required than through direct payment of the account.
Insurance Settlements
During its 20% years of operation, the Corporation has had 37 “insurance settlement actions”—instances in which insured associations experienced difficulties necessitating financial assistance by the Corporation. In connection with these cases, the Corporation has had net losses of $5,160,774—equal to less than 3 percent of its gross income for the entire operating period. The only case requiring financial assistance during the past five years was received in 1954. In this instance, a contribution of $16,500 was authorized to remove an estimated impairment of the assets of the association. The contribution will be disbursed as the anticipated losses are actually realized. The association is now operating normally under new management.
A summary of insurance losses through December 31, 1954, follows:
Condition of the Corporation
Assets of the Federal Savings and Loan Insurance Corporation increased $12,074,766 during the year to $235,517,456 at year end. Approximately 97 percent of the assets consisted of United States Government securities. A comparative statement of condition of the Corporation as of December 31, 1954, and December 31, 1953, appears in Table 16.
67
Type Number Amount
Contributions: Continued operations 20 6 3 $4, 356, 551 535,262 2,748
Mergers
Voluntary liquidations
Net total.--
29 4,894, 561
Receiverships: Payment of insurance
7 6, 699, 801 6,390, 254
Recoveries
Net
309, 547
Purchase of assets: Disbursements _ ___
1
4,534, 236 4,577,570
Collections-- _
Net .
(—)43,334
Net insurance losses
37 5,160, 774
HOUSING AND HOME FINANCE AGENCY
SOURCE ANO DISTRIBUTION OF CUMULATIVE GROSS INCOME OF THE FEDERAL SAVINGS AND LOAN INSURANCE CORPORATION
PROFIT ON SALE OF SECURITIES \ 1.8 %
SOURCE
ADM. FEES AND MISC. INCOME .5%
jW/N TERES tIB - ■ \
'' -/'EARNED''f ;■ |
37 6% INSURANCE I
| 8 / PREMIUMS j
\ ‘ / 60.1% . /
Insurance premiums and interest earned on United States Government securities comprise the major sources of income of the Corporation. During the past 20 years funds derived from these sources amounted to 60.1% and 37.6%, respectively, of the Corporation's total cumulative income of $212,231,449.
DISTRIBUTION
Cumulative expenses have amounted to but 4.2% of the Corporation's income to date. Net insurance losses have absorbed 2.4% and return on capital stock 18.7%. Thus, of the income received since the inception of the Corporation, 74.7% has been credited to reserves.
GROSS^ ^''—NET INSURANCE
EXPENSES LOSSES
/RETURN >7%
/ . 0 N . Va OiltlO kg. CAPITAL Vi
[ STOCK /8.7%
RESERV
CHART 13
The Corporation has made provision for the systematic retirement of the capital stock held by the United States Treasury, as required by law. The last payment of $10,208,000, made in July, 1954, brought the total amount of stock retired to $33,221,000, leaving a balance outstanding of $66,779,000 on December 31, 1954.
At year end, the Corporation’s reserve for losses rose to $158,481,522, all of which has been accumulated out of net earnings from the time the Corporation began operations in 1934. The combined capital
68
HOME LOAN BANK BOARD
stock and reserve of the Corporation totaled $225,260,522 and was equal to about 1 percent of the insured liability at year end.
Operations of the Corporation
The income of the Corporation is derived from two main sources— the annual premiums paid by the insured member institutions and earnings on United States Government securities owned by the Corporation. Operating expenses of the Corporation are paid out of funds received from these sources, with no part being paid by the United States Treasury. Cumulative expenses have amounted to 4.2 percent of the total income of the Corporation. After payment of an annual return on capital stock to the United States Treasury, the balance of net income is transferred at the close of the fiscal year to the reserve account for insurance losses.
During the year 1954, operating income of the Corporation amounted to $22,720,013, an increase of $3,102,062, or 16 percent, from the previous year. Insurance premiums and admission fees of $17,437,813 made up 77 percent of the total, while interest on investments of $5,282,199 accounted for 23 percent. Operating expenses totaled $755,690 for the calendar year 1954, and were equivalent to 3.3 percent of operating income. In 1953, the ratio was 3.7 percent. A statement of income and expenses for 1954 and 1953 appears in Table 17.
Assets and Liabilities of Insured Associations
Assets of the insured membership, as shown in the following tabulation, totaled $28,367,000,000 on December 31, 1954, an increase of $4,869,000,000, or 21 percent, during the year and more than double the assets at the end of 1950. About $166,000,000 of the growth was due to the admission of new members and the balance was attributable to the growth of the institutions already insured.
[Dollar amounts in millions]
End of year
1940______________________________
1944______________________________
1948______________________________
1949______________________________
1950__________________________
1951___________________
1952__________________________
1953____________________ .
1954 1_________________
Total assets Mortgage loans outstanding
Amount Percent of all S&LA’s
$2, 926 51.0 $2,370
4, 995 67.0 3,272
9,715 74.6 7, 777
11,278 77.1 9,022
13, 644 81.0 11,153
16,146 84.3 13,191
19, 582 86.7 16,031
23, 498 88.2 19, 444
28,367 89.5 23,564
Cash and U. S. Governments Percent to assets
Mortgage loans outstanding Cash and U. S. Governments
$195 81.0 6.7
1,493 65.5 29.9
1,616 80.1 16.6
1,869 80.0 16.6
2,002 81.7 14.7
2,295 81.7 14.2
2,718 81.9 13.9
3,038 82.7 12.9
3,578 83.1 12.6
1 Preliminary.
350920—56----7
69
HOUSING AND HOME FINANCE AGENCY
ASSETS OF INSURED AND UNINSURED SAVINGS AND LOAN ASSOCIATIONS
BILLIONS OF DOLLARS 321 fl-------------------------
LEGEND _
04 ___ rw INSURED _____________ _
UNINSURED^ F~l
16 —— ----------------------tt— — — -
—
8------------------'■ - ----------- --- _
oflLris 11 ■ la li la lilw 1
1935 1940 1945 1949 1950 1951 1952 1953 1954
CHART 14
The mortgage lending operations of the insured associations rose to an all-time high during 1954. The $8,176,000,000 of new loans placed on their books for all purposes was greater than the previous peak year of 1953 by $1,192,000,000, or 17 percent. On December 31, 1954, as shown below, first mortgage loans of these institutions totaled $23,564,000,000, of which 18 percent were guaranteed or insured by Veterans’ Administration and 5 percent were insured by Federal Housing Administration. The number of borrowers totaled over 4,400,000. Liquid assets of cash and United States Government securities were equivalent to 15 percent of savings capital at year end.
Type of loan Mortgage loans held Percentage distribution
FHA—insured $1,088,935,000 4,323,385,000 4.6 18.4
VA-—insured or guaranteed
Subtotal
5,412,320,000 18,151, 758,000 23.0 77.0
Uninsured mortgage loans
Total
23, 564,078,000 100.0
The large volume of lending has, of course, been dependent upon a heavy inflow of savings into these institutions. At year end, savings
70
HOME LOAN BANK BOARD
capital held by the savers in insured associations aggregated $24,529,-000,000, an increase of almost 22 percent during the year. Nearly 97 percent of the savings accounts were fully covered by insurance.
The reserves and undivided profits of insured associations, which would be available for losses in case of need, continued to increase in 1954. These accumulations, resulting from consistent annual allocations of net income, totaled over $1,876,000,000 at the close of the year, equivalent to 7.6 percent of savings capital.
71
HOUSING AND HOME
FINANCE AGENCY
TABLETS
Federal Savinas and Loan Insurance Corporation.—Number and assets of insured savings and loan associations, by type, Dec. 31, 1954 and 1953
[Dollar amounts shown in thousands]
Insured State 1953 Assets $9, 548,328 s o' CM 94, 028 15, 491 8, 048 17, 421 124, 412 444 1, 547, 689 835, 070 712, 619 457, 636 445,220 12, 416 1,012,819 19,135 427, 487 6,702 12, 789 145, 042 263, 095 56,848 81, 721
Number 1, 700 CO 22 4 1 5 4 1 262 148 114 r—< i co »Q i CO CD CO r—< 7 16 2 4 19 83 19 16
1954 Assets $11, 591, 658 5 111, 288 21, 894 9,292 26, 771 141,930 436 oo CM cm OO 1, 026, 850 797, 578 535,120 3, 038 517, 290 14, 792 1,203,265 23, 399 486,180 11, 314 14, 897 178, 970 319, 748 70, 716 98, 041
Number 1,793 44 23 6 1 7 6 1 266 154 112 CO 1 137 5 £3 7 17 3 4 18 91 19 18
Federal 1953 Assets CO 00 *9- 808,325 | 230,131 12, 757 490, 934 40,885 14, 739 18, 879 1,499,337 | 125, 641 1,358,614 15,082 928,859 4, 742 851,044 73, 073 2,388,954 108,220 142, 795 773, 202 415, 668 386, 897 206, 404 186, 548 169, 220
Number 1,604 00 io r-< CO 20 73 1 CM r-4 2 129 21 OO 00 CM 23 10 66 63 39 32 34 21
1954 Assets $16, 775, 485 924,875 265, 271 14,321 562,363 45, 801 15,108 22,011 1,746,307 1 157,960 1, 567,375 20,972 1,121,733 5,787 1,032,630 83,316 2,957, 753 135, 525 162, 695 1, 021,927 494, 999 459, 967 242, 666 226, 936 213,038
Number 1,640 58 U- IQ r-4 CM rH CM rH CO 05 05 CM CD r-1 cm r- co 2 130 21 307 iCHHOOOWNM CMt-H^COt^COCOCM
All insured 1953 Assets $23, 593,181 1,068,169 | 324,159 28, 248 498, 982 58, 306 139,151 19, 323 3,047,026 960, 711 2,071, 233 15,082 1,386, 495 4, 742 1, 296, 264 85, 489 3,401, 773 127, 355 570, 282 779, 904 428,457 531, 939 469, 499 243,396 250, 941
Number 3, 304 _S6 39 9 32 7 5 3 CO co 168 187 1 293 2 265 26 454 30 26 68 67 58 115 53 37
1954 Assets $28, 367,143 1,236,486 376, 559 36,215 571, 655 72, 572 157, 038 22, 447 3,570,735 1,184,810 2,364,953 20,972 1, 656, 853 8,825 1, 549, 920 98,108 4,161,018 158, 924 648, 875 1,033, 241 509, 896 638, 937 562, 414 297, 652 311, 079
Number 3, 433 SOI 40 11 32 9 7 3 365 176 188 1 296 3 267 26 484 32 28 74 72 58 123 56 41
United States District No. 1—Boston Connecticut Maine Massachusetts New Hampshire Rhode Island Vermont District No. 2—New York New Jersey New York Puerto Rico District No. 3—Pittsburgh Delaware Pennsylvania . West Virginia District No. 4—Greensboro Alabama District of Columbia Florida Georgia Maryland North Carolina South Carolina Virginia
72
HOME LOAN BANK BOARD
1 1, 288,916 23, 417 1, 261, 208 4,291 446,128 271, 673 174,455 1,521,807 1,098,100 423, 707 490,826 101,195 101, 638 253, 573 25, 453 8, 967 718, 981 14,191 297, 327 13, 418 21,311 372, 734 350, 730 86,294 119, 296 73, 734 71, 406 1,452, 952 18, 611 1, 215, 294 7,885 1,331 31,301 51,436 127,094
CO o 05 r-4 CO 00 05 CD r—1 u-cm g 231 92 CO 05 00g CM CO 05 COg IQ 00 rH 00 C5 55332 co 3 101 3 1 9 4 20
co co 00 cd CD 26,974 1,437,869 1,990 524, 347 310, 668 213, 679 j 1, 871,802 1, 352, 695 519,107 608, 002 114, 515 132, 534 319, 645 30,252 11,056 884,387 16, 434 341, 616 18, 523 25,607 482,207 438,109 123, 507 141, 218 89,493 83, 891 1,923, 754 28,900 1, 599, 659 770 32, 563 1,794 36, 921 68, 215 154,932
s 05 CM CM 05 § 05 t—1 t- CM CM CO 248 94 05 C5 CO 05 CM CM CO CM CO T—1 geo GO CD IQ O t^oo^ co N’t HrH 1 r—< 1 III I LQ xf< r-4 rt< r-4 CO I ILOH । • 2Z1 ‘ ■ CM I > it! ! iii 1 iii ■ iii
1 1, 715, 748 250,441 1,197, 553 267, 754 957, 953 503, 445 454, 508 1, 408, 435 1, 206,013 202, 422 947,561 165, 613 439, 972 298, 949 29, 750 13, 277 605,473 93, 487 71,977 71, 344 35,949 332, 716 608, 526 163,014 174,184 46, 930 224,398 2,175,682 2,071 50, 907 1,445,188 13,365 53,826 15, 542 8,696 125,305 57, 519 374, 535 28,728
1 55 135 36 g CO CO r- co 05 r—1 109 40 co r—I 33 32 37 6 5 00 80 00 05 23 29 15 31 05 T—1 1 2 71 1 8 4 1 21 6 35 9
1 2, 003,828 298, 771 1, 376, 782 328, 275 1,104,921 573, 970 530, 951 1,687,960 1,436, 634 251,326 1,153,032 204, 073 517,948 378,313 36, 813 15,885 741,716 110, 702 82, 216 91,141 45,933 411, 724 730,143 | 204, 912 207,028 59, 002 259, 201 2,603,217 | 2,143 68,194 1,705,123 15,900 61, 361 19, 247 10, 669 146, 477 73,285 467, 445 33, 373
8 CM 55 135 39 S CO co r^co g 110 40 2 35 36 38 7 5 CO 37 14 22 7 80 o 22 29 16 30 3 1 2 69 1 8 4 1 21 6 35 9
1 3,004, 664 273,858 2, 458, 761 272,045 1,404, 081 775,118 628, 963 2, 930, 242 2,304,113 626,129 1,438, 387 266, 808 541, 610 552, 522 55, 203 22, 244 1,324,454 107,678 369, 304 84, 762 57, 260 705,450 959,256 249,308 293,480 120, 664 295,804 3,628,634 2,071 69, 518 2, 660,482 21, 250 55,157 46,843 8,696 125,305 108,955 501, 629 28,728
o 64 316 39 CO ■ .8 149 57 CM 340 132 C5 8 57 40 96 8 8 o co T—1 CO s 47 73 29 47 05 CM 1 5 172 4 9 10 1 21 10 55 9
I 3, 470, 661 325, 745 2,814, 651 330, 265 1, 629, 268 884, 638 744, 630 3,559,762 2, 789,329 770, 433 1, 761,034 318, 588 650,482 697, 958 67, 065 26,941 1,626,103 127,136 423, 832 109, 664 71, 540 893,931 1,168,252 328, 419 348, 246 148, 495 343,092 4,526,971 2,143 97,094 3,304, 782 770 48,463 63,155 56,168 10, 669 146,477 141, 500 622,377 33, 373
0 § g^g0500 I 74 28 15 156 1
i i d 2; Kentucky _ Ohio Tennessee 2Z” District No. 6—Indianapolis District No. 7—Chicago Illinois-.. District no. 8—Des Moines North Dakota —. . . . . ' South Dakota _ . 1 District No. 9—Kittle Kock Arkansas New Mexico Texas "II” District No. 10—Topeka Colorado Nebraska i”“IIIII"II”II"I”I" Oklahoma District No. 11—San Francisco Arizona IIIIIII California Hawaii-... Idaho Montana 2IIII Nevada Utah Washington Wyoming ZZZI
73
HOUSING AND HOME FINANCE AGENCY
TABLE 16
Federal Savings and Loan Insurance Corporation.—Statement of condition as of dates indicated
Dec. 31,1954 Dec. 31,1953
ASSETS Cash . ... $1.496,515.46 $1,073,174. 45
Accounts receivable: Insurance premiums—payments due
368,737.81 5,112, 582.91 1, 269.43 333,614. 26 4,174, 711. 91 120.27
Insurance premiums—payments deferred
Admission fees receivable
Total
5,482,590.15 4,508,446.44
Investments: U. S. Government securities (par value)
228, 690,000. 00 996,012. 76 217,440,000.00 608.452.79
Unamortized discount on investments-l
Market value ($227,285,000.00)
227,693,987. 24 678, 410.91 216,831,547. 21 867,776.09
Accrued interest on investments...
Pending and unclaimed insured accounts in liquidated Institutions
7,040.42 595.49 7,046.38 596. 23
Less: Allowance for losses .2 ... ...
Total . .
6,444. 93 6,450.15
Furniture, fixtures, and equipment
59,758.09 59, 758.09 59,035. 59 59,035.59
Less: Allowance for depreciation
Total
Deferred charges: Prepaid assessment to Home Loan Bank Board
158,403. 60 737.88 201. 85 155,037.03
Fidelity bond and other insurance premiums
Preliminary expenses on problem cases . .
Total
159.343.33 164.07 155,037.03 258.45
Other assets
Total assets -
235,517,456.09 223,442,689. 82
LIABILITIES AND CAPITAL Liabilities: Accounts payable.
8.06 24,589. 72 782,924. 50 19,542.31
Accrued liabilities _ 22,387.30 683,906.19 7,124. 58 16, 500. 00 7.040.42 8,127.62
Accrued payments in lieu of dividends on capital stock
Deductions from employees* salaries „
Undisbursed commitments for contributions to insured institutions.. Pending and unclaimed insured accounts in liquidated institutions.. Custodial funds—receiverships
7,046.38 8,132.84
Total
745,086.11 842. 243.81
Deferred credits: Unearned insurance premiums
9, 511, 682.12 166.03 7,866,514.94 53.76
Prepaid insurance premiums
Total
9, 511,848.15 66, 779,000. 00 7,866,568.70 76.987,000.00
Capital: Capital stock
Reserve fund as provided by law
147,620,308. 70 10, 861,213.13 128,751,381. 70 8.995.495. 61
Unallocated income . .
Total- - -
158,481.521.83 137,746,877.31
Total liabilities and capital -- -
235,517,456.09 223,442,689.82
74
HOME LOAN BANK BOARD
TABLE 17
Federal Savings and Loan Insurance Corporation.—Statement of operations for the calendar years 1954 and 1953
Items Jan. 1, 1954, through Dec. 31, 1954 Jan. 1, 1953, through Dec. 31, 1953
Operating income and recoveries: Insurance premiums and admission fees earned $17.437.813. 54 5, 282,199. 03 $14.514,451.56 5.083. 232. 37 20. 267. 22
Interest earned on U. S. Government securities
Recoveries on contributions
Total operating income and recoveries .
22, 720, 012. 57 19,617,951.15
Operating expenses: Administrative expenses
442. 965. 32 310,459.17 2, 265. 06 431.516.42 289.409.60 4.292.31
Services rendered by Home Loan Bank Board..
Other
Total operating expenses
755, 689. 55 725.218.33
Net income from operations
21,964, 323.02 234,268. 59 18, 892, 732. 82 2,738. 05
Nonoperating income: Net profit on sale of securities and other miscellaneous income
Net income before provision for losses
22,198, 591.61 16,499. 26 18,895,470.87
Provision for insurance losses
Net income before payment of return on capital stock
22,182,092. 35 1,447,447.83 18,895,470.87 1, 633,426.15
Provision for return on capital stock in lieu of dividends..
Net income
20, 734, 644. 52 17, 262,044. 72
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SECTION 4
FEDERAL SAVINGS AND LOAN SYSTEM
Introduction
The 1,640 Federal savings and loan associations in operation at the close of 1954 comprise the Federal Savings and Loan System. These associations are privately owned and operated mutual institutions. Responsibility for their chartering and regulation is vested in the Home Loan Bank Board pursuant to section 5 of the Home Owners’ Loan Act of 1933.
The basic purpose of this legislation was to meet a long-existing need throughout many areas of the United States for adequate local sources of home mortgage credit and facilities for the investment of savings.
Under its provisions, Federal savings and loan associations may be established by the granting of new charters to local organizing groups or by the conversion of existing institutions of the savings and loan type from State to Federal charter. The Home Loan Bank Board has endeavored to incorporate into the charter for Federal associations the soundest and most advanced operating principles and practices known for savings institutions specializing in home financing.
Savings and Lending Features
Being mutual institutions, the entire capital of Federal savings and loan associations is owned by their members in the form of savings accounts. Federal associations may not accept deposits or conduct a commercial banking business. Savings accounts are nonassessable and all participate equally in the earnings of the association. Dividends on savings accounts are paid semiannually at a rate determined by the directors on the basis of net earnings. The directors are elected by the members at annual meetings. Withdrawal of accounts, in full or in part, may be made by the owner upon application, in accordance with charter and regulatory provisions.
The funds invested in Federal savings and loan associations are loaned principally in the form of first mortgages on homes located within fifty miles of the association’s home office. For the most part, these loans are made on a monthly, direct-reduction basis.
Federal associations are limited by charter and regulatory provisions as to the percentage of property value that may be loaned, depending
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-on the type of property and the terms of repayment. They may, within certain limitations, make unsecured loans for property alteration, repair, or improvement.
In addition to their lending operations, Federal associations may invest their funds in obligations of the United States and in obligations and stock of the Federal Home Loan Banks.
All Federal savings and loan associations must qualify for insurance of their accounts by the Federal Savings and Loan Insurance Corporation. The funds of each investor in these associations are, therefore, insured against loss up to $10,000 by the Insurance Corporation. All Federal associations are also required to be members of the Federal Home Loan Bank System. Such membership provides them with a readily available credit reservoir. These associations are examined regularly and supervised by the Home Loan Bank Board and are subject to its regulations.
Granting of Charters and Branches
Section 5(e) of the enabling Act provides the criteria to be followed by the Home Loan Bank Board in the granting of permission to organize new Federal associations. Consideration is given to the character and responsibility of the applicant group, the need for such an institution in the community to be served, the prospects for its usefulness and success, and whether it could be established without undue injury to properly existing local thrift and home-financing institutions.
In the case of every application, provision is made for a public hearing. If no objection is received in response to locally published notice of such hearing, the hearing may be dispensed with and approval granted. On the basis of the information disclosed at the public hearing, the Home Loan Bank Board makes its final determination. During the year 1954, there were 27 charters issued for new Federal associations.
The Board applies the same eligibility standards for conversion of an uninsured State association to Federal charter as if it were seeking insurance of accounts under State charter. It is the policy of the Board to permit conversion of insured associations, either from State to Federal charter or from Federal to State charter, in accordance with the expressed vote of the association’s mutual shareholders. During the 1954 calendar year, 3 Federal associations reincorporated as State institutions and 17 State associations converted to Federal charter.
Applications for branch offices by Federal associations are considered on the basis of the same tests as applications for new Federal charters. Approvals are granted only when there is satisfactory evidence that there is a real need for such an office in the community
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and that it can be operated successfully without undue injury to local institutions.
Without exception, provision is made for a public hearing before approval of the establishment of any branch office. Notice of such hearing is published locally and also mailed to the State supervisory authority and to the appropriate regional savings and loan trade organization. Those who wish to protest the establishment of a branch office may appear in person or submit their objections in writing.
On December 31, 1954, there were 262 branch offices operated by 175 Federal savings and loan associations, compared with 198 branches operated by 140 associations at the close of the previous year, or a net increase of 64 branches. Of the 262 branch offices, 223 represent newly established facilities, 16 represent offices acquired through merger, and 23 offices were in existence prior to conversion to Federal charter.
NUMBER AND ASSETS OF FEDERAL SAVINGS AND LOAN ASSOCIATIONS
NUMBER IN THOUSANDS BILLIONS OF DOLLARS
101 [f- 120
LEGEND
8----- ASSETS --------0“ 16
NUMBER H ' (BILLIONS OF DOLLARS)
(THOUSANDS) |gg| pi - -
6----------------------------------------==---- ---- - 12
4-----------------------------T1--------------- ---- -8
2---------------p-j— I— — ■ — — B :—§ - 4
1935 1940 1945 1949 1950 1951 1952 1953 1954
CHART 15
Number and Assets of Federal Associations
Federal savings and loan associations are located in each of the 48 States, District of Columbia, Alaska, Hawaii, and Puerto Rico. As of December 31, 1954, there were in operation 1,640 Federal associations, of which 725 represented newly organized institutions and 915 had converted from State to Federal charter.
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HOME LOAN BANK BOARD
Combined assets of all Federal savings and loan associations at the close of 1954 were $16,775,500,000, an increase of $2,730,600,000, or 19.4 percent during the year. The assets of Federal associations account for about 53 percent of the combined assets of all operating savings and loan associations in the country.
The remarkable growth and development of the Federal Savings and Loan System during the period 1935 to 1954 is shown in Chart 15. Indicative of this development is the fact that the average size of Federal associations has increased from $502,000 in 1935 to $2,673,000 in 1945, and to $10,229,000 in 1954.
Savings Activity
New savings continued to flow into Federal savings and loan associations during the calendar year 1954, attaining an all-time high of $6,228,425,000—an 18 percent increase over the previous year. Withdrawals totaled $3,763,586,000, accounting for a withdrawal ratio of 60 percent as compared with 61 percent for 1953.
The number of investors in Federal savings and loan associations increased by 11 percent from 7,178,400 at the close of 1953 to 7,975,100 on December 31, 1954. A new peak—$14,549,200,000—was also reached in the aggregate of savings accounts in Federal associations at the end of 1954.
Lending Activity
Accompanying the large increase in savings, the mortgage lending operations of Federal savings and loan associations experienced the greatest growth since their creation. At the close of the calendar year 1954 the mortgage loan portfolio of these associations represented almost 83 percent of their total assets and amounted to $13,888,300,000, an increase of 20 percent over the $11,567,100,000 of mortgage loans on December 31, 1953.
As in previous years, conventional loans represented nearly three-fourths of the mortgage loan portfolio of Federal associations during 1954, accounting for $10,333,000,000. GI loans represented $2,784,-000,000, or 20 percent of the total, and FHA loans accounted for $771,300,000, or 6 percent.
Of the $4,680,300,000 of new mortgage loans made by Federal associations during the calendar year 1954, $1,942,900,000, or more than two-fifths of the total were for the purchase of existing homes. Loans for new home construction accounted for $1,666,000,000, or about one-third, and the remaining $1,071,400,000 served for refinancing, reconditioning, and other purposes.
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Liquidity and Reserves
On December 31, 1954, Federal savings and loan associations held liquid assets totaling $2,156,700,000 in the form of cash and Government obligations, an increase of $314,000,000, or 17 percent over the holdings at the close of 1953. These liquid assets were equivalent to 15 percent of all savings accounts and 13 percent of total assets. General reserves and surplus accounts of all Federal savings and loan associations increased during 1954 to $1,084,700,000 and represented 6.5 percent of assets at the close of the year.
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PART III
Eighth Annual Report
HOUSING AND HOME FINANCE AGENCY
Covering the Activities of the
FEDERAL HOUSING ADMINISTRATION
FUNCTIONS OF THE FEDERAL HOUSING ADMINISTRATION
Under authority of the National Housing Act of June 27, 1934, as amended, the Federal Housing Administration operates insurance programs designed to encourage improvement in housing standards and conditions and to exert a stabilizing influence in the mortgage market. The FHA makes no loans and does not plan or build housing;
As provided by the President’s Reorganization Plan No. 3 of 1947, the FHA is a constituent unit of the Housing and Home Finance Agency.
The various types of FHA insurance in effect in 1954 are summarized below. Modifications of the FHA program made by the Housing Amendments of 1955 (Public Law 345, 84th Cong., approved Aug. 11, 1955) are not reflected in this report.
Title I
Section 2 of Title I of the Act authorizes the FHA to insure qualified lending institutions against loss on loans made to finance the alteration, repair, improvement, or conversion of existing structures and the building of small new nonresidential structures.
Section 8 of Title I, added to the Act in 1950, authorized the insurance of mortgages on new single-family dwellings for families of low and moderate income, particularly in suburban and outlying areas. This authority was terminated by the Housing Act of 1954 (Public Law 560, 83d Cong., approved Aug. 2, 1954), and similar authority was provided under Section 203(i) of Title II, which also authorizes FHA insurance of mortgages in amounts up to $6,650 on farm properties.
Title II
Section 203 authorizes the insurance of mortgages on new and existing 1- to 4-family dwellings. This section accounts for nearly two-thirds of all mortgage insurance written by the FHA.
Section 207 authorizes the insurance of mortgages, including construction advances, on rental housing projects.
Section 213, added to Title II in 1950, authorizes the insurance of mortgages on cooperative housing projects. In a sales-type project (one built by a nonprofit corporation or trust organized for the purpose of building homes for members), the individual homes may be released
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from the blanket mortgage on the project and mortgages on the individual homes may be insured under Section 213. This section also authorizes the FHA to furnish technical advice and assistance in the organization of the cooperatives and in the planning, development, construction, and operation of their housing projects.
Section 220, added in 1954, provides FHA mortgage insurance on liberal terms to assist in financing the rehabilitation of existing salvable housing and the replacement of slums with new housing in areas for which urban renewal plans or urban redevelopment plans have been certified to FHA by the Housing and Home Finance Administrator. Urban redevelopment plans under Title I of the Housing Act of 1949, as amended prior to the Housing Act of 1954, are eligible for the Administrator’s certification. However, Title I as amended by the Housing Act of 1954 now requires, as a step preliminary to such certification, that the Administrator shall have approved and certified a workable program designed for the entire community to eliminate slums and prevent the spread of urban blight.
Section 221, also added in 1954, authorizes mortgage insurance on homes for families from urban renewal areas. Mortgage insurance is available under Section 221 for purchase of existing housing, rehabilitated housing, and new construction. It is also available for rental housing if the mortgagor is a private nonprofit organization regulated under Federal or State law.
Section 222, added in 1954, authorizes the insurance of mortgages on dwellings owned and occupied by persons on active duty with the Armed Forces or the Coast Guard, on certification by the Department of Defense (or the Treasury Department, for Coast Guard personnel)»
Section 223, added in 1954, authorizes the insurance under Sections 203 and 207 of mortgages on specified types of permanent housing sold by the Government. This authority is similar to that formerly provided under Section 610 of Title VI.
Title VI
Sections 603 and 608 were enacted in 1941 and 1942, respectively to aid the production of war housing through mortgage insurance provisions more liberal than those under Sections 203 and 207. The authority to issue commitments of mortgage insurance on new construction under Section 603 expired April 30, 1948, and new-con-struction commitments under Section 608 were limited to those for which applications were received on or before March 1, 1950.
Section 609, added in 1947, authorized the insurance of short-term loans to finance the manufacture of housing, and the insurance of lending institutions against loss on notes given in part payment by purchasers of manufactured housing financed with insured loans.
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Section 610, added in 1947, authorized the insurance under Sections 603 and 608 of mortgages on specified types of permanent housing sold by the Government.
Section 611, added in 1948, authorized the insurance of mortgages on projects of 25 or more new single-family dwellings in order to encourage the application of site fabrication and other cost-reduction techniques to large-scale home building operations.
The Housing Act of 1954 provided that no new insurance commitments should be issued under Title VI after August 2, 1954.
Title VII
Title VII, added in 1948, authorizes the insurance of a minimum amortization charge and an annual return on outstanding investments in debt-free rental housing projects.
Title VIII
Title VIII, added in 1949, authorizes the insurance of mortgages on rental housing built on or near military reservations for the use of military or civilian personnel of the Armed Forces, on certification by the Secretary of Defense, and rental housing for employees of Atomic Energy installations on certification by the Atomic Energy Commission.
Title IX
This title, added to the Act in 1951, authorizes FHA insurance of mortgages on housing programed by the Housing and Home Finance Administrator for critical defense areas. The Housing Act of 1954 provided that no commitment should be made after June 30, 1954, on new construction, except that the President was given stand-by authority until July 1, 1955, to authorize the use of Title IX for Federal aid in the provision of defense housing during certain periods or for a specific project or projects.
350920—56---8
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SECTION 1
GENERAL REVIEW
The year 1954 was a critical one in FHA history. It saw the enactment of a new housing program in which the FHA was given a vital role. It saw a rapidly accelerating volume of applications for FHA mortgage insurance. It saw the FHA free itself of debt to the Federal Government. But it also saw the searchlight of investigation turned on the 20-year-old agency to reveal weaknesses and errors in the past that required vigorous corrective action.
When the year ended, the FHA was in a much stronger position than it had been twelve months before. Its insurance programs had been streamlined. The scope of its activities had been expanded to cover service to neighborhoods and families never before reached. Its policy-making staff had been reorganized. Its procedures had been strengthened. Despite the unfavorable publicity resulting from the investigations, public confidence in the FHA had been maintained. In the last five months of the year, following passage of the new housing law, the rate at which applications for home mortgage insurance were received had established a new record for each individual month.
FHA in the New Housing Program
On January 25, 1954, President Eisenhower presented to Congress a housing program based on recommendations made to him on December 14, 1953, in the report of the President’s Advisory Committee on Government Housing Policies and Programs. The committee, established by executive order on September 12, 1953, with the Housing and Home Finance Administrator as chairman, had been directed to study Government housing policies, programs, and organizations and to develop recommendations that would define the proper role of the Federal Government in the housing field and “outline more economical and effective means for improving the housing conditions of our people.”
The major proposals made by the President in his housing message were incorporated in the Housing Act of 1954 (Public Law 560, 83d Cong., approved Aug. 2, 1954). The Act included a number of important amendments to the FHA program.
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In general, the effect of the amendments was to make the benefits of the program available to a greater number of families, particularly in the lower income group and in rural and suburban communities; to remove inequities in the financing terms available at various price levels; to do away with discriminatory provisions that had affected the financing of older homes; to assist in the restoration and preservation of blighted neighborhoods; to consolidate the provisions for mortgage insurance and simplify their administration; and to safeguard property owners and renters against exploitation under the FHA program.
Property Improvement Loans
To emphasize the responsibility of lending institutions holding contracts of insurance under Title I of the National Housing Act, this title was amended by limiting FHA insurance on property improvement loans to 90 percent of loss on the individual loan (instead of 100 percent as before), up to 10 percent of the aggregate net proceeds of all such loans made by an institution. Other amendments restricted Title I insurance to the financing of items that substantially protect or improve the basic livability or utility of properties, and authorized the Commissioner to declare ineligible any item that he determined to be especially subject to selling abuses. Title I as amended also provides that a residential structure to be improved must have been completed and occupied for at least six months, and that the outstanding balance of all loans for any one structure may not exceed the maximum specified in the Act for the particular type of loan: that is, $2,500 to improve an existing property, $3,000 to build a new nonresidential structure, or $10,000 to improve or convert a structure used or to be used as a dwelling for two or more families. (The last mentioned type of loan has been limited by FHA regulation to $2,500 per dwelling unit or $10,000, whichever is less.)
Home Mortgage Insurance
Section 203.—The principal amendments made to Section 203 of Title II were:
1. The maximum mortgage amounts were increased from $16,000 to $20,000 for a 1- or 2-family dwelling, from $20,000 to $27,500 for a 3-family dwelling, and from $25,000 to $35,000 for a 4-family dwelling.
2. For owner-occupied dwellings, the maximum loan-value ratio was established at 95 percent of the first $9,000 of appraised value plus 75 percent of additional value, if the property was approved for mortgage insurance before construction was begun; and 90 percent of the first $9,000 plus 75 percent of the remaining value, if the property had not been so approved. When the mortgagor is not the occupant of the property, the mortgage may not exceed 85 percent of the amount that an owner-occupant could obtain.
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3. The maximum mortgage maturity was set at 30 years, but not to exceed three-fourths of the FHA estimate of the remaining economic life of the building.
4. The authority to insure mortgages on low-cost homes under Section 8 of Title I was terminated, and a similar provision was made in Section 203 (i). The maximum mortgage amount is $6,650 when the mortgagor is an owner-occupant and $5,950 when the mortgagor is a builder. The structure must be a single-family dwelling approved for mortgage insurance before construction starts, and the ratio of mortgage loan to appraised value may be as high as 95 percent for an owner-occupant mortgagor and 85 percent for a builder mortgagor.
This type of financing was made available to an owner-occupant mortgagor regardless of his credit standing, if a person or corporation, other than the builder, with satisfactory credit standing, guarantees payment of the mortgage. The guarantor may lend to the mortgagor all or part of the required down payment, on a note maturing after the maturity date of the mortgage.
5. Section 203(i) financing was also authorized for the construction of a farm home on a site of 5 or more acres adjacent to a public highway. This replaced the farm mortgage insurance authority formerly contained in Section 203(d), which was terminated.
6. The insurance of mortgages up to $7,000 and 100 percent of value on owner-occupied single-family structures built to replace homes destroyed by floods, fires, or other disasters was authorized in Section 203(h). This authority had formerly been contained in Section 8.
Mortgage Insurance for Servicemen.—A new Section 222 of the National Housing Act was designed to assist men on active duty in the Armed Forces and the Coast Guard to finance homes. The Act provides that any mortgage eligible under Section 203 may be insured under Section 222, except that under the latter section the mortgage amount may be as much as 95 percent of appraised value but not over $17,100. The serviceman must occupy the dwelling or certify that his failure to do so is occasioned by his military assignment. The Secretary of Defense (or the Secretary of the Treasury if the mortgagor is serving in the Coast Guard) must certify that the serviceman requires housing, is on active duty, and has been serving on active duty for more than 2 years. The Secretary of Defense (or the Secretary of the Treasury, for Coast Guard personnel) will pay the mortgage insurance premium as long as the serviceman owns the home.
Other Provisions.—Other provisions of the Housing Act of 1954 affecting home mortgage insurance included a requirement that the borrower make a down payment of at least 5 percent of the acquisition cost of the property; that the seller of a 1- or 2-family dwelling give the mortgagor a written statement of the FHA appraisal; and that the
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builder or seller of a new 1- to 4-family dwelling give the purchaser a warranty of substantial conformance with the plans and specifications on which the FHA valuation was based.
The FHA was authorized to insure advances to the mortgagor for improvements and repairs under an open-end provision in the insured mortgage.
Rental Housing
Section 207 was amended by increasing the maximum mortgage amount per room from $2,000 to $2,400 and the maximum amount per unit (applicable to projects of less than 4 rooms per unit) from $7,200 to $7,500 in projects consisting of elevator structures. The $10,000 per-unit limitation for Section 207 mortgages on projects of 4 or more rooms per unit was removed, and the insurance authority under the section was extended to rehabilitation of eligible properties in slums and blighted areas.
The insurance under Section 207 of mortgages in amounts up to 90 percent of estimated replacement cost was authorized for properties in Alaska and Guam.
Cooperative Housing
The provisions of Section 213 were amended in the interests of soundness and wider applicability.
The new Act provided for determining the maximum insurable mortgage amount on the basis of estimated value of the project rather than on the previous basis of replacement cost. The maximum of $5 million was increased to $25 million for a mortgagor regulated by Federal or State laws. For other mortgagors the maximum was left at $5 million.
The maximum mortgage amount was set at $2,250 per room and 90 percent of estimated value, except that if at least 65 percent of the cooperative members were veterans, these limitations might be increased to $2,375 and 95 percent respectively. For projects of fewer than 4 rooms per family unit, the mortgage amount was to be not over $8,100 per family unit (or $8,550, in veterans’ projects). FHA administrative rules, however, limited these amounts to $7,200 per family unit, or $7,600 in a veterans’ cooperative, in order to encourage the creation of larger family units under Section 213.
Higher amounts per room and per unit were authorized for projects consisting of elevator structures.
Urban Renewal
The Housing Act of 1954 provided two new programs of FHA mortgage insurance in Sections 220 and 221 of the National Housing Act to assist the financing of rehabilitation and new construction in urban renewal areas.
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Section 220 authorized the insurance of mortgages on homes and rental properties on terms similar to those under Sections 203 and 207, and in addition provided for the insurance of mortgages on dwellings with more than 4 units but fewer than 12. The property must be located within the area delimited by an urban redevelopment or renewal project which the Administrator of the HHFA has certified to the FHA Commissioner as an approved project for which the local government has the organization and financial capacity necessary to carry to successful completion.
Section 221 authorized the insurance of mortgages on low-cost housing for families displaced because of governmental action in communities which have workable programs for the prevention and elimination of slums or blight or for which redevelopment or urban renewal projects have been approved. The maximum mortgage for an owner-occupant mortgagor was limited to $7,600, or $8,600 in a high-cost area, and 95 percent of appraised value. Mortgages in amounts up to $6,800 ($7,650 in high-cost areas) or 85 percent of value could be insured on single-family homes built, or acquired and rehabilitated, for sale to owner occupants. Insurance under Section 221 could also cover mortgages up to $5 million in amount to finance the construction or rehabilitation of rental accommodations for 10 or more displaced families when the mortgagor was a private nonprofit organization subject to Government supervision. The maximum number of units to be financed under Section 221 was limited to the number that the Housing and Home Finance Administrator certified to the FHA Commissioner were needed to relocate displaced families.
Veterans’, Military, and Defense Housing Insurance
FHA authority to insure mortgages under Title VI of the National Housing Act was terminated.
A new Section 223 authorized the FHA to insure under Sections 203 and 207 mortgages to finance sales of publicly owned housing. Mortgages for this purpose were formerly insurable under Title VI. Section 223 also provides that a mortgage insured under Section 608 of Title VI or under Section 903 or 908 of Title IX could be refinanced under Section 203 or 207 of Title II.
Authority under Title VIII of the National Housing Act to insure mortgages on housing at national defense installations for military and civilian personnel, and housing for personnel at atomic energy installations was continued through June 30, 1955.
The President was given stand-by authority until July 1, 1955, to authorize the use of Title IX of the National Housing Act (mortgage
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insurance on housing for workers in critical defense areas) for Federal aid in the provision of defense housing during certain periods or for specific projects. One- and two-family dwellings on which mortgages were insured under Section 903 of Title IX after August 2, 1954, must be held for rental for at least 3 years.
Miscellaneous Provisions
Cost Certification.—To guard against the possibility that on multifamily housing projects financed with FHA-insured mortgages the loan proceeds might exceed the approved percentage of cost, the new act provided that the mortgagor must certify to the actual cost of the project, and, if the mortgage amount was more than the statutory ratio applied to such actual cost, the mortgage amount must be correspondingly reduced.
Violations.—The FHA Commissioner was authorized to refuse to permit any person or organization that has wilfully violated the provisions of the ational Housing Act to participate in any way in the ■FHA program. Before such action is taken the person or firm must be given an opportunity for a hearing on the specified charges.
Restriction to Residential Purposes.—The use of FHA-insured housing for transient or hotel purposes was specifically prohibited unless the Commissioner on or before May 28, 1954, agreed to rental for such purposes, or unless the project was located in a resort area in which, before May 28, 1954, part of the accommodations had been made available for hotel or transient purposes.
Mutual Mortgage Insurance Fund.—Revisions were made in the method specified in Section 205 of the National Housing Act for managing the Mutual Mortgage Insurance Fund, in order to give added protection to the Treasury.
Insurance Authorization.—All FHA mortgage insurance authorizations were combined and the aggregate amount was limited to the estimated total of mortgage insurance in force and commitments outstanding as of July 1, 1954, plus $1.5 billion, with authority given to the President to approve an increase of $500 million.
Debentures.—The Housing Act of 1954 provided that debentures presented in payment of mortgage insurance premiums under Title II must represent obligations of the particular insurance fund to which the premium charges were to be credited.
In place of the former requirement that the mortgagee acquire possession of property and transfer it to the FHA before the issuance of debentures, the FHA Commissioner was authorized to permit the mortgagee to tender conveyance of title and transfer possession direct from the mortgagor.
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HOUSING AND HOME FINANCE AGENCY
A standard term of 20 years was established for all debentures issued with respect to mortgages insured on or after August 2, 1954, except those under the new Section 221 of the National Housing Act.
The interest rate on debentures will be the rate in effect at the time of insurance, as determined by the Secretary of the Treasury by estimating average yield to maturity on marketable obligations of the United States having maturities of 15 years or more.
Investigations of FHA
On April 12, 1954, on the basis of reports indicating that there had been widespread abuses of the FHA Title I program and the Section 608 postwar rental housing program, the President authorized the Housing and Home Finance Administrator to impound all FHA files and records on Title I and Section 608.
The Administrator immediately appointed a special Deputy Administrator to conduct an investigation of FHA operations, particularly under these two programs.
Two reports touched off the investigation. The Commissioner of Internal Revenue had reported that the income tax returns of corporations sponsoring Section 608 projects revealed large windfall profits in hundreds of projects; and a report by the Federal Bureau of Investigation had pointed to evidence of extensive victimization of property owners by unscrupulous dealers and salesmen negotiating Title I loans.
Norman P. Mason, whom the President named Acting Commissioner of the FHA on April 13, instructed FHA offices to cooperate fully with the investigative staff.
Field offices were directed to make comprehensive reports to the HHFA Administrator on Section 608 projects in their respective jurisdictions, and a procedure was set up for making FHA files available for inspection by investigators.
The investigative staff formerly maintained by the FHA was transferred to the office of the Administrator.
FHA headquarters and field offices were instructed to forward to the Deputy Administrator in charge of the investigation all complaints received while the investigation was in progress, concerning FHA procedures and policies, improper actions by FHA personnel, frauds, violations of FHA regulations, and similar matters.
To aid the investigation, the Commissioner forwarded to all Section 608 mortgagors on June 17, 1954, a questionnaire calling for detailed information on project costs. A special staff of 65 attorneys and accountants was assigned to review the questionnaires and prepare cases for submission to the Department of Justice when such action should be found appropriate.
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FEDERAL HOUSING ADMINISTRATION
A report of the investigation was submitted to the HHFA Administrator on August 31. It confirmed the existence of the conditions that had provoked the investigation, pointed out the danger of similar abuses under other FHA programs, and presented a series of 33 recommendations designed to correct abuses and safeguard future operations of the agency. Some of the measures recommended were placed in effect by the FHA Commissioner before the report was completed, and others were subsequently adopted.
In the course of the investigation, a number of FHA employees shown to have been delinquent in their responsibilities as public servants were dismissed or suspended.
Court actions were initiated in 1954 to recover windfalls on seven Section 608 projects, and further actions were contemplated. No new mortgage insurance commitments were issued under this section after March 1, 1950, except pursuant to applications for mortgage insurance received in FHA insuring offices on or before that date, and the fact that for many projects the statute of limitations had expired may prevent recoveries that might otherwise be obtainable.
Over 1,200 firms and individuals were placed on a Title I “precautionary measures” list from April 1, 1954, to the end of the year. By comparison, only 598 names had been placed on the list in the preceding 12 months.
In addition, the Department of Justice before the end of the year reported 132 indictments naming 225 individuals in criminal cases developing from the investigations. Other cases were still in preparation.
While the HHFA investigation was under way, the Housing Act of 1954 was being studied by the House and Senate Committees on Banking and Currency. In order to evaluate the provisions of the bill in the light of charges affecting FHA operations, the Senate Committee conducted an investigation of its own. Preliminary hearings were held in Washington April 19-29. Senate Resolution 229 provided funds for a further investigation, and from June 28 through October 8 hearings were held in Washington and in six other cities.
The testimony presented in the Senate hearings brought out evidence similar to that developed by the HHFA investigation. It was apparent that excessive profits totaling many millions of dollars had been made by firms sponsoring rental housing projects financed under Section 608 in the years immediately following the war, and that Title I also had been subject to abuses.
As a result of the hearings, a number of additional safeguards recommended by the Federal Housing Commissioner and the Housing and Home Finance Administrator were incorporated in the Housing Act of 1954, which was approved August 2.
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HOUSING AND HOME FINANCE AGENCY
In the report of its investigation, the Senate Committee on Banking and Currency recommended that funds be made available to it to conduct a thorough study of the effect on FHA operations of the safeguards placed in the Act.
Objectives and Policies in 1954
Norman P. Mason of Chelmsford, Mass., a member of the board of directors of the Chamber of Commerce of the United States, a past president of the National Retail Lumber Dealers Association, and a member of the President’s Advisory Committee on Government Housing Policies and Programs, was appointed Acting Commissioner of the FHA on April 13, 1954. He became Commissioner on August 2.
When Mr. Mason took charge of the FHA as Acting Commissioner, preparations for the HHFA investigation of FHA were under way. Morale in the agency was at a low point. The public was shocked by the widely publicized charges, for the FHA had been highly esteemed. Various commentators suggested now that its usefulness might be coming to an end.
The task facing the new Commissioner was a formidable one. The effects of past abuses had to be rectified in so far as possible, and safeguards instituted to prevent their recurrence. All programs of the agency had to be scrutinized to discover danger spots. The organizational structure had to be rebuilt, employee morale restored, and public confidence regained. The basic purposes for which the FHA was established had to be re-emphasized and its responsibility to the consumer and to the industry placed in the proper perspective.
Cooperation by the building industry, the public, and FHA personnel was necessary to attain these ends.
Within a few days of his appointment, the Acting Commissioner established a review committee composed of FHA and other HHFA staff members to assist him in determining legislative and administrative actions needed to improve FHA programs and operations. Four subcommittees of the review committee undertook studies of organization, multifamily housing, sales housing, and the Title I program, respectively.
An industry advisory committee made up of 12 leaders in home building and financing, and a consumers’ interest advisory committee of 8 members from labor and consumer interest groups were also appointed. They met with the Acting Commissioner in Washington early in May to discuss recommendations for additional safeguards to be incorporated in the pending housing act and for amendments to FHA procedures and regulations.
A series of recommendations that the Acting Commissioner made to the Senate Banking and Currency Committee on May 17, at the
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FEDERAL HOUSING ADMINISTRATION
request of the chairman, incorporated suggestions received from the three committees. Most of the legislative proposals were made part of the Housing Act of 1954 as it was finally enacted.
In the following months, numerous changes in administrative policy and procedure were adopted in order to improve the soundness and effectiveness of FHA operations.
The Commissioner emphasized that the primary purpose of the FHA was to serve the public; that the partnership of FHA, lending institutions, and the building industry existed to provide better housing for the people of the United States, and that the interest of the consumer must be the first consideration in carrying out the FHA program.
The necessity for integrity on the part of FHA employees in the discharge of their responsibilities was also repeatedly stressed.
The FHA security program, which had been in operation since September 1953, was broadened in 1954 and the number of positions in the agency designated “sensitive” was increased from 21 to 91, including key personnel in Washington and in the field.
Despite the importance of the reorientation of FHA personnel and procedures, the major objective pursued during the year was to put into effect as quickly and as widely as possible the benefits that the President’s housing program made available through the FHA. Cooperation with industry was stressed throughout the year. The Commissioner addressed 30 different groups in the course of the year on the subject of the new program and its significance to their members.
A number of advisory committees representing financial, professional, and industrial groups were appointed to confer with appropriate FHA staff members on various phases of FHA operations.
Home Mortgage Insurance
The insurance of mortgages on homes accounts for over 60 percent of all insurance written by the Federal Housing Administration. This is the program by which the FHA is best known. It was the means through which homes for nearly 4 million families were financed from 1934 through 1954. Nearly 30 percent of all privately financed nonfarm dwellings started in that period were constructed under the FHA system of compliance inspections.
A very important purpose of the Housing Act of 1954 is to provide greater opportunity for home ownership to families of limited means, to those living in small communities and remote areas or in blighted areas of cities, to members of minority groups, and to men and women on active military service.
Public acceptance of the new mortgage insurance provisions of the Act was evident in the volume of applications coming to the FHA in
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HOUSING AND HOME FINANCE AGENCY
the five remaining months of 1954 after the Act became law. Applications received in each of those months broke all previous records for the month. The volume was so great that serious backlogs developed in many insuring offices and special measures were necessary to expedite processing.
The steps taken, which had to be within budgetary limitations and without sacrifice of processing standards, included authorization for temporary use of independent fee appraisers for mortgages involving older homes, payment for overtime work in field offices, and the employment of additional personnel for property inspection and appraisal work in the field. Insuring office directors were also authorized, after an appraisal on a pilot house had been established, to issue conditional commitments covering all other substantially similar homes in a project.
Early in 1955 Congress made available a supplementary budget authorization to permit the recruitment of additional technical personnel in field offices.
Applications were received from August through December 1954 for home mortgage insurance on over 279,000 units. Of these, over 47 percent were in existing homes. Applications on existing homes were more frequent than ever before after the passage of the new Act, as a result of the more helpful terms it provided.
The total volume of applications also included 7,466 for mortgage insurance under Section 203 (i) on new low-cost homes in outlying areas.
Accelerating interest by servicemen in the provisions of the new Section 222 is indicated by the increase in number of applications from 13 in September to 492 in December. Of the 632 applications received under this section, 72 percent were on existing homes.
Multifamily Projects
Because of irregularities disclosed by the investigation of the Section 608 program, all FHA multifamily project programs were subjected to particularly careful review in 1954 and various procedural amendments were effected.
Insuring offices were directed not to insure, without headquarters approval, mortgages exceeding the statutory limit of $5 million when executed by a single mortgagor with respect to several properties which for all practical purposes were a single project. With such approval, exceptions might be made for multifamily housing under Section 220 when the limitation would unduly restrict an urban renewal program involving one particular area with the soundness of each project depending to some extent on the completion of other projects on adjoining sites. In addition, some exceptions might be
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FEDERAL HOUSING ADMINISTRATION
necessary or desirable in other multifamily insurance programs in order to meet urgent housing needs and to avoid hardships or inequities.
Insuring offices were also instructed to send to Washington, for approval before issuance of a commitment, any application for mortgage insurance on 12 or more rental units under Section 203. This step was taken to prevent exploitation of Section 203 by promoters seeking to avoid the more restrictive requirements for multifamily project insurance.
On May 18 the Commissioner put into effect a requirement that corporate sponsors of multifamily projects obtain FHA approval before paying dividends out of proceeds of insured loans or making changes in capital structure.
The necessity for enforcing the prevailing wage requirements set forth in Section 212 of the National Housing Act, applying to multifamily housing projects insured by the FHA, was emphasized to directors and detailed procedures were outlined for the guidance of the directors.
Mortgages on nearly 600,000 units were insured by the FHA under its multifamily housing programs from 1947 through 1954. The volume has declined each year since 1950, when the authority to issue new commitments under Section 608 expired. An occupancy survey of rental projects with mortgage insurance in force has been made annually as of March 31, beginning in 1950. In that year, the vacancy ratio was 7.2 percent. Thereafter it declined each year until 1953, when it reached 2.8 percent. In 1954 for the first time there was an increase in the ratio, which was reported as 3.5 percent.
Cooperative Housing.-—Additional safeguards were developed in 1954 to protect the consumer’s interest in projects developed under Section 213 of the National Housing Act.
To prevent exploitation of families acquiring homes under the Section 213 program, the FHA put into effect on July 9, 1954, with respect to statements of eligibility issued after that date, a requirement that construction contracts should provide for payment on the basis of actual cost plus a fixed fee not to exceed 10 percent and exclusive of kickbacks, rebates, and normal trade discounts. Certification of costs must be filed- with the FHA before endorsement of the mortgage note for insurance.
Through December 31, 1954, project mortgages insured under Section 213 totaled nearly $299 million, covering 31,853 units in 283 projects; outstanding commitments amounted to approximately $13 million, covering 1,521 units in 16 projects; eligibility statements outstanding amounted to $64 million, covering 7,068 units in 57 projects; and applications in process at the end of 1954 amounted to $106 million, covering 10,803 units in 80 projects.
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As of the same date, 247 Section 213 projects had been completed and 43 others were under construction.
Yield Insurance.—A committee was appointed in September to study methods for developing the use of Title VII of the National Housing Act so that it would serve the intent of Congress.
This title, added to the Act in 1948, provides for the insurance of yields on equity investments in rental housing for families of moderate income. No mortgage financing would be involved. An investing corporation owning a project outright could sell its bonds to other investors and the FHA would insure the yield.
Although no formal applications for insurance under Title VII have been filed in the 6 years since its enactment, it is hoped that practical solutions may be found to the problems that have so far hampered its use.
Property Improvement Loans
A number of amendments to the Title I regulations were made in 1954 to bring them into accord with the provisions of the new housing law and to prevent repetition of abuses brought to light by the investigation.
The new regulations limited the amount of the claim paid by the FHA on an individual loan to 90 percent of the loss sustained by the lender. At the same time, the amount for which lenders could be reimbursed for legal expenses incurred in their collection activities was substantially increased; additional measures were taken to prevent abuses of the program by unethical dealers; the period during which lenders could file claims for loss on delinquent accounts was extended from 6 months to 9 months; a requirement of at least 6 months’ occupancy was made for new residential structures to be improved; and the insurance charges were reduced to 0.65 percent for loans on which the charge had formerly been 0.75 percent, and to 0.45 percent for loans on which the charge had been 0.5 percent. These and other changes in the regulations became effective October 1, 1954.
The regulations were reviewed by an advisory committee of Title I lenders before issuance.
The kinds of improvements being financed came under review during the year and certain types of improvements were made ineligible—some because they failed to contribute to basic livability or utility, others because they were believed to be subject to selling abuses, and still others because it was believed that homeowners did not need Government assistance in acquiring the items.
Urban Renewal
The new program for FHA participation in urban renewal projects through mortgage insurance under Sections 220 and 221 of the Na-98
FEDERAL HOUSING ADMINISTRATION
tional Housing Act is one of the most significant programs ever authorized for this agency. It enables the FHA to help families whose need for better housing is great and for whom opportunity to improve their housing conditions has heretofore been remote. FHA property and location standards have not in the past made feasible the insurance of mortgages in blighted urban neighborhoods; but the Housing Act of 1954 visualizes such insurance as part of a comprehensive program to renew and preserve values in the central areas of cities through collaborative action by Government and industry.
FHA appraisals in such areas are made upon the assumption that the specific neighborhood improvements to which the locality is committed in its urban redevelopment or urban renewal plans will be carried out successfully. Further, when it becomes apparent that deterioration of a neighborhood has been arrested, proposed loans can be considered economically sound and eligible for mortgage insurance under other FHA programs.
No Federal funds may be used for the construction or improvement of any private building in an urban renewal project. The intent is that building operations will be carried out by private enterprise, with FHA assistance where necessary.
An urban renewal officer was appointed by the FHA Commissioner in 1954 to administer the provisions of Sections 220 and 221 with the assistance of a small staff. At the end of the year, basic underwriting and administrative instructions for processing applications under the two sections were completed. In order to gain experience necessary to the formulation of sound procedures under Section 220, six applications were accepted in the New York area and processing was carried forward by supervisors from the headquarters staff working with insuring office personnel. No commitments were issued in 1954 under Section 220 or 221.
The provisions of the Housing Act of 1954 made it necessary for FHA insuring offices and local public agencies to collaborate in the formulation of new urban renewal plans. In recognition of this requirement, the FHA, the Office of the HHFA Administrator, and the Urban Renewal Administration worked to develop procedures which would facilitate the formulation of urban renewal plans acceptable to all interested agencies. These procedures were still in the development stage at the end of the year.
Technical Standards
The report of the Conference Committee on the Housing Act of 1954 called attention to the basic importance of the FHA appraisal system, as well as FHA property location standards, minimum construction requirements, inspection system, and other procedures, in
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the proper underwriting of mortgage risk. The report also pointed out the fact that these procedures operate for the benefit and protection of the individual home buyer as well as for the protection of the Government and its insurance funds.
FHA underwriting organization, requirements, and procedures were reviewed and amended during the year to improve the quality and speed of processing applications for mortgage insurance.
The former Underwriting Division was reorganized into two operating divisions—an Appraisal and Mortgage Risk Division with authority over valuation, land planning, borrower’s credit, and review functions, and an Architectural Standards Division responsible for architectural standards, construction cost estimating, and property requirements. Both divisions are under the supervision of an Assistant Commissioner for Technical Standards.
The establishment of a separate Architectural Standards Division indicates the increased emphasis that the FHA is placing on the importance of good design and construction. The Architectural Standards Division is sponsoring greater research into contemporary residential design and advanced engineering methods applicable to housing, and area engineers are being stationed in many field offices to facilitate prompt and effective field review of these problems. Structural, mechanical, architectural, sanitary, and cost engineers will be stationed in the field to provide advice and assistance in the early planning stages for problems formerly submitted to headquarters.
An advisory committee on architectural and technical standards composed of representatives of national associations allied with the building industry, and leading members of industry groups was appointed by the Commissioner and met in Washington to discuss the adoption of new FHA techniques that would permit the FHA to give recognition in its appraisals to quality in design, construction, and materials over and above FHA minimum requirements.
Tn November, the FHA regional sanitary engineers met in Washington for the first time for a 5-day conference.
Housing Market Analyses
Over 150 housing market studies were prepared in 1954 by the field staff of market analysts for the use of FHA insuring offices and headquarters officers in the administration of the various mortgage insurance programs. The studies covered localities in 41 states, Puerto Rico, and Alaska. The type of market problem dealt with varied considerably. Some analyses were overall studies of the demand for new sales and rental housing. Others were concerned specifically with the market for housing among minority groups, proposals for military housing under Title VIII, problems having to
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FEDERAL HOUSING ADMINISTRATION
do with proposed slum clearance and urban redevelopment projects, the disposition of acquired properties, and the impact of defense activities.
Two comprehensive housing market reports were released to the public late in the year under a new experimental policy as part of a program of action designed to provide more extensive public service and to aid in the development and maintenance of sound housing and mortgage markets.
Housing of Minority Groups
The FHA intensified in 1954 its efforts to promote improvement in the housing conditions of racial minorities.
Amendments made to FHA programs by the Housing Act of 1954 provide opportunities for minority groups as well as others to obtain better housing. They include the more liberal home financing terms under Section 203, particularly with respect to older properties; the mortgage insurance authorized in Sections 220 and 221 for urban renewal areas; the voluntary home mortgage credit program through which private lending institutions undertake to place FHA-insured home mortgages for members of minority groups and others; and the safeguards instituted for FHA programs.
FHA directors and their staffs, as well as the Washington headquarters staff of the FHA, were alerted during the year to their responsibility for doing all in their power to make the benefits of the insurance programs available to all families on an equal basis. The role of the minority-group housing adviser in Washington and the 10 racial relations officers in the field was re-emphasized.
In July the Commissioner announced that the FHA would encourage the development of demonstration open-occupancy projects in key areas.
The racial relations officers met in Washington in October to study the provisions of the new housing law as they affected minority groups, and to discuss new procedures and approaches in racial aspects of private housing.
Tne FHA programs are helping to make an impressive volume of good housing available to minority groups.
Organization and Personnel
One fact that became apparent early in the investigations of FHA in 1954 was the need for closer internal supervision and control of its operations.
On the basis of studies initiated shortly after he took office on April 13, 1954, Acting Commissioner Mason put into effect in June a
350920—56---9
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HOUSING AND HOME FINANCE AGENCY
FEDERAL HOUSING ADMINISTRATION
ORGANIZATIONAL CHART
OFFICE OF THE COMMISSIONER COMMISSIONER regional
DEPUTY COMMISSIONER ___ LIAISON
ASSISTANTS TO THE COMMISSIONER OFFICERS
I I 'f—~
PUBLIC MINORITY GROUP
INFORMATION HOUSING
OFFICER ADVISOR
_________r~—----------------------------------------1_________
DIRECTOR OF
GENERAL COUNSEL
EXAMINATION AND AUDIT
I । . । j ‘ -----1
-SEr I""-
i......... ......j_________ -J_____________
ASSISTANT COMMISSIONER ASSISTANT COMMISSIONER ASSISTANT COMMISSIONER ASSISTANT COMMISSIONER
FOR TECHNICAL STANDARDS FOR PROGRAMS FOR OPERATI ON S FOR ADMINISTRATION
I 1 -—I I ■ 1 -—I 1_____ -—I _____I ~ 1—
DIRECTOR DIRECTOR DIRECTOR DIRECTOR DIRECTOR COMPTROLLER DIRECTOR
ARCHITECTURAL APPRAISAL AND DIRECTOR RESEARCH ANO HOME MULTI-FAMILY COMPTROlLER* PERSONNEL
STANDARDS MORTGAGE RISK PROGRAM DIVISION STATISTICS MORTGAGE HOUSING .u.e.Au enJ
DIVISION DIVISION PROGRAM DIVISION DIVISION DIVISION DIVISION DIVISION DIVISION
i———i .. r____। , n_______
DIRECTOR DIRECTOR | DIRECTOR D'RECTOR
DIRECTOR PROPERTY GENERAL BUDGET AND
TITLE I MANAGEMENT SERVICES ORGANIZATION
DIVISION DIVISION | DIVISION j DIVISION
r~——~~r~——zzrz~ zz_________
ZONE ZONE ZONE ZONE ZONE ZONE
OPERATIONS OPERATIONS OPERATIONS OPERATIONS OPERATIONS | OPERATIONS
COMMISSIONER COMMISSIONER COMMISSIONER COMMISSIONER COMMISSIONER COMMISSIONER
ZONE I ZONE II ZONEJII ZONEU ZONES | ZONED
—ezz_______________~rz_______________ —_________________~e±_______________zzzz_______________zzr~
FIELD OFFICES
CHART 16
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FEDERAL HOUSING ADMINISTRATION
reorganization designed to increase efficiency and improve control of operations both at Washington headquarters and in the field.
Headquarters Reorganization
Chart 16 shows the new Washington headquarters organization. The number of officials reporting directly to the Commissioner, in addition to his immediate staff, has been reduced from 12 to 6, including the General Counsel, the Director of Examination and Audit, and Assistant Commissioners for Programs, Operations, Technical Standards, and Administration.
The new position of Assistant Commissioner for Programs was established to assist the Commissioner in formulating and evaluating FHA programs in the light of the objectives set by Congress.
The Director of Examination and Audit, in another newly created position, is responsible for independent selective review of procedures and operations in both headquarters and the field to assure the effective functioning of established procedures and responsibilities.
An Assistant Commissioner for Technical Standards directs the activities of the Appraisal and Mortgage Risk Division and the recently established Architectural Standards Division. Increased emphasis is being placed on appraisal standards and on recognition of quality in construction, materials, and architectural design, in properties financed with FHA-insured mortgages.
One of the most important objectives of the reorganization was to obtain closer contact with and control over the 75 insuring offices. An Assistant Commissioner for Operations was appointed with responsibility for all operating programs. By this means a single line of supervision was provided for field operations—home mortgage insurance, multifamily project insurance, property improvement loan insurance, and property management—where formerly there had been four.
The new FHA policy of keeping the public fully informed about its activities is reflected in the appointment of a public information officer on the staff of the Commissioner.
Field Offi ce Reorganization
A special committee was appointed to study, with the help of the Civil Service Commission, the organization and staffing of FHA field offices. The insuring office organizational chart (Chart 17) was drawn up after the study had been made. Within the limitations of administrative policies determined at Washington headquarters, the insuring office directors are responsible for the successful operation of the FHA programs in their jurisdictions. The organization of field! offices and the selection of field office directors are therefore of great
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HOUSING AND HOME FINANCE AGENCY
104
FEDERAL HOUSING ADMINISTRATION INSURING OFFICE ORGANIZATIONAL CHART OFFICE OF THE DIRECTOR
I----- ADMINISTRATIVE
SECTION _________I I____________ UNDERWRITING OPERATIONS
DIVISION DIVISION
I-- --- I I---------------- -----1----- I I I----
LAND VALUATION ENGINEERING INSURANCE MARKET RACIAL LEGAL
PLANNING PROGRAMS ANALYSIS RELATIONS
SECTION SEC 0 SECTION SECTION SECTION SECTION SECTION
_____i____ i________ _____i_____ " r~~'.....r i_______
ARCHITECTURAL_MORTGAGE_PROPERTY MGMT._______CLERICAL......T1T(_E j
SECTION CREDIT &MTGE. SERV. PROCESSING
SECTION SECTION SECTION SECTION
____i____1 l_______ i_______ I I ___________________________
PROCESSING_INSPECTION_RECORDING_____________RECEIVING COMMITMENT CLOSING
UNIT UNIT UNIT UNIT UNIT UNIT
L....... ..... .... L_ I,......1 .... --------.-
THIS IS THE MAXIMUM ORGANIZATION OF AN FHA INSURING OFFICE. WHERE THE MAXIMUM ORGANIZATION IS NOT REQUIRED, THE FUNCTIONS ARE COMBINED OR ARE OFFICES ON A PART- TIME BASIS AND SOME OR ALL OF THE SHADED UNITS ARE NOT ESTABLISHED.
CHART 17
FEDERAL HOUSING ADMINISTRATION
importance in the FHA pattern of operation. New directors were appointed for 10 insuring offices in 1954.
On August 16, 1954, the first general meeting of FHA directors held since the end of World War II convened in Washington for a two-day session to discuss national housing policies and their execution, and the provisions of the Housing Act of 1954.
Number of Field Offi ces
At the end of 1954, there were 137 field offices. They included 75 insuring offices, which receive and completely process applications for mortgage insurance; 15 service offices, which receive applications for mortgage insurance and process them for submission to insuring offices for review, issuance of commitments, and endorsement for insurance; and 47 valuation stations, where technical personnel prepare architectural and valuation reports for the insuring offices in their respective areas.
New Regional Pattern
On December 23, 1954, the Housing and Home Finance Administrator announced a reorganization of HHFA field office operations to improve efficiency, promote economy and public convenience, and achieve closer coordination of the various agency programs. As part of the reorganization, a uniform regional pattern was created for the conduct of all HHFA field activities, and six regional offices were established.
FHA regional boundaries were changed to accord with the overall agency pattern, and the States comprising the former 5 FHA regions were regrouped into the 6 regions shown in Chart 18.
FHA Personnel
There were 5,231 FHA per-annum employees at the beginning of 1954 and 5,226 at the end of the year. The average employment during the year was approximately 5,089, with about 71.8 percent of the employees serving in field offices. The remaining 28.2 percent was divided among the realty, fiscal, and liquidation operations carried on centrally in Washington, and the administrative services and other management staff functions necessary in the Washington headquarters office to support, direct, and control the operating program. In 1954, there were 842 appointments of per-annum employees, and 847 separations were effected. Of the total number of employees separated, 115 were separated by reduction-in-force action, and 10 were displaced under the separated-career-employee program. The separation rate averaged 16.6 percent. During the year, 658 employees were promoted, 1,184 reassigned, and 154 demoted.
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HOUSING AND HOME FINANCE AGENCY
106
CHART 18
LEGEND SYMBOLS INDICATE THE FOLLOWING INSURING OFFICE •
SERVICE OFFICE ©
VALUATION STATION O
JURISDICTIONAL LINE-----
*m ms mks j/uts/cs f^oarsses /tout msnssts anr, m >o»r PREPARED BY ■
FEDERAL HOUS)*; ADMINISTRATION CNVISMN OF RESEARCH ANO STATISTICS
PUERTO RICO - SAN JUAN • HAWAII - HONOLULU •
ALASKA - ANCHORAGE •
JUNEAU O
GUAM - AGANA •
JURISDICTION OF FIELD OFFICES - FEDERAL HOUSING ADMINISTRATION _ JANUARY 16.1955
FEDERAL HOUSING ADMINISTRATION
Volume Of Insurance
Insurance under all FHA programs from 1934 to the end of 1954 totaled more than $36 billion. Of this amount, $22.8 billion represented the insurance of 3.6 million mortgages on 1- to 4-family homes, $4.9 billion the insurance of 8,450 mortgages on multifamily projects with 668,000 housing units; and $8.3 billion insurance covering 18 million property improvement loans. The volume of each of the three types of insurance was less in 1954 than in 1953.
As of December 31, 1954, $14.1 billion of the $36 billion insurance written since 1934 uncl er all programs had been terminated, leaving in force loans and mortgages with original face amounts totaling $21.9 billion. An estimated $3.6 billion of this amount had been amortized, and $18.3 billion was outstanding. The amount outstanding included $1.4 billion insurance on property improvement loans and $16.9 billion mortgage insurance on homes and multifamily projects.
Home Mortgages
Home mortgages were insured in 1954 under the following sections of the Act:
Section Number of mortgages Percent of total number Amount (000) Percent of total amount
Total 214,237 100.0 $1,942,266 100.0
Sec. 8 ......
15,897 175,698 4,502 10 1 18,128 7.4 82.0 2.1 (') (’) 8.5 89,389 1, 640,392 42,095 142 6 170,290 4.6 84.4 2.2 (l) (>) 8.8
Sec. 203 ..
Sec. 213
Sec. 222
Sec. 610
Sec. 903._ ...
1 Less than 0.05 percent.
The number of home mortgages insured in 1954 was 47,304 under the number insured in 1953. The difference occurred chiefly in Section 203 insurance, which was 24 percent less in 1954 than in 1953. There was a sharp increase in volume under Section 8 from about 4,000 mortgages insured in 1953 to nearly 16,000 insured in 1954. This program was terminated on August 2, 1954, and a similar program was provided under Section 203 (i) of Title II.
Following passage of the Housing Act of 1954 in August, home mortgage insurance applications for the last 5 months of 1954 were at a higher level than for the corresponding months in any preceding year. The large volume of applications involving existing construction was particularly notable, apparently as a result of the more liberal provisions in the new law for mortgage insurance on older homes.
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HOUSING AND HOME FINANCE AGENCY
Project Mortgages
The volume of project mortgage insurance in 1954 and for the entire period of FHA operations is as follows:
Section 1954 1934-54
Number of units Percent of total units Amount (000) Number of units Percent of total units Amount (000)
Total 28,257 100.0 $234, 022 668, 342 100.0 $4,881,334
Sec. 207__ 11,442 40.5 92,928 75, 452 11.3 408,161
Sec. 213 6,220 22.0 56,417 31, 853 4.8 298, 610
Sec. 608 465, 683 69.7 3,439, 771
Sec. 610 3,915 .6 8,360
Sec. 611 1,984 .3 11,991
Sec. 803 9,310 33.0 74, 764 81,076 12.1 651,939
Sec. 908 1,282 4.5 9,820 8, 379 1.2 62, 503
Project mortgage insurance has declined each year since 1950, when Section 608 of the National Housing Act became inactive. There was a slight increase in 1954 under Section 207. The insurance of mortgages on projects in critical defense areas under Section 908 in 1954 was less than a third of the preceding year’s volume.
Foreclosures and Losses
At the end of 1954 the FHA had acquired through foreclosure or the assignment of mortgage notes 48,494 units of housing, representing about 1 percent of the 4,498,580 units covered by mortgages or loans insured since the beginning of operations. Of the acquired units, 26,085 had been sold and 22,409 remained on hand at the end of 1954.
Losses realized on the total amount of mortgage insurance written from 1934 through 1954 amounted to three one-hundredths of 1 percent. Losses to the Mutual Mortgage Insurance Fund on sale of acquired properties under Section 203 amounted to two one-hundredths of 1 percent.
Dwelling Units Started
The 276,307 dwelling units started under FHA home and project mortgage programs in 1954 were 9.7 percent above the number started in 1953. The 250,910 units started under the home mortgage programs alone exceeded the 1953 number by 15.9 percent. Total units started under FHA programs amounted to 23.0 percent of all privately financed nonfarm units started in 1954 as estimated by the Bureau of Labor Statistics. This was slightly below the 1953 ratio of 23.6 percent. Over the 20 years of FHA mortgage insurance operations, dwelling-units financed under FHA programs have accounted for 29.4 percent of the total.
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FEDERAL HOUSING ADMINISTRATION
Property Improvement Loans
In 1954 there were 1.5 million property improvement loans with net proceeds of $0.9 billion tabulated as insured, while in 1953 there were 2.2 million such loans with net proceeds totaling $1.3 billion. The volume of property improvement loans tabulated in 1954 cannot fairly be compared, however, with the 1953 volume. As explained in the FHA report for 1953, the volume of insurance tabulated in that year was substantially higher than the volume of loans reported for insurance during the year (1.8 million for $1.1 billion), because of a carryover of loans reported in 1952 but not insured until 1953. The backlog resulted from the near exhaustion in 1952 of the maximum statutory insurance authorization, which mide it necessary for the FHA to limit Title I insurance to the estimated liquidation rate of outstanding loans until the authorization was increased in March 1953. For the 5 years beginning with 1950, about 1% million property improvement loans have been tabulated as insured each year, except for the abnormally high 2.2 million tabulated in 1953. The 1954 volume was the second largest in FHA history, exceeded only by the 1953 volume.
Title I income for 1954 exceeded losses, expenses, and additions to reserves during the year by more than $7 million. As of December 31, the total earned surplus of the Title I insurance fund was $34.1 million.
In 1954 the FHA paid 47,488 claims amounting to $21.0 million on Title I property improvement loans, bringing the year-end cumulative volume of claims paid to $168.8 million, or 2.03 percent of the total net proceeds of all loans insured, as compared with 1.99 percent at the end of 1953.4 FHA recoveries, actual and anticipated, from notes and security assigned as a result of claims amount to $86.1 million, leaving unrecoverable paid claims of $84.1 million. The estimated unrecoverable amount is 1 percent of the net proceeds of all loans insured.
Cash recoveries in 1954 amounted to nearly $7 million, representing a decrease of 8.5 percent from recoveries in 1953. A major portion of the decrease is attributable to the fact that FHA collection activity, which in former years was carried on largely through correspondence between debtors and Washington headquarters, was decentralized late in 1954 by transfer of accounts and collection personnel to FHA field offices. During this reorganization the close follow-up of debtors was temporarily disrupted, but it is expected that the change will ultimately improve the effectiveness of the collection program.
After a claim on a defaulted note is paid, the FHA makes every effort to effect collection of the obligation. This is done by correspondence
4 The cumulative figure of $168.8 million excludes 810 claims totaling $1.4 million paid on mortgages insured under Title I (Section 2).
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HOUSING AND HOME FINANCE AGENCY
or personal interview with the debtor by the staff of the FHA field office, and, if these efforts fail, by reference of the case to the Department of Justice for legal action. If this is of no avail, the case is held in suspense as uncollectible, although periodic attempts at collection on such accounts result in some recoveries.
Detailed statistics on volume of FHA insurance operations will be found in Section 2 of this report.
Property Management
All properties acquired by the FHA under the terms of mortgage insurance contracts are managed and sold under the supervision of the Property Management Division of the FHA in compliance with general policies established by the Commissioner. The intent is to dispose of all properties as rapidly as possible, consistent with sound business practice.
No sale of a rental project or a group of four or more houses may be concluded without specific concurrence of the Commissioner.
The policy of the FHA is not to sell acquired home properties in bulk, but to place them in good condition and then return them at fair prices in the going market, without speculative markup, to the homeownership use for which they were originally produced. The agency uses the facilities of qualified local real estate brokers to manage and sell 1- to 4-family properties through established retail channels.
The FHA rehabilitates acquired rental project properties to the extent necessary to enable them to compete in the rental market, and then operates them until the income is stabilized. Although a local real estate broker is engaged to act as managing agent for such a property, the marketing of the property is handled independently of a broker as a direct transaction between the Government and the purchaser. The sale is publicized in advance through advertisements stating minimum prices and terms, and the property is sold to the qualified operator whose offer meets the minimums and is most advantageous.
Properties owned by the FHA at the beginning of 1954 included 1,524 1- to 4-family homes and 86 rental developments consisting of 7,614 units. During the year, 1,576 1- to 4-family properties were acquired and 638 were sold, leaving 2,462 properties of this type on hand at the end of the year. Rental developments owned at the end of 1954 totaled 84 with 8,463 units, resulting from the acquisition of 34 developments totaling 2,514 units and the sale of 36 developments comprising 1,665 units.
Statements of profit and loss on sales of properties acquired under the various FHA home mortgage insurance programs are included in Section 4 of this report (Accounts and Finance), together with similar
110
FEDERAL HOUSING ADMINISTRATION
statements for properties acquired and mortgage notes assigned to the FHA under the multifamily housing programs.
Financial Position
At June 30, 1954, the Federal Housing Administration had capital and statutory reserves of $354,026,126 which had accumulated from earnings. Of this amount, $338,826,126 represented earned surplus and statutory reserves. The remaining $15,200,000 represented capital contributions from earnings of FHA insurance funds to other FHA insurance funds under the provisions of Section 217 of the National Housing Act as amended.
The capital and statutory reserves of each fund at June 30, 1954 are as follows:
Title I Insurance Fund_________________________________________ $29, 387, 380
Title I Housing Insurance Fund_________________________________ 1, 449, 262
Mutual Mortgage Insurance Fund_________________________________ 191, 957, 095
Housing Insurance Fund_________________________________________ 7, 166, 328
War Housing Insurance Fund_____________________________________ 106, 498, 018
Housing Investment Insurance Fund______________________________ 832, 880
Military Housing Insurance Fund________________________________ 9, 895, 918
National Defense Housing Insurance Fund________________________ 6, 839, 245
Total----------------------------------------------------- 354, 026, 126
From the establishment of the Federal Housing Administration in 1934 through June 30, 1954, gross income from fees, insurance premiums, and income on investments totaled $882,770,694, while operating expenses for the same period amounted to $346,098,702. Expenses of the agency during the first 3 fiscal years, 1935 through 1937, were met from funds advanced through the Reconstruction Finance Corporation by the United States Treasury. During the following 3 fiscal years, 1938 through 1940, partial payments of operating expenses were met from income. Since July 1, 1940, the operating-expenses of the FFIA have been paid in total by allocation from the various insurance funds.
Gross income from fees, insurance premiums, and investments during the fiscal year 1954 from all insurance operations of the FHA totaled $125,223,448. Expenses of administering the agency during the fiscal year 1954 amounted to $31,365,885, leaving an excess of gross income over operating expenses of $93,857,563.
During fiscal year 1954, the Federal Housing Administration completely liquidated its indebtedness to the United States Treasury Department for funds advanced by the Treasury for salaries and expenses during the early years of FHA operations and for the establishment of certain insurance funds. Repayment was required under
111
HOUSING AND HOME FINANCE AGENCY
the provisions of Public Laws 5 and 94, 83d Congress. The principal indebtedness repaid by each fund, together with the interest thereon, is as follows:
Fund Date of final payment Principal Interest Total
Title I Insurance Fund - - - - - July 1,1953 Mar. 11,1954 Oct. 31,1953 Sept. 30,1953 July 31,1953 Nov. 30,1953 $8,333,314 41,994,095 4,170,024 5,000,000 1,000,000 5,000,000 $8,333,314 59,053,941 5, 556, 691 6,390,009 1,107,915 5, 441,092
Mutual Mortgage Insurance Fund (Title II) Housing Insurance Fund (Title II) War Housing Insurance Fund (Title VI) Housing Investment Insurance Fund (Title VII) _ _ _ Military Housing Insurance Fund (Title VIII) Total _ $17,059,846 1, 386, 667 1,390,009 107,915 441,092
65, 497,433 20,385,529 85, 882,962
FHA Debentures
On March 29, 1954, the FHA called for redemption on July 1, 1954, at par and accrued interest, all its callable debentures issued through March 15, 1954, in the total amount of $67.3 million.
On September 22, all callable debentures issued through September 1, 1954, were called for redemption on January 1, 1955, in the total amount of $19.4 million.
With the concurrence of the Secretary of the Treasury, the interest rates on FHA debentures issued pursuant to mortgage insurance commitments made on and after May 29,1954, were reduced % of 1 percent. On 10-year debentures the rate was reduced from 2% percent to 2% percent, and on debentures with longer terms it was reduced from 3 percent to 2% percent.
In September, with the concurrence of the Secretary of the Treasury, the interest rate on debentures of the Mutual Mortgage Insurance Fund was reduced from 2% percent to 2% percent, effective with respect to mortgages on which commitments were issued after September 1. This reduction was made in accordance with a provision of the Housing Act of 1954 to establish an interest rate consistent with that prevailing for other Government obligations having similar maturities.
112
SECTION 2
VOLUME OF FHA MORTGAGE AND LOAN INSURANCE OPERATIONS
Section 2 of the FHA report provides detailed statistical information on various phases of FHA insuring operations during 1954, including such topics as the geographical distribution of FHA business, types of financial institutions financing, purchasing, selling, or holding mortgages and loans insured under the various programs, termination and foreclosure experience, and the default status of mortgages with insurance in force. In 1954, insurance was available to approved lending institutions under programs authorized by various titles and sections of the National Housing Act. These programs may be functionally classified into the following principal categories: (1) Home Mortgage Insurance.—Title I, Section 8; Title II, Sections 203, 213, 220, 221, 222, 223, and 225; Title VI, Sections 603, 603-610 and 611; and Title IX, Section 903.
(2) Project Mortgage Insurance.—Title II, Sections 207, 213, 220, 221, and 223; Title VI, Sections 608, 608-610 and 611; Title VIII, Section 803; and Title IX, Section 908.
(3) Property Improvement Loan Insurance.—Title I, Section 2.
(4) Prefabricated Housing Production and Marketing Loan Insurance.— Title VI, Section 609.
(5) Rental Housing Investment Yield Insurance.—Title VII, Section 701.
Mention of the Section 609 prefabricated housing loan insurance program is restricted to the major volume tables, since there was very little activity under this program during the year.
There will be no further reference to the Title VII yield insurance program in this section of the report, inasmuch as no contracts had been insured under this program at the end of 1954.
Summary of Operations
Combined Insurance Activity
Insurance written by FHA during 1954 aggregated slightly more than $3 billion. Although this was about 20 percent under the volume insured in 1953 and represented the lowest yearly volume since 1947, Chart 19 shows that it compared favorably with other
113
HOUSING AND HOME FINANCE AGENCY
years since World War II and was the seventh consecutive year in which insurance written exceeded $3 billion. Some 214,000 home mortgages, 28,300 dwelling units in multifamily projects, and over 1.5 million property improvement loans were financed with the aid of FHA insurance in 1954 (Table 18).
The following table indicates the relative importance of the three major types of FHA programs on the basis of dollar volume of insurance written during 1954 and cumulatively from 1934 through 1954:
Type of program Year 1954 1934-54
Billions of dollars Percent Billions of dollars Percent
1.9 63 22.8 63
Project mortgages .2 8 4.9 14
Property improvement loans — . 9 29
Total 3.1 100 36.0 100
In 1954, as in the last several years following the termination of the Title VI veterans’ emergency housing program, most FHA mortgage insurance was written pursuant to the provisions of Title II of the
114
VOLUME OF INSURANCE WRITTEN, 1934 - 54
BILLIONS OF DOLLARS
LEGEND
i. TOTAL —
<- PROPERTY IMPROVEMENT LOANS
1934-36 1937-39 1940-42 1943-45 1946-48 1949 1950 1951 1952 1953 1954
(YEARLY AVERAGE)
CHART 19
5
4
3
2
I
FEDERAL HOUSING ADMINISTRATION
National Housing Act. This title accounted for nearly 3 of every 5 dollars insured in 1954 (a somewhat larger proportion than in 1953), with over one-half of the year’s total attributable to Section 203 insured home mortgages (Table 19). Ranking next in volume of insurance written during 1954 was Title I, which accounted for over 32 percent of the total, a slightly lower proportion than in 1953, with property improvement loan insurance—the major activity under this title—responsible for 29 percent of the year’s aggregate volume. Title IX defense housing activity accounted for only about 6 percent of the total (down slightly from 1953). The preponderant proportion of Title IX insurance was written under the home mortgage provisions of Section 903. Some 2 percent of the year’s insurance was written under the Title VIII military housing program. Activity under the virtually inactive programs of Title VI (which were terminated by the Housing Act of 1954, approved August 2) was practically limited to the insurance of manufactured-housing loans under Section 609. The
TABLE 18
Mortgages and loans insured by FHA, 1934-1954
[Dollar amounts In thousands]
Year Total—all programs 1 Home mortgage programs 2 Project mortgage programs 3 Property improvement loans 4 Manufactured housing loans 5
Amount Number Amount Units Amount Number Net proceeds Number Amount
1934 $27,406 297,495 72, 658 635, 747 617,697 124, 758 376,480 $27, 406 201,258 221, 535
1935 23,397 $93,882 308,945 424,373 738 $2,355 2,101 10. 483
1936 532, 581 489, 200 77, 231 102, 076 624
1937 3,023 11, 930 54', 344 138,143 178,647 216,142 228,007 126,354 86, 267 114,013 170,923 320,654 533, 645 614, 239
1938 671, 593 115,124 485,812 47,638
1939 925, 262 164, 530 694, 764 13,462 51,851 12,949 13, 565 502,308 653,841 680,104 427, 534 307,826 389,615 501,441 799, 304
1940 991,174 177, 400 762,084 3, 559 3, 741
1941 1,152, 342 210,310 910, 770
1942 1,120,839 223, 562 973, 271 5,842 21,215
1943 933,986 166,402 763, 097 20,179 12, 430 84, 622 56, 096
1944 877,472 146, 974 707,363
1945 664, 985 96, 776 474, 245 4, 058 19,817
1946 755, 778 80,872 421, 949 2,232 13,175
1947 1,788,264 141,364 894, 675 46,604 359, 944 1, 247, 613 1, 357,386
1948 3, 340,865 300,034 2,116,043 79,184 608, 711 3 $1,872
1949 3,826,283 305, 705 2, 209,842 133,135 1,021,231 1, 246, 254 593, 744 196 1,466
1950 4, 343, 378 342, 582 2, 492,367 154,597 1,156, 681 1, 447,101 693, 761 175 569
1951 3, 219,836 252, 642 1, 928,433 74, 207 583, 774 1,437, 764 707,070 131 560
1952 3,112, 782 234, 426 1, 942, 307 39,839 321,911 1, 495, 741 848,327 85 237
1953 3,882, 328 261, 541 2, 288,626 30, 701 259,194 2, 244, 227 1,334,287 40 221
1954 3,067, 250 214, 237 1,942,266 28, 257 234,022 1, 506, 480 890, 606 115 356
Total 36,021,100 3,637,185 22,835,114 668,342 4,881,334 18,071,879 8, 299,372 745 5, 280
1 Throughout this report, component parts may not add to the indicated totals because of negative adjustments or rounding of numbers.
2 Includes the following sections listed in order of enactment date: Sec. 203. June 27,1934; Sec. 2 (class 3), Feb. 3,1938; Sec. 603, Mar. 28,1941; Sec. 603-610, Aug. 5, 1947; Sec. 8, Apr. 20,19.50; Sec. 213 (individual home mortgage provisions), Apr. 20, 1950; Sec. 611 (individual home mortgage provisions), Apr. 20, 1950; Sec. 903 Sept. 1, 1951; Secs. 220, 221, and 222, Aug. 2, 1954.
3 Includes the following sections listed in order of enactment date: Sec. 207, June 27, 1934; Sec. 210, Feb. 3, 1938 (repealed June 3, 1939); Sec. 608, May 26, 1942; Sec. 608-610, Aug. 5, 1947; Sec. 611 (project mortgage provisions), Aug. 10, 1948; Sec. 803, Aug. 8, 1949; Sec. 213 (project mortgage provisions}, Apr. 20, 1950; Sec. 908, Sept. 1, 1951.
4 Sec. 2 (classes 1 and 2), enacted June 27, 1934. Data are based on loans tabulated in Washington. The increase in 1953 loans over 1952 loans insured resulted in part from authorization controls which caused a tabulation backlog of approximately $200 million as of Dec. 31, 1952. See text of report for detailed explanation.
5 Sec. 609, enacted June 30, 1947.
115
FHA insurance written by title and section, 1953, 1954, cmd 1934-5-4
[Dollar amounts In thousands]
f
HOUSING AND HOME FINANCE AGENCY
i- H H H
1954 1953 1934-54
Number Amount Units Number Amount Units Number Amount Units leI_______________________________________ 1,522,377 $979,995 NA 2,248,606 $1,356,233 NA 18,150,473 $8,597,225 NA
Section 2 property improvement loans------ 1,506,480 890,606 NA 2,244,227 1,334,287 NA 18,071,879 8,299,372
Ppptinn ? hnmp mnrtffappq __ ________________________________ ___________________________ 46,115 126,611 46,115
Section 8 home mortgages/. ////////////-I 15,897 89,389 15,897 4,379 21,946 4,379 32,479 171,242 32,479
leII______________________________________ 180,448 1,831,974 203,483 234,261 2,192,992 256,693 2,877,907 19,101,244 3,100,342
Section 203 home mortgages 175,698 1,640,392 181,309 231,445 2,037,210 239,250 2,866,157 18,292,355 2,982,288
Sect on 207project mortgages’/////:/__________ 100 92,928 11,442 82 53,839 7,175 718 408,161 75,452
Section 213 cooperative housing 4,640 98,512 10,722 2,734 101,943 10,268 11,022 400,586 42,592
Project mortgages__________ ___________ (138) (56 417) (6 220) (45) (74,880) (7,579) (283) (298,610) (31,853)
Home mortgages ________ (4,502) (42,095) (4,502) (2,689) (27,062) (2,689) (10,739) (101,976) (10,739)
Section 222..... ./////////////-/-_______________10______142_______10 10 142 10
;leVI_____________________________________ 116 40(T 5 115 1,468 217 635,929 7,127,277 1,166,821
Section 603 home mortgages------------------------------------------- 65 278 65 624,653 0’^00’77?
Section608project mortgages______________________________---___----________________________; i ’ 7’24? 3’43?™
Section 609 manufactured housing loans---- 115 356 NA 40 221 NA 745 5,280 NA
Section 610 public housing sales---------- 1 6 1 7 44 7 3,386 24,468 9,072
Section 603-610 home mortgages--------- (1) (6) (1) (7) (44) (7) (3’^ (16,109) (5,157)
Section 608-610 project mortgages------ (—) (—) (—) (—) (—) (~) (23) (»,360) (3,915)
Section 611 site fabricated housing-------------—-----------------3 926 145 100 12,546 2,059
Project mortgages---------------------- (—) (—) (—) (3) (926) (145) (25) (H 991)
Home mortgages_________________________ (—) ('—) ( ) ______( )______( ) ( ) ______(^)_____(656)_____(75)
tie VIII__________________________________ 30~ ~ 74,764 9,310 44 100,558 12,181 260 651,939 81,076
Section 803_______________________________ 30 74,764 9,310 44 100,558 12,181 260 651,939 81,076
tleIX ____________________________________ 18,144 180,110 22,227 23,000 232,584 29,799 53,690 543,415 69,795
Section 903 home mortgages -- _________ 18,128 170,290 20.945 22,956 202,086 25,909 53,594 480,912 61,416
Section 908 KcStgages’/:/________________ 16 9^20 / 282 ______44_ 30,497 3,890 96 62,503 8,379
Total 1_________________________________ 1,721,115" 3,067, 250 2 250,922 2,506,023 3,882,328 2 303,000 21,718,259 36,021,100 2 4,496,628
1 2
116
All tables presenting cumulative data for Section 207 include 106 mortgages for $7,782,866 and 2,176 units insured under Section 210.
Excludes Title I, Section 2 property improvement loans and Section 609.
TABLE 19
FEDERAL HOUSING ADMINISTRATION
1954 insurance volumes under all titles and sections were lower than in 1953 except for Section 8, which increased threefold, Section 207, which went up 73 percent, and Section 609, which was 61 percent greater than in the preceding year.
Through the end of 1954, some $36 billion in mortgages and loans had been financed with the assistance of FHA insurance—63 percent ($23 billion) in home mortgages, 23 percent ($8 billion) in property improvement loans, and 14 percent ($5 billion) in multifamily projects. In addition, some $5 million in loans for the production and sale of manufactured houses had been facilitated by FHA insurance. Table 19 shows that $19 billion or 53 percent of the total represented insurance written under Title II. Of this amount, the long-term Section 203 home mortgage program has accounted for over $18 billion, representing over one-half of the total amount of insurance reported under all programs since 1934. Over $8.5 billion or roughly one-fourth of the total volume for all programs has been in Title I insurance—very largely in property improvement loans. About $7 billion (one-fifth of the cumulative total) covered mortgages on homes and multifamily rental housing built under the World War II and postwar emergency housing provisions of Title VI. Titles VIII and IX have each accounted for less than 2 percent of the total insurance volume.
Of the $36 billion in insurance written through the end of 1954, over $14 billion or nearly two-fifths had been terminated as of the year end. Terminations have resulted primarily from the maturity of property improvement loans and from prepayment prior to maturity of home mortgages (Table 20). Amortization through regular payments by the borrowers had reduced the $21.9 billion original face amount of loans and mortgages in force at the end of 1954 to an outstanding balance estimated at $18 billion or only about one-half of the total amount of FHA insurance written. The proportion of insurance terminated varies from program to program, reflecting differentials in the average term of mortgages and loans insured and in the dates of enactment of the individual sections of the act. For example, under the Title I property improvement program, with loans averaging only 3 years in duration, the terminated proportion is considerably greater than that reported for the Section 608 rental housing program where the typical mortgage term is 32 years. In turn, terminations under the latter section are relatively higher than for the more recently enacted programs of Titles VIII and IX.
FHA Influen ce in Residential Financing During 1954
Of the estimated $23.0 billion of nonfarm mortgages in amounts of $20,000 or less recorded during 1954, only $1.9 billion or 8 percent represented home mortgages insured by the FHA. This is the lowest
350920—56----10
117
HOUSING AND HOME FINANCE AGENCY
TABLE 20
Status of FHA insurance written as of Dec. 31, 1954
[Dollar amounts in thousands]
Insurance in force Insurance Insurance----------------------—
written terminated Amortized Net out-
r oral (estimated) standing
Title I: /Number of loans______ 18,117,994 13,821,124 4,296,870 - 4,296,870
Sec. 2 property improvement loans >-----------------/Net proceeds__________ $8, 425, 982 $5, 665,323 $2, 760, 660 $1,368, 231 $1, 392, 429
~ , . /Number of mortgages_ 32,479 567 31,912 567 --------
Sec. 8 home mortgages-------------------------------/Amount_______________ $171,242 $2,614 $168,629 $6,481 $162,148
Title II: /Number of mortgages_ 2,866,157 1,255,087 1,611,070 1,255,087 ---
Sec. 203 home mortgages-----------------------------/Amount_____________$18,292,355 $6, 260, 655 $12, 031, 700 $1,574,494 $10,457,206
• x . /Number of units______■ 75,452 40,616 34,836 ---------------
Sec. 207-210 project mortgages----------------------/Amount________________ $408,161 $155,045 $253,117 $7,756 $245,361
. . /Number of units________ 42,592 9,009 33,583 -----------------
Sec. 213 cooperative housing------------------------/Amount________________ $400,586 $86,260 $314,326 $4,711 $309,615
, /Number of mortgages-- 10 -------- 10 ----------------------
Sec. 222 servicemen’s housing-----------------------/Amount________________ $142 ___________ $142 $1 $141
Title VI (war and veterans’emergency programs): /Number of mortgages__ 628,016 326,518 301,498 326,518 _______
Sec. 603 home mortgages 2---------------------------/Amount________________ $3,661,321 $1,659,495 $2,001,826 $417,575 $1,584,251
n , /Number of units______ 469,598 43,452 426,146 --------------
Sec. 608 project mortgages s------------------------/Amount________________ $3,448,131 $260, 434 $3,187, 697 $229, 675 $2,958, 021
. /Number of loans----- 745 700 45 -------- 45
Sec. 609 manufactured housing loans *---------------/Amount________________ $5,280 $5,040 $240 _______ $240
o x v. • /Number of units______ 2,059 1,892 167 ----------------
Sec. 611 site-fabricated housmg---------------------/Amount________________ $12,546 $11,741 $806 $37 $769
Title VIII (military project mortgages): /Number of units _ ___ 81,076 55 81,021 _______________
Sec. 803--------------------------------------------/Amount________________ $651,939 $408 $651,531 $15,734 $635, 797
Title IX (defense housing programs): /Number of mortgages__ 53,594 1,049 52,544 ---------------
Sec. 903 home mortgages-----------------------------/Amount_______________ $480,912 $8, 974 $471,938 $11, 604 $460, 334
„ . x x /Number of units_____ 8,379 253 8,126 ---------------
Sec. 908 project mortgages----•---------------------/Amount_______________ $62,503 $1,881 $60,623 $754 $59,869
Total______________________________________________ Amount_______________$36, 021,100 $14,117, 867 $21, 903, 233 $3, 637,053 $18, 266,181
i Includes home mortgages insured under Sec. 2. , „ _, , t x ■ .
2 Includes 3,363 mortgages for $16,108,500 insured under Sec. 610 provision, of which 541 mortgages in the amount of $2,152,300 had been terminated, leaving 2,822 mortgages for ^13’35ineludesf3^915 units (23 mortgages) for $8,359,500 insured under Section 610 provision, of which 980 units (6 mortgages) in the amount of $1,777,700 had been terminated, leaving 2,935 units (17mortgages) for $6,581,800 in force. . . ,
t Includes 734 discounted purchasers’ loans for $2,083,688, of which 690 loans in the amount of $1,943,845 had been terminated, leaving 44 loans for $139,843 in force.
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FEDERAL HOUSING ADMINISTRATION
FHA proportion reported since 1947. Compared with the total home mortgage debt outstanding at the end of 1954 (estimated at $75.9 billion), the FHA-insured portion was somewhat larger—$12.8 billion or about 17 percent, reflecting the relatively larger volumes of home mortgages insured by FHA in earlier years, the influence of construction loans and other short-term mortgages in the volume of mortgage recordings, and the fact that FHA-insured home mortgages typically have longer terms than do conventionally financed permanent mortgages. The 1950 Census Survey of Residential Financing indicated that the typical conventional first mortgage had a term of 11 years—about half of the 20-year term reported for FHA-insured mortgages. Of the 1954 increase in outstanding home mortgage debt ($9.6 billion) some $0.8 billion or about 8 percent was accounted for by FHA-insured home mortgages—about the same as the FHA proportion of mortgage recordings during the year. Comparison of FHA multifamily project activity with the overall United States total is not possible because data on the overall total of multifamily project mortgage recordings during the year and debt outstanding at the year end are not available. However, with respect to the total amount of home repair and modernization installment loans outstanding at the year end ($1.6 billion as estimated by the Federal Reserve Board) FHA-insured loans predominated with an estimated comparable volume of $1.1 billion or about 70 percent of the total.5
It is important to note that comparisons of FHA insurance written with mortgage recordings and of FHA insurance outstanding with total outstanding mortgage debt are not necessarily an adequate gauge of FHA influence. With respect to mortgage recordings, FHA has never accounted for more than 25 percent of the total (in 1942 when wartime building and credit restrictions tended to channel a larger proportion of business into FHA) and in the postwar period has averaged only about 12 percent. This is attributable to the operating practices of many home builders and home mortgage lenders, under which a substantial portion of properties appraised by FHA and built under the FHA system of compliance inspections, with construction loan financing underwritten by FHA insurance commitments, are finally financed either with GI mortgages guaranteed by the Veterans’ Administration or with conventional mortgages.
Table 21 indicates that some 23 percent of the total privately financed nonfarm dwelling units started in 1954 were constructed under the FHA inspection system. Although this proportion includes both home and multifamily project starts, the FHA portion of one-to four-family home starts was about the same. From 1947 through 1952, the FHA proportion exceeded 25 percent and, at the height of
5 Estimates of Federal Reserve Board and FHA cover consumer credit only.
119
HOUSING AND HOME FINANCE AGENCY
120
TABLE 21
Nonfarm dwelling units started under FHA programs compared with total for United States 1935-54
Home mortgage programs Project mortgage programs
Total FHA as
Sec. 213 Total United percent of
Year _____________ FHA States United
and 8^ Sec‘ 203 Sec> 222 Sec' 603 Sec> 903 Sec- 207 Manage- Sec- 608 Sec' 611 Sec- 803 Sec‘ 908 Un’tS ’unit™ ^otaT
fyne ment'
type typo
1935------------------------- 13,226 738 13,964 215,700 6.5
1936------------------------- 48,752 624 49,376 304,200 16.2
1937-------------------------- 56,980 ---------------- 3,023 ------------------------------------ 60,003 332,400 18.1
1938------------------- 5,845 100,966 11,930 118,741 399,300 29.7
1939------------------ 10,783 133,874 ---------------- 13,462 ----------------------------------- 158,119 458,400 34.5
1940------------------- 10,194 166,451 3,446 180,091 529,600 34.0
1941------------------ 9,145 180,156 ---- 27,790 --- 3,296 ------------------------------------ 220,387 619,500 35.6
1942. ---------------- 4,010 41,578 ---- 114,616 -- 1,163 ------------ 4,295 _________________ 165,662 301,200 55.0
1943------------------ 307 338 ----- 125,474 -- 41 --------------- 19,994 ________________ 146,154 183,700 79.6
1944.. ---------------------- 208 --------- 83,396 ---------------------- 9,655 _________________ 93,259 138,700 67.2
1945------------------------- 17,049 ------ 21,848 --- 200 -------.------ 2,062 _______________... 41,159 208,100 19.8
1946-------------------------- 44,244 ----- 22,878 --- 41 _______________ 1,870 _________________ 69,033 662,500 10.4
1947------------------ 217 20,884 ---- 157,168 --------------.....-- 50,766 ________________ 229,035 845,600 27.1
1948------------------ 3,006 82,979 ---. 130,464 --------------------- 77,610 ________________ 294,059 913,500 32.2
1949. .. -------- 3,261 241, 559 - 7,806 ------ 813 -------------- 109,995 100 268 ____ 363,802 988,800 36.8
1950. -------- 3,191 324,937 . . 117 ____ 2,277 141 _____ 143,331 372 12,315 ___ 486,681 1,352,200 36.0
1951 9,357 177,435 . 132 4,651 1,780 5,888 39,826 1,328 23,126 263,523 1,020,100 25 8
1952. 5,533 190, 973 32,579 7,342 3,791 6,338 5,895 37 24,039 3,374 279,901 1,068,500 26.2
1953.. 4,572 181,436 30,501 7,451 2,519 5,464 199 195 15,575 4,057 251,969 1,068,300 23.6
1954.... -- .... . .. 22,643 220,189 5 ----- 8,073 11,856 3.569 2,659 28 _____ 6,313 972 276,307 1,201,700 23.0
Total------------- 92,064 2,244,214 5 691,557 71,285 72,354 11,800 20,349 465,526 2,032 81,636 8,403 3,761,225 12,812,000 29.4
1 Sec. 2 activity, 1938-50; Sec. 8, 1950-54.
2 Total number of privately financed nonfarm dwelling units started, as reported by the Bureau of Labor Statistics,
FEDERAL HOUSING ADMINISTRATION
'35 '36 '37 '38 '39 '40 '41 '42 '43 '44 '45 '46 '47 '48 '49 '50 '51. '52 '53 1954
CHART 20
the multifamily rental project program from 1948-50, reached as high as 37 percent of the total. With the decline in FHA multifamily project activity since 1951, the FHA share of the total starts has been at a lower level (Chart 20). The May 1950 increase in the FHA application fee on proposed home construction to $45.00 per case may also have been influential. Furthermore, in many areas of the country the homes most in demand were in price ranges where the financing under FHA regulations in effect before August 2, 1954, was no more favorable for new homes than for existing, so that new homes could be produced advantageously without FHA compliance inspections and submitted later for mortgage insurance as existing properties.
FHA Workload
Although the volume of mortgages reported as insured in 1954 was lower than in the preceding year, FHA workload was at a relatively high level during much of the year. Reacting to the more liberal supply of mortgage money and the impetus of the August legislation, home mortgage applications reached an all-time high of 578,000 units in 1954, pushing total receipts up to 623,000 units—23 percent more than in 1953 and the third highest total volume on record. For the year as a whole, applications for the insurance of project mortgages
121
PRIVATE NONFARM DWELLING UNITS STARTED
ofLKts FHA AND T0TAL’ 1935-54
1.5 ।------------------------------------------------------
RATIO OF UNITS STARTED UNDER FHA INSPECTION TO TOTAL NONFARM UNITS STARTED
80%--------------------------
-- 60%-------------------------- 40%---------------------------7-1/---,------------
20% —p/-----------------f—
0 I • I » ■ ■ 'll! I •-! - . I ■ . .
I Q ___________________ '35 ’40 '45 '50 54
LEGEND
! TOTAL UNITS
“UNITS STARTED / Wx STARTED UNDER FHA \ E:O:I. ____
HOUSING AND HOME FINANCE AGENCY
were off 39 percent, although in the first half of the year they were slightly above the same period of 1953.
FHA field offices processed cases involving approximately 528,000 units. Commitments were issued for mortgage insurance involving 496,000 of these units. The remainder of the cases processed involved transactions in which either the property or the mortgagor failed to meet FHA eligibility requirements. In addition to this processing workload, FHA had an inspection workload for the. year of 385,000 units under construction. At the close of the year, because of the nigh volume of applications received after the enactment of the new legislation, FHA offices reported a backlog of 49,400 home mortgage cases involving about 50,500 units and 248 multifamily project applications involving about 34,700 units—a total of over 85,100 units as compared with 45,000 at the end of 1953. This increased backlog developed in spite of intensive efforts by Washington headquarters and insuring office personnel in instituting and applying numerous procedures designed to increase the processing efficiency oi the insuring offices. With the provision by the Congress in early 1955 of additional budgetary authorization for the operation of the field offices, an intensive recruitment program was initiated by the Commissioner with a view to providing the personnel necessary to reduce this backlog to the lowest possible level consistent with quality processing and efficient operation.
Volume of Insurance Written
Home Mortgage Volume
The following pages are devoted to a detailed analysis of the volume of home and project mortgages and property improvement loans insured by FHA during 1954 under specific provisions of the National Housing Act and to a comparison of this volume with that reported for earlier years.
FHA home mortgage insurance was available during 1954 under eleven different sections of the National Housing Act: Section 8 of Title I; Sections 203, 213, 220, 221, 222, and 225 of Title II; Sections 603, 603-610, and 611 of Title VI; and Section 903 of Title IX. Several of these programs were in effect during only part of the year. The authority to issue new commitments under Section 8 of Title I and the three Title VI programs was terminated by the Housing Act of 1954, effective August 2. The same Act authorized the institution of insurance activity under Sections 220, 221, 222, and 225. It also provided a new Section 223, which authorizes insurance under Section 203 of mortgages formerly insurable under Section 603-610, mortgages given to refinance existing mortgages insured under Section 903, and any mortgages financing sales of properties acquired by FHA.
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FEDERAL HOUSING ADMINISTRATION
As indicated earlier in this report, no insurance was written during 1954 under Section 603 or 611 or under the home mortgage provisions of the recently enacted Sections 220, 221, and 225. Insurance written pursuant to Section 223 is included in the Section 203 existing-construction data.
HOME MORTGAGES INSURED BY FHA, 1935 - 54
THOUSANDS OF UNITS
350,------------------------------1---------/A------------------1
300------------------TOTAL HOMES \
250 — / \ _
200------------------X------X------------________zr—\
150 - / / \ \ I \ /S -
/ / \ \ /1 ........, \
100------X—----/— NEW HOMES —A J-M_ Z_ / ./ \ _
/ / at v <•••■ n
/ .... / \ EXISTING HOMES
L............ \ /
50— ...............—N' / -
o^_X,—L_L____L_________L—l___I I I I I I Illi
35 36 37 38 39 '40 '41 '42 '43 '44 '45 '46 '47 '48 '49 '50 '51 '52 '53 '54
CHART 21
Reflecting the relatively low ebb of applications in the latter part of 1953 and the early months of 1954, the volume of home mortgages insured during 1954 declined by 18 percent in number of units to 223,000 (the lowest since 1947) and by 15 percent in total amount to $1.9 billion, which figure (reflecting the highest average amount in FHA history of $8,700 per unit) was still the sixth highest on record. New-cons traction 6 insurance decreased by 20 percent in number of units to 122,000 (the lowest since 1947), and by 18 percent in amount to $1.0 billion (the lowest since 1952). Existing construction dropped 16 percent in number of units to 100,800 (the fourth lowest figure in the postwar period), while the amount declined 12 percent to about $0.9 billion (the third highest on record). The average mortgage amounts per unit for both new and existing homes ($8,500 and $9,000, respectively) were the highest on record. (Chart 21 and Table 22.)
6 Throughout this report, the terms “new construction’’ and “new homes” refer to properties approved for mortgage insurance before the beginning of construction and inspected by the FHA during construction.
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HOUSING AND HOME FINANCE AGENCY
TABLE 22 Home mortgages insured by FHA, 1935-54 [Dollar amounts in thousands]
New construction
Total new construe- Total existing___________________________________________________
Grand total tion construction
Year Secs. 2 and 82 Sec. 203 Sec. 603 Sec. 903
Units Amount Units Amount Units Amount Units Amount Units Amount Units Amount Units Amount 1935-39____________ 513,615 $2,007,777 235,391 $1,012,590 278,224 $995,187 16,628 $37,914 218,763 $974,676 --------------------
1940-44____________ 981,388 4,116,585 738,051 3,117,345 243,337 999,240 22,373 61,888 399,467 1,792,224 316,211 $1,263,233 -
1945-49____________ 979,451 6,116,754 540,396 3,603,452 439,055 2,513,302 5,591 20,452 187,002 1,324,183 347,803 2,258,816 ----
1950_______________ 351,528 2,492,367 225,269 1,636,678 126,259 855,690 1,759 7,428 221,381 1,613,725 2,129 15,525 -
1951_______________ 261,231 1,928,433 161,673 1,215,535 99,558 712,898 6,106 28,514 155,416 1,187,402 23 184 -
1952______________ 246,109 1,942,307 122,764 968,613 123,345 973,694 5,615 29,112 102,695 831,748 14,449 $107,716
1953______________ 272,299 2,288,626 151,777 1,258,558 120,522 1,030,068 4,276 21,393 121,981 1,038,234 25,520 198,933
1954______________ 222,665 1,942,266 121,847 1,035,366 100,818 906,899 15,826 89,007 85,184 777,067 20,836 169,340
Total_______ 3,828,286 22,835,114 2,297,168 13,848,136 1,531,118 8,986,978 78,174 295,708 1,491,889 9,539,258 666,300 3,357,181 60,805 475,989
Existing or refinanced construction
Sec. 8 Sec. 203 Sec. 213 Sec. 222 Sec. 603 Sec. 603-610 Sec. 611 Sec. 903
Units Amount Units Amount Units Amount Units Amount Units Amount Units Amount Units Amount Units Amount
1935-39________________________ 278,224 $995,187 ________________________________________________________________________
1940-44________________________ 236,737 973,301 _______________________ 6,600 $25,939 ----------------------------------
1945-49 _______________________ 419,194 2,423,058 _____________________ 16,874 81,155 2, 987 $9,089 ---------------------
1950___________________________ 125,186 852,330 ______________________ 136 481 937 2,880 ----------------------
1951_______________ 46 $215 97,991 706,196 313 $2,464 _________ 17 74 1,185 3,909 6 $40 -- —
1952_______________ 200 996 119,673 940,724 3,235 30,355 _________ 16 109 40 182 69 516 113 $819
1953_______________ 103 553 117,269 998,977 2,689 27,062 _________ 65 279 7 44 ----------- 389 3,154
1954_______________ 71 382 96,125 863,325 4,502 42,095 10 $142 ____________ 1 6 ----------- 109 950
Total__________ 420 2,145 1,490,399 8,753,097 10,739 101,976 10 142 23,707 108,031 5,157 16,110 75 556 611 4,922
_________________________________________________________________________________________________________________________
1 For total number and amount of mortgages insured under each section in 1953, 1954, and cumulatively through the end of 1954, see Table 19.
2 Sec. 2 activity, 1938-50; Sec. 8 activity, 1950-54.
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FEDERAL HOUSING ADMINISTRATION
As shown by the following summary table, most of the 1954 home mortgage insuring activity occurred under Section 203. This has been the principal FHA home mortgage insurance program since 1935, except for the period from 1943 through 1948 when the bulk of home mortgage applications were processed under the war and veterans’ housing provisions of Section 603.
Section Total New Existing
Units Amount Units j Amount Units Amount
Percentage distribution
203 81 9 7 2 G) 84 9 5 2 G) 70 17 13 75 16 9 95 G) G) 4 G) 95 G) G) 5 G)
903
8
213
Others.. ..
Total..
100 100 100 100 100 100
- — -■ ■
1 Less than 0.5 percent.
As compared with 1953, however, the proportion of business attributable to Section 203 was down—in new construction from 80 percent of the units and 82 percent of the amount to 70 and 75 percent, respectively. Most of this difference was accounted for by the Section 8 program, which increased to 13 percent of the units compared with 3 percent in 1953. *1 he Section 903 defense housing share remained about the same. The increased popularity of the Section 8 program reflected primarily the increased availability of mortgage funds for such transactions, thus making effective the opportunity for production and sale of these lower priced homes. The monthly service charge first authorized for this program in early 1953 contributed to the availability of funds for this program. In existing construction, Section 203 registered less of a decline, from 98 to 95 percent with most of the difference taken up by Section 213 which increased by nearly two-thirds over 1953.
The Section 203 new construction decrease (30 percent in terms of units) is largely attributable to the decreased volume of applications in the latter part of 1953 and early 1954, reflecting in turn the relatively high discount rates on FHA mortgages which were prevalent at that time. Moreover, as shown in Table 23, the proportion of Section 203 new construction commitments which the lending institutions permitted to expire increased markedly during the year.7 For the first time since 1947 the proportion of Section 203 new construction mortgages insured was lower than the proportion expired—reflecting
7 Of the 185,000 new-construction properties covered by Section 203 commitments which were completed and available for sale in 1954, only 46 percent were closed out with FHA mortgage insurance compared with 67 percent in 1953 and 78 percent in 1950.
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HOUSING AND HOME FINANCE AGENCY
the increase in the relative volume of properties built with FHA inspections and with construction loans secured by FHA commitments that are being sold without FHA-insured financing. Since cases closed also include rejections of applications, the lower insurance rate was also induced by the increased proportion of rejections—new and existing—notably in the months immediately following the enactment of new legislation in August. Through the end of July only 10 percent of the new home closed cases represented rejects. This proportion increased to 29 percent during August, then declined slightly to 27 percent in September and 25 percent in October.
TABLE 23
Disposition of home-mortgage applications. Section 203, selected years
Year Number of cases closed Percent of cases closed by—
Rejection of application 1 Expiration of commitment 1 Insurance of mortgage
Total construction
1940 244, 442 18.8 12.3 68.9
1949 ... 398’, 669 13.4 22. 0 64. 6
1950 539,640 10. 4 26. 9 62. 7
1951 436,755 7.1 36.7 56.2
1952 _ 367' 064 9. 6 32. 5 57.9
1953 395, 640 6. 6 34.9 58. 5
1954 357, 920 14.6 36.3 49.1
New construction
1940 176,394 15.3 13.4 71.3
1949 204, 547 12. 5 23.1 64.4
1950 345' 478 9. 5 27. 2 63.3
1951 297', 204 5. 5 43.3 51.2
1952 . ... 194^ 029 8.1 41.5 50.4
1953 207,151 5. 2 37.5 57.3
1954 „„ 196; 291 13.5 44.0 42.5
Existing construction
1940 68,048 27.9 9.5 62.6
1949 194.122 14.2 20.9 64.9
1950 194,162 12.1 26.4 61.5
1951 ’. 139, 551 10.6 22.5 66.9
1952 173', 035 11.3 22.3 66.4
1953 188; 489 8.2 32.0 59.8
1954 16i; 629 16.0 26.8 57.2
1 Excludes cases reopened after rejection or expiration.
The slight decline in the proportion of Section 203 existing cases that were insured during 1954, as shown in Table 23, reflects to some extent the fall-off in the total volume of existing construction insurance, but the decline seems primarily attributable, along with the greater decrease in the proportion of expirations, to the marked increase in rejections accompanying the high volume of applications
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FEDERAL HOUSING ADMINISTRATION
from August to December, as indicated by the fact that the reject proportion was almost double the 1953 ratio. As was noted for new construction, this was particularly evident in the period from August through October, following the enactment of the new legislation.
As shown in Table 22, the 1954 Section 203 volume of existing construction insurance exceeded the comparable new construction volume for the second time since 1950. The differential of 13 percent based on number of units, is particularly noteworthy because the number of units in new construction cases closed by expiration or insurance during the year exceeded the existing-construction volume by 22 percent. This provides additional evidence of the common use of FHA new-construction commitments as security for construction loans on homes that are subsequently sold with GI or conventional financing. Among factors that may have contributed to the relatively high level of existing construction business during the year are the following:
(1) Before the enactment of the 1954 legislation, which had only very limited effect on the volume or characteristics of the mortgages reaching insured case status in 1954, FHA financing terms for existing-construction properties in the price ranges above $11,000 were just as favorable with respect to maximum loans and ratios of loan to value as for new-construction properties, i. e., those requiring FHA approval of plans and specifications before the start of construction and subject to FHA compliance inspections during construction. In recent years, therefore, there has been an increasing tendency for builders of homes in the medium and higher price ranges to apply for FHA mortgage insurance after completion of construction. The proportion of recently built homes included in the categorv of existing construction insured by FHA rose from 24 percent in 1951 to about 30 percent in 1953 and 1954.
(2) Transfers of home properties continued at a very high level in 1954, as indicated by the all-time high of 3,458,000 nonfarm mortgage recordings of $20,000 or less. Undoubtedly included in these transfers were many of the more than two million homes that have been constructed with FHA mortgage insurance assistance in previous years. These properties, having been approved by FHA before start of construction and constructed with FHA inspections, were eligible for FHA-insured mortgages providing more favorable terms than were available for other existing homes.
Although the lower down payments provided in the August legislation generated substantial volumes of both new- and existing-home mortgage insurance applications in the last third of the year, the normal lag from date of application to date of insurance prevented any large number of these applications from resulting in insured mortgages by the end of 1954.
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HOUSING AND HOME FINANCE AGENCY
Project Mortage Volume
Programs in operation in 1954 providing for the insurance of rental and cooperative project mortgages included: Under Title II, Section 207 covering (1) new and rehabilitated rental housing, (2) sale of public housing by certain Federal or State agencies,8 (3) refinanced Section 608 and Section 908 mortgages,8 and (4) commissioner-held mortgages assigned and properties acquired under provisions of Title II, Title VI, Title VII, Title VIII, or Title IX, upon sale;8 Section 213 cooperative housing; Section 2208 redevelopment housing; and Section 2218 relocation housing; under Title VIII, Section 803, military housing; and under Title IX, Section 908, defense housing.
Other programs in operation during a portion of 1954 were those Title VI programs which were repealed by the Housing Act of 1954. They included Section 608 refinanced war and veterans’ housing, and Section 608—610 sales of certain public housing. The insurance provisions for both of these sections were incorporated into Section 207 by the legislation, while the provisions of insurance under Section 611 for site-fabricated housing developments was discontinued.
Title VII, authorizing the insurance of a minimum annual amortization of 2 percent of the established investment and an annual return of 2% percent on outstanding investments in debt-free rental housing projects for families of moderate income, has been inactive since its inception in 1948. It may also be noted that no insurance was written during 1954 under any of the provisions of Title VI, or under the newly created Sections 220 and 221 of Title II.
An explanation of the purposes of these various programs appears at the beginning of the FHA report.
Project mortgages totaling $234 million and covering 28,300 units were insured by FHA during 1954. Decreasing by 10 percent from 1953, mortgage insurance under these programs continued the decline of recent years, the 1954 volume being only one-fifth of that reported in the peak year 1950 (Table 24 and Chart 22) and accounting for only 8 percent of the total amount of loans and mortgages insured under all FHA programs during the year. All mortgages insured in 1954 were secured by newly constructed projects.
The highest volume of insurance reported in 1954 under any of the multifamily programs was under Section 207. Mortgages totaling $93 million and covering 11,400 dwelling units constituted the highest volume for any year for this program. Through 1954, insurance written under Section 207 has aggregated nearly $392 million secured by 70,841 units in new projects and $17 million covering 4,611 units
s Provided by the Housing Act of 1954.
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FEDERAL HOUSING ADMINISTRATION
129
TABLE 24
Project mortgages insured, by FHA, 1935-54
[Dollar amounts in thousands]
New Construction
T tal Total existing or —————
Grand totaP construction refinanced con- Sec. 213
Year struction Sec. 207 ----------------------------------
Sales type Management type
Units Amount Units Amount Units Amount Units Amount Units Amount Units Amount 1935-39---------- 29,777 $114,429 29,777 $114,429 __ 29 777 $114 429
1940-44...-. ---- 45,751 188346 41,890 174,187 3 861 $14 259’ 7 946 28 752 --------------------------------
J945“49-- -------- 265,213 2,022,878 260,592 2,008,452 4,621 14326 1^054 8’519
195?-------------- 154’597 153,477 1,154,680 1,120 2,002 2,514 18,’o65 285 $2 691' "" ‘
1952-------------- 39 839 111’911 39 839 32? 911 874 6,229 33,201 1,928 17,726 6>067 $55,194
1953-------------- 30 70? dMl tn’lo? 9^0 ?ol ---------------- 6’ 943 41’843 3,681 35,788 6,093 55,913
1954-------------- 28 257 934 099 9R w 924’099 ----------------- 7,175 53>839 L 915 20,926 5,664 53,954
1954-------------- 28,257 234,022___28,257 234,022 -------------- 11,442 92,928 3,665 32,145 2,555 24, 273
Total--------- 668,342 4,881,334 657,866 4,844,418 | 10,476 36,916 70,841 391,576 11,474 109,275 20,379 189,334
New construction (continued) Existing or refinanced construction
Sec- 608 Sec.611 Sec. 803 Sec. 908 Sec. 207 Sec. 608 Sec. 608-610
■ -----------------------------------------------
Units Amount Units Amount Units Amount Units Amount Units Amount Units Amount Units Amount
1935-39___________________________________________
1940—44----------- 33,944 $145,436 ---------------------- _ _ 3 967 $11 444 594 $9 R15
J?46-49----------- 257,723 1,986,212 275 $1,650 1,540 $12,071' I"".”" ZZZ 1 344 5 142 476 2 828 "'Tsoi--Jr’+r
950--------------- 135,076 1,007,996 473 2,877 15 129 123 052 ____ ’ ’ 2’ $M56
9fl--------------- 33,799 259,937 966 5,832 25,683 205 653 _______ 864 6 94 ’?o 11
£52--------------- 3,457 29,634 125 706 17,233 135,842 3,207 $22,186 ’ ° 35
J963---------------------------- 145 926 12,181 100,558 3,890 30,497 _ '
1954------------------------------------------- 9,310 74,764 1,282 9,820 _______-----ZZZIZZZZZZZZZ ZZZZZZZZZZ ZZZZZZZZZZ
rr Total--------1 463,733 3,427,800 1,984 11,991 81,076 651,939 8,379 62,503 4,611 16,586 1,950 11,971 3,915 8,360
1 For total number and amount of mortgages insured under each section in 1953,1954 and cumulatively through 1954 see Table 19.
HOUSING AND HOME FINANCE AGENCY
PROJECT MORTGAGES INSURED BY FHA, 1935 - 54
THOUSANDS OF UNITS
500 r-------------------------;----------------------------------------
100---------------------------------------------y/—--------------------
i o----------/~~\------------r— \----------/--------------------------
।------j-------------------------------------------------------------
• SL--L-L—I----1-------I--:--1---1______;__;___! I I I I I I
35 36 37 38 39 '40 '41 '42 '43 '44 '45 '46 '47 '48 '49 '50 '51 '52 '53 '54
CHART 22
involved in refinancing transactions—the total representing 8 percent of the aggregate insurance written under all project programs.
The second ranking project mortgage insurance program in 1954 was the Section 803 military housing program, under which mortgages amounting to $75 million on 9,300 units were insured. Section 803 insurance has declined for the last 3 years, although the 1952 and 1953 volumes exceeded those of any other project program in those years. Through 1954 there has been some $652 million of insurance written under this program covering 81,100 dwelling units.
Insurance written during the year under the Section 213 cooperative housing program accounted for over $56 million and 6,200 dwelling units $24 million covering 2,600 units in management-type projects and $32 million involving 3,700 units in sales-type projects. For the first time—except in 1950 when no management-type projects were insured—the volume for sales-type cooperatives exceeded that of the management-type, increasing by 54 percent over 1953 while the volume of management-type projects declined 55 percent. With respect to total insurance written through 1954 of $299 million covering 31,900 units, the volume of mortgages on management-type cooperatives surpassed that of sales-type cooperatives—$189 million and 20,400 units as compared to $109 million and 11,500 units. Mort-
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FEDERAL HOUSING ADMINISTRATION
gages under the sales-type program—all single-family dwellings— provide for the release of the individual homes to the cooperative members, who may use the insurance provisions of either Section 213 or Section 203. The Section 213 home mortgage program is discussed in the section dealing with home mortgage insurance operations elsewhere in this report.
In addition, project mortgages amounting to $9.8 million covering 1,300 dwelling units were insured under the. Section 908 defense housing program in 1954, bringing the total insurance under this section to $62.5 million on 8,400 units.
Construction activity for all project programs combined declined during the year with 25,400 dwelling units reported started—a decrease of 28 percent from 1953: 33,500 units reported completed (down one-third); and 52,100 dwelling units under construction during the year—one-third below the 1953 level. At variance with this general decline, Section 207 rental housing operations moved ahead with 11,900 units reported started and 8,200 completed as compared to nearly 7,500 units and 5,500 units, respectively, in 1953. More than one-third of the project units under construction in 1954 were in Section 207 projects.
Applications received under the project programs during 1954 totaled 44,200 units—down nearly two-fifths from the preceding year. There were 24,400 dwelling units covered by commitments issued—little more than half the number for 1953. Project applications involving 34,700 units were under examination in FHA field offices at the year end. Again, activity under Section 207 increased, with 32,200 units in applications received during the year compared to 27,700 in 1953; commitments issued involving 15,100 units declined slightly, leaving 22,300 units under examination at December 31— nearly two-thirds of all the project units in this stage of processing.
Property Improvement Loan Volume
In 1954, FHA was authorized to insure qualified lenders under two sections of Title I of the National Housing Act. Section 2, enacted in 1934, provides for one of the major activities of the FHA, the insurance of property improvement loans. Section 8 was enacted in 1950, providing for the insurance of mortgages on new single-family homes for low- and moderate-income families. As previously noted, the authority to issue new commitments for the insurance of mortgages under this section was terminated by the Housing Act of 1954, with provision being made for the insurance of mortgages of this type under the new Section 203 (i). Statistics on these mortgage programs are presented in the home mortgage sections of this report. The volume of property improvement loan insurance under Section 2 is analyzed in the following paragraphs.
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HOUSING AND HOME FINANCE AGENCY
It should be noted, initially, that property improvement loans are primarily small, short-term, unsecured loans financing the repair, alteration, and modernization of existing residential properties and the construction of new structures for other than residential purposes. Prior to October 1, 1954, the FHA insured approved lending institutions against loss up to 10 percent of the aggregate net proceeds advanced by each lender. As of that date, the co-insurance amendment of the Housing Act of 1954 became effective, limiting the amount of each claim paid by FHA to 90 percent of the calculated principal loss sustained by the lender on the transaction plus allowances permitted by regulations, thereby making the lender share in the risk. However, the total claim payments made to any institution still may not exceed the 10 percent limitation established by earlier legislation.
Information on changes in regulations, premiums, and on the scope of operations will be found in Section 1 of this report.
Table 25 shows the trend of insurance written and claims paid for the property improvement program. It should be noted that there are two totals shown for each of the years 1952 and 1953. The tabulated totals normally used are not representative of the actual business generated during these years. Therefore, for analytical purposes it was necessary to estimate volume based on the loan reports received by FHA.
TABLE 25
Property improvement loans insured and claims paid by FHA, 1934-54
Year Loans insured Claims paid Cumulative claims paid as percent of cumulative loans insured
Number Net proceeds (000) Average Number Amount (000) Average
1934-39 2, 329, 648 $821,332 $353 103,390 $23, 888 $231 2. 91
1940-44 ; 2, 458, 920 770,782 313 85, 795 25, 442 297 3.10
1945-49 5,151, 998 2,233,205 433 122, 962 41, 627 339 2.38
1950 1, 447,101 693, 761 479 56,446 18,148 322 2. 41
1951 1, 437, 764 707, 070 492 35, 579 12,086 340 2. 32
1952 t 1952 estimated) 1 1, 495,741 1, 816,881 848, 327 1, 047, 358 567 33, 265 11, 524 346 2.18
1953 1953 (estimated) ! . 2,244,227 1, 832,180 1.334,287 1,092, 277 595 37, 470 14,995 400 1.99
1954 1, 506, 480 890, 606 591 47,488 21,047 443 2.03
Total.., 18,071,879 8,299, 372 459 522, 395 168, 758 323 —
1 Estimated number and dollar amount of loans originated during the year based on a count of loan reports received.
In 1952, the Title I insurance authorization was exhausted and it was only possible for FHA to insure property improvement loans at a rate equal to the amount of the insured notes amortized each month, or approximately $70 million a month, but loan reports were received at the rate of about $100 million a month, causing a large backlog of
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FEDERAL HOUSING ADMINISTRATION
loans awaiting insurance to develop. As a result, the tabulated totals for 1952 understated the actual volume of loan applications received. In 1953, Congress increased the insurance authorization to $1% billion, thus making it possible to insure and tabulate the accumulated backlog of loans from 1952 as well as the current business. However, this return of insuring operations to a current basis distorted the tabulated totals for 1953. (See FHA 1953 Annual Report, Section 2, for a more detailed explanation.)
In 1954, over 1% million property improvement loans with net proceeds aggregating more than $890 million were insured by FHA, Not only was the dollar volume down 18 percent from that estimated for 1953, but it was the first downtrend in this activity since 1949. The decline may be attributed to the influence of the more stringent regulations placed in effect after the initiation of agency and congressional investigations in the Spring of 1954, and to the institution of co-insurance.9
Nevertheless, insurance activity in 1954 continued at a high level, registering the third highest volume reported for any year since the inception of the program in 1934. As in earlier years, property improvement loans continued to be an important portion of FHA business, accounting for 29 percent of the total dollar volume insured in 1954. At the end of 1954, the total amount of insurance written under this program was $8.3 billion—nearly one-fourth of the $36 billion in loans and mortgages insured by FHA since 1934.
State Distribution of FHA Insurance
All Programs
Chart 23 depicts the dollar volume of insurance written on properties in each State under home, project, and property improvement programs for the year 1954.
Table 26 shows the number and amount of loans insured under the home mortgage, project mortgage, and property improvement programs of FHA during 1954, together with the combined dollar amount under all programs in each State and Territory of the United States. Comparable data on insurance written cumulatively to the end of 1954 are shown in Table 27. For each of the individual programs the State distribution is discussed in more detail in subsequent paragraphs of this report.
9 Insurance written during 1954 includes 214,531 loans amounting to $125,994,700 subject to the co-insurance ^provisions which became effective on October 1, 1954. No claims were paid during the year on loans insured under these new provisions.
350920—5(
-11
133
HOUSING AND HOME FINANCE AGENCY
MORTGAGES AND LOANS INSURED UNDER ALL'SECTIONS, 1954 P ____—V R
„ / , “ l. io 'jn ATr/^vnj/
n o M Wy
MILLION LEGEND /__J —e --1 xx., I 7 { /
DOLLARS \ «i p \ / I “J
~pnn \ _ Ba n-R \ r 11 -r„, R HOME PROJECT PROPERTY \ \\ HAWAII ALASKA PUERTO R. G
MORTGAGES MORTGAGES IMPROVEMENT U RICO
LOANS XZ
CHART 23
134
I
FEDERAL HOUSING ADMINISTRATION
TABLE 26
Volume of FHA-insured mortgages and loans, by State location of property, 195 J,.
[Dollar amounts In thousands]
State Total amount Home mortgages Project mortgages Property improvement loans
Number Amount Units Amount Number Net proceeds
Alabama $31,018 71,354 21, 345 420,571 30,043 53, 561 6,116 6,650 80, 396 42, 829 17, 504 147, 414 93, 870 40,769 46, 556 31,834 43, 679 15, 733 42,883 36,114 219, 495 43,473 13, 466 84,155 14, 618 26,193 33,078 4,099 90,056 15,140 264, 529 33, 940 6,092 198,514 47, 915 33, 500 100, 861 9,360 13, 326 11,605 52,855 180, 578 28,137 2, 754 74,236 90, 839 12, 627 28,182 5,148 13, 511 521 23,041 9,502 9 2,071 5,724 1,887 32,384 2, 338 3,339 603 154 6,656 3, 751 1,413 9, 392 7, 658 3,228 4,057 1,973 3,272 1,289 2,638 1,637 15,292 2,123 1,205 6,360 1,191 2,336 2, 563 303 5,515 993 10,024 2,876 432 13,370 4,029 3,021 6,770 850 1,124 1,126 3, 778 12,869 1,720 253 4,927 7,040 933 1, 772 447 716 39 1,939 811 1 $17,854 46, 540 15,850 300,879 19, 799 34,173 5,916 2,087 50,910 31,362 12, 393 89, 923 65, 519 28,065 36, 574 18, 664 29, 487 10, 541 21, 901 14,137 141,163 21,518 9,244 62,031 11,243 19, 491 26, 865 2,329 48, 431 8,430 90, 924 24. 689 4, 377 135,100 31,816 26,220 62,099 7,933 9, 547 9,243 32, 803 100,037 17, 674 2,055 45, 776 66,046 8, 490 19,436 4,076 12,882 486 19, 908 6,255 9 172 2,112 78 5, 415 $1, 344 15, 951 499 43, 436 21, 542 15,283 7,893 150, 617 17, 557 8,200 327 7,715 40, 865 18, 612 7,323 88,402 48, 542 20,897 18,242 19, 685 18,925 6,439 42,694 35,329 131, 993 37,426 7,109 40.135 3,908 9,180 2,891 3, 581 39, 787 4, 771 167,272 14,280 2, 577 93, 544 23,128 10, 598 63,309 2, 702 6,734 3, 557 27, 546 109, 514 17, 818 1,280 26, 980 33,904 7,538 13, 492 1,492 466 27 718 2,165 $11, 820 8,863 4, 996 76,256 10,244 5,439 200 4,563 26,869 10,105 5,111 56,237 26, 742 12,256 9,983 10, 095 11, 684 3,274 20, 982 19,998 73,114 21,852 4,221 21, 581 3,147 5,383 2,371 1,770 29, 680 3, 320 121,386 8, 776 1,594 52,290 13,823 7,156 35,431 1,427 3, 779 2,363 14, 574 60,483 10, 399 699 14,213 22,232 4,137 8,746 1,072 628 35 629 2, 616
Arizona
Arkansas
California..
Colorado. _ ___ ... _
Connecticut .
1,597 13, 948
Delaware ...
District of Columbia
Florida
392 192 2, 617 1,362
Georgia
Idaho _
Illinois
142 234 43 1,254 1,609 447
Indiana _
Iowa
Kansas
Kentucky _
335 489 232 3, 075 2, 507 1, 919
Louisiana
Maine
Maryland.. .. ..
Massachusetts.. ..
232 645 12 1,979 5,217 103
Michigan
Minnesota
Mississippi
Missouri.
78 28 131 315 543 228 1, 319 3,842
Montana
Nebraska ___ -
Nevada
New Hampshire
New Jersey
1,292 400 5,910 76 16 1,450 ' 248 16 379 11, 945 3,389 52,219 475 121 11,124 2,276 124 3,330
New Mexico
New York
North Carolina.
North Dakota..
Ohio ...
Oklahoma.
Oregon
Pennsylvania
Rhode Island
South Carolina
South Dakota
Tennessee
648 2,925 12 5, 477 20,059 65
Texas _
Utah
Vermont.. ..
Virginia .
1,424 285 14,247 2,561
Washington
West Virginia ...
Wisconsin- _ ___
Wyoming
.Maska .
Guam
Hawaii
224 74 2,505 631
Puerto Rico...
Virgin Islands .
United States total >
2 3,066,187 214,212 1, 941,203 28,257 234,022 1, 506, 480 890,606
‘ Based on cases tabulated in 1954, including adjustments not distributed by States, includes $355,826 in loans insured under Sec. 609 not distributed by States.
135
HOUSING AND HOME FINANCE AGENCY
TABLE 27
Volume of FHA-insured mortgages and loans, by State location of property, 1934-54 [Dollar amounts in thousands]
State Total amount Home mortgages Project mortgages Property improvement loans
Number Amount Units Amount Number Net proceeds
Alabama $428,813 41, 721 $251, 256 11,992 $72, 757 269,451 $104,800
Arizona 407,508 48, 607 310, 422 4, 628 32,611 128,287 64,476
Arkansas 272,276 36, 526 209,481 1,712 11,757 119, 498 51,038
California 4,986, 511 602,060 3, 771, 276 48,447 356,095 2,118,063 859,140
Colorado ________________ 351, 344 41,172 260,447 3,141 22,417 153, 834 68, 480
C onnecticut 414; 331 39, 310 279,068 6, 766 52,002 178,963 83,261
Delaware _______ 83', 844 7,391 46,913 4,155 29,974 15,173 6,957
District of Columbia 241,932 6,984 52, 504 21,102 142, 787 94,448 46,640
Florida 98L 225 110,100 695,124 15, 229 105; 759 349; 849 183, 342
Georgia 623; 854 59,909 364, 567 23, 273 159, 947 234, 775 99, 340
Idaho _________________ 182,082 20,199 127, 238 626 4, 970 98, 586 49, 873
Illinois 1,779; 577 160, 651 1, 068,110 22,362 175,813 1,105,209 535, 655
Indiana i; 034,181 119, 309 711,961 9, 050 66,906 619, 536 255, 314
Iowa_ 334,108 33,939 210, 425 1,806 14,137 248,869 109, 546
Kansas ___________ _ 526,615 66,898 427, 736 4, 634 29,926 171, 052 68,954
Kentucky 356, 535 35, 242 225, 583 6, 668 49,021 197, 989 81, 932
Louisiana 544', 847 59,940 401,787 9,140 66, 528 172,216 76,532
Maine _ __ 116, 678 11, 654 64,284 2,420 19,383 75,928 33,012
Maryland 799,585 55,042 340, 269 43,691 297, 520 378,963 161, 796
Massachusetts __________ 382,007 21,137 132, 869 5,326 41, 538 462,315 207, 601
Michigan 2, 292; 545 245; 010 1, 560, 801 10, 720 77,314 1, 516,369 654,430
Minnesota 447,232 34, 664 ' 223, 738 6,310 46, 337 406, 448 177,158
Mississippi 206; 454 26; 199 140, 782 2,722 16,962 115,199 48, 710
Missouri 871,983 93, 089 607,958 11, 293 81, 472 464,262 182, 554
Montana 110,624 12, 685 79, 061 837 6,304 46,825 25,259
Nebraska 275,338 34,337 209, 388 2,599 19, 687 103,439 46,263
Nevada __________ 119,251 12,039 94,870 956 8,808 25,186 15, 573
New Hampshire _ 47,936 4,867 25, 713 244 1,672 46,693 20, 551
New Jersey 1, 609', 217 136, 706 824,165 58, 507 429,071 631,969 355, 981
New Mexico _____________ ' 187; 148 21, 619 143, 656 2, 472 21,138 38, 747 22,354
New York 3,354; 217 177; 327 1,169,303 123, 858 1, 012,683 1, 972,163 1,172, 231
North Carolina 453, 217 44,424 276, 858 17, 433 106,884 157,299 69, 474
North Dakota__________ _ _ 44; 038 3,850 27,061 154 1.143 33,344 15,834
Ohio __________________ 1,821,114 176,959 1,202,098 21, 582 159,858 1,084, 592 459,158
Oklahoma ' 65L 949 85,878 512, 574 4,662 34, 353 254,211 108,022
Oregon _ 472, 779 52,139 334, 967 5, 387 39, 388 217, 974 98, 423
Pennsylvania 1,688,308 182,460 1,069,128 24, 769 187,101 983,971 432,079
Rhode Island 86,505 7,925 50,020 952 7,973 64,975 28,512
South Carolina __ _ __ 263,288 32, 889 181,831 7, 229 44, 964 85, 653 36,493
South Dakota 94; 193 12, 047 71,832 729 5, 573 32, 944 16, 787
Tennessee 597', 993 67,107 400, 216 10,194 61,604 350,323 136,173
Texas 2,022, 902 230, 872 1,356, 546 32,990 226,046 990, 587 440,309
Utah________ ___ _ ' 316, 285 34, 608 221, 336 1,615 12,752 178, 546 82,198
Vermont _ __ __ ______ 32, 477 4,260 21,425 193 1,512 20, 532 9, 540
Virginia— 926; 015 82, 579 518, 947 45,191 293, 359 243, 727 113,709
Washington 1,158, 630 143, 806 887, 745 10, 267 79,781 425, 913 191,104
West Virginia ' 181', 925 23,467 137, 062 797 3,601 85, 445 41, 262
Wisconsin 356, 754 31,211 210, 658 4,104 32, 589 247,941 113, 507
Wyoming 79,195 11, 668 64,148 571 4,451 17, 654 10, 596
Alaska - 83, 874 2, 673 36, 595 3, 853 45, 399 1,729 1,881
Guam 1,203 72 883 265 320
Hawaii . 128; 744 11,485 102, 382 3,151 24,062 3,163 2, 300
Puerto Rico_ _______ 159, 974 15, 548 99, 563 5, 833 35, 646 29, 962 24,764
Virgin Islands 92 10 87 3 5
United States total1 2 36, 000,237 3,634,139 22, 814, 251 668, 342 4, 881,334 18,071,879 8,299,372
i Based on cases tabulated through 1954, including adjustments not distributed by States.
2 Includes $5,280,170 in loans insured under Sections 609 not distributed by States.
136
FEDERAL HOUSING ADMINISTRATION
State Distribution of Home Mortgages in 1954
Home mortgages insured by the FHA in 1954 cover new- and existing-home properties in every State, the District of Columbia, Alaska, Guam, Puerto Rico, and the Virgin Islands, as indicated by Table 28.
TABLE 28
Volume of FHA-insured home mortgages, by State location, 1954
[Dollar amounts in thousands]
State Total New construction Existing construction
Number Amount Units Number Amount Units Number Amount Units
Alabama,-- 2,071 5, 724 1,887 32,384 2,338 3,339 603 154 6,656 3,751 1,413 9,392 7,658 3, 228 4,057 1,973 3,272 1,289 2,638 1,637 15,292 2,123 1,205 6, 360 1,191 2,336 2, 563 303 5, 515 993 10,024 2,876 432 13,370 4,029 3,021 6,770 850 1,124 1,126 3,778 12,869 1,720 253 4,927 7,040 933 1, 772 447 716 39 1,939 811 1 $17,854 46, 540 15,850 300,879 19,799 34,173 5,916 2,087 50, 910 31,362 12,393 89,923 65,519 28,065 36, 574 18,664 29,487 10,541 21,901 14,137 141,163 21, 518 9,244 62,031 11,243 19,491 26,865 2,329 48,431 8,430 90,924 24,689 4,377 135,100 31,816 26, 220 62,099 7,933 9,547 9, 243 32,803 100,037 17,674 2,055 45, 776 66,046 8,490 19,436 4,076 12,882 486 19,908 6,255 9 2,094 5,944 1,917 34, 789 2,387 3,625 604 261 6,673 3, 769 1,439 9,486 7,928 3,247 4,219 2,000 3,339 1,367 2,729 1,886 15, 615 2,152 1,209 6,673 1,290 2,359 2,973 320 5,702 1,007 10,821 3,112 469 14,336 4,046 3,073 6,851 960 1,136 1,163 3,822 12,959 1,763 286 5,050 7,250 962 2,053 513 825 55 1,992 823 1 1,177 3,588 832 20,014 1,763 858 287 85 5,589 1,986 373 5,436 4,346 1,947 2,078 641 1,607 506 1,793 654 9,432 774 872 2,548 353 1,077 1,852 150 2,825 765 4,413 1,988 165 6,683 2,193 1,124 4,018 245 511 590 2,237 7,959 742 68 2,555 1,179 263 974 172 519 20 1,527 380 1 $9, 541 29, 695 6,984 182, 658 14,083 9,242 2,527 1,304 41,459 14,345 3,682 48,799 35,976 16,189 18,625 5,463 14,169 4,498 13,747 5,497 85,699 7,729 6,490 24,381 3, 555 8,539 18,848 1,142 23,467 6,367 39,944 16,493 1,805 67,030 16,499 9,637 37,049 2,204 4,114 5,018 19,169 60, 520 7,542 580 22,523 11,201 2,278 11,292 1,558 9,665 259 15,397 3,251 9 1,192 3, 749 842 21,806 1,799 870 287 179 5,594 1,991 378 5,436 4,536 1,953 2,200 647 1,637 493 1,866 657 9,585 778 873 2,683 356 1,094 2,246 150 2,841 775 4,494 2,217 199 7,352 2,194 1,146 4,041 251 512 603 2,245 8,001 759 74 2,633 1,228 264 1,242 178 581 21 1,577 384 1 894 2,136 1,055 12, 370 575 2,481 316 69 1,067 1,765 1,040 3,956 3,312 1,281 1,979 1,332 1, 665 783 845 983 5,860 1,349 333 3,812 838 1,259 711 153 2,690 228 5,611 888 267 6,687 1,836 1,897 2,752 605 613 536 1,541 4,910 978 185 2,372 5,861 670 798 275 197 19 412 431 $8, 313 16,845 8,866 118,221 5,716 24,932 3,389 784 9,451 17,018 8,711 41,124 29, 543 11,877 17,949 13,201 15,319 6,043 8,154 8,640 55,464 13,789 2,754 37,650 7,688 10,952 8,018 1,188 24,964 2,064 50,980 8,197 2,572 68,070 15,317 16,583 25,050 5,729 5,432 4,225 13,634 39,517 10,132 1,475 23,253 54,845 6,212 8,144 2, 519 3, 217 226 4,511 3,005 902 2,195 1,075 12,983 588 2,755 317 82 1,079 1,778 1,061 4,050 3,392 1,294 2,019 1,353 1,702 874 863 1,229 6,030 1,374 336 3,990 934 1,265 727 170 2,861 232 6,327 895 270 6,984 1,852 1,927 2,810 709 624 560 1,577 4,958 1,004 212 2,417 6,022 698 811 335 244 34 415 439
Arizona
Arkansas
California
Colorado-
Connecticut
Delaware-
District of Columbia Florida
Georgia
Idaho .
Illinois
Indiana-..
Iowa
Kansas
Kentucky
Louisiana
Maine-.-
Maryland-
Massachusetts ..
Michigan. ._
Minnesota
Mississippi
Missouri
Montana ..
Nebraska.. _
Nevada...
New Hampshire .
New Jersey
New Mexico _.
New York
North Carolina
North Dakota
Ohio.
Oklahoma.
Oregon
Pennsylvania
Rhode Island
South Carolina
South Dakota
Tennessee
Texas
Utah-.
Vermont
Virginia..
Washington
West Virginia
Wisconsin
Wyoming ..
Alaska.
Guam
Hawaii _
Puerto Rico
Virgin Islands
Total L.
214,212 1,941,203 223,324 116, 734 1,029,733 121,690 97,478 911,470 101,634
1 Cases tabulated in 1954.
137
HOUSING AND HOME FINANCE AGENCY
The related distribution of the dwelling units involved is shown for new and existing homes and by sections of the Act, in Table 29.
TABLE 29
Dwelling units securing FHA-insured home mortgages, by State location, 1954
State New construction Existing construction
Total Section— Total Section—
8 203 903 8 203 213 222 903
Alabama Units 1,192 3,749 842 Units 462 Units 703 Units 27 Units 902 Units 6 Units 896 Units Units Units
Arizona 188 2,041 643 1,520 83 2,195 1 807 1,386 248 1
Arkansas 116 L075 12,983 588 2 823 2
California 21,806 1,799 870 60 16, 454 812 5,292 188 2 11, 523 1,433 25
Colorado 799 2 ' 585 1
Connecticut 655 215 2,755 317 1 2,754 317
Delaware 287 100 187
District of Columbia 179 179 82 82
Florida 5,594 1,991 1, 558 3,764 1,041 295 272 1,079 1,778 9 1,069 1,774 1
Georgia 749 201 3 1
Idaho ... _ ' 378 83 1,061 4,050 3,392 1,294 2,019 1,353 1,702 1,060 4,046 3,387 1,250 2,017 1,282 1
Illinois 5,436 4,536 1,953 2 200 1 010 2,716 2,508 958 1, 710 4
Indiana 1,144 '884 4 1
Iowa '413 582 43 1
Kansas 103 1,636 366 461 2
Kentucky 647 142 139 1 70
Louisiana 1,637 327 1,310 1,423 279
Maine.. . 493 23 ' 210 260 '874 ' 867 7
Maryland 1,866 657 366 1,324 176 863 861 1 1
Massachusetts. 137 '374 146 1,229 1,228 5,877 1,374 333 1
Michigan . 9,585 778 2,117 6 7,146 567 322 6'030 1,374 336 11 140 2
Minnesota 205
Mississippi 873 370 503 3
Missouri .. 2,683 356 1,094 2,246 150 2,841 775 26 1, 742 915 3,990 934 3,990 934
Montana 3 250 103
Nebraska . . 363 721 10 1,265 727 5 1,128 129 3
Nevada 1,677 90 569 '434 293
New Hampshire 30 30 170 25 144 1
New Jersey 117 2,116 648 608 2,861 232 3 2,820 231 38
New Mexico 6 121 1
New York 4,494 2, 217 199 881 3,223 1,806 137 390 6,327 895 6 6,321 895
North Carolina 93 318
North Dakota 62 270 269 1
Ohio 7,352 2,194 527 5,271 1, 208 1,554 6,984 1,852 1,927 2,810 709 2 6,970 1,596 12
Oklahoma 908 78 8 248
Oregon. __ . 1,146 4,041 251 ' 966 180 L 911 16
Pennsylvania 119 3,549 242 373 1 2,807 709 2
Rhode Island 9
South Carolina 512 92 418 2 624 591 33
South Dakota 603 2,245 8,001 759 87 515 1 560 3 557
Tennessee 135 1,670 5,703 440 1,577 1 1,453 4,838 1,004 212 122 1
Texas 2,045 2 253 4, 958 1,004 212 16 103 1
Utah '755 2
Vermont 74 4 70
Virginia 2,633 1, 228 77 1,660 1,134 896 2,417 6,022 698 1 2,415 1
W ashington 86 8 1 6i 018 698 1 2
West Virginia 264 85 ' 179
W isconsin 1,242 178 581 44 368 830 811 3 804 4
Wyoming 4 174 335 335
Alaska 581 244 244
Guam 21 21 34 34
Hawaii 1, 577 384 1 2 1,432 143 415 415
Puerto Rico 379 5 439 439
Virgin Islands 1
Total1 121,690 15,835 85,011 20,844 101,634 126 96,851 4,522 10 125
7 Oases tabulated in 1954.
138
FEDERAL HOUSING ADMINISTRATION
Leading in FHA home mortgage volume in 1954 were 5 States— California, Michigan, New York, Ohio, and Texas—each with 10,000 or more mortgages and together accounting for nearly two-fifths of the national total. In most States, the 1954 volume ranged between 1,000 and 4,999 mortgages—15 States and Hawaii reporting from 1,000 to 2,499 and 12 from 2,500 to 4,999. Only 8 States, the District of Columbia and 4 Territories reported less than 1,000 mortgages insured.
New homes outnumbered existing homes in half of the States and most of the Territories—the largest new home proportions occurring in Colorado, Florida, New Mexico, and Hawaii.
In 22 States and Puerto Rico, existing homes predominated, while in two States—New Hampshire and Ohio—there was about an even distribution. As in other recent years, the greatest existing-home preponderance was reported in Washington State.
Table 29 shows that Section 203 was used in every State and Territory in 1954 and predominated in both new-and existing-home transactions with one exception—Arizona—where a larger proportion of existing-home mortgages was insured under Section 213. Section 8 insurance, in this peak year of the program, assisted the financing of new home purchases in 42 States and Hawaii, although about one-half of the properties involved were concentrated in five States—Florida, Illinois, Indiana, Michigan, and Texas. Section 903 defense housing activity was similarly widespread in 1954 with a comparable concentration (nearly half of the units) in Arizona, California, Illinois, and Ohio. Section 213 home mortgage operations were confined to 14 States, with Arizona and California accounting for five-eighths of these transactions.
Cumulative State Distribution of Home Mortgages
Table 30 shows the cumulative number and amount of home mortgages insured by FHA from 1935-54 in each State and Territory for all home mortgage programs combined, as well as the two principal home mortgage programs—Sections 203 and 603. Although the number ranged from 10 in the Virgin Islands to over 600,000 in California, the cumulative volume in the greater number of the States was between 10,000 and 60,000 mortgages. Top-ranking California, Michigan (245,000 mortgages), and Texas (231,000) together have accounted for nearly 30 percent of the total. Including with these the eight other States with more than 100,000 insured home mortgages (Florida, Illinois, Indiana, New Jersey, New York, Ohio, Pennsylvania, and Washington), the combined volume represented over half of the national total.
139
HOUSING AND HOME FINANCE AGENCY
TABLE 30
Volume of FHA-insured home mortgages by State location, 1935-54
[Dollar amounts in thousands]
State Total Sec. 203 Sec. 603 Other sections 1
Number Amount Number Amount Number Amount Number Amount
Alabama Arizona Arkansas California Colorado Connecticut Delaware District of Columbia... Florida Georgia Idaho . Illinois Indiana Iowa Kansas Kentucky Louisiana Maine Maryland Massachusetts Michigan Minnesota Mississippi Missouri Montana Nebraska Nevada . New Hampshire New Jersey New Mexico New York North Carolina North Dakota Ohio Oklahoma Oregon Pennsylvania Rhode Island South Carolina South Dakota Tennessee Texas Utah Vermont Virginia Washington West Virginia Wisconsin Wyoming Alaska 41,721 48,607 36,526 602, 060 41,172 39,310 7, 391 6, 984 110,100 59,909 20,199 160,651 119, 309 33,939 66, 898 35,242 59, 940 11, 654 55,042 21,137 245,010 34, 664 26,199 93,089 12, 685 34,337 12,039 4,867 136, 706 21, 619 177,327 44,424 3,850 176, 959 85,878 52,139 182,460 7,925 32,889 12,047 67,107 230, 872 34, 608 4,260 82, 579 143, 806 23, 467 31,211 11,668 2,673 72 11, 485 15, 548 10 $251,256 310,422 209, 481 3,771,276 260, 447 279,068 46,913 52, 504 695,124 364, 567 127,238 1,068,110 711,961 210,425 427, 736 225, 583 401, 787 64,284 340,269 132, 869 1,560, 801 223, 738 140, 782 607,958 79, 061 209,388 94, 870 25, 713 824,165 143, 656 1,169,303 276, 858 27,061 1,202,098 512, 574 334, 967 1,069,128 50,020 181, 831 71,832 400,216 1,356, 546 221, 336 21,425 518,947 887,745 137,062 210, 658 64,148 36,595 883 102,382 99,563 87 30, 335 35,076 29,806 445, 505 34,158 31, 272 4,533 4,203 77, 791 42,083 19,198 133, 679 99, 543 29,911 50,894 29, 563 45, 586 9,938 37, 994 17,175 195, 886 29,213 20, 624 84, 699 12,152 27, 545 9,001 4,325 116, 320 17, 993 144, 859 33, 442 3, 562 148, 111 65,191 44,229 149,211 6, 613 23, 542 11,148 48, 430 166,159 26, 477 3,960 58,068 121,297 22, 019 25, 597 10,440 2, 651 72 10, 663 11,381 8 $190,234 226,947 173,205 2,832,059 222,002 238,217 30,490 31,811 500,500 261, 583 120,845 907,926 587,342 186,270 326,183 191, 362 314,778 53, 933 238,255 109, 728 1,273, 556 188,377 109, 413 559, 514 74, 523 171,875 73, 470 22, 429 701, 485 119, 624 975, 353 208, 613 24, 600 1,022,277 388, 389 290, 067 866, 233 43,141 126, 254 64, 777 286, 591 1,007,168 177,482 20,006 388,880 769,106 130,239 173,427 57,284 36, 525 883 95,988 80, 382 74 9,649 7,132 4,869 126,012 5,069 7,527 2, 631 2,780 26, 895 13, 307 527 21, 975 15, 801 2, 551 10,329 4, 737 12, 381 1,240 14, 409 3,076 41,334 4, 810 4,168 7,080 334 5,868 1,925 337 16, 615 2,624 23,069 8,829 162 24, 771 17, 706 6, 845 31, 443 1,263 6,378 520 15, 977 52,028 7, 920 283 18,806 19, 076 1,325 4,425 1,125 1 $50, 612 43,215 24, 493 742,836 29,429 37, 340 14, 622 20, 691 165,132 70,525 3,104 128, 698 93, 631 13, 568 57, 646 27, 874 75, 633 6, 470 88, 416 17,275 248,254 31, 968 22, 926 38, 418 2,849 31, 520 10,177 2,173 106,257 16, 587 151,850 53,933 1,135 146,767 101, 697 40,369 193,118 6,730 34,137 3,439 96,140 281, 987 42, 924 1,372 102, 931 103,235 6,224 25, 510 6,582 7 1,737 6, 399 1,851 30, 543 1,945 511 227 1 5,414 4, 519 474 4,997 3,965 1,477 5,675 942 1,973 476 2, 639 886 7, 790 641 1,407 1,310 199 924 1,113 205 3, 771 1,002 9,399 2,153 126 4,077 2, 981 1,065 1,806 49 2, 969 379 2,700 12, 685 211 17 5,705 3,433 123 1,189 103 21 $10,410 40, 260 11, 783 196,381 9,016 3, 511 1,801 3 29,493 32, 460 3,290 31,485 30,987 10, 587 43, 907 6,348 11,376 3,881 13, 598 5,865 38,991 3,393 8, 444 10,026 1,690 5, 993 11,224 1,111 16, 423 7,444 42,101 14,312 1,326 33,054 22, 488 4, 531 9, 777 149 21, 440 3,616 17, 485 67,392 929 47 27,136 15,403 599 11, 721 282 63
Hawaii Puerto Rico Virgin Islands Total2 544 4,162 2 3,677 19,146 13 278 5 2, 718 35
3, 634,139 22, 814,251 2, 863,131 18,271,673 624, 652 3, 645,260 146,356 897,317
i Includes Secs. 2, 8, 213, 222, 603-610, 611, and 903.
’ Cases tabulated through Dec. 31, 1954, including adjustments not distributed by States.
140
FEDERAL HOUSING ADMINISTRATION
State Distribution of Project Mortgages
Two-fifths of the dwelling units securing mortgages insured under the project programs during 1954 were located in the States of New York (21 percent) and California (19 percent). With the addition of 6 States—-Texas, Arizona, Connecticut, Ohio, Virginia, and New Jersey (ranked by volume)—about four-fifths of the units insured during the year are accounted for. Each of these 8 States had a volume in excess of 1,000 units. No project insurance was written in 14 States, the District of Columbia, Alaska, or Guam (Table 31).
As shown in Table 32, the highest volumes of insurance written for the year were under Sections 207 and 803, with the bulk of insurance for the two high volume States under these sections—New York accounting for one-third of Section 207 units and California accounting for more than two-fifths of Section 803 activity. The States of New York, Texas, and Virginia accounted for nearly three-fifths of the volume under Section 207 and the same proportion under Section 803 was attributable to California and Texas.
Although the volume of insurance under the Section 213 cooperative housing program was down nearly one-fifth this year, there was much greater dispersion of project activity, with 17 States participating as compared to only 6 States during 1953. Most of this wider geographical distribution reflected the insurance of sales-type cooperatives. However, projects located in the high-volume State, New York—accounting for one-third of the program—were exclusively management type. Management type projects were insured also in Pennsylvania, California, and Ohio. Arizona, the second ranking State (all sales-type), accounted for one-fourth of the Section 213 insuring activity.
Table 31 shows the geographical distribution of projects insured under the combined FHA programs from 1935 through 1954 and Table 32 shows the proportion of activity for the various sections. To date, New York is by far the leading State, with nearly one-fifth of all insured project units. The second ranking State—New Jersey— has accounted for only 9 percent of the units. Other States having volumes in excess of 20,000 units, ranked by volume, are California, Virginia, Maryland, Texas, Pennsylvania, Georgia, Illinois, Ohio, and the District of Columbia. Combined, these leading States have accounted for seven of every ten units insured. As will be noted from the table, there has been some project activity in every State,
141
I-
HOUSING AND HOME FINANCE AGENCY
the District of Columbia, Alaska, Hawaii, and Puerto Rico, with the" bulk—70 percent—under the Section 608 program. Section 207— the leading program for 1954—now accounts for a little more than one-tenth of all the units insured through 1954.
TABLE 31
Volume of FHA-insured multifamily housing mortgages, by State location, 195/ and 1935-54
[Dollar amounts in thousands]
State 1954 1935-54
Number Amount Units Number Amount Units
Alabama 2 $1,344 172 232 $72, 757 11,992’
Arizona . .. . 49 15, 951 2,112 104 32, 611 4, 628
Arkansas . 1 499 78 54 11, 757 1, 712'
California ._ . _ ___ 49 43,436 5,415 1,062 356,095 48, 447
Colorado. _ 71 22,417 3,141
Connecticut . . ... 7 13, 948 1,597 74 52,002 6, 766
Delaware. __ _ . 19 29, 974 4,155
District of Columbia ... 180 142, 787 21,102'
Florida ... 1 2,617 392 337 105, 759 15,229
Georgia. _ 2 1,362 192 182 159, 947 23,273
Idaho 9 4,970 626
Illinois 3 1,254 142 297 175,813 22, 362'
Indiana . 2 1,609 234 141 66, 906 9,050
Iowa . _. 1 447 43 31 14,137 1,806
Kansas 86 29,926 4,634
Kentucky. 3 3,075 335 103 49,021 6, 668
Louisiana 13 2,507 489 106 66, 528 9,140
Maine ... 1 L919 232 19 19, 383 2,420
Maryland 327 297, 520 43, 691
Massachusetts .. 2 1,979 232 50 41, 538 5,326-
Michigan. 9 5, 217 645 265 77,314 10, 720
Minnesota _ _. 1 103 12 157 46, 337 6,310'
Mississippi 44 16,962 2, 722'
Missouri _ 2 543 78 163 81, 472 11, 293
Montana . 1 228 28 8 6,304 837
Nebraska.. ... _ .. 1 1,319 131 54 19, 687 2,599
Nevada _ 16 3,842 315 30 8,808 956
New Hampshire 7 1,672 244
New Jersey . . 11 11,945 1,292 576 429,071 58, 507
New Mexico 1 3,389 400 17 21,138 2, 472
New York ... ... 41 52, 219 5,910 936 1. 012, 683 123,858
North Carolina . 1 '475 76 127 106, 884 17,433
North Dakota 1 121 16 9 1,143 154
Ohio 14 11,124 1,450 322 159,858 21, 582
Oklahoma . 6 2,276 248 147 34,353 4,662
Oregon .. 1 124 16 143 39,388 5,387
Pennsylvania 5 3,330 379 403 187,101 24, 769'
Rhode Island 12 7, 973 952
South Carolina . 92 44,964 7,229
South Dakota 12 5,573 729
Tennessee .. 5 5,477 648 143 61, 604 10,194
Texas _ . 17 20,059 2,925 453 226,046 32,990
Utah 1 65 12 25 12,752 1, 615
Vermont . 7 1,512 193
Virginia . . 9 14, 247 1,424 379 293,359 45,191
Washington 2 2,561 285 127 79, 781 10, 267
West Virginia 15 3,601 797
Wisconsin.. . .. 166 32,589 4,104
W yoming 6 4,451 571
Alaska 34 45,399 3,853
Hawaii 2 2,505 224 59 24,062 3,151
Puerto Rico 1 631 74 28 35,646 5,833
Total 283 234,022 28,257 8, 450 4,881, 334 668, 342
142
FEDERAL HOUSING ADMINISTRATION
TABLE 32
Dwelling units securing FHA-insured multifamily housing mortgages, by State location, 1954 and 1935-54
State 1954 1935-54
All Secs. Sec. 207 Sec. 213 Sec. 803 Sec. 908 All Secs.1 Sec. 207 Sec. 213 See. 608 Sec. 803 Sec. 908
Units Units Units Units Units Units Units Units Units Units Units
Alabama 172 32 140 11,992 674 10, 275 947 1,005 1,119 38
Ari zona 2,112 78 547 1,565 78 4,628 1,712 48,447 3,141 6,766 4,155 21,102 837 1,565 569
Arkansas . - 211 932
California 5,415 174 684 4,048 509 4,783 251 7,142 21,575 1,896 3,013 3, 771 19,037 10,669 18, 882 12,922 680 994
Colorado 264
Connecticut . 1,597 816 450 331 1,160 364 60 450 2,083
Delaware
District of Columbia 2,065 324
Florida... 392 392 15i 229 23,273 626 68 4,168 2,150
Georgia 192 92 100 1,592 104 200
Idaho _ 571 55
Illinois . 142 142 22,362 9,050 1,806 4,634 6, 668 9,140 2, 420 2,247 1,514 172 35 17,012 6,065 1,591 3,243 2,247 7,071 688 3,052 510 16
Indiana 234 176 58 961
Iowa 43 43 43
Kansas 206 823 12
Kentucky 335 70 265 682 70 3,465 692 204
Louisiana _ 489 208 281 921 281
Maine .. . _ 232 232 1,732 4,794 1,502 661
Maryland.. 43; 691 5,326 10, 720 6,310 2, 722 11,293 837 3,900 594 182 34, 221 3,186 7, 214 5,037 1,852 9,439 135 108
Massachusetts 232 82 150 44
Michigan 645 506 139 1,882 463
Minnesota ..... 12 12 1,273
Mississippi 12 858
Missouri 78 78 1,734 120
Montana 28 28 592 110
Nebraska... 131 131 2,599 956 202 1, 786 240 611
Nevada. 315 315 315 401
New Hampshire. 244 244
New Jersey _. 1,292 400 892 400 58,507 2, 472 123,858 17,433 154 4,559 52 51,451 277 1,983 2,195 1,642 5,571 462
New Mexico 400
New York 5, 910 76 3,679 76 2,231 16,444 2,494 16 18,843 85, 807 9,107 43
North Carolina... 176
North Dakota 16 16 95
Ohio 1,450 248 722 40 528 160 21, 582 4,662 5,387 24, 769 1,933 132 88 16, 207 2,974 5,155 19, 474 210 2,528 500 816
Oklahoma ... 248 667 389
Oregon. 16 16 134 16 82
Pennsylvania 379 59 126 196 3,381 36 595 400 469
Rhode Island ' 952 706
South Carolina 7,229 729 290 6,329 258 585
South Dakota 70 401
Tennessee 648 24 124 500 10,194 32, 990 1,615 193 965 324 6,915 19,432 737 1,740 8, 772 854
Texas 2,925 12 1, 435 103 1,387 4,683 24 103
Utah 12
Vermont 56 137
Virginia.. 1,424 1,353 85 25 46 45,191 10, 267 797 10,196 498 25 29,700 6,369 209 4,329 3,100 501
Washington ' 285 200 300
West Virginia 188
Wisconsin ... 4,104 571 235 41 3,828 71
Wyoming 500
Alaska 3,853 3,151 5,833 1, 496 224 2,357 850
Hawaii. 224 224 2,077 886
Puerto Rico.. 74 74 4,947
Total 28,257 11, 442 6,220 9,310 1, 282 668,342 75,452 31,853 465,683 81,076 8,379
1 Includes 3,915 units and 1,984 units insured under Secs. 608-610 and 611 respectively. State distribution of these units same as reported in 1953 report.
143
HOUSING AND HOME FINANCE AGENCY
State Distribution of Property Improvement Loans
As shown in Table 33, the FHA insured during 1954 more than 167,000 property improvement loans for $121 million which were made to repair or maintain properties located in the State of New York. This heavy concentration of business made up 14 percent of the year’s volume, far exceeding the amount insured on properties in any other State. California ranked second with $76 million in proceeds to borrower, followed by Michigan ($73 million) and Texas ($60 million). In each of these 4 States, more than 100,000 properties were improved, with the four States accounting for $331 million—37 percent of the $890 million total. These data pertain to the location of the property improved and do not necessarily reflect the location of the lending institution.
TABLE 33
Volume of FHA-insured property improvement loans by State location of property, 1954
Loans insured Loans insured
State Net State Net
Number proceeds Average Number proceeds Average
(000) (000)
Alabama . 21, 542 15,283 7,893 150,617 17, 557 8,200 327 $11,820 8,863 4,996 $549 580 New Jersey 39, 787 4, 771 $29,680 3,320 121,386 8, 776 1, 594 52,290 13,823 7,156 35,431 1,427 3, 779 2,363 14,574 60,483 10,399 699 $746
Arizona New Mexico 696
Arkansas 633 New York.. 167i 272 14,280 2,577 93, 544 23,128 10, 598 63,309 2,702 726
California 76, 256 10,244 5,439 200 506 North Carolina 615
Colorado 583 North Dakota 618
Connecticut 663 Ohio 559
Delaware 611 Oklahoma 598
District of Columbia 7,715 40,865 18,612 7,323 88,402 48, 542 20,897 18,242 19,685 18,925 6,439 42,694 35,329 131,993 37,426 7,109 40,135 3, 908 9,180 2,891 3,581 4, 563 26,869 10,105 5, 111 591 Oregon 675
Florida . 657 Pennsylvania 560
Georgia __ 543 Rhode Island 528
Idaho. 698 South Carolina 6i 734 3,557 27, 546 561
Illinois _ 56,237 26,742 12, 256 9,983 10,095 11,684 3,274 20,982 19,998 73,114 21,852 4,221 21, 581 3,147 5,383 2,371 1,770 636 South Dakota 664
Indiana 551 Tennessee 529
Iowa 587 Texas 109, 514 17,818 1,280 552
Kansas 547 Utah 584
Kentucky 513 Vermont... 546
Louisiana . - 617 Virginia 26; 980 33, 904 7,538 13,492 1,492 14,213 22,232 527
Maine 508 Washington 656
Maryland. 491 West Virginia <137 8, 746 1,072 628 549
M assachusetts 566 Wisconsin .. 648
Michigan 554 Wyoming 719
Minnesota 584 Alaska '466 1,349
Mississippi 594 Hawaii 718 629 876
Missouri 538 Puerto Rico 2,165 27 2,616 35 1,208 1,310
Montana 805 Guam
Nevada 820 Total i 1, 506,480 890,606 591
New Hampshire 494
1 Includes adjustments.
With respect to the State distribution of the cumulative total of $8.3 billion in property improvement loans insured through the year end, Table 34 shows that this distribution is quite similar to that
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FEDERAL HOUSING ADMINISTRATION
TABLE 34
Volume of FHA-insured property improvement loans and claims paid, by State location, 1934-54
State Loans insured Claims paid Percent of claims paid to loans insured
Number Net proceeds (000) Average Number Amount (000) Average
Alabama 269,451 $104,800 $389 9,065 $2, 267 $250 2.16
Arizona 128, 287 64,476 503 3,119 1,265 406 1.96
Arkansas 119,498 51,038 427 5,688 1,631 287 3.19
California 2,118,063 859,140 406 59,203 19,864 336 2.31
Colorado 153,834 68,480 445 3, 267 1,156 354 1.69
Connecticut 178, 963 83, 261 465 5,653 2,009 355 2.41
Delaware 15,173 6,957 459 621 222 358 3.20
District of Columbia 94,448 46,640 494 3,454 1,069 309 2.29
Florida 349,849 183,342 524 12,250 4,355 356 2.38
Georgia 234,775 99, 340 423 8,583 2,457 286 2.47
Idaho 98,586 49,873 506 3,162 1,255 397 2. 52
Illinois 1,105, 209 535,655 485 24,554 8,115 330 1.51
Indiana 619, 536 255, 314 412 19, 376 5,356 276 2.10
Iowa 248,869 109, 546 440 6,690 2,215 331 2.02
Kansas 171,052 68,954 403 4,835 1,316 272 1.91
Kentucky 197,989 81,932 414 5,508 1,694 308 2.07
Louisiana 172, 216 76,532 444 5, 746 1,363 237 1.78
Maine 75,928 33,012 435 3,081 1,017 330 3.08
Maryland 378,963 161, 796 427 9, 711 2,844 293 1.76
Massachusetts 462,315 207,601 449 14, 709 4,902 333 2.36
Michigan 1,516,369 654,430 432 41,962 12, 659 302 1.93
Minnesota 406,448 177,158 436 8,319 2,804 337 1.58
Mississippi 115,199 48, 710 423 7,146 1,816 254 3.73
Missouri 464,262 182, 554 393 13,091 3,637 278 1.99
Montana 46,825 103, 439 25, 259 539 1,333 523 393 2.07
Nebraska 46,263 447 2,658 869 327 1.88
Nevada 25,186 15, 573 618 518 263 508 1.69
New Hampshire 46,693 20,551 440 2,228 722 324 3. 51
New Jersey 631,969 355,981 563 24,444 8,051 329 2.26
New Mexico 38, 747 22, 354 577 1,304 494 379 2. 21
New York 1,972,163 1,172, 231 594 55,556 23,183 417 1.98
North Carolina 157,299 69,474 442 5, 672 1, 594 281 2.30
North Dakota 33,344 15,834 475 1,294 452 349 2.86
Ohio 1,084,592 459,158 423 25,309 8,199 324 1.79
Oklahoma 254, 211 108,022 425 6,831 1,865 273 1.73
Oregon 217,974 98,423 452 6,472 2, 236 345 2.27
Pennsylvania 983,971 432,079 439 29,952 9,051 302 2.09
Rhode Island 64,975 28,512 439 1,696 537 317 1.88
South Carolina 85, 653 36,493 426 3, 568 951 267 2. 61
South Dakota 32,944 16,787 510 973 376 386 2.24
Tennessee 350,323 136,173 389 9,176 2,653 289 1.95
Texas 990,587 440,309 444 27,902 7, 209 258 1.64
Utah 178,546 82,198 460 3,972 1,552 391 1.89
Vermont 20,532 9, 540 465 1,548 571 369 5.98
Virginia 243, 727 113,709 467 6,168 2,020 327 1.78
Washington 425,913 191,104 449 10,921 3,371 309 1.76
West Virginia 85,445 41, 262 483 2,799 1,084 387 2.63
Wisconsin 247,941 113,507 458 6, 327 2,193 347 1.93
Wyoming 17,654 10, 596 600 483 241 498 2.27
Alaska 1,729 1,881 1,088 56 31 559 1.67
Hawaii 3,163 2,300 727 10 5 512 0.22
Puerto Rico Virgin Islands 29,962 3 24,764 5 827 1.807 4,137 1,209 292 4.88
Guam 265 320 L 207 1 1 811 0.25
Total L— 18,071,879 8, 299, 372 459 522,395 168, 759 323 2.03
1 Includes adjustments.
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HOUSING AND HOME FINANCE AGENCY
reported for 1954 alone. More than a million home owners in each of the five leading States have benefited by this FHA program. The leaders, based on dollar volume, are New York ($1.2 billion), California ($859 million), Michigan ($654 million), Illinois ($536 million), and Ohio ($459 million). With a combined total of almost $3.7 billion, these States have accounted for some 44 percent of insurance written since 1934.
The largest volume of claims submitted under this program has involved properties located in New York ($23 million), California ($20 million), and Michigan ($13 million) with defaulted loans on properties in each of these States resulting in approximately 50,000 claims since 1935. These three States have accounted for one-third of the total amount of all claim payments. If the next 4 ranking States are included—Pennsylvania ($9 million), and Ohio, Illinois, and New Jersey (each with $8 million in claims), the total is brought to $89 million or slightly more than one-half of the $169 million in claims paid to all Title I lenders.
The cumulative claim ratio increased from 1.99 percent as of December 31, 1953, to 2.03 percent at the end of 1954. It may be noted, however, that—with the exception of 1953—the 1954 ratio is lower than that reported for any other year since 1936. The table shows that the majority of the States reporting relatively large volumes of property improvement loans insured had claim ratios below the national average. The main exception to this was California, which has reported claims aggregating 2.31 percent of the total amount of insurance written.
Not only are the property improvement loans relatively concentrated in a small number of States, but the program tends to center around the larger urban areas. Table 35 indicates that 10,000 or more loans were insured on properties in each of 29 Standard Metropolitan Areas in 1954. More than half ($452 million) of the aggregate proceeds of all insured loans was used for modernization work in these areas during 1954.
The New York-Northeastern New Jersey area exceeded all other metropolitan areas, reporting $94 million in loans. This was double the $47 million reported for Detroit, the next ranking area. Five additional areas—Chicago, Los Angeles, Baltimore, Minneapolis-St. Paul, and Houston—reported more than 25,000 loans each in 1954. When these areas are combined with New York-Northeastern New
146
FEDERAL HOUSING ADMINISTRATION
Jersey and Detroit, the seven areas accounted for $3 of every $10 in net proceeds insured in 1954.
On a cumulative basis, the same general pattern of operations is evident. New York-Northeastern New Jersey, reporting $1 billion in loans since 1934, leads all other areas in the country. When it is combined with Los Angeles ($434 million), Chicago ($433 million), and Detroit ($418 million), the 4 areas account for one-fourth of the national total. In addition, it may be noted that the $2.3 billion attributable to these four centers exceeds the $2.0 billion in insurance reported on properties outside the 172 Standard Metropolitan Areas in the entire United States.
TABLE 35
Property improvement loans insured in selected metropolitan areas 1954 and 1934—54
Standard metropolitan area 1 1954 1934-54
Number of loans Net proceeds Number of loans Net proceeds
Baltimore, Md 31, 533 $14,842,887 284,754 $117,176,471
Boston, Mass 19,140 10,938. 811 239,163 107, 835, 682
Buffalo, N. Y 17,543 10, 627, 859 157, 269 78,373, 034
Chicago, Ill .. 68, 940 44, 958, 286 863,400 433, 242,178
Cincinnati, Ohio 10,110 5,124, 720 112,110 45,359,914
' Cleveland, Ohio .. 14, 614 10, 219,825 184,965 94, 543, 826
'Columbus, Ohio 12,306 6, 095, 325 121, 072 46, 689,427
Dallas, Tex 17,160 8, 289, 079 167, 044 64,501, 507
Denver, Colo 13, 103 7, 016, 295 106,496 44, 977, 098
Detroit, Mich 84,849 46, 546, 060 931,506 418,221,789
Elint, Mich 10, 206 5, 364, 203 112,724 42,977,952
Fort Worth, Tex _. .. 11,423 5,897, 650 91,553 40,436,488
Houston, Tex 25, 230 12, 972, 269 235,979 96, 917,314
Indianapolis, Ind ....... 13, 217 7,160, 516 165,177 66, 017, 021
Kansas City, Mo 18,192 9, 529, 638 186,430 71,351, 529
Los Angeles, Calif 79,570 40,022,175 1, 086, 218 434,137,764
Louisville, Ky 12, 909 6, 644, 089 129, 285 53, 301, 267
Miami, Fla 13,188 8, 633,367 95,444 51,934,297
Minneapolis-St. Paul, Minn . . 25, 652 14, 577, 217 263,181 113,788,194
New York-Northeastern New Jersey 118, 599 94,159, 689 1, 578,391 1, 006,796,230
Philadelphia, Pa 20, 533 11,393, 447 396,899 172,358,982
Phoenix, Ariz 10, 566 5, 532, 307 78,110 36, 216,823
Pittsburgh, Pa 18, 809 11,351,877 285,152 125, 649,125
St. Louis, Mo .. . . 24, 210 12, 996, 209 293,378 115,372,980
Kan Antonio, Tex 10,605 5, 044, 024 85, 729 35, 562,912
San Diego, Calif 10, 002 5,112,551 105,034 47,351, 202
San Francisco-Oakland, Calif 21,937 10,719, 622 364,984 147,151,385
• Seattle, Wash 11,578 8,079, 655 152, 650 70,937,134
Washington, D. C 20,440 11,876,222 198, 582 97,114,476
Total, 29 standard metropolitan areas ' Total remaining continental standard metropolitan 766,164 451, 725, 874 9,072, 679 4, 276, 294, 001
areas 386, 282 215,486, 007 4, 713, 773 2,023,015,980
Total continental standard metropolitan areas 1,152,446 667,211,881 13, 786,452 6, 299,309,981
) 44 57,154 16. 9 9 9’ 409 2 8
Savings and loan association (>) (>) 1 78 (2) 3 3,998 1.2
Savings bank (!) (i) 86 99, 547 29 4 10 7 459 2 2
Federal agency (1) (i) 74 96,471 28. 5 38 79,726 23.6
All other (') (i) 9 25,297 7.5
Total (») (') 253 338, 524 100.0 253 338, 524 100.0
Sec. 207
National bank 10 22 $22 046 38. 5
State bank 3 8 4 $3, 999 7. 0 25 18, 414 32.1
Mortgage company.. 2 13 2 1,802 3 1 21 12,369 21.6
Insurance company 9 1 17 15, 524 27.1 1 1 500 2.6
Savings bank..2 17 35 25,098 43.8
Federal agency 1 1 12 lOi 906 19.0 1 3,000 5.2
Total 32 33 70 57,329 100.0 70 57,329 100. O'
Sec. 213
State bank 3 11 $19, 234 84.7
Mortgage company 2 2 2; 350 10.3
Insurance company. 1 1 $1,650 7.3
Savings bank 6 10 12, 806 56.3
Federal agency 1 1 1 700 3 1 2 1,138 5.0
All other 3 3 7, 566 33.3
Total 11 6 15 22, 722 100.0 15 22,722 100.0)
Sec. 608
National bank 1 2 2 $335 1. 0 9 $2,676 7.6
State bank 2 6 4 3,011 8. 6 10 16,122 46. 0
Mortgage company 1 1 7 9! 073 25. 9 4 ' 915 2.6
Insurance company 5 1 13 5! 036 14. 4 8 7, 909 22. 6
Savings and loan association 1 1 1 78 .2 1 78 .2
Savings bank.. 8 4 15 13, 212 37. 7 9 6,009 17. 2
Federal agency 1 2 1,317 3.8
All other 1 1 4,280 12. 2
Total 19 16 43 35,025 100.0 43 35,025 100.0
Sec. 803
National bank . 3 12 4 $7,432 4.0 18 $51,146 27. 5
State bank 1 12 1 4^800 2. 6 19 42, 989 23.1
Mortgage company 6 9 12 27,224 14.6 11 24,053 13.0
Insurance company 2 8 28', 877 15.5
Savings and loan association 2 2 3,920 [2.1
Savings bank 9 16 39,137 21.1
Federal agency 1 2 27 64, 958 35.0 23 63,773 34.3
All other 4 5 13^ 451 7.2
Total 26 37 73 185,880 100.0 73 185,880 100.0
Sec. 908
National bank 5 18 $8,498 22.6
State bank 5 17 13! 034 34. 7
Mortgage company 1 3 3 $2,301 6.1 6 <088 10.9
Insurance company 3 5 6! 067 16.2
Savings bank . 6 1 10 9,295 24.7 1 1,450 3.9
Federal agency 1 1 34 19! 906 53.0 10 10! 499 27.9
Total 11 15 52 37, 568 100.0 52 37, 568 100.0
| 1 Not available.
l 2 Less than 0.05 percent.
160
FEDERAL HOUSING ADMINISTRATION
of the secondary market activity during 1954 was attributable to the Section 803 program (55 percent), while Section 207 ranked second with 17 percent of the total. Section 908 accounted for 11 percent and Section 213, the least active, for 7 percent.
Savings banks were the leading purchasers during 1954 with Federal agencies (FNMA) accounting for nearly the same volume—31 percent and 29 percent respectively. While ranking the same as in 1953, FNMA increased its proportion from 22 percent and savings banks decreased theirs from 32 percent. Two-fifths of the purchases by savings banks and two-thirds of those for FNMA were Section 803 mortgages. Table 43 and Chart 27 show the volume of purchases and sales for the various types of institutions for project programs.
PURCHASES AND SALES OF FHA PROJECT MORTGAGES BY TYPE OF INSTITUTION, 1954
r 1 i, i, i o
F SAVINGS M
... . ; BANKS j
I___ . I ....
r™ : FEDERAL .................. ”
J agencies ___
i...T
i INSURANCE I~1
[•••: \ ! COMPANIES J
...I....
IMORTGAGE ' ...
COMPANIES
i._
PURCHASES RIP TYPES SALES
~ I
IB STATE I”' [Q BANKS ...................। । .................
I NATIONAL '' 7" .
BANKS _ _______
[ SAVINGS a 1 j LOAN ASSNS j
125 100 75 50 25 0 0 25 50 75 100 125
MILLIONS OF DOLLARS
CHART 27
More than one-half of the project mortgages sold in 1954 were sold by State banks (32 percent) and National banks (25 percent), yet combined, they accounted for only 5 percent of the mortgages purchased. Federal agencies, with 24 percent of the dollar volume, ranked third in sales—mostly Section 803 mortgages. Mortgage companies (13 percent) were the fourth ranking sellers while the remaining types of institutions including savings banks, the leading purchasers, sold only 6 percent.
161
HOUSING AND HOME FINANCE AGENCY
Property Improvement Loan Financing in 1954
At the end of 1954, there were 7,300 approved Title I lending institutions. More than 5,000 of these lenders have been active in the period since 1950 (under the 1950 Reserve) with an average of approximately 3,600 institutions a month reporting some activity in 1954.
Home modernization activity by type of financing institution under the 1950 Reserve and for the year 1954 is summarized in Table 44. The distributions indicate that commercial banks have financed the bulk of the loans—84 percent in 1954 and the same proportion in the cumulative operations under the 1950 Reserve. Finance companies and savings and loan associations have originated the major portion of the remainder.
The total experience under the 1950 Reserve is shown in Chart 28. State chartered banks, the second ranking type of lenders, have the best record, as reflected in their claim ratio of 0.92 percent which is significantly less than the national ratio of 1.12 percent. Savings and loan associations also report a lower than average ratio of 1.03 percent.
TABLE 44
Origination of FHA-insured property improvement loans by type of institution, 1954 and 1950 reserves
Type of institution Loans insured
Number Net proceeds (000) Percent of net proceeds Average net proceeds
1954
National bank __ 794,892 485, 797 92,814 135,460 $461,163 287,128 51.7 $580f 591
State chartered bank L 32.2
Finance company 62,824 81,039 7.0 677
Savings and loan association. 9.1 598
Other
Total 1, 506, 480 890, 606 100.0 591
1950 Reserve—March 1950-December 1954
National bank 4,183,340 2,464, 306 591, 781 502,889 25, 599 $2,249, 722 1,358,808 386,676 287,758 18,224 52.3 $538
State chartered bank 31.6 551
Finance company _ ___ 9.0 653
Savings and loan association 6.7 572
Other __ .4 712
Total _ __ 7,767, 915 4,301,189 100.0 554
1 Includes State banks, industrial banks, and savings banks. Totals may not agree with components, because of rounding.
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FEDERAL HOUSING ADMINISTRATION
INSTITUTIONS ORIGINATING PROPERTY IMPROVEMENT LOANS AND RECEIVING CLAIM PAYMENTS, 1950 RESERVE, 1950-1954
BILLIONS OF DOLLARS
(NET PROCEEDS) 2.5--------------------------------------
$ 2 250
RATIO OF CLAIMS TO LOANS 2.0% r—-----
2.0--- “ LOANS INSURED ,.5%----------- —
I- - - $1.359--------Jlll-I -
■ NATL STATE FIN SVGS. OTHERS
BANKS BANKS COS. 6 LOAN
—
• a------------------- $ 387 ----———————
% OF i E. I
Q TOTAL-► 5523%? $ 18 ^'Q4°/o
NATIONAL STATE FINANCE SAVINGS OTHERS
BANKS CHARTERED COMPANIES & LOAN
BANKS ASSNS.
MILLIONS
OF DOLLARS
30— $26.9 /•’Us-H ~"
uj . 8888883 &
§ 20 — HH —
§ ■ SgggS $12 6
1 '°~ M $30
s n % OF TOTAL —► «5eo%| $02 ,^0.3%_____
CLAIMS PAID
CHART 28
During 1954, national and State chartered banks financed well over a million loans with net proceeds totaling $748 million. These same institutions also received $8 out of every $10 in claim payments made by FHA during the year under the Title I program (Table 45) a proportion which is in keeping with their originations of such loans. Nevertheless, it appears significant that national banks have had a larger than usual share of loans go into default. These defaults result in claim payments and are reflected in the increase in the cumulative claim ratio for national banks under the 1950 Reserve from 0.83 percent in 1953 to 1.19 percent in 1954. (It should be noted that claims paid in any year are not necessarily related to insurance written during that year but are related rather to the volume of insurance outstanding.)
A comparison of the 1954 percentage distribution of net proceeds of Title I loans originated by type of lending institution with the distributions for selected other years is shown in Table 46.
163
HOUSING AND HOME FINANCE AGENCY
TABLE 45
Claims paid on FHA-insured property improvement loans by type of institution 1954 and 1950 reserve
Type of institution
National bank--------------
State chartered bank 1_____
Finance company------------
Savings and loan association.
Other______________________
Total.
National bank--------------
State chartered bank 1_____
Finance company____________
Savings and loan association.
Other______________________
Total.
Claims paid
Number Amount (000) Percent of amount Average claim
1954
28, 563 $12, 291 58.4 $430
11,733 5, 337 25.4 455
4,300 1,959 9.3 456
2, 825 1 433 6 8
67 28 .1 422
47, 488 21,047 100.0 443
1950 Reserve—March 1950-December 1954
63,430 $26, 882 56.0 $424
29,092 12, 556 26.2 432
10,955 5, 398 11.3 493
6,055 2,964 6.2 490
279 160 .3 572
109, 811 47,959 100.0 437
1 Includes State banks, industrial banks, and savings banks. Totals may not agree with components because of rounding.
National banks and State chartered institutions combined have raised their share of the total volume from 57 percent in the earlier years of the program to 66 percent in the postwar period and finally to an average of more than 80 percent in recent years. To some extent, this relative change has been the result of the almost complete withdrawal of finance companies from the Title I program. Savings and loan associations, now accounting for almost one-tenth of the annual volume of net proceeds, continue to show increasing interest in this field of consumer credit.
TABLE 46
Origination of FHA-insured property improvement loans by type of institution, selected years
Type 1954 1953 1952 1951 1946 1940
Net proceeds—Percentage distribution
National bank State chartered bank Finance company Savings and loan association Other . 51.7 32.2 7.0 9.1 52.2 32.0 8.5 6.7 .6 52.1 30.5 10.4 6.4 .6 52.7 31.8 9.6 5.5 .4 41.3 24.9 33.1 .7 25.3 31.6 40.5 1.4 1.2
Total
100.0 100.0 100.0 100.0 100.0 100.0
164
FEDERAL HOUSING ADMINISTRATION
Terminations, Defaults, and Claims Paid
This section of the report provides data on the termination and default status of FHA-insured home and project mortgages and on claims paid on defaulted Title I property improvement loans.
As shown in Table 20, total terminations of FHA-insured mortgages and loans amounted to over $14.1 billion through the end of 1954— approximately 39 percent of the total amount insured.
About $1.5 billion of FHA mortgages and loans were terminated during 1954. Of this amount about 57 percent represented home mortgages, 6 percent project mortgages, and 36 percent property improvement loans.
Terminations and Defaults of Home Mortgages
As of the end of 1954, nearly 1.6 million FHA-insured home mortgages aggregating almost $8 billion in original principal amounts had been terminated. This left in force some two million mortgages with combined face amounts of over $14% billion—the equivalent of all home mortgage insurance written in the seven years from 1948 through 1954.
Termination of an FHA mortgage insurance contract occurs when:
1. The loan is paid in full at maturity.
2. The loan is prepaid prior to maturity. If prepaid without refinancing or with the proceeds of a non-FHA mortgage involving the same or a new mortgagor, it is classified as a prepayment in full. If the prepayment involves refinancing with a new FHA-insured mortgage, it is classified as a prepayment by supersession.
3. The mortgage is foreclosed and title to the property is acquired by the mortgagee. The mortgagee may either transfer title to FHA in exchange for debentures and a certificate of claim for those foreclosure expenses not covered by the debentures, or retain the property, in which case the mortgagee “withdraws” from the FHA contract and foregoes its insurance privileges.
As shown in Table 47, nearly all of the FHA-insured home mortgage terminations through the end of 1954 were the result of prepayments—16 percent of the total refinanced with new FHA-insured mortgages and 81 percent prepaid with funds from other sources. Only 1.4 percent of the terminations resulted from foreclosure. Although over one-half of the foreclosures occurred under Section 603, these represented only 3.8 percent of the total terminations under that program. The highest ratio of foreclosures to total terminations was 66 percent under the Section 903 Defense Housing program. Of the 22,500 properties involved in foreclosed cases under all home mortgage programs, 17,000 were transferred to FHA in exchange for debentures with the remaining 5,400 being retained and disposed of by the mort-
350920—56----13
165
HOUSING AND HOME FINANCE AGENCY
TABLE 47
Disposition of FHA-insured home mortgages, 1935-54 [Dollar amounts in thousands]
Total1 Sec. 8 Sec. 203 Sec. 213
Number Amount Number Amount Number Amount Number Amount
Mortgages insured Mortgages terminated: Prepaid in full Prepaid by supersession. _ Matured loans 3,591,070 $22, 708, 503 32, 479 $171, 242 2, 866,157 $18, 292,355 10, 739 $101,976
1, 289, 868 257, 220 13,061 17,048 5,430 631 6, 429,176 1,328, 754 38,155 101,435 31, 691 2, 840 358 115 1,660 530 1,047,011 185, 275 13,059 5, 712 3,541 489 5,197, 768 970, 954 38,148 31,008 20,525 2,251 25 5 234 35
Properties acquired by mortgagee: Transferred to FHA Retained by mortgagee Other terminations Total terminations Mortgages in force 82 11 1 367 52 5 3 24
1, 583, 258 7, 932,051 567 2,614 1,255,087 6, 260,655 33 292
2,007, 812 14, 776, 452 31,912 168, 629 1,611,070 12, 031, 700 10, 706 101,684
Sec. 222 Sec. 603 Secs. 603-610 Sec. 611 Sec. 903
Number Amount Number Amount Number Amount Number Amount Number Amount
Mortgages insured Mortgages terminated: Prepaid in full 10 $142 624, 653 $3,645, 212 3,363 $16,109 75 $556 53, 594 $480, 912
241, 830 71,582 2 10,545 1,877 141 1, 225, 982 355, 444 7 64, 214 11,112 584 415 113 1,659 451 3 22 226 130 1,851 1,340
Prepaid by super-session __
Matured Ioans. _ .
Properties acquired by mortgagee: Transferred to FHA 12 1 39 3 694 5,783
Retained by mortgagee. _. _
Other terminations..
Total terminations Mortgages in force.
325,977 1,657,342 541 2,152 3 22 1,050 8,974
10 142 298, 676 1,987, 870 2,822 13, 956 72 534 52, 544 471,938
1 Excludes Sec. 2 home mortgages.
gagees. Section 603 accounted for 62 percent of the properties transferred to FHA, while 65 percent of the properties retained by mortgagees after foreclosure originally secured Section 203 insured transactions. The financial experience of FHA with respect to acquired home properties is presented in Section 5 of this report.
Yearly Trend.—Included in the terminations showi in Table 47 were nearly 132,000 occurring in 1954, all but 3 percent of which were prepayments. Table 48 shows the total number of terminations, terminations resulting from foreclosure (including properties held by mortgagees pending final disposition), and terminations resulting in FHA acquisition of the properties involved, for each year from 1950 through 1954 and for 5-year periods from 1935 through 1949. The 132,000 terminations reported for 1954 were over 8,000 higher than in 1953, principally because of a 6-percent increase in the annual
166
FEDERAL HOUSING ADMINISTRATION
TABLE 48
Termination of FHA-insured home mortgages, 1935-54
Year Total terminations Foreclosures 1 2 FHA acquisitions
Number for the period Cumulative through end of year Number for the period Cumulative through end of year Number for the period Cumulative through end of year
Number Percent of total insured Number Percent of total insured Number Percent of total insured
Total
1935-39 28,258 28,258 6. 07
1940-44 281, 675 309, 933 22. 66 6, 912 9,007 .66 5,911 7, 099 . 52
1945-49 675,029 984, 962 43. 06 4,684 13, 691 .60 3, 748 10, 847 . 47
1950 131.833 1,116,795 42. 50 2, 610 16, 301 .62 1,860 12,707 . 48
1951 109, 795 1,226, 590 42. 58 1,523 17, 824 .62 1,142 13,849 . 48
1952 101,134 1, 327, 724 42.62 1,478 19, 302 .62 893 14, 742 . 47
1953 123, 624 1,451,348 42.98 1,132 20, 434 .61 733 15, 475 .46
1954 131,910 21, 583,258 44. 09 3, 415 23, 849 .66 1,573 17,048 .47
Sec. 8
1951 2 89 193 283 2 91 284 2 567 0. 03 .75 1.71 1.75
1952 5 64 45 5 69 114 0. 04 .42 .35 2 55 25 2 57 82 0.02 .34 .25
1953
1954
1935-39
Sec. 203
28,258 269, 406 486,037 97,144 85,506 81, 301 101, 832 105,603 28,258 297, 664 783, 701 880, 845 966,351 1,047, 652 1,149,484 21,255,087 6. 07 27. 52 47.13 44.02 43.02 42.60 42. 72 43. 79 2,095 3,'308 244 677 760 684 741 1,131 2,095 5, 403 5,647 6,324 7,084 7, 768 8, 509 9,640 0. 45 .50 .34 .32 .32 .32 .32 .34 1,188 2, 871 49 225 407 282 263 427 1,188 4,059 4,108 4,333 4,740 5,022 5,285 5,712 0.26 .38 .25 .22 .21 .20 .20 .20
1940-44
1945-49
1950
1951 .
1952
1953
1954
1952
Sec. 213
1 10 22 1 11 33 0. 03 . 18 .31
1953
1954 4 4 0. 04 3 3 0.03
1940-44
Sec. 603 3
12,269 188, 992 34, 689 24,287 19, 743 21, 425 25,113 12,269 201,261 235,950 260,237 279, 980 301,405 2 326, 518 4.28 32.23 37.62 41.45 44. 59 47. 99 51.99 3,604 4,440 1,933 763 789 305 1,114 3, 604 8, 044 9,977 10, 740 11,529 11, 834 12, 948 1.26 1.29 1.59 1. 71 1. 84 1.88 2. 06 3,040 3,699 1,635 735 609 412 427 3,040 6,739 8,374 9,109 9,718 10,130 10, 557 1.06 1.08 1.34 1. 45 1.55 1.61 1.68
1945-49 1950
1951
1952 1953
1954
1953
Sec. 611
3 0 3 3 4.00 4. 00
1954
1953
Sec. 903
161 889 161 21,050 0. 45 1.96 22 1,121 22 1,143 0. 06 2.13 3 691 3 694 0. 01 1.29
1954..
1 Include terminations with titles transferred to FHA or retained by mortgagee; also foreclosed properties held by mortgagees pending redemption period or final disposition—21 under Sec. 8, 387 under Section 203 1 under Sec. 213, 513 under Section 603, and 449 under Section 903.
2 Of the cumulative number of terminated mortgages FHA reinsured 115 Sec. 8 cases, 185,275 Sec. 203 cases, 5 Sec. 213 cases, 71,695 Sec. 603 cases and 130 Sec. 903 cases. A reinsured mortgage involves the same property as covered by the original FHA insurance contract.
3 Includes Sec. 603-610 cases.
167
HOUSING AND HOME FINANCE AGENCY
volume of prepayments. Practically all the terminations involved mortgages insured under either Section 203 (80 percent) or Section 603 (19 percent).
Foreclosures, including foreclosed properties held by mortgagees pending final disposition, tripled over 1953 to more than 3,400, about evenly distributed among Sections 203, 603, and 903, each of which showed an increase, with the largest increase reported under Section 903.
FHA property acquisitions more than doubled—from 733 to 1573— the largest number since 1950. Most of the increase was under Section 903.
TERMINATION RATES OF FHA HOME MORTGAGES BY YEARS, 1935-54
PERCENT OF PERCENT OF
MORTGAGES IN FORCE MORTGAGES IN FORCE
20°/ --------------------------------- or>°/ ---------------———---------------
TOTAL ° PREPAYMENTS
15% -............./—\--------------15%---------------------/—\-------------
io%---------------zj-------\ 4—------- io%-----------------fv------v----------
5%-----_■ /-------------------5%------------- V-----------------------
0 ..<111 I I 1_1_1___Illi_____Illi O 4lil I I I I I Illi Illi
FORECLOSURES FHA ACQUISITIONS
Uj . I Uj
0.3%-------A.-------------------------3 0.3%--------1---------j---------------
0 K I I I I I I I I I I u ! I 1 I I I 0 I I< I I I I I I I I I I I I I I I
1935 1939 1944 1949 1954 1935 1939 1944 1949 1954
CHART 29
Chart 29 shows the trends in yearly rates of FHA home mortgage terminations for total types, for prepayments (in full and by super-session), for total foreclosures, and for those foreclosures that result in transfer of properties to FHA. The rates represent the percentage relationship between yearly volume of terminations and average number of mortgages in force during the year.
The curves in the chart illustrate graphically that the trend of FHA home mortgage termination rates has been determined almost exclusively by prepayments; that the peak of prepayments (and hence of terminations) occurred in the early postwar years when mortgage obligations were retired on homes retained by owners or
168
FEDERAL HOUSING ADMINISTRATION
on those sold to new owners; that foreclosures even in the peak years represented only a small part of total terminations; that FHA property acquisitions, as expected, tend to parallel foreclosures with a rate consistently somewhat lower than that of foreclosures; and that foreclosure rates react not only to economic conditions (as evidenced by the peak following the 1937-38 recession and the 1948-49 inventory adjustment) but may also rise after a period of heavy new loan activity, as in 1944 when foreclosures of Section 603 War Housing in-creased following the peak years of activity under that program In 1954, as the chart shows, the termination rate inched upward, reflecting a very slight increase in the prepayment ratio, while the foreclosure rate tripled (to only 0.17 of 1 percent) and the FHA acquisition rate doubled (to only 0.08 of 1 percent).
Default Status of Home Mortgages.—FHA home mortgage defaults at the end of 1954 included 16,200 cases—50 percent over 1953 and the highest level in three years. This is indicated by the data in Table 49, which shows the total number of FHA home mortgages in default at the close of the years 1939 and 1944 and at each year end from 1949 through 1954. The table also shows the number of these defaulted cases where foreclosure was in process and the number in the mortgagee inventory, i. e. where foreclosure had been completed but the properties were retained by the mortgagees pending the expiration of the redemption periods provided by the laws of individual States or for other reasons.
Over one-half of the December 31, 1954, defaults involved Section 203 mortgages, one-fourth involved Section 903 mortgages, and about one-sixth involved Section 603 cases. The greatest relative increase during the year occurred under Section 903, bringing the number reported under this program to more than two and a half times the number reported at the end of 1953.
Despite the increases noted above, only eight of every 1,000 FHA-insured mortgages in force were in default at the end of 1954—somewhat more than at the close of 1952 or 1953, but significantly less than for the other years shown in the table. In the individual programs, Section 903 had by far the highest default ratio—involving nearly 80 out of each 1,000 cases as compared with 9 per 1,000 for Section 603 and about 5 per 1,000 Section 203 cases. Of the mortgages in default as of December 31, 1954 only 7 percent (representing 5/100ths of 1 percent of all mortgages in force) were in process of foreclosure and only 8 percent (7/100ths of 1 percent of those in force) were foreclosed and in the mortgagee inventory.
The uptrend in defaults during 1954 is probably a reflection of the economic adjustments in many communities throughout the nation during the year. Another factor was the cutback in the demand for Section 903 defense housing in many areas of the country.
169
HOUSING AND HOME FINANCE AGENCY
TABLE 49
Default status of FHA-insured home mortgages, 1939-54
As of year end Mortgages in force Defaults and potential FHA acquisitions
Total defaults Foreclosures in process Mortgagee inventory1 2
Number Percent of in force Number Percent of in force Number Percent of in force
1939 Total
437,472 1,058,072 1,302, 203 1,511,402 1,654,276 1, 787, 568 1,925, 485 2,007,812 8, 617 10, 725 12,461 17,058 18,007 10,562 10,778 16, 231 1.97 1.01 .96 1.13 1. 09 .59 .56 .81 808 820 1,281 1,167 899 646 822 1,091 0.18 .08 . 10 .08 .05 .04 .04 .05 598 948 807 950 607 513 299 1,371 0.14 .09 .06 .06 .04 .03 .02 .07
1944
1949
1950
1951
1952
1953
1954 1
1950
Sec. 8
209 6,386 12,112 16, 298 31,912
1951 7 87 90 207 0.11 .72 .55 .65 1 5 12 19 0. 02 .04 .07 .06
1952 3 8 21 0. 02 .05 .07
1953
1954
1939
Sec. 203
437,472 783,878 878, 986 1,119,967 1, 279, 915 1, 411,362 1, 540,975 1, 611,070 8,617 5,433 5,212 9,480 11,087 7,141 6,737 8,966 1.97 .69 .59 .85 .87 .51 .44 .56 808 99 302 502 515 438 511 681 0.18 .01 .03 .04 .04 .03 .03 .04 598 40 82 306 225 176 210 387 0.14 .01 .01 .03 .02 .01 .01 .02
1944
1949 .
1950 .
1951
1952
1953
1954
1951
Sec. 213
313 3,547 6,226 10, 706
1952
1953 40 84 0. 64 .78 3 16 0. 05 .15
1954 1 0.01
1944
Sec. 603 3
274,194 423,217 391, 226 367, 656 347, 962 326, 609 301,498 5, 292 7, 249 7,578 6,913 3,317 2, 309 2,810 1.93 1.71 1.94 1.88 .95 .71 .93 721 979 665 383 203 178 190 0. 26 .23 . 17 .10 .06 .05 .06 908 725 644 382 334 62 513 0. 33 . 17 .16 .10 . 10 .02 .17
1949
1950
1951
1952
1953
1954
1951
Sec. 611
6 75 72 72
1952
1953
1954-.
1952
Sec. 903
12, 510 35,305 52, 544 17 1,602 4,164 0.14 4. 54 7. 92
1953 118 185 0. 33 .35 19 449 0. 05 .85
1954
1 Includes Sec. 222.
2 Titles to foreclosed properties subject to redemption or held by mortgagees pending final disposition.
3 Includes Sec. 603-610 cases.
170
FEDERAL HOUSING ADMINISTRATION
Chart 30 shows the monthly trend of FHA home mortgages in default during the 5-year period from 1950 through 1954, the top line depicting the number in default and the lower line indicating the default ratio.
DEFAULTS OF FHA HOME MORTGAGES, 1950-54
NUMBER
IN THOUSANDS PERCENT
2 0-----------------------------------------------------------2.0
/ A NUMBER OF
J \ / MORTGAGES
/ \ IN DEFAULT S
15 —-------------------------\----------------------------/---15
io |-----------py-----------------------------------L0
DEFAULTS AS ~\
PERCEN T OF \
— MORTGAGES IN FORCE \
5UJ-LI I I I I I I I I I I I I I I I I I 1 I I I I I I I I I I [ | | rHhT--r,-, Includes mortgage notes and property titles transferred to FHA and projects retained by mortgagees with termination of FHA mortgage insurance contracts, numbering 7 for 348 units under Section 207 and 2 for 37 units under Section 608.
2 Includes terminated contracts superseded by new FHA insurance contracts covering the same properties, numbering 13 for 2,035 units under Section 207, and 16 for 1,320 units under Section 608.
177
HOUSING AND HOME FINANCE AGENCY
TABLE 54
Terminations and default status of FHA-insured multifamily housing mortgages, by State location, as of Dec. 31, 1954
State Total units covered by insurance 1935-54
Alabama 11,992 4,628 1,712 48,447 3,141 6, 766 4,155 21,102 15, 229 23,273 626 22,362 9,050 1,806 4,634 6, 668 9,140 2,420 43, 691 5,326 10,720 6, 310 2,722 11,293 837 2,599 956 244 58, 507 2,472 123,858 17,433 154 21, 582 4, 662 5,387 24, 769 952 7,229 729 10,194 32,990 1,615 193 45,191 10, 267 797 4,104 571 3,853 3,151 5,833
Arizona _________
Arkansas _
California _ _ _
Colorado __ _
Connecticut
Delaware _
District of Columbia Florida
Georgia _
Idaho -
Illinois
Indiana
Iowa
Kansas _ _
Kentucky _
Louisiana
Maine _
Maryland __
Massachusetts
Michigan
Minnesota
Mississippi •
Missouri .
Montana
Nebraska
Nevada __
New Hampshire
New Jersey
New Mexico
New York
North Carolina
North Dakota
Ohio .
Oklahoma
Oregon __ __
Pennsylvania
Rhode Island __
South Carolina ..
South Dakota.
Tennessee
Texas..
Utah
Vermont
Virginia.
Washington .
West Virginia
Wisconsin
Wyoming
Alaska
Hawaii
Puerto Rico.
Total
668,342
Units in terminated mortgages 1935-54
Total Default terminations
Total1 Mortgage notes assigned and held by FHA2 Property titles transferred to FHA
As percent of insured units
8. 40 3.16 0. 87 2.18
23.96 3. 69 1.55 2.14
51.17 23. 07 6.19 16.88
24.82 4.12 1.42 .43
17.19
6. 53
3.75 5. 05 2. 24 2.81
26.33
19,06 16. 52 7. 72 8.80
7. 29 2. 54 1.32 1.22
68.69 68.69 52.08 16.61
12.64 .21 .21
7.43
7. 53 8.85 3. 71 4.92
20.00
9.87 5.89 1.92 3. 97
41.60 30.67 13. 74 16.93
7.40 7.40 7.40
12.19 1.31 1.29 .02
10. 27 8.24 8. 24
16.38 1.34 8. 75
20.05 9.08 . 17
14.51 14.07 14. 07
21.23 8. 57 8.48
3.66
67.21 67.21 67.21
2.06
11.57 3. 58 1.46
9.19
1.62 .37 . 99
10. 97 3.82 .50 3.32
14.18
. 11 9.70 . 11
36. 53 19.61 9. 91
8.78 .89 .89 —
13.84 .94 .94
3. 78 15. 23 7. 21 8.02
18. 66
6. 31
10.04 1.09 1.09
9.05 3.29 . 56 2.69
29.02 22.80 22.80
21.89 4.64 .46 4.18
10.28 6. 45 1.05 5. 30
21.83 1.00 1.00
7.53
5. 78 2.21 2.21
2. 21 —
27.19 27.19 27.19
—
14. 25 4.10 1.59 2.26
Units in de-
fault as of
Dec. 31, 1954
Units
Units covered
covered by in-
by mort- Poten- sured
gages in tial ac- mortgages
force as quisi- in good
of Dec. tions 3 standing
31,1954 Dee. 31,
1954
As percent of
units in force
10,985 3.77 1.82 10, 571
3, 519 3,519
'836 34. 69 1.91 546
36, 424 .75 .14 36,151
2,601 2,601
6j 324 6,324
3', 999 1.00 3j 959
15, 545 1.93 .21 15,245
12,326 .34 .34 12, 284
21, 576 .98 .06 21,364
196 8. 67 179
19, 536 19, 536
8,378 2.39 2.39 8,178
1,670 1, 670
3j 707 3,707
6, 010 2.35 5, 869
5,338 5.15 3.78 5j 063
2, 241 2, 241
38,365 .50 38,175
4, 779 1.19 1.19 4, 722
8, 964 3. 61 8, 640
5', 045 3.69 4,859
2,327 2,327
< 895 8,895
'837 47.79 437
2, 504 2, 504
' 956 '956
80 80
51, 737 1.23 .10 51,102
2, 472 2,472
112; 481 .49 .37 111,930
15, 520 .13 .13 15, 500
154 154
18, 521 18, 521
2,959 5.88 5.07 2, 785
4, 914 2. 50 1.20 4, 791
21,341 .43 .43 21, 249
916 916
5 880 .27 5,864
683 '683
9,171 .74 9,103
30,004 3.87 1.87 28, 842
1,615 2. 35 1,577
' 137 11.68 11.68 121
35, 299 35,299
9' 212 3.39 8,900
'623 '623
3, 795 3, 795
' 538 ' 538
3, 768 10.14 2. 76 3,386
3,151 .29 3,142
4,247 — <247
573,101 1.21 .40 566,142
1 Includes mortgage notes and property titles transferred to FHA and 9 projects involving 385 units retained by mortgagees with termination of FHA mortgage insurance contracts.
2 Excludes mortgage notes foreclosed with title transferred to FHA and mortgage notes sold by FHA.
3 Includes mortgage notes in process of assignment to FHA and property titles in process of acquisition by mortgagees.
178
FEDERAL HOUSING ADMINISTRATION
insured units—2 of these, Idaho and .New Hampshire, accounting for two-thirds of the units covered by insurance for each State. Only 4 States have had default terminations ranging from 10 percent to 20 percent of insured units while 24 States, the District of Columbia, and Alaska have reported default terminations involving less than 10 percent of their respective volume of units covered by insurance. In 15 States and Hawaii there have been no default terminations, and for the entire Nation terminations of this type have accounted for only 4 percent of all units covered by insurance.
Default Status of Project Mortgages.—The 90 mortgages in default as of December 31, 1954, for all project programs combined was the highest since the end of 1950 (Table 55). From the standpoint of dwelling units covered by mortgages in default, 1954 with nearly 7,000 units exceeds all other years. The increase over |1953 applied to’all the project programs, with Sections 213 and 803 showing their first defaults as of a year end. The Section 608 program,
TABLE 55
Status of FHA-insured multifamily housing mortgages in force, Dec. 31, 1954
Status Number Number of units Number Number of units Number Number of units
Insured mortgages in force All Secs. Sec. 207 Sec. 213
7,321 573,101 354 34,836 185 22, 877
Insured mortgages in good standing _ __
7,231 90 566,142 6, 959 347 7 33, 950 886 184 1 22,603 274
Insured mortgages in default, total...
In default less than 90 days...
30 27 21 12 1,423 3,260 1,314 962 2 2 2 1 245 387 150 104
In default 90 days or more ._ ... ...
1 274
Projects being acquired by mortgagee ... .
Mortgage notes being assigned to FHA
Trend of insured mortgages in default as of Dec. 31: 1954 .
90 52 70 76 113 6, 959 5,154 5,585 6, 471 6,495 7 1 2 886 214 42 1 274
1953
1952 i
1951
1950 . 1 800
Insured mortgages in force. .. _
Sec. 608 Sec. 803 Sec. 908
6,412 423,211 259 81,021 92 8,126
Insured mortgages in good standing ...
6, 346 66 419,186 4,025 255 4 80, 313 708 80 12 7,060 1,066
Insured mortgages in default, total
In default less than than 90 days
25 18 14 9 829 1,616 814 766 1 2 1 65 443 200 2 4 4 2 284 540 150 92
In default 90 days or more ... .
Projects being acquired by mortgagee..
Mortgage notes being assigned to FHA Trend of insured mortgages in default as of Dec. 31: 1954
66 43 67 76 112 4,025 4,191 5,524 6, 471 5,695 4 708 12 8 1,066 749
1953
1952
1951
1950 1
1
Total includes 1 default under Sec. 611 involving a project with 19 units.
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HOUSING AND HOME FINANCE AGENCY
involving three-fourths of all units covered by insurance in force, showed the largest increase with 66 projects in default as compared to 43 on December 31, 1953, though less than at the end of 1950, 1951, or 1952. The ratio of units covered by project mortgages in default to units covered by mortgages in force—all project programs— increased to 1.2 percent from 0.9 percent in 1953, but was less than the high of 1.5 percent reported for 1950. Units covered by mortgages in default combined with cumulative FHA acquisitions (mortgage notes and property titles transferred to FHA) for all project programs represented 5.1 percent of the units covered by insurance written.
Table 54 shows the distribution of project mortgages in default by States. In 6 States and Alaska, mortgages covering 5 percent or more of the units in projects with mortgage insurance in force were in default as of December 31, 1954. Of these, Idaho, Louisiana, Oklahoma, and Alaska reported defaults ranging from 5 to 10 percent; Vermont, 12 percent; and Arkansas and Montana 35 and 48 percent, respectively. In only 2 States—Oklahoma and Vermont—did defaulted mortgages in the status of potential acquisition account for 5 percent or more of the dwelling units covered by mortgage insurance in force. Of the 18 States and Territories having defaulted mortgages in this category, 8 showed less than 1 percent and 5 States ranged from 1 to 2.0 percent. The United States total for mortgages that were considered potential FHA acquisitions involved less than one-half of 1 percent of the units with insurance in force.
Title I Claims Paid
In contrast to the decline in the volume of insurance written in 1954 on property improvement loans, there was a sharp increase of 40 percent in the amount of claim payments (Table 56), with more than 47,000 payments amounting to $21 million made on defaulted notes submitted by insured lenders. This was the largest dollar volume of claim payments recorded in the history of FHA. A larger number of claims were paid in 1949 and 1950 but, because of the smaller average amount of insured notes in force at that time, the total amount was only $17 million and $18 million respectively.
The annual amount of claims paid in relation to the average balance of loans outstanding is shown in Chart 31 and Table 56. The trend of outstanding balances, as portrayed in the chart, manifests a persistent upward movement with only slight interruptions in 1937-38 (reflecting a lapse in FHA authority to insure) and again during 1942-45 (under wartime restrictions). The claims picture is quite similar, with a 1-year lag, through 1950. Subsequently, claims fell sharply, reflecting the high level of prosperity prevailing during the Korean crisis. With the exception of 1946, the 1952 ratio of claims paid to average net proceeds outstanding, of 1.02 percent, was the lowest for
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FEDERAL HOUSING ADMINISTRATION
INSURED PROPERTY IMPROVEMENT LOANS OUTSTANDING
BILLIONS AND CLAIMS PAID BY FHA, 1934-1954
OF DOLLARS
i.6|----------------------------------------------------------------------------
RATIO OF CLAIMS PAID
— 5% TO LOANS OUTSTANDING I |
1.2----- 4X—A------------------- INSURANCE OUTSTANDING -----------------/-------
. 3% —j-\---------------, y
— 21. -I--V 's-----~/^\--- I __
i% /-------
.8------ o I i i i i i I i i i i I i i i i l i i i I----------------------------
1935 1940 1945 I960 1954
.4------------------------------------------------------------------------------
0 -xXl------1---1---1----)-1____|__|___|___|__Illi_______________Illi
.02---------------------------------------------------------------------------y
\ y
a CLAIMS PAID f \ X
t .01-----------------------------------------------------/------------------------
| ______________________________________ /
o —I /|______i__i___i____I_i____i__ii , "T*i i i_________________iiii
‘34 ’35 ‘36 ‘37 ‘38 '39 '40 '41 '42 '43 '44 '45 '46 '47 '48 '49 '50 '5L '52 '53 '54
CHART 31
any year since World War II. During 1953 claim payments edged upward, continuing this trend in 1954. The 1954 ratio of claims paid to average net proceeds outstanding was 1.47 percent—larger than in the 3 preceding years, but lower than the ratios reported for the 3 years from 1948 through 1950, or for any year from 1936 through 1943. This 1953-54 increase in claim payments is presumably a reflection of the decline in business activity during those years and of the resultant reduction in incomes of individual borrowers.
TABLE 56
Property improvement loans outstanding and claims paid by FHA, 1934-54 [Dollar amounts in thousands]
Year Average net proceeds of loans outstanding Annual amount of claims paid Claims paid as percent of loans outstanding Year Average net proceeds of loans outstanding Annual amount of claims paid Claims paid as percent of loans outstanding
1934 $12,008 1945 $140 947 81 524
1935 93, 582 $447 0. 48 1946 x 26? 376 2 434 1. 09
1936 253, 218 5,885 2. 32 1947 501 171 5 830 . 93
1937 224,861 6; 891 3. 06 1948 748 438 14 346 1.16
1938 144, 449 6,016 4.17 1949 803 293 17 494 1. yz 9 1 Q
1939 199, 347 4,649 2 33 1950 889 433 18 148 Z. io
1940 253,676 6,115 2. 41 1951 959 294 XO, 14:0 19 Z. U4
1941 303; 149 7; 071 2. 33 1952 1 130 827 1a, UOO 11 524 1. 26 1 no
1942 265, 583 6; 998 2. 64 1953 1 .377 67Q 14 995 1. uz
1943 155, 667 3; 588 2. 30 1954 1 436 558 21 047 1. uy 1 47
1944 115,153 1,670 1.45 1. 4/
350920—56.----14
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HOUSING AND HOME FINANCE AGENCY
Of the 18 million property improvement loans insured through 1954, some one-half million—about 2.9 percent—had gone into default. This resulted in claim payments of $169 million, or slightly more than 2 percent of the $8.3 billion insured. The ratio is reduced to 1.2 percent when allowance is made for actual recoveries on the defaulted notes taken over by FHA after payment of claims to the lenders. Anticipated recoveries on notes in process of collection further reduce the net claim ratio to 1 percent.
Net cash collections by FHA amounted to $7.7 million during 1954. This figure is a decrease of more than 8 percent from the all time high of $8.4 million collected in 1953. Through 1954, the cumulative total of cash collections and proceeds from disposable real properties amounted to almost $68 million. In other words, 40 percent of the total amount of claim payments made to lending institutions since 1934 has been recovered by FHA.
It is expected that another $18 million will be recovered from notes in process of collection, bringing the total to $86 million. With this deducted from the claim payments through 1954, the net loss to the Title I insurance fund is only 1 percent—a fraction higher than the 0.98 percent reported as of 1953, but slightly less than the comparable ratios for 1951 and 1952.
Amounts of claims paid and the claims paid ratio by State location of property are presented on Table 34 and discussed under the topic of State Distribution of Property Improvement Loans.
All claims and operating expenses under the property improvement program have been met by the FHA out of income, with no cost to the Government with respect to insurance written since July 1, 1939 when insurance premiums were first authorized under this program. Since that time, an insurance reserve of $34 million has been built up. In addition, $8% million originally advanced for operating capital has been repaid to the United States Treasury.
Payments Received Prior to Default of Title I Loans.— A cross tabulation of the number of payments made by borrowers prior to default by the number of payments called for in the note is shown in Table 57. Almost 8 out of every 10 claims paid during 1954 involved notes originally insured for 36 month terms. Of these 3-year notes on which claims were paid, default occurred on more than one-fourth in less than 6 months, and over one-half in less than a year.
Chart 32 shows that almost 6 percent of the 1954 claims, representing nearly one-tenth of the dollar volume, involved notes upon which the borrower had made no payments. More than 1 out of every 5 claims, accounting for nearly one-third of the total amount, was paid on notes which went into default after one payment was received but before the time the sixth monthly payment was due. The largest concentration of claims—involving roughly one-fourth of the total number and
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FEDERAL HOUSING ADMINISTRATION
TABLE 57
Number of payments received prior to default by term of property improvement loans, 1954
Number of payments received prior to default Term of defaulted loan Total number Total amount Average claim paid
6-11 months 12-23 months 24-35 months 36 months 37 or more months
0 Percentage distribution $737 652 523 411 272 145 72 596
44.2 53.9 1.9 14.8 36.3 34.4 14.3 .2 3.2 13.2 17.0 18.1 20.3 27.9 .3 5.3 21.0 24.6 20.3 14.6 8.1 6.0 .1 4.6 17.3 22.5 15.6 8.1 6.5 3.9 21.5 5.7 20.9 23.9 19.5 14.5 10.6 4.7 .2 9.6 30.7 28.2 18.0 8.9 3.5 .8 .3
l-5_.
6-11
12-17
18-23
24-29
30-35
36 or more
Total. .. _ _
100.0 0.5 1.4 100.0 5.9 5.8 100.0 15.3 17.5 100.0 77.7 11.8 100.0 0.6 14.2 100.0 100.0 11.9 100.0 443
Percent of total—
Median - - ...
some 28 percent of the amount—represented notes going into default between the sixth and eleventh payments. When these three groups are combined, it becomes apparent that over one-half of the claims, accounting for over two-thirds of the total amount, were paid on notes going into default within a year after their origination.
PAYMENTS MADE PRIOR TO DEFAULT OF LOAN
CLAIMS PAID ON PROPERTY IMPROVEMENT LOANS, 1954
NUMBER OF CLAIMS AMOUNT OF CLAIMS 0-2% I MOReI 0 3 % [4.7% 30-35 ] 0.8% [ 10.6% 24-29 j 3.5%
: 14.5% 18-23 8.9% J
[ 19.5% 12-17 18.0% ]
| 23.9 % 6-11 28.2% ~]
| 20.9 % 1-5 ' 307% !
[57 % NONE 9.6% J NUMBER OF PAYMENTS RECEIVED PRIOR TO DEFAULT
CHART 32
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SECTION 3
CHARACTERISTICS OF MORTGAGE AND LOAN TRANSACTIONS INSURED BY FHA IN 1954
This portion of the report is devoted to a discussion of selected characteristics of the home and project mortgage and the property improvement loan transactions endorsed for FHA insurance in 1954.
During 1954, about 1.2 million new privately financed dwelling units were started in the nonfarm areas of the nation. Construction and sale of most of these units were facilitated by short-term construction money and long-term permanent mortgage funds advanced by privately owned financial institutions. Over 276,000 units, or 23 percent of the total, were started after FHA approval of the plans and specifications and were subject to FHA compliance inspections in the course of construction.
Of the units started under FHA inspection, 251,000 were approved under the home mortgage programs and the remaining 25,000 under the multifamily project programs. Nearly 221,000 units in FHA-inspectcd 1- to 4-family homes were reported as completed and ready for occupancy in 1954. Mortgages secured by 122,000 of these new units and by an additional 101,000 existing units were insured by FHA during the year.
The characteristics of these insured home mortgages, the properties securing them, and the mortgagors buying homes for their own occupancy are analyzed in this part of the report. The analysis of characteristics of home-mortgage transactions is based largely on cases insured under Section 203, the principal FHA home mortgage program. For the first time in the postwar period, data on the-characteristics of FHA home mortgage transactions have been compiled by States and Territories and are presented in this report. These data not only provide a picture of the various facets of FHA home mortgage activity in specific areas of the country, but also aid in obtaining a better understanding of the characteristics data when summarized on a United States total basis. In 1954, 71 percent of the new home and 95 percent of the existing-home mortgages insured
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FEDERAL HOUSING ADMINISTRATION
by FHA were endorsed under the provisions of Section 203. Characteristics of transactions insured under Section 8, terminated by the Housing Act of 1954, are also presented in this section of the report.12
Characteristics of Section 203 Home Mortgage Transactions
As in previous years, almost all Section 203 insured transactions covered single-family homes—98 percent of the new and 96 percent of the existing transactions being in this category. Table 58 shows practically no change from 1953 to 1954 in the proportion of either new or existing dwellings which contained only 1 living unit. Two-family structures accounted for slightly less than 2 percent of the new homes and for about 3 percent of the existing homes.
TABLE 58
Structures and dwelling units in 1- to 4-family homes, Sec. 203, selected years
Units per structure New homes Existing homes
1954 1953 1950 1946 1940 1954 1953 1950 1946 1940
Structures—Percentage distributions
1 98.1 97.8 99.0 98.7 99.0 96.2 96.4 95.5 93.6 92.7
2 1.6 1.8 .9 1.0 .7 3.2 3.2 4.1 5.8 6.1
3 .1 (>) (■) .1 .1 .3 .2 .2 .3 .7
4 .2 .4 .1 .2 .2 .3 .2 .2 .3 .5
Total 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0
Dwelling units—Percentage distributions
1 95.9 95.1 97.7 96.9 97.7 91.9 92.4 90.1 87.4 85.0
2 3.1 3.4 1.8 2.1 1.5 6.1 6.0 7.8 10.9 11.3
3 .3 . 1 .1 .2 .2 1.0 .7 .7 .7 1.8
4 .7 1.4 .4 .8 .6 1.0 .9 1.4 1.0 1.9
Total 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0
Average 1.02 1.03 1.01 1.02 1.01 1.05 1.04 1.06 1.07 1.09
1 Less than 0.05 percent.
Owner occupants were the mortgagors of some 94 percent of the new 1-family homes and of virtually all the existing homes securing these insured transactions. The proportion of landlord owners of new 1-family homes increased significantly from 1 percent in 1953 tojnearly 4 percent in 1954 while the proportion of builders who were the designated mortgagors at time of closing remained the same at 2% percent.
Over 90 percent of 3- and 4-family properties involved in Section 203 transactions insured in 1954 were built or purchased for rental income purposes. Of the 2-family houses, nearly three-fifths of the new but
12 Data used in this analysis are based on the following samples:
1. Section 203 29,200 new home and 30,900 existing home cases selected fromlmortgages insured during the first 11 months of 1954.
2. Section 8—15,800 new home cases insured during 1954.
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HOUSING AND HOME FINANCE AGENCY
less than 2 percent of the existing were primarily rental income properties. In August 1954, FHA limited the use of Section 203 for rental income purposes by stipulating a maximum of 11 units in any such project and forbidding the use of the provisions of this section for rental purposes when the property was part of or contiguous to a project involving 12 or more dwelling units in which the mortgagor had a financial interest.
Typical Section 203 Home Mortgage Transactio n
Table 59 presents data on selected characteristics of typical new-and existing-home mortgage transactions insured in 1954 and permits
TABLE 59
Characteristics of mortgages, homes, and mortgagors for single-family home tran-actions, Sec. 203, selected years
Year New homes Existing homes New homes Existing homes New homes Existing homes New homes Existing homes
Amount of mortgage 1 Duration in years 2 3 4 5 Loan as a percent of FHA value 1 1-family as a percent of 1- to 4-family
1954 $8,862 8,555 8, 273 7, 586 7,101 7,143 5, 504 3 4,358 $9,030 8,623 8,047 7,448 6,801 6,778 4, 697 3 3,687 22.9 22.2 21.7 23.4 24.1 22.8 21.0 ‘23.0 20.1 19.9 19.7 21.1 20.2 19.8 18.9 ‘ 17.5 85.3 86.5 83.7 86.5 88.0 87.3 87.0 3 87.0 78.5 78.3 77.9 76.6 77.8 78.0 78.4 3 76.8 98.1 97.8 96.1 98.5 99.0 98.9 98.7 99.0 96.2 96.4 96.3 95.6 95.5 96.1 93.6 92.7
1953
1952.
1951
1950
1949
1946
1940.
1954
Property value 1 Market price of site 2 Number of rooms 15 Percent with garages
$10,678 10,140 10,022 9,007 8,286 8,502 6, 558 5,028 $11,549 11,061 10, 289 9,843 8,865 8,700 5,934 4,600 $1,456 1,291 1,227 1,092 1,035 1,018 761 662 $1, 591 1,461 1,296 1,222 1,150 1,098 833 948 5.4 5.3 5.3 5.2 4.9 4.9 5.5 5.6 5.6 5.6 5.5 5.6 5.6 5.6 5.9 6.3 66.6 59.7 53.4 49.6 48.7 49.6 58.1 75.6 79.6 74.1 70.7 69.5 70.6 70.4 83.4 87.2
1953
1952..
1951
1950
1949
1946
1940 ...
1954
Mortgagor’s effective annual income 16 Total monthly payment1 Payment as a percent of income 8 7 Ratio of property value to annual income 6 7
$5,139 4,880 4,811 4,225 3,861 3,880 3,313 2,416 $5,696 5,396 4,938 4, 726 4, 274 4,219 3,101 2,490 $68. 62 65.95 64.16 58.84 54.31 55.59 46.18 ‘ 35.15 $74.34 70.84 65.08 61.57 56.65 56.12 40.83 ‘ 34. 56 15.1 15.2 15.1 15.1 15.8 16.0 15.3 17.2 14.8 14.7 14.5 14.4 14.6 14.8 14.3 15.1 1.96 1.96 1.99 2.00 2.04 2.05 1.81 1.97 1.91 1.92 1.95 1.96 1.92 1.92 1.71 1.70
1953
1952
1951.
1950
1949
1946
1940
1 Data shown are medians.
2 Data shown are averages (arithmetic means).
3 Based on 1- to 4-family home mortgages.
4 Estimated.
5 Throughout this report medians are computed on the assumption that all characteristics distributio ns are represented by continuous data within groups.
9 Throughout this report distributions of housing expense, and mortgagor’s income, as well as characteristics relating to income, are based on owner-occupant cases only.
7 Based on arithmetic means.
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FEDERAL HOUSING ADMINISTRATION
comparison of these figures with comparable ones for selected previous years.13
The typical new-home transaction in 1954 involved a mortgage of $8,862, scheduled to be repaid over a term of nearly 23 years at a monthly rate of $68.62 including debt service, real estate taxes, and hazard and FHA mortgage insurance premiums. This typical property was valued by FHA at $10,678, including land with a market price of $1,456. The single-family dwelling securing this mortgage contained 961 square feet and provided 5.4 rooms including 3 bedrooms. Garage facilities were provided. The mortgage loan represented 85 percent of the FHA estimated property value.
The typical new-home owner occupant mortgagor had an income of $5,100 of which about 15 percent was required for mortgage payments. The property value averaged just under twice the mortgagor’s income. Compared with the typical new-home transaction of 1953—the mortgage amount was 4 percent higher, the duration 3 percent longer, and the monthly payment 4 percent more; property value increased by 5 percent and land price by 13 percent, but the ratio of loan to value declined 1.2 percentage points. The typical mortgagor’s income was up 5 percent, with its relationship to mortgage payment and property value virtually unchanged.
The typical FHA existing-home transaction in 1954, compared with its new-home counterpart, involved a larger, more expensive house and a site with a higher market price. The mortgage provided for a larger amount and a shorter duration and consequently required a higher monthly payment. The typical existing-home mortgagor
13 Throughout this report the use of technical terms is in keeping with the following definitions established by the FHA Underwriting Division in their procedures for the appraisal of properties and the evaluation of mortgage risk:
Estimate of Property Value is the price that typical buyers would be warranted in paying for the property (including the house, all other physical improvements, and land) for long-term use or investment, assuming the buyers to be well-informed and acting intelligently, voluntarily, and without necessity.
Market Price of Site is an estimate by FHA for an equivalent site including street improvements or utilities, rough grading, terracing, and retaining walls, if any.
Number of Rooms excludes bathrooms, toilet compartments, closets, halls, storage, and similar spaces.
Mortgagor’s Effective Income is the estimated amount of the mortgagor’s earning capacity (before deductions for taxes) that is likely to prevail during approximately the first third of the mortgage term.
Total Monthly Mortgage Payment includes monthly payment for first year to principal, interest, FHA insurance premium, hazard insurance, taxes and special assessments, and miscellaneous items including ground rent, if any.
Replacement Cost includes estimated cost of building and other physical improvements, land, and miscellaneous allowable costs for the typical owner.
Total Requirements include the total amount, including mortgage funds, necessary to close the transaction less any prepayable expenses such as unaccrued taxes, insurance premiums, and similar items.
Sale Price is the price stated in the sale agreement.
Taxes and Assessments include real estate taxes and any continuing non-prepayable special assessment’. Prospective Monthly Housing Expense includes total monthly mortgage payment for first year, estimated monthly cost of maintenance, and regular operating expense items (water, gas, electricity, fuel).
Rental Value is estimated on the basis of typical year-round tenant occupancy, excluding any premium obtainable because of local housing shortages or newness of the individual property.
Calculated Area is the area of spaces in the main building above basement or foundations, measured at the outside surfaces of exterior walls. Garage space and finished spaces in attic are excluded.
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HOUSING AND HOME FINANCE AGENCY
was in a somewhat higher income level and made a larger down payment, but the mortgage payment represented a smaller proportion of his income and the property value-income ratio was slightly lower. The typical existing-home property was valued by FHA at $11,500 and consisted of a lot with an estimated market price of $1,600. The 5% room house, including 3 bedrooms, had a calculated area of 1,035 square feet. The mortgage amounted to $9,030 (over 78 percent of the property value) and had a duration of 20 years. It was to be repaid at a monthly rate of $74.34 (including payments on principal, interest, real estate taxes, hazard and FHA insurance premiums). The typical existing-home mortgagor had an income of almost $5,700, nearly 15 percent of which was required for monthly payments. The property value represented about 1.9 times the mortgagor’s income. As compared with the typical existing-home transaction of 1953, both the mortgage amount and the monthly payment were about 5 percent higher, and the duration was slightly longer. The property value increased by about 4 percent and the land market price by 10 percent, while the size of the structure, although increasing some 3 percent in calculated area, remained about the same with respect to number of rooms. The annual income of the typical existing-home mortgagor increased nearly 6 percent from 1953 to 1954 but the proportion required for mortgage payment remained practically unchanged and there was only a slight decline in the value-income relationship.
Trends of Characteristics of Section 203 Home Mortgage Transactions
Chart 33 depicts for typical new- and existing-home mortgage transactions insured under Section 203 the trends in property value, mortgage amount, mortgagor’s income, land prices, and the ratios of loan to value, income to value, and payment to income.
The increase in FHA new-home values from 1953 to 1954 averaged about the same as the rise in the average construction cost of all privately financed 1-family houses started. According to the Bureau of Labor Statistics, the average construction cost of 1-family homes started in 1954, excluding land, was $10,625 or 7 percent more than in 1953, paralleling the 7 percent rise in the average FHA values for FHA new homes. Mortgage amounts for FHA new-home transactions registered an average increase (6% percent) comparable to that for total mortgages of $20,000 or less recorded during 1954. However, in the case of existing-home mortgages insured by FHA during 1954, the mortgage amount increase, 5 percent, was slightly lower than that for total mortgages recorded during the year. Similarly, values of existing properties insured by FHA in 1954 did not increase as much as the new, reflecting stabilization tendencies in existing-property values.
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FEDERAL HOUSING ADMINISTRATION
CHARACTERISTICS OF FHA MORTGAGES, HOMES, AND MORTGAGORS
SINGLE-FAMILY HOME MORTGAGES,SECTION 203,1940-54
DOLLARS NEW HOMES DOLLARS EXISTING HOMES
12,000--------1--1:----]--------- 12,000---------j--:--1---j---1-F——
| " PROPERTY VALUE
10,000-----property value l0000-----------------1___LXL______
8,000------------1 8,000------------------------------------------
P/Hl I lU ’ -/Vf p' MORTGAGOR’S INCOME »' I
4,0001 UX*X I \"*\ 4P°°i' । '^--MORTGAGOR’S INCOME
P ’ i I I I -
2,000 i----MARKET PRICE OF StTE 2,OOoj— MARKET-PRICE OF SITE ------
L______। I I J—1—------------------------------------------------
i I ! I l I H oi,;i ui l I I I 1
PERCENT PERCENT
T j i i LU । I I । I
60-----------------------1 1 604— ~L— INCOME -VALUE RATIO -------:
INCOME -VALUE RATIO
40----------1--1---------1-----40-----------------[--1------------
i । iI । i! r
2Q_____PAYMENT-INCOME RATIO _______________PAYMENT - INCOME RATIO
Xj i ,1J 1,1 i U oQ I ! ill I il
1940 46 <17 48 49 50 51 52 53 '54 1940 46 '47 '48 '49 '50 '51 '52 '53 '54
CHART 33
A major cause of the sustained upward trend in FHA property-values and mortgagors’ incomes has been the general inflation which has characterized the postwar period. However, other major factors have also contributed to this upward trend. One of these has been the increase in land prices and development costs reflected by the 41-percent increase reported in land market price for new homes since 1950. As a result of the postwar building boom, land sites in developed areas of many of the more heavily populated sections of the country have been almost completely used up, thus creating price raising competition among builders for suitable sites. High development costs have stemmed in part from the necessity for greater extension of utility lines.
The increase in the size of the homes has also contributed to the rise in property values. In 1954 the typical new FHA home was
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HOUSING AND HOME FINANCE AGENCY
4 percent larger in terms of calculated area, while the typical existing property was nearly 3 percent larger. These larger homes have found a ready market, particularly in view of the increase in the typical size of families in the postwar period. In addition, because of competition and buyers’ demands there has been an increasing tendency in many sections of the country for builders to provide “extras”—fully equipped kitchens, more efficient closet and storage facilities, automatic heating and ventilating equipment, landscaping and plantings, and garage facilities. These have all been reflected in higher property value.
Another factor influencing property values in 1954 was the increasing availability of mortgage funds resulting from the cutback in the inventory and capital investment expenditures of industry and commerce, the reduction in reserve requirements for Federal Reserve Banks, and stabilization in the bond financing requirements of the Federal Government. With more money available for investment, lenders tended to be willing to lend on the average larger amounts of money for home mortgage purposes. This, in turn, enabled home buyers to purchase higher-priced properties.
Incomes of mortgagors involved in both new- and existing-home mortgage transactions insured by FHA in 1954 were about 5 percent higher than the incomes of the 1953 mortgagors. This rise was not typical of the change in nonfarm family income from 1953 to 1954. Incomes of families covered by the Federal Reserve Board Survey of Consumer Finances averaged somewhat lower in 1954 than in 1953. The higher income level of buyers of FHA homes in 1954 may be indicative of the fact that these persons were buying more expensive homes requiring larger downpayments and larger monthly payments and thus larger incomes to meet these expenses.
In the last 5 years mortgagors’ incomes have increased relatively more than mortgage amounts or property values in FHA new-home transactions. In existing-home transactions during the same period, mortgagors’ incomes and mortgage amounts gained at about the same rate and slightly more than property value. The biggest gain in typical mortgage amount for new homes was during the years from 1946 through 1949 and reflects the liberalization of the maximum amount of mortgage and ratio of loan to value provisions of Section 203 in 1948 to bring FHA mortgage amounts into line with increased construction costs during the postwar period.
The lower portion of Chart 33, showing trends in the loan-value, income-value, and income-mortgage payment ratios, points up the minimum change that has occurred with respect to the income-value and mortgage payment-income relationships. The loan-value ratio curve for new homes reflects the effect of changes in legislation and
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FEDERAL HOUSING ADMINISTRATION
credit control regulations. The comparable curve for existing-home transactions shows little change, remaining constant during most of the period covered by the chart.
Mortgage Characteristics
Mortgage Amount Distribution.—Single-family home mortgages insured under Section 203 in 1954 averaged about $9,100 on new properties and $9,300 on existing properties. The median for new-home mortgages was nearly $8,900 compared with $9,000 for existing homes.
As in the previous year, over two-thirds of the new-home FHA mortgages insured in 1954 were for amounts of $7,000-$9,999, with about 23 percent each in the $7,000, $8,000, and $9,000 groups (Table 60 and Chart 34). There were significant changes, however, in the proportions above and below this range—mortgages of less than $7,000 declining from 16 percent of the 1953 total to 6 percent in 1954, while the $10,000 to $12,999 range increased from 12 percent to 21 percent and the proportion of mortgages amounting to $13,000 and over more than doubled.
TABLE 60
Amount of mortgage for single-family homes, Sec. 80S, selected years
Amount of mortgage • Percentage distributions
New homes Existing homes
1954 1953 1950 1946 1940 i 1954 1953 1950 1946 1940 1
Less than $2,000 (2) (2) 0.1 0.5 0.2 1.0 7.3
$2,000 to $2,999 (2) (2) (2) 1.1 10.4 (2) (2) 1.2 7.6 24.5
$3,000 to $3,999 0.1 0.1 0.4 7.1 28.6 0.4 0.2 3.0 19.2 26.6
$4,000 to $4,999 . 1 .2 1.1 22.6 29.1 1.1 1.2 8.3 29.0 19.1
$5,000 to $5,999 .7 1.1 9.0 31.4 20.7 3.6 4.6 16.3 21.3 9.7
$6,000 to $6,999 5.2 14.4 33.0 25.0 6.1 9.5 11.2 22.0 11.0 5.6
$7,000 to $7,999 23.3 20.6 28.5 9.5 2.4 15.8 18.0 18.6 4.7 2.5
$8,000 to $8,999 22.8 24.4 16.0 2.4 1.1 18.5 20.4 13.0 2.7 1.8
$9,000 to $9,999 22.8 25.0 8.3 .4 .4 16.0 16.7 7.2 • 1.2 .9
$10,000 to $10,999 10.6 7.5 1.9 .2 1 4 12.7 11.8 4.5 1.1 ( 1 1
$11,000 to $11,999 6.1 3.2 .8 .2 f -4 7.4 6.1 1.9 .2 J L1
$12,000 to $12,999 3.9 1.7 .5 (2) 6.0 4.6 1.7 .4
$13,000 to $13,999 1.8 .7 .2 3.2 2.2 .7 .1
$14,000 to $14,999 1.1 .8 .1 2.6 1.8 .7 .2
$15,000 or more 1. 5 .3 .2 — 3.2 1.2 .7 .3
Total 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0
Average $9,143 $8, 585 $7,307 $5, 548 $4,424 $9,283 $8, 847 $7,102 $4,929 $3, 977
Median $8,862 $8,555 $7,101 $5, 504 $4,358 $9,030 $8, 623 $6,801 $4, 697 $3, 687
1 1- to 4-family distribution.
2 Less than 0.05 percent.
Existing-home mortgages, as in 1953, were more widely distributed than new-home transactions, with relatively more cases in the lower and higher amount ranges. About half of the 1954 mortgages were for amounts of $7,000 to $9,999, with one-fifth in the $10,000 to $11,999 range, about 15 percent with amounts of $12,000 or more,
191
HOUSING AND HOME FINANCE AGENCY
AMOUNT OF MORTGAGE
SINGLE-FAMILY HOME MORTGAGES, SECTION 203, 1954
PERCENT
n~T NEW HOMES
M EXISTING HOMES
20-----------------------|||--- ----------------------------------
___
•______________ I I ‘1 J i
10 ■ ■ b ■ itI
' If Bl $3? Hi
o J ........B______a_____iL_ll._________'id a FSi J
$5,999 $6,000 $7;000 $8,000 $9,000 $10,000 $11,000 $13,000 $15,000
OR LESS TO TO TO TO TO TO TO OR MORE
6,999 7999 8,999 9,999 10,999 12,999 14,999
AMOUNT OF MORTGAGE
CHART 34
and 13 percent in the $5,000 to $6,999 range. As with new homes, there was a general upward shift in existing home mortgages as compared with 1953—the less than $7,000 and the $7,000 to $9,999 groups declining 3 and 5 percentage points, respectively, while the proportion of mortgages with amounts of $10,000 to $11,999 rose 2 points and those of $12,000 or more were up 5 points.
Ratio of Loan to Value.—New home mortgages insured under Section 203 in 1954 represented slightly smaller proportions of property value than in the previous year. As shown in Table 61, the loan-value ratio averaged 82 percent (83 percent in 1953) while the median ratio was down to 85 percent from 86% percent in 1953.
Nearly one-half of the 1954 new-home mortgages had ratios of 86 to 95 percent, with two-fifths reporting ratios of 76 to 85 percent. Those with loan-value ratios of 75 percent or less constituted only 11 percent, about the same proportion as in 1953. The biggest shift occurred in the 76 to 80 percent group (up to 29 percent of the cases from 22 percent in 1953) and the 86 to 90 percent mortgages (down to about one-fourth from nearly 31 percent).
Existing-home mortgage amounts averaged nearly 78 percent of property value in 1954, about the same as 1953, with a median ratio of 78.5 percent—only slightly above the year before. Over half of the
192
FEDERAL HOUSING ADMINISTRATION
TABLE 61
Ratio of loan to value of single-family homes, Sec. 208, selected years
Percentage distributions
Ratio of loan to value (percent)
50 or less________________ _
51 to 55_____________________
56 to 60______________________
61 to 65________________
66 to 70____________________
71 to 75______________________
76 to 80_____________________
81 to 85________________
86 to 90__________________
91 to 95_____________________
Total___________________
Average______________________
Median________________________
New homes
1954 1953 1950 1946 1940
0.8 0.7 0.6 0.6 0.4
.4 .4 .4 .8 .2
.7 .8 .5 .8 .5
1.4 1.3 .9 1.3 .8
2.6 2.7 1.6 3. 3 2.7
5.1 5. 2 3. 2 4.8 3.6
28.8 21.7 8. 8 11.8 11.8
11.8 13.8 10.9 14.1 13.2
25.6 30.7 57.1 62.5 66.8
22.8 22.7 16.0
100.0 100.0 100.0 100.0 100.0
82.2 82.9 85.0 84.1 84.8
85.3 86.5 88.0 87.0 87.0
Existing homes
1954 1953 1950 1946 1940
1.1 1.3 2.1 1.3 2.3
.8 .8 1.4 .9 1.7
1.6 1.5 2.2 1.2 3.2
2.8 2.6 3.7 2.8 4.7
7.7 7.2 8.8 5.8 8.6
9.8 9.8 13. 5 8.8 16.2
52.2 58.8 51.5 60.7 63.3
7.3 4.0 4.4 3.6
10.8 8.8 9.8 14.9
5.9 5.2 2.6
100.0 100.0 100.0 100.0 100.0
77.8 77.5 76.4 78.6 75.3
78.5 78.3 77.8 78.4 76.8
transactions were in the 76 to 80 percent loan-value bracket, with about 18 percent in both the 66 to 75 and the 81 to 90 percent brackets. Mortgages averaging less than two-thirds of the estimated value represented slightly over 6 percent of the total, and just under this proportion had loan-value ratios of 91 to 95 percent. As compared with 1953, the most significant difference in the distribution was a decline in the proportion having ratios of 76 to 80 percent and the offsetting increase in the proportion of those with ratios of 81 to 90 percent. Most of the existing-home cases with ratios in excess of 80 percent (the maximum 14 for transactions not approved for insurance prior to the beginning of construction) represented transactions involving properties approved by FHA prior to construction and constructed under FHA inspection in connection with previous transactions.
Most of the mortgages insured under Section 203 in 1954 were at or near the maximum amounts permitted under the legislation effective at the time the mortgages were approved for insurance. This is indicated by the data in Table 62, which shows the distribution of the new- and existing-home transactions in various property value groups by ratio of loan to value. The median loan-value ratios (second column of the table) indicate that for homes valued below $12,000 the new-home mortgages represented markedly higher proportions of value than did the existing, while in the higher value categories the differences were negligible.
Under the provisions of Section 203 in effect until August 2, 1954, the maximum ratio of loan to value for new 1-family homes with FHA values up to $11,000 was 95 percent of the first $7,000 of value
U Increased to 90 percent by the legislation approved August 2, 1954. It is probable that only a small number of cases were insured during 1954 in which this increase was a factor.
193
HOUSING AND HOME FINANCE AGENCY
plus 70 percent of the additional value up to a maximum mortgage of $9,450; for higher valued new homes and for practically all existing homes (including those under construction or recently completed) the maximum ratio was 80 percent of value up to a maximum amount of $16,000. Under the 1954 amendments to the National Housing Act, the maximum ratio for new 1-family homes was increased to 95 percent of the first $9,000 of FHA appraised value plus 75 percent of the value in excess of $9,000 up to a maximum mortgage of $20,000; for existing homes the new maximum ratio was 90 percent of the first $9,000 of appraised value plus 75 percent of additional value up to a maximum mortgage of $20,000. Transactions involving properties in Alaska, Guam, and Hawaii are permitted higher maximum mortgage amounts; in recognition of the higher cost of construction and property prices, the maximum mortgage amounts may be as much as one-half higher. In the value ranges from $12,000 upward, most of the new- and existing-home transactions with loan-value ratios in
TABLE 62
Ratio of loan to value by property value of single-family homes, Sec. 203, 1954
FHA estimate of property-value Percentage distribution Median loanvalue ratio Ratio of loan to value—Percentage distributions
50 percent or less 51 to 60 percent 61 to 70 percent 71 to 75 percent 76 to 80 percent 81 to 85 percent 86 to 90 percent 91 to 95 percent Total
New homes
0.6 92.9 1. 2 0.6 2.5 8. 8 5.0 81. 9 100.0
$7,000 to $7,999 6.0 93.1 (’) .2 0.1 0.6 4.3 3.1 6.9 84. 8 100.0
$8,000 to $8,999 18.8 92.2 .2 (*) .4 .5 2.3 2.6 28. 2 65.8 100.0
$9,000 to $9,999 15. 7 89. 1 .3 .5 .8 2. 2 4.8 4.7 59.9 26.8 100.0
$16,000 to $10,999 12.4 87.3 . 4 .6 1.9 4.3 6.8 19.2 62.4 4.4 100.0
$lL000 to $11*999 12. 8 82.9 .6 1.0 3.0 6.9 16.9 56.9 13.7 1.0 100.0
$12^000 to $12,999 10.1 78.1 1.1 1.4 6.2 8.6 76.9 1.9 3.8 . 1 100.0
$13,000 to $13,999 7.8 78.0 1. 2 2.3 8.1 9.9 72.8 2.1 3.5 . 1 100.0
$14,000 to $14,999 5. 5 77.7 1.8 2.6 12.6 10.2 67.7 2. 1 3.0 100.0
$15,000 to $15,999 3.8 77.8 2.5 2.8 10.4 8.9 71.2 1.7 2.3 . 2 100.0
$16 000 to $17,999 3. 8 77.5 2. 7 3.5 13.3 11.6 63.6 3.6 1.7 100.0
$18,000 to $19*999 1. 4 77.6 2.6 4.8 9.8 10.3 68.9 3.4 .2 100.0
$20^000 or more 1.3 77.6 3.1 3.4 10.7 9.4 72.6 .8 — 100.0
Total 100.0 85.3 .8 1.1 4.0 5.1 28.8 11.8 25.6 22.8 100.0
Existing homes
Less than $7,000-_ 2.6 80.1 1.2 1.6 8.4 5.8 40.5 1.9 10.7 29.9 100.0
$7,000 to $7,999 5.5 86. 2 .5 1.4 5.8 4.7 34.5 2.6 12. 1 38.4 100.0
$8*000 to $8^999 10.1 81. 9 .8 1.0 6. 1 5.7 35.6 4.3 23.2 23.3 100.0
$9,000 to $9*999 _ - - . 11.1 80.0 .6 1. 4 8.0 6.6 41.3 7.7 31.3 3.1 100.0
$16,000 to $10,999 12.6 79.0 .9 2.3 8.9 7.7 49.9 9.0 19.5 1.8 100.0
$11,000 to $11,999 12.1 78.5 .7 2.4 9.7 8.9 55.5 14.2 8.2 .4 100.0
$12,000 to $12^999 11. 8 77.8 1.1 2.6 11.4 12.4 64.0 4.9 3.6 (') 100.0
$13^000 to $13,999 9. 1 77.6 1. 2 2.6 12.5 13.1 63.0 6.6 .9 . 1 100.0
$14,000 to $14*999 6. 6 77. 4 1.7 2.8 14.5 14.3 58.6 7.1 .9 . 1 100.0
$15*000 to $15,999 5. 8 77. 6 1.5 3. 4 14. 9 11.0 61.7 6. 7 .8 100.0
$16,000 to $17*999 7.0 77. 4 2.0 3.3 13. 4 14. 2 59.3 7.4 .4 100.0
$18 000 to $19 999 3. 1 77. 7 1.6 2.0 13.5 11.5 62.3 9.1 100.0
$20,000 or more 2.6 76.4 4.2 5.9 18.6 17.0 49.1 5.2 100.0
Total 100.0 78.5 1.1 2.4 10.5 9.8 52.2 7.3 10. 8 5.9 100.0
1 Less than 0.05 percent.
194
FEDERAL HOUSING ADMINISTRATION
excess of 80 percent probably involve properties located in Alaska, Guam, or Hawaii where the maximum loans and ratios of loan to value are higher. Those existing-home cases with loan-value ratios of more than 80 percent and property values of less than $12,000 are for the most part properties approved by FHA prior to the beginning of construction and constructed under FHA inspection and hence eligible for the higher maximum mortgage amounts.
Property Value Characteristics
Under the FHA underwriting system, one of the basic processes is the determination of the value of the property, including the house, other physical improvements, and land. Involved in this determination is a consideration of such items as the estimated replacement cost of the property, its rental value, selling prices of comparable houses, the type and location of the neighborhood, the character and market price of the site, materials and quality of construction, the size of the house, and garage facilities. The following portion of the report is devoted to an analysis of certain characteristics of the properties involved in the Section 203 transactions insured during 1954.
Property Value Distribution.—In the Section 203 transactions insured by FHA during 1954, most of the properties had FHA estimated
FHA ESTIMATE OF VALUE
SINGLE-FAMILY HOME MORTGAGES, SECTION 203, 1954
PERCENT
30 ---------- -------------------------------------------
LZZi new homes
■ EXISTING HOMES
----TO____________________________
.o—_ |... |L g <
o An__________s_______M_______id II rh rii
$7,999 $8,000 $10,000 $12,000 $14,000 $16000 $18 000
OR TO TO TO TO TO OR
LESS 9,999 11,999 13,999 15,999 17^999 MORE
FHA ESTIMATE OF PROPERTY VALUE
CHART 35
195
HOUSING AND HOME FINANCE AGENCY
TABLE 63
Property value of single-family homes, Sec. 203, selected years
FHA estimate of property value Percentage distributions
New homes Existing homes
1954 1953 1950 1946 1940 1954 1953 1950 1946 1940
Less than $3,000 («) 2.3 3.2 (') 0.4 1.7 10.9
$3,000 to $3,999 (’) 18. 6 o — .8 7.3 21.8
$4,000 to $4, 999 0.4 10.0 26.8 0.2 1. 4 16.8 22.5
$5, 000 to $5, 999 (*) 1.6 20.3 23.6 .4 4.2 24.6 17.3
$6, 000 to $6, 999 0.6 2.2 18.3 27.8 16.5 2.0 2.8 10.7 20.3 10.8
$7, 000 to $7, 999 6.0 14.9 20.8 22.4 5.7 5.5 6.8 15.8 12.1 6.1
$8,000 to $8, 999 18.8 14.4 22.5 11.1 2.6 10.1 11.2 17.1 7.0 3.6
$9,000 to $9, 999 15.7 14.8 15.9 3.4 1.2 11.1 12.5 14.5 3.4 1.9
$10, 000 to $10, 999 12.4 15.7 10.0 1.5 .7 12.6 14.0 11.3 2.5 1.5
$11, 000 to $11, 999 12.8 14.5 4.7 .5 .3 12.1 12.9 7.6 1.1 .9
$12,000 to $12, 999 10.1 10.1 2.3 .3 .3 11.8 12.1 5.7 1.2 .8
$13, 000 to $13, 999 7.8 5.2 1.4 .2 .1 9.1 8.7 3.3 .5 .4
$14, 000 to $14, 999 5.5 3.2 .7 .1 \ 2 6.6 6.0 2.0 .3 1 7
$15,000 to $15, 999 3.8 2.0 .5 .1 f 5.8 4.6 1.7 .4 J •'
$16,000 to $17, 999 3.8 1.9 .5 (•) 1 1 7.0 5.2 1.9 .3
$18,000 to $19, 999 1.4 .7 .2 — J -1 3.1 1.9 .9 .2 J
$20,000 or more 1.3 .4 .2 — . 1 2.6 1.3 .7 .3 .2
Total 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0
Average value $11,120 $10,357 $8, 594 $6,597 $5,199 $11,934 $11,419 $9, 298 $6,269 $5,179
Median value $10,678 $10,140 $8,286 $6, 558 $5,028 $11,549 $11,061 $8,865 $5,934 $4, 600
1 Less than 0.05 percent.
values of $8,000 to $11,999. As Chart 35 and Table 63 indicate, nearly % of the new homes and roughly one-half of the existing homes were in this range. The proportions of existing homes exceeded the new in the higher value brackets. About % were in the $12,000 to $15,999 range compared with 27 percent of the new, and % were valued at $16,000 or more—nearly twice the proportion reported for new homes. Properties with values of less than $8,000 comprised less than 7 percent of the new homes and only about 8 percent of the existing homes.
Compared with 1953, both new- and existing-home values exhibited a general upward shift. As shown in Table 63, the changes in the new home distribution followed a pattern of alternating decreases and increases in the value groups below $12,000—those valued at less than $8,000 declining from 17 to 7 percent, those in the $8,000 to $9,999 range increasing from 29 to 35 percent, offset by a decline in the $10,000 to $11,999 range from 30 to 25 percent. While the proportion with values of $12,000 to $12,999 remained unchanged, properties in the higher value ranges ($13,000 or more) increased from 13 to 24 percent. Changes in the existing home distribution were more regular—all value groups below $13,000 occurring in smaller proportions than in 1953, while those valued at $13,000 or more showed increases.
196
FEDERAL HOUSING ADMINISTRATION
Property Value by States—Tables 64 and 65 show, for each State and certain Territories, median property values and the distribution of the property values for new- and existing-home transactions insured under Section 203 during 1954. Median new-home property values ranged from about $8,800 in North Carolina to $22,500 in Alaska. In most (25) States and 1 Territory the median was in the $9,000 to $10,999 range, and in 19 States it was between $11,000 and $12,999, with only Montana, Alaska, and Hawaii exceeding $13,000. Only 3 Southern States had median values below $9,000.
TABLE 64
Property value by States, new 1-family homes, Sec. 203, 1954
State Median property value Property value—Percentage distribution
Less than $8,000 $8,000 to $9,999 $10,000 to $11,999 $12,000 to $13,999 $14,000 to $15,999 $16,000 to $17,999 $18,000 to $19,999 $20,000 or more Total
Alabama $11, 359 5.4 26.2 25.8 19.4 10.7 7.2 3.9 1.4 100.0
Arizona 9,221 12.8 52.4 15.8 10.4 4.9 2.4 .3 1.0 100.0
Arkansas 9, 988 19.4 30.8 26.0 8.4 9.2 2.6 1.8 1.8 100.0
California 9, 641 4.1 52.9 20.5 11.1 7.9 2.2 1.0 .3 100.0
Colorado 12, 848 --- 3.4 39.2 27.8 19.0 6.8 1.1 2.7 100.0
Connecticut 12, 710 — 15.5 24.5 24.5 12.3 8.6 10.0 4.6 100.0
Delaware District of Columbia 10,318 (i) 12.8 28.2 51.3 2.6 5.1 100.0
8,962 14.0 54.1
Florida 23.2 5.9 2.2 .4 .2 100.0
Georgia 9, 776 11.9 44.4 22.3 13.0 5.1 1.7 .8 .8 100.0
Idaho 12,036 4.0 19.2 26.3 23.3 11.1 8.1 4.0 4.0 100.0
Illinois 12,034 .5 12.0 37.0 23.1 16.7 6.7 2.9 1.1 100.0
Indiana 10, 257 4.0 41.0 34.4 12.4 5.4 1.9 .6 .3 100.0
Iowa 10,231 11.0 35.2 26.9 17.4 7.1 1.5 .9 100.0
Kansas 10,254 8.2 38.7 21.4 15.8 10.7 4.0 1.0 .2 100.0
Kentucky 10,825 16.9 36.8 28.8 14.4 11.2 4.0 3.2 1.6 100.0
Louisiana 10, 877 22.0 23.1 12.7 14.9 6.6 2.0 1.8 100.0
Maine Maryland 9, 472 10, 849 19.2 16.4 43.8 22.6 28.8 34.6 5.5 20.6 3.4 2.7 1.2 1.0 . 2 100.0 100. 0
Massachusetts Michigan 10,837 12, 727 .8 .8 20.6 7.4 58.7 31.6 12.7 33. 1 4.0 21.0 2.4 4.6 1.1 .8 . 4 100.0 100.0
Minnesota 12, 800 6.3 24.5 43.8 13.9 7.7 2. 4 1.4 100.0
Mississippi Missouri 10,044 12,431 8.1 .8 41.1 4.3 29.7 34.1 11.9 32.2 6.5 18.2 2.7 8.7 1.4 .3 100.0 100.0
Montana Nebraska Nevada 13,117 10, 478 3.1 6.2 3.1 31.5 20.6 38.8 50.5 15.4 16.5 5.0 4.1 1.9 2.1 1.2 100.0 100.0
10, 646 38.7 46.2 8.1 1.9 3.2 .2 1. 7 100.0
New Hampshire New Jersey 9,188 9,856 30.8 8.8 35.9 45.0 23.1 23.2 5.1 12.5 5.1 5.9 3.0 1.2 .4 100.0 100.0
New Mexico New York 9,512 12, 438 6.1 4.0 62.6 16.1 26.6 25.4 4.7 19.7 16.6 11. 6 4. 7 1. 9 100. 0 100.0
North Carolina 8,756 25.2 49.8 15.7 5.5 2.2 1.1 .3 .2 100. 0
North Dakota Ohio 11,167 25.4 61.9 26.2 7.1 4.8 100.0
11, 949 . 9 24.4 26.4 13.5 7.6 1.3 .5 100.0
Oklahoma 9, 635 12.3 45.2 20.4 14.6 3.9 1.9 .5 1.2 100.0
Oregon 9,524 5.3 53.1 23.0 11.2 4.8 1.7 .6 .3 100. 0
Pennsylvania 11,412 .4 23. 1 37.9 25.1 7.5 4.7 .8 . 5 100. 0
Rhode Island South Carolina 11, 667 9,989 1.3 4.5 7.9 45.8 46.1 33.6 35.5 11.0 7.9 2.6 1.3 .6 1. 3 . 6 100.0 100. 0
South Dakota 10, 429 3.6 42.8 25.3 18.1 7.8 1.8 .6 100.0
Tennessee 10,150 4.1 43.6 29.2 14.2 6.2 1.5 .7 .5 100.0
Texas 8,870 18.0 54.9 16.6 6.6 2.1 1.3 .4 .1 100.0
Utah 12, 641 — 10.8 29.2 31. 2 18.8 6.4 .4 3.2 100.0
Vermont Virginia 10,000 12.9 50.0 50.0 100.0
12,128 19.8 13.4 32.7 15.8 3.1 .7 1.6 100.0
Washington 11. 864 9.6 15.1 27.2 25.2 12.8 5.4 2.2 2.5 100.0
West Virginia 12,143 1.5 21.2 25.8 24.2 9.1 7.6 3.0 7.6 100. 0
Wisconsin 12, 667 2.8 3.4 23.3 45.9 17.1 3.4 2.8 1.3 100.0
Wyoming Alaska 11,318 2.0 21.5 41.2 29.4 3.9 2.0 100.0
22, 473 5.3 4.7 15.8 79.5 100.0
Hawaii 13, 540 1.6 3.1 61.2 8.4 5.8 5.8 8. 8 100.0
Puerto Rico 9,667 17.8 38.8 13.2 7.9 5.9 4.6 3.9 7.9 100.0
Total —
10, 678 6.6 34.5 25.2 17.9 9.3 3.8 1.3 100.0
1 Inadequate sample.
350920—56---15
197
HOUSING AND HOME FINANCE AGENCY
With the existing-home median value of $11,500 for the nation exceeding the new-home median ($10,700), a parallel relationship obtained in two-thirds of the States and Hawaii. Typical existing-home values ranged from $6,600 in Puerto Rico to $19,500 in Alaska. In 28 States median property values ranged between $11,000 and $12,999, in 15 States between $9,000 and $10,999, with 5 States and the District of Columbia in the $13,000 range, Hawaii in the $15,000 range, and Alaska in the $19,000 range.
TABLE 65
Property value by States, existing 1-family homes, Sec. 203, 1954
State Median property value Property value—Percentage distribution
Less than $8,000 $8,000 to $9,999 $10,000 to $11,999 $12,000 to $13,999 $14,000 to $15,999 $16,000 to $17,999 $18,000 to $19,999 $20,000 or more Total
Alabama $11,173 16.0 23.6 17.6 17.9 12.6 6.6 1.7 4.0 100.0
Arizona 9,808 20.7 31.4 21.1 13.6 3.7 4.1 1.3 4.1 100.0
Arkansas 9,786 23.8 29.0 16.7 15.6 7.1 3.7 1.5 2.6 100.0
California 11, 562 4.8 23.8 27.7 22.1 12.1 5.8 2.5 1.2 100.0
Colorado 12,135 3.9 16.2 31.9 24.3 16.7 7.6 1.1 2.2 100.0
Connecticut 13,155 9.4 21.2 26.2 18.6 10.2 6.3 4.2 100.0
Delaware 12,333 — 16.3 31.6 7.2 25.5 10.2 7.2 2.0 100.0
District of Columbia.__ 13,833 17.4 34.8 8.7 8.7 26.1 4.3 100.0
Florida 10, 287 13.2 31.8 27.0 14.1 6.8 3.7 2.0 1.4 100.0
Georgia 11, 725 7.5 23.1 22.5 22.1 13.2 5.9 3.0 2.7 100.0
Idaho 10,081 19.4 29.7 23.8 13.8 5.3 5.3 1.8 .9 100.0
Illinois 13,474 1.3 7.5 21.4 26.7 19.8 12.3 5.9 5.1 100.0
Indiana 11,011 5.4 30.3 26.2 18.5 10.9 5.3 2.1 1.3 100.0
Iowa 11,726 10, 908 5.3 20.5 28.1 24.9 11.5 6.0 2.3 1.4 100.0
Kansas 12.7 24.7 23.9 14.8 11.4 8.9 2.4 1.2 100.0
Kentucky 11, 888 . 6.7 18.3 26.6 19.7 12.7 9.1 5.0 1.9 100.0
Louisiana 12,283 7.3 21.4 18.1 22.7 14.3 7.0 4.8 4.4 100.0
Maine 9,038 24.3 41.7 18.3 6.8 4.7 3.0 .8 .4 100.0
Maryland 12,143 10.6 16.4 21.6 19.9 13.7 6.2 8.9 2.7 100.0
Massachusetts 11,077 9.0 19.3 35.8 19.7 7.5 5.1 1.2 2.4 100.0
Michigan 12,406 2.6 14.3 27.8 24.4 15.5 10.4 3.2 1.8 100.0
Minnesota 13, 287 .4 4.1 19. 4 37.6 21.0 9.7 5.4 2.4 100.0
Mississippi 10,147 11.5 36.3 31.9 15.0 4.4 .9 100.0
Missouri 12,491 3.2 14.1 26.4 23.2 15.4 9.4 4.0 4.3 100.0
Montana 12,234 13.4 11.8 20.6 27.5 12.6 9.2 1.5 3.4 100.0
Nebraska 10, 515 11.2 29.9 30.6 16.1 5.5 4.4 1.0 1.3 100.0
Nevada 13,038 .7 5.8 30.9 21.6 12.2 10. 1 3.6 15.1 100.0
New Hampshire 11,000 18.8 21.9 21.9 21.9 6.2 3.1 6.2 100.0
New Jersey 12,148 7.0 16.1 25.3 22.7 12.7 10.3 3.3 2.6 100.0
New Mexico 11, 591 2.8 26.8 26.8 40.8 1.4 1.4 100.0
New York 11,381 4.3 28.6 23.9 22.3 11.6 5.4 1.4 2.5 100.0
North Carolina 11,429 10.1 21.6 23.5 20.2 10.8 5.9 4.6 3.3 100.0
North Dakota 12, 735 2.0 12.8 22.8 29.7 18.8 11.9 1.0 1.0 100.0
Ohio 12,952 1.2 11.7 23.8 26.5 19.3 9.7 4.4 3.4 100.0
Oklahoma 9,301 20.9 42.2 19.5 8.6 4.6 1.8 1.2 1.2 100.0
Oregon 10, 970 7.2 27.4 31.8 20.2 8.3 2.5 1.6 1.0 100.0
Pennsylvania 11, 405 8.0 19.2 30.6 21.2 9.3 6.7 2.7 2.3 100.0
Rhode Island 12, 250 2.7 9.1 35.8 23.5 17.1 6.4 4.3 1.1 100.0
South Carolina 10,313 23.9 22.4 22.9 10.7 8.8 6.4 3.9 1.0 100.0
South Dakota 10,141 17.0 30.4 29.2 17.5 3.5 1.8 .6 100.0
Tennessee 10,205 13.9 33.5 22.3 17.3 7.5 3.0 2.0 .5 100.0
Texas 9,166 24.3 40.5 21.6 8.6 2.9 1.4 .5 .2 100.0
Utah 12, 549 2.3 14.2 25.6 24.1 13.9 8.2 4.0 7.7 100.0
Vermont 9,500 8.9 53.6 16.1 19.6 1.8 11.6 7.6 3.0 100.0
Virginia 12,032 12.6 18.8 18.3 15.3 12.8 100.0
Washington 11, 676 8.4 20.9 25.2 21.7 12.2 5.9 2.7 3.0 100.0
West Virginia 11,350 12.6 19.7 23.1 18.9 11.8 6.3 4.2 3.4 100.0
Wisconsin 13, 200 1.5 6.2 22.6 31.4 21.2 10.9 2.9 3.3 100.0
Wyoming 11,500 11.6 21.7 21.7 18.9 18.9 2.9 2.9 1.4 100.0
Alaska 19, 500 1.8 3.5 1.8 8.8 10.5 15.8 14.0 47.3 100.0
Hawaii 15,133 1.4 13.4 17.6 23.2 12.0 7.1 21.8 100.0
Puerto Rico 6,625 81.9 3.2 2.6 2.6 2.6 1.9 .7 4.5 100.0
Total.. 11, 549 8.1 21.2 24.7 20.9 12.4 7.0 3.1 2.6 100.0
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Characteristics by Property Value.—Selected characteristics of the Section 203 single-family home cases insured in 1954 are presented in Tables 66 through 71. The upper portions of these tables summarize averages of the characteristics by property value groups on a national basis, while the lower portions show the averages for all value groups combined in the States and Territories. Tables 66 and 67 deal with transaction characteristics—property value, total requirements, sale price, mortgage amount, and mortgagor s annual income; Tables 68 and 69 with property characteristics— property value, replacement cost, land price, calculated area, number of rooms, number of bedrooms, and garage facilities; and Tables 70 and 71 with financial characteristics—property value, term of loan., monthly payment, real estate taxes, prospective housing expense, and mortgagor’s monthly income. Interrelationships of selected’ characteristics are also indicated in these tables.
The usefulness of the data in these 6 tables may be illustrated by delineating the characteristics of the new home transactions in the $9,000 value range. The average property value for these cases was estimated by FHA to be $9,346, of which 88 percent or $8,249 was covered by the FHA-insured mortgage. In the great majority of these cases, represented by purchase-type transactions, the average sale price was $9,387, which, together with incidental closing costs of $199 (excluding prepayable expenses), brought the average total requirements to $9,586. About 87 percent of this amount was provided by mortgage funds, the remaining 13 percent representing the buyer’s investment. The annual income of the mortgagors in this value group averaged $5,178, or somewhat over one-half of both the property value and total requirements. The average estimated replacement cost was $9,765 (4 percent above the valuation), including $1,248 for the lot (actually the FHA estimate of the market price of an equivalent site). The structures m these properties had an average calculated area of 959 square feet and about 5 rooms, usually including 3 bedrooms. Garage accommodations were available in 64 percent of these properties.
The prospective monthly housing expense for the new-home properties m the $9,000 value range was $83.31, of which $63.21 was attributable to the monthly mortgage payment while the remainder represented the amount estimated to be required for household operation (i. e, heating and cooking fuel, lighting, refrigeration, and water) together with the anticipated monthly cost of maintenance and repairs. Included m the monthly mortgage payment was interest, amortized principal, real-property taxes and special assessments averaging $8.96 monthly, and the premiums for hazard and FHA mortgage insurance. Slightly over 19 percent of the incomes of the mortgagors
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owning properties in this value class was, on the average, required for housing expense, including 15 percent for the total mortgage payment portion.
Comparable profiles may be drawn for new- and existing-home transactions in the other value groups on a national summary basis, while average characteristics of the transactions in each State may be ascertained for all value groups combined.
Some of the more significant aspects of the Section 203 singlefamily home transactions of 1954 are summarized in the following paragraphs.
Transaction Characteristics.—It should be noted that the sale price and total requirements data shown in Tables 66 and 67 are based on purchase-type transactions only and hence are not strictly comparable with the property value and mortgage amount data covering all types of single-family home transactions. These include, in addition to purchases, new-home transactions where the house is custom-built for or by the owner on his own lot; existing-home transactions where the existing indebtedness is being refinanced with no change in ownership; and existing-home transactions where a substantial portion of the mortgage funds is being used to finance improvements to the property. Although, on a national basis, purchase-type transactions predominate for both new and existing homes, variation in the proportions of the different types of transactions in the individual value classes and States result in relationships between the averages of FHA valuation and sale price or total requirements which may diverge somewhat from the normal pattern.
In several States, the average FHA-appraised property value for new homes reflects comparatively larger proportions of buildermortgagor cases involving properties built for rent, or sales properties for which the builder was temporarily required to be the mortgagor for the permanent financing because of sluggish market conditions.
Although, as indicated previously, nearly all existing-home transactions were of the purchase type, the data for several States were influenced by relatively larger proportions of transactions involving refinancing or major improvements to the property.
Data on new- and existing-home transactions in Maryland and Hawaii reflect the influence of significant proportions of leasehold estates—the FHA valuations including land, but the sale price and total requirements figures excluding the cost of land.15 These limitations must be kept in mind in comparing property value with sale price and total requirements in these tables.
18 In leasehold cases, the maximum amount of insurable loan is determined by deducting the value of the leased fee (i. e., the land) from the maximum amount of insurable loan on the property as if held in fee simple.
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TABLE 66
Transaction characteristics by property value and by States, new 1-family homes. Sec. 203, 1954
FHA estimate of property value Percentage distribution Average Ratio of
Property value Total requirements 1 Sale price1 Amount of mortgage Mortgagor’s annual income Loan to total value (percent) Loan to total requirements (percent) 1 Property value to income
Less than $7,000 0.6 $6, 524 $7 304 $7 125 $6 063 $4 156 92 9 88 9 1 57
$7,000 to $7,999 6.0 7,447 7, 646 / 456 6; 869 4; 451 92; 2 90.6 L67
$8,000 to $8,999 18.8 8,259 8,422 8,314 7, 568 4,843 91.6 90.2 1.71
$9,000 to $9,999 15.7 9, 346 9,586 9,387 8, 249 5,178 88.3 86.7 1.80
$10,000 to $10,999 12 4 10 429 10 862 10 654 8 806 5 369
$11,000 to $11,999 12.8 11 326 if 756 if 571 9’ 203 5 646 81 3 7K g 2 01
$12,000 to $12,999 10.1 12 421 12 869 12’ 674 623 5 942 77
$13,000 to $13,999 7.8 13 407 13’ 826 13 616 io’ 216 283 76 9
$14,000 to $14,999 5.5 14^ 386 14; 881 14; 664 io; 950 6,655 76.1 73.8 2.16
$15,000 to $15,999 3.8 J 5 329 15 944 15 694 11 641 7 26.5 75 9 2 11
$16,000 to $17,999 3 8 16 705 17* 309 17’ 154 12’ 551 7 969 75 1 2 10
$18,000 to $19^999 1.4 18^ 695 19; 391 19; 209 13; 966 8,981 74.7 72.8 2.08
$20,000 or more 1.3 22,273 21,445 21,120 16,401 10,457 73.6 70.1 2.13
Total 100.0 11,120 11,185 10,985 9,143 5. 672 82.2 80.8 1.96
Averages by States
Alabama 1.0 $11,839 $11,882 $11,523 $9,676 $6,098 81.7 80.3 1.94
Arizona 2.4 9,980 10,193 10,066 8,480 6,028 85.0 83.4 1.66
Arkansas .8 10,457 10,339 10,125 8, 773 5,468 83.9 82.9 1.91
California 20.3 10, 298 10,466 10,349 8, 763 5,619 85.1 83.2 1.83
Colorado .9 12,873 13,063 12, 745 10,246 6,713 79.6 77.9 1.92
Connecticut .8 13,365 13, 766 13,650 10,657 6,683 79.7 77.5 2.00
Delaware .1 10.118 (2) (2) 8,021 (2) 79.3 (2) (2)
District of Columbia (3) (2) (2) (2) (2) (2) (2) (2) (2)
Florida 4.7 9,378 9, 685 9,447 8, 221 5,187 87.7 84.3 1.81
Georgia 1.2 10,315 10, 234 9,915 8,646 5,467 83.8 83.9 1.89
Idaho .3 12,463 12, 297 12,191 9,939 6,129 79.7 77.4 2.03
Illinois 3.3 12, 556 12,847 12, 667 9,972 5, 771 79.4 77.7 2.18
Indiana 3.0 10,575 10, 797 10, 584 8,887 5,423 84.0 81.8 1.95
Iowa 1.1 10, 505 10,469 10,331 8,740 5,104 83.2 83.1 2.06
Kansas 1.6 10,832 11,194 10,884 9,092 5,812 83.9 82.3 1.86
Kentucky .4 11,411 11,806 11, 568 9, 540 6,344 83.6 80.6 1.80
Louisiana 1.5 11,435 11,105 10,858 9,440 5, 705 82.6 83.0 2.00
Maine .2 9, 616 9,402 9,254 8,177 4,866 85.0 84.6 1.98
Maryland 1.4 10,554 10, 358 10,134 7,837 5, 433 74.3 78.8 1.94
Massachusetts .4 11,066 10, 784 10,643 9,013 5,726 81.4 82.6 1.93
Michigan 8.1 12, 659 13,050 12, 916 10,022 5,796 79.2 77.0 2.18
Minnesota .7 13,016 13,417 13, 209 10,089 5,605 77.5 74.3 2.32
Mississippi .6 10,284 10,372 10,257 8,757 5,327 85.2 84.4 1.93
Missouri 2.2 12, 765 13, 221 12,872 9,779 5, 978 76.6 74.1 2.14
Montana .3 12,874 13,404 13,082 10,043 6,381 78.0 ■ 75.9 2.02
Nebraska .9 10, 790 10, 799 10, 553 8,943 5,329 82.9 82.8 2.02
Nevada 1.6 10, 775 10,859 10, 734 8,905 7,434 82.6 82.3 1.45
New Hampshire .1 9, 310 8,907 8,758 8,004 4,915 86.0 85.5 1.89
New Jersey 2.6 10,462 10, 749 10,488 8, 545 5,877 81.7 79.2 1.78
New Mexico .7 9,406 9,839 9,676 8,497 5,818 90.3 86.1 1.62
New York 4.0 12, 685 13,296 13,064 9,846 6, 268 77.6 74.3 2.02
North Carolina 1.9 9,139 9,209 9,031 8,068 5,075 88.3 86.4 1.80
North Dakota .1 11, 761 11,876 11,688 9,429 6,263 80.2 77.9 1.88
Ohio 5.4 11,966 12,013 11,813 9,708 5,495 81.1 80.9 2.18
Oklahoma 1.5 10,220 10, 736 10,444 8,812 5,379 86.2 81.8 1.90
Oregon 1.2 10,009 10,035 9, 906 8,501 5,354 84.9 84.1 1.87
Pennsylvania 4.1 11, 636 12, 245 12,040 9,332 5, 688 80.2 75.3 2.05
Rhode Island .3 11, 669 11,912 11, 628 9, 253 5,485 79.3 78.2 2.13
South Carolina .5 10, 254 9,824 9,595 8,594 5,280 83.8 84.6 1.94
South Dakota .6 10,700 10,319 10,209 8,825 5,900 82.5 83.8 1.81
Tennessee 2.0 10,441 10, 656 10,305 8,930 5,382 85.5 82.9 1.94
Texas 6.9 9,314 9,448 9,298 8,228 5,303 88.3 86.9 1.76
Utah .9 12,767 12,970 12,830 10, 200 5,613 79.9 79.1 2.27
Vermont .1 10,105 10,466 10,367 8,691 4,350 86.0 79.9 2.32
Virginia 2.0 11,531 10,530 10,331 9,445 5,172 81.9 83.0 2.23
Washington 1.4 12,032 11,248 11,085 9,499 5,801 78.9 81.2 2.07
West Virginia .2 12,612 13, 276 13,003 10,040 5,761 79.6 74.9 2.19
Wisconsin . 5 12, 729 12.858 12, 718 9, 934 4,907 78.0 77.9 2. 59
Wyoming .2 11,445 11,884 11,628 9,386 5, 929 82.0 78.2 1.93
Alaska .6 22,582 (2) (2) 18,042 (2) 79.9 (2) (2)
Hawaii 1.9 14,451 11,872 11, 666 9,902 6,550 68.5 83.1 2.21
Puerto Rico .5 11,075 9,599 9,270 8, 612 5,821 77.8 78.6 1.90
1 Purchase cases only. 2 Inadequate sample. Less than 0.05 percent.
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TABLE 67
Transaction characteristics by property value and by States, existing 1-family homes, Sec. 203, 1954
FHA estimate of property value Percentage distribution Average Ratio of
Property value Total requirements 1 Sale price 1 Amount of mortgage Mortgagor’s annual income Loan to total value (percent) Loan to total requirements (percent) 1 Property value to income
Less than $7,000 2.6 $6,117 $6, 460 $6, 296 $5,097 $4,455 83.3 81.1 1.37
$7,000 to $7,999 5.5 7,408 7,752 7, 575 6,271 4,792 84.7 82.3 1.55
$8 <00 to $<999 10.1 8,403 8, 777 8,593 6, 994 5,097 83.2 81.0 1. 65
$9,000 to $9,999 11.1 9,345 9,900 9, 650 7, 563 5,312 80.9 77.6 1.76
$10,000 to $10,999 12.6 10,332 10,899 10, 716 8,182 5, 521 79.2 76.1 1.87
$11,000 to $11,999 12.1 11,326 11,925 11, 691 8, 839 5, 824 78.0 75.1 1.94
$l<000 to $12,999 11.8 12,332 13,040 12,798 9,468 6,185 76.8 73.5 1.99
$13<00 to $13,999 9.1 13,343 14, 087 13, 851 10,164 6,652 76.2 73.1 2. 01
$14<00 to $14,999 6.6 14, 300 15,054 14,840 10,849 7,009 75.9 73.0 2.04
$15,000 to $15,999 5.8 15,259 16,151 15,908 11,549 7,741 75.7 72.5 1.97
$16J)00 to $17,999 7.0 16, 726 17, 779 17, 536 12,645 8,460 75.6 72.0 1.98
$18,000 to $19<99 3.1 18,620 20, 007 19, 599 14,174 9,467 76.1 71.7 1.97
$20<00 or more 2.6 21,526 23,042 22, 273 15,576 11,360 72.4 68.6 1.89
Total 100.0 11, 934 12, 578 12, 344 9,283 6,308 77.8 74.7 1.89
Averages by States
Alabama 1.0 $11, 509 $12, 021 $11, 636 $9,146 $6,404 79.5 76.7 1.80
Arizona. .8 10,694 11,186 10, 868 8,072 7,020 75.5 71.9 1. 52
Arkansas .9 10, 342 10, 679 10, 306 8,313 6,054 80.4 77.9 1.71
California 12.2 11. 739 12.959 12, 759 9,163 6,575 78.1 72.1 1.79
Colorado - .6 12, 543 13, 553 13,369 9,806 7,194 78.2 74.4 1. /4
Connecticut 2.6 13, 308 14, 007 13, 897 10,339 6,655 77.7 75.1 2.00
Delaware. .3 12,987 13,772 13. 373 10, 493 6,194 80.8 76.6 2.10
District of Columbia. . 1 14,761 16, 245 15, 869 11,028 6,687 74.7 74.2 2. 21
Florida 1. 1 10, 522 11, 396 11,149 8, 772 6,272 83.4 77.0 1.68
Georgia 2.0 11,976 12,318 11, 962 9, 535 6,627 79.6 77. 8 1. 81
Idaho 1.1 10,341 10, 715 10,585 7,992 6,032 77.3 76.9 1. 71
Illinois.. .. 4.3 13,683 14, 879 14,640 10,325 6,746 75.5 70.6 2. 03
Indiana 3.6 11,418 12,432 12,235 8,935 6,069 78.3 73.7 1. 88
Iowa 1.4 11,741 12,337 12,226 9,108 5,884 77.6 74. 5 2. 00
Kansas 2.1 11,485 12,466 12,188 9,072 6,441 79.0 73.9 1. 78
Kentucky 1.2 12 192 12, 849 12,589 9. 576 6,109 78.5 75.1 2. 00
Louisiana 1.5 12,423 12,340 12,118 9,715 6,882 78.2 78.9 1. 81
Maine. .8 9,485 9,804 9, 596 7, 614 5,294 80.3 78.6 1.79
Maryland .. .9 12,375 12,133 11,874 9.660 6,361 78.1 77.7 1.95
Massachusetts .8 11,317 11,337 11,153 8. 748 5,907 77.3 78.4 1.92
Michigan . . 6.2 12, 718 13,309 13, 201 9,492 6,247 74.6 72.2 2.04
Minnesota 1.5 13, 535 14, 268 13,973 10,167 6,117 75.1 72.9 2. 21
Mississippi . .4 10,265 10, 784 10,618 8,174 5,424 79.6 78.5 1.89
Missouri. .. 4.1 12, 770 13,359 13,085 9, 735 6,472 76.2 73.5 1. 97
Montana .8 12,015 13,141 12, 777 8,999 6,825 74.9 70.3 1. 76
Nebraska 1.2 10, 775 11,960 11,639 8.641 5,939 80.2 73.5 1.81
Nevada .4 14, 209 15, 324 15, 068 10, 592 10,432 74.5 70.5 1. 36
New Hampshire . 1 10,943 10,498 10, 359 8,625 6,357 78.8 82.0 1.72
New Jersey 2.7 12, 359 13,138 12.930 9, 337 6,743 75.5 71.7 1. 83
New Mexico .2 11,010 12,319 12,146 9,120 6,887 82.8 76.0 1. 60
New York _ 5.7 11,682 12,104 11,810 9, 067 6,205 77.6 74.9 1. 88
North Carolina 1.0 11,837 12, 206 12,023 9. 276 6,453 78.4 77.3 1. 83
North Dakota .3 12,739 13,491 13, 254 9. 577 7,004 75.2 72.3 1.82
Ohio 7.2 13,126 13, 805 13,484 10,136 6,015 77.2 73.6 2.18
Oklahoma.. 1.6 9,939 10,257 9,995 8,279 5,708 83.3 80.6 1. 74
Oregon 2.0 11,167 11, 277 11 153 8,591 6,312 76.9 77.1 1.77
Pennsylvania 3.0 11,727 12, 407 12,141 9, 023 6,042 76.9 73.1 1. 94
Rhode Island .6 12,476 12,619 12,438 9,467 5,854 75.9 75.8 2.13
South Carolina .7 10, 793 11, 083 10,821 8, 656 5,752 80.2 78.9 1. 88
South Dakota. .6 10, 060 10, 810 10,705 7.677 6,090 76.3 71.9 1. 65
Tennessee .. 1.4 10, 609 11, 232 10,954 8 706 5,692 82.1 78. 8 1.86
Texas . 5.4 9,460 9 831 9,628 8,063 5,844 85. 2 82.1 1. 62
Utah . 1.1 13,176 13,833 13,710 10 178 6,110 77.2 75.7 2.16
Vermont .2 9, 496 9,820 9,712 7,538 4,386 79.4 79.5 2.17
Virginia __ _ 2.8 12, 433 12, 815 12,547 9, 781 6,244 78. 7 76.4 1. 99
Washington 6.4 12,011 12, 308 12,089 9,240 6,403 76.9 77.3 1. 88
West Virginia .8 12,037 12, 973 12, 669 9,100 5,885 75.6 72.3 2.05
Wisconsin .9 13,353 13, 956 13,757 10,151 5,890 76.0 73.8 2.27
Wyoming . .2 12,151 13,350 13,176 9,074 6,802 74.7 70.1 1.79
Alaska .2 20,459 18,918 18,185 15,395 12,171 75.2 76.6 1. 68
Hawaii .5 16,215 14,787 14 500 10,924 7,024 67.4 73.7 2.31
Puerto Rico .5 8,000 7,360 7,106 6,737 4,945 84.2 86.0 1.62
1 Purchase cases only;
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In purchase-type transactions only, FHA-estimated property values for new homes averaged about 98% percent of sale price compared with about 96% percent for existing properties. On a nationwide basis this probably indicates that the supply and demand components of the housing market were nearly in balance and price levels fairly well stabilized. The comparatively lower ratio of value to price for existing properties reflects the FHA estimate of depreciation likely to occur in the value of older properties because of obsolescence and shorter economic life.
As evidenced by the ratio of loan to total requirements, initial investments of FHA home buyers in 1954 were somewhat higher than indicated by the average ratios of loan to value, because the combination of sale prices and incidental closing costs (i. e., total requirements) was usually higher than FHA-estimated property values. On the average, new-home buyers provided about one-fifth and existing-home buyers about one-fourth of the total financing requirements. The ratio of initial investment to total requirements for new homes ranged from 11 percent in the lowest value class to 30 percent in the highest, and for existing homes from 18 percent to 31 percent. Only in those transactions where property values were below $12,000 were the buyers’ initial investments less than one-fourth of total financing requirements.
In the various States and Territories, initial cash investments for new homes ranged from 13 percent of total requirements in Texas to nearly 26 percent in Missouri; and for existing homes from 14 percent in Puerto Rico and 18 percent in Texas to 30 percent in Wyoming. In about half of the States and Territories, the new-home initial investment ratio averaged from 15 to 19.9 percent for new homes, while existing home ratios of 20 to 24.9 percent occurred in nearly half of the States and ratios of 25 to 29.9 percent in nearly all the rest.
An approximation of the amount of incidental costs required in closing the Section 203 transactions insured in 1954 is obtainable by differencing the average total requirements and sale price figures. On this basis, closing costs in 1954 averaged about $185 for new and $234 for existing properties. The data by value classes show that in most corresponding value classes, the existing-home closing costs exceeded the new (possibly because costs of the minor repairs required in many existing-home transactions are frequently included in the overall cost figure) and that closing costs generally were more for the higher value properties. Exceptions to these observations probably stem from the considerable variations in the amounts of closing costs in the various sections of the country, ranging from low averages in Vermont of $99 for new homes and $108 for existing homes to highs of $351 for new homes in Tennessee and $399 for existing homes in Delaware and $733 for existing homes in Alaska. Contributing to these differences were
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such factors as variations in the size of typical transactions, the use of the Torrens system of land transfer (under which costs of title search are lower), and differences in financing charges and costs of repairs. Another possible factor was the tendency on the part of builders in some communities to absorb part or all of the closing costs in the sale price in order to promote the sale of their properties.
Although the average mortgage amount for all existing homes exceeded that reported for all new dwellings, within most corresponding value groups the new-home averages were greater, reflecting higher ratios of loan to value. The spread between the average mortgage amounts and ratios of loan to value for new and existing homes narrowed as values increased, and for properties valued at $12,000 or more the differences were slight. This, of course, was a reflection of the schedule of maximum loan-to-value ratios which was effective for most of the cases insured in 1954. In slightly over half the States and Territories, new-home mortgage amounts averaged more than those reported for existing-home transactions, although new-home property values were higher in only one-third of the States and Territories. New-home ratios of loan to value exceeded the existing-home ratios in nearly every State and Territory. Average mortgage amounts for new homes ranged from $7,837 in Maryland to $10,657 in Connecticut and $18,042 in Alaska, with existing homes registering low averages of $6,737 in Puerto Rico and $7,538 in Vermont and highs of $15,395 in Alaska, $11,028 in the District of Columbia, and $10,592 in Nevada. In slightly less than one-half of the States and Territories, new-home mortgages averaged between $8,000 and $8,999 and in over one-third between $9,000 and $9,999; existing-home mortgages in about three-fifths of the States and Territories averaged from $9,000 to $10,999. Average loan-value ratios in most areas ranged from 79 to 84.9 percent for new-home transactions and from 75 to 79.9 percent for existing homes.
Sale prices and amount of total requirements for new homes in about half of the States and Territories averaged from $10,000 to $11,999, while existing-homes average sale prices and amounts of total requirements for existing homes occurred most frequently in the $11,500 to $13,000 range. Average sale prices ranged from $8,758 in New Hampshire to $13,650 in Connecticut for new homes and from $7,106 in Puerto Rico and $9,596 in Maine to $15,869 in the District of Columbia, $15,068 in Nevada, and $18,185 in Alaska for existing homes.
Property Characteristics.—As is evident in Tables 68 and 69, the FHA-estimated replacement cost of properties averaged higher than FHA valuations in all the value classes, both for the country as a whole and in each State and Territory. This is in accord with a
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TABLE 68
Property characteristics by property value and by States, new 1-family homes, Sec. 203, 1954
FHA estimate of property value Percentage distribution Average Price of site as percent of value 1 Average Percentage of structures with garage
Property value Property replacement cost Market price of site 1 Calculated area (square feet) Number of rooms Number of bedrooms
Less than $7,000 0.6 $6,524 $7,042 $851 13.0 749 4.3 2.1 47.1
$7,000 to $7,999 6.0 7, 447 7,832 912 12. 2 771 4.2 2.1 56.0
$8',000 to $8^999 18.8 A 259 8,602 1,068 12. 9 904 4.8 2. 7 70.5
$9,000 to $9,999 15.7 9,346 9; 765 1,248 13.4 959 5.1 2.9 64.0
$10,000 to $10,999 12.4 10,429 10, 737 1,296 12.4 961 4.8 2.6 60.5
$11,000 to $11,999 12.7 11, 326 11, 733 1,496 13.2 996 4.9 2.6 61.8
$12,000 to $12,999 10.1 12, 421 12,772 1,616 13.0 1,033 5.0 2.7 60.4
$13,000 to $13,999 7.8 13, 407 13, 724 1,734 12. 9 1,046 5.1 2.8 70.3
$1LOOO to $1L999 5.5 14i 386 14, 714 1,951 13.6 1,116 5.2 2.8 69.1
$15,000 to $15,999 3.8 15i 329 15; 628 2; 204 14.4 1,162 5.2 2.8 77.2
$16,000 to $17,999 3.8 16, 705 17,023 2,330 13.9 1,238 5.4 2.9 83.9
$18,000 to $19,999 1.4 18,695 19,068 2, 527 13.5 1,332 5.5 2.9 85.5
$20,000 or more 1.4 22,273 22, 970 3,123 14.0 1,291 5.5 2.5 93.6
Total 100.0 11,120 11,482 1,456 13.1 990 4.9 2.7 66.6
Averages by States
Alabama .. 1.0 $11,839 $12, 364 $1,705 14.4 1,129 5. 5 2. 8 57.7
Arizona 2.4 9', 980 io; 189 1,333 13.4 i; 133 5. 0 2. 8 94. 6
Arkansas .8 10; 457 IL 009 li 365 13.1 1,026 4.8 2. 5 85.0
California... _ 20.3 10,298 io; 714 i; 560 15.1 1.071 5.1 1. 3 99. 7
Colorado . . .9 12; 873 13, 324 1, 774 13. 8 1,044 4. 9 2. 7 70. 5
Connecticut . 8 13; 365 14, 025 1,385 10.4 957 4.9 2. 7 45.1
Delaware ... __ . . 1 10,118 10; 363 1,431 14.1 925 4. 6 2. 6 37. 5
District of Columbia.. (2) (3) (3) (3) (3) (3) (3) (3) (3)
Florida 4.7 9,378 9, 637 1,036 11.0 948 4. 9 2. 6 71. 9
Georgia... _ __ 1.2 io; 315 io; 500 L227 11.9 988 5.0 2. 6 56.9
Idaho .3 12*, 463 13,033 1,204 9. 7 1,006 4 5 2. 3 66. 7
Illinois . 3.3 12; 556 12,926 1, 735 13. 8 922 4. 6 2. 6 15.1
Indiana... . __ 3.0 10; 575 10; 811 1,353 12. 8 880 4 8 2. 6 15. 8
Iowa ... . . 1.1 io; 505 IL 502 1,156 11.0 875 4 5 1. 3 31.8
Kansas 1.6 10, 832 11, 388 1, 357 12. 5 945 5. 0 2. 9 62. 5
Kentucky .4 IL 411 11, 865 1, 630 14. 3 950 4 6 2 4 23.5
Louisiana 1.5 li; 435 11, 720 1, 685 14. 7 1, 006 4.7 2. 6 76.1
Maine .2 9; 616 9; 959 811 8. 4 956 4. 4 2. 3 25. 9
Maryland. .. 1. 4 10, 554 10, 782 1,449 13. 7 958 5. 2 2 5 3.3
Massachusetts .4 IL 066 11,303 1,171 10. 6 899 4. 8 2. 7 36.3
Michigan _ 8.1 12; 659 13; 115 L 700 13. 4 955 4 8 2. 6 15.1
Minnesota . . 7 13; 016 13, 662 1,229 9. 4 946 4 7 2 5 41 3
Mississippi .6 10,284 10, 622 i; 141 11.1 1,103 5.1 2. 8 81.4
Missouri* 2.2 12; 765 13,294 1,879 14. 7 919 5. 0 2 5 74 1
Montana .3 12; 874 13,229 1, 265 9. 8 992 4 6 2 4 60 8
Nebraska. .9 10, 790 11,136 1 1,158 10. 7 860 4 3 2 3 36.0
Nevada. .. . ... 1.6 10; 775 10, 923 1,532 14. 2 968 4. 6 2. 6 81. 6
New Hampshire . 1 9, 310 9; 737 ' 694 7. 5 831 4 4 2 2 28 0
New Jersey 2.6 10, 462 10, 821 1,343 12. 8 925 4 8 2 6 26.1
New Mexico... . .7 9; 406 k 964 1,104 11. 7 1 099 5 5 3 2 94.2
New York. _ _ 4.0 12, 685 13 136 1, 387 10 9 1 014 5 2 2. 7 60 6
North Carolina 1.9 9,139 9, 435 1,141 12. 5 948 4 9 2 7 26. 6
North Dakota - . 1 IL 761 12, 643 1,245 10. 6 870 4 5 2 3 59 0
Ohio. - _ _ 5.4 IL 966 12 180 1, 589 13. 3 911 4 9 2 7 22 3
Oklahoma - 1. 5 10,220 10,510 1 355 13 3 981 4 9 2 6 92 0
Oregon 1. 2 10,009 10,265 960 9. 6 936 4 9 2 8 65 7
Pennsylvania 4.1 11,636 12 042 1, 600 13 8 1 054 5 2 2 7 71 6
Rhode Island .3 11,669 12, 413 1,108 9. 5 ’ 964 5.1 2 0 50.0
South Carolina .5 10; 254 10, 745 1,185 11 6 1 050 5 2 2 9 27 0
South Dakota - .6 10; 700 11, 245 1,099 10. 3 896 4 6 2 5 39 0
Tennessee 2.0 io; 441 10; 733 1, 254 12 0 1 028 5 1 2 8 62 5
Texas.- - 6. 9 9; 314 9 528 1, 227 13 2 982 5 0 2 8 89 5
Utah .9 12, 767 13, 262 1,436 11. 2 1 042 4 8 9 6 64 1
Vermont . .1 10,105 10,263 1,127 11. 2 850 4 5 1 5 40 0
Virginia 2.0 IL 531 Hi 625 1,351 11. 7 976 4 9 2 7 9 3
Washington ... . 1.4 12; 032 12; 522 1,234 10 3 1 029 4 9 2 5 78 1
West Virginia . .2 12; 612 13; 485 1,806 14.3 1^020 4 9 2 7 61.1
Wisconsin .5 12, 729 13,181 L471 11. 6 885 4 6 2 6 18 3
Wyoming .2 11) 445 IL 596 1,497 13 1 940 4 4 2 3 63 6
Alaska..^ .6 22; 582 22, 743 2, 972 13.2 853 5.0 1.6 96.9
Hawaii 1.9 14, 451 14, 710 4, 670 32.3 944 4.7 2.7 96.0
Puerto Rico .5 11,075 12,001 2,532 22.9 983 5.5 3.0 73.7
1 Excludes Hawaii. 2 Less than 0.05 percent. 5 Inadequate sample.
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TABLE 69
Property characteristics by property value and by States, existing 1-family homes, ______________________________________Sec. 203, 1954_______________________________________
FHA estimate of property value Percentage distribution Average Price of site as percent of value 1 Average Percentage of structures with garage
Property value Property re-place-ment cost1 Market price of site 1 Calculated area (square feet) Number of rooms Number of bedrooms
Less than $7,000 2.6 $6,117 $8, 526 $903 14.8 876 4.7 2.3 63.7
$7,000 to $7,999 5.5 7, 408 9; 298 975 13.2 873 4.6 2.2 67.4
$8^000 to $8^999 10.1 8,40.3 10; 168 1,133 13.5 927 4.8 2.3 70.8
$9',000 to $9,999 11.1 9,345 11,134 1,237 13.2 979 4.9 2.4 77.4
$10,000 to $10,999 12.6 10,332 12; 095 1', 332 12.9 1,031 5.1 2.5 77.7
$11^000 to $11,999 12.1 11, 326 12,902 1,472 13.0 1,053 5.1 2.6 79.9
$12;000 to $12i999 11.8 12, 332 13,974 i; 594 12.9 1,122 5.3 2.7 80.5
$13i000 to $13,999 9.1 13^ 343 14, 782 1,751 13.1 1,143 5.4 2.7 82.2
$14^000 to $14,999 6.6 14, 300 15, 830 1, 895 13.3 1,206 5.5 2.8 83.4
$15,000 to $15^999 5.8 15, 259 16; 811 2,062 13.5 1,271 5.6 2.9 85.9
$16,000 to $17i999 7.0 16; 726 18, 375 2,303 13.8 1,369 5.8 3.0 88.1
$18,000 to $19i999 3.1 18,620 20,369 2,750 14.8 1,492 6.0 3.1 89.6
$20,000 or more 2.6 2L 526 24; 231 3,079 14.3 1,712 6.3 3.3 92.2
Total 100.0 11,934 13, 646 1,591 13.3 1,104 5.2 2.6 79.6
Averages by States
Alabama 1.0 $11, 509 $12,572 $1, 755 15.2 1,208 5.6 2.6 76.4
Arizona .8 10,694 11,883 1,374 12.8 1,247 5.1 2.7 78.8
Arkansas .9 io; 342 11,941 1,686 16.3 1,182 5.2 2.5 82.2
California 12.2 li; 739 12; 903 2, 045 17.4 1,189 5.1 2.6 98.5
Colorado. . 6 12; 543 13, 542 1,990 15.9 1,024 4.8 2.5 82.9
Connecticut 2.6 13, 308 15, 700 1,456 10.9 1,137 5.4 2.9 66.2
Delaware - - .3 12; 987 13; 779 1,766 13.6 1,146 5.4 2.9 47.6
District of Columbia . 1 14, 761 16, 513 2,154 14.6 1,224 6.2 2.9 55.0
Florida 1.1 10', 522 11, 877 1,310 12.5 1,087 5.3 2.6 82.9
Georgia. 2.0 11,976 12, 647 1,607 13.4 1,181 5.5 2.6 60.2
Idaho 1.1 10', 341 12, 306 1,035 10.0 1,004 4.7 2.4 79.2
Illinois 4.3 13,683 15,873 1,742 12.7 1,093 5.1 2.5 65.0
Indiana 3.6 11,418 13, 366 1,306 11.4 1,020 5.0 2.6 71.8
Iowa __ 1.4 11, 741 14, 258 1,550 13.2 1,067 4.9 3.1 74.5
Kansas _ _ _ _ _ __________ 2.1 11,485 12, 863 1, 366 11.9 1, 040 5.2 2.5 91.3
Kentucky 1.2 12; 192 13,700 1,738 14.3 1,097 5.2 2.5 68.8
I >Qiii si an a 1.5 12,423 13,321 2,171 17.5 1,162 5.1 2.5 87.5
Maine _ .8 9', 485 11,600 949 10.0 1,170 5.5 2.9 69.1
Maryland . .9 12,375 13; 500 1, 680 13.6 1,010 5.2 2.7 23.4
Massachusetts .8 11,317 13,361 1,222 10.8 1,222 5.6 2.9 67.8
Michigan 6.2 12; 718 14, 999 1,645 12.9 1,054 5.3 2.7 68.8
Minnesota 1. 5 13, 535 15, 651 1,477 10.9 1,084 5.3 2.7 75.8
Mississippi .4 10, 265 li; 129 1,354 13.2 1,177 5.4 2.7 86.5
Missouri _______________ 4.1 12, 770 15,038 1,669 13.1 1,149 5.4 2.5 89.9
Montana .8 12,015 13; 877 1,408 11.7 1,078 5.0 2.6 79.6
Nebraska 1.2 10, 775 13; 174 1,330 12.3 1,033 5.0 2.5 85.0
Nevada .4 14, 209 15; 408 1,825 12.8 1,181 5.0 2.6 82.6
New Hampshire . 1 10,943 13, 031 1,109 10.1 1,145 5.9 3.1 73.9
New Jersey 2.7 12; 359 14', 209 1,801 14.6 1,108 5.6 2.8 69.9
New Mexico .2 11,010 12,177 1,376 12.5 1,221 5.7 2.8 85.7
New York _ 5.7 11,682 14,032 1,348 11.5 1,124 5.4 2.7 67.8
North Carolina 1.0 IL 837 12,911 1,688 14.3 1,243 5.5 2.7 57.4
North Dakota .3 12; 739 14,965 1,662 13.0 1,082 5.0 2.6 67.0
Ohio 7.2 13; 126 15,097 1,506 11.5 1,054 5.2 2.6 76.5
Oklahoma 1.6 9; 939 10,943 1,361 13.7 1,065 5.1 2.4 93.8
Oregon . 2.0 11,167 12, 869 1,234 11.1 1,071 5.1 2.6 93.6
Pennsylvania 3.0 11, 727 13,176 1, 477 12.6 1,195 5.7 2.9 78.1
Rhode Island .6 12,476 14,606 1,341 10.7 1,206 5.5 3.3 77.8
South Carolina .7 10, 793 11,894 1,451 13.4 1,147 5.5 2.7 58.4
South Dakota .6 10,060 13,402 1,149 11.4 1,068 5.2 2.7 75.0
Tennessee. 1.4 10; 609 Hi 459 1,514 14.3 1,088 5.3 2.5 73.5
Texas 5.4 9', 460 10,416 1,440 15.2 1,016 5.0 2.3 95.9
Utah. 1.1 13,176 14, 573 1,747 13.3 1,021 4.8 2.4 81.9
Vermont .2 9,496 12,374 1,038 10.9 1,161 5.6 3.2 76.0
Virginia 2.8 12,433 13,258 1,552 12.5 1,090 5.4 2.6 40.4
Washington 6.4 12; 011 14,128 1,567 13.0 1,126 5.2 2.6 90.8
West Virginia .8 12,037 14,484 1,794 14.9 1, 284 5.6 2.7 68.6
Wisconsin .9 13,353 15; 503 1,800 13.5 1,045 4.9 2.5 62.8
Wyoming ____________ .2 12; 151 12,886 1,429 11.8 978 4.7 2.4 78.8
Alaska .2 20,459 23, 594 2,128 10.4 981 4.7 2.4 58.0
Hawaii _ ______________ .5 16, 215 16,853 5,382 33.2 1,064 5.0 2.7 97.8
Puerto Rico 1 •’ 8,000 8,654 1,656 20.7 889 5.2 3.0 80.0
i Excludes Hawaii.
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fundamental precept of the FHA valuation policy, that replacement costs establish an upper limit to value, inasmuch, as stated in the FHA Underwriting Manual, “a typical buyer acting intelligently would not be warranted in paying more for property than the cost of producing an equivalent property.” Because of depreciation (primarily obsolescence), the difference between value and replacement cost is noticeably greater for existing properties than for new. For Section 203 new-home transactions closed in 1954, value averaged about 97 percent of replacement cost; for existing homes, the comparable figure was 87 percent. The lower values of existing properties reflect not only the shorter economic life of the structure but also the influence of obsolescence on such items as structural design, the amounts and types of equipment, and, occasionally, the location.
On both new and existing homes, the ratio of value to replacement cost increased with higher property values, ranging from 93 percent for new homes valued at less than $7,000 to about 98 percent for those in the higher value brackets and from 72 percent for existing homes of less than $7,000 value to slightly over 90 percent for the higher priced existing properties. This is indicative of the greater influence of going market prices on values of lower-priced properties. Reflecting the influence of market conditions in various localities, sale prices exerted more downward pull on property values in these lower brackets than in the higher value categories. The reason is probably a more plentiful supply of housing and keener competition in the lower value groups.
By States and Territories, average value-cost ratios for new homes were in a relatively narrow band of 91 to 99 percent, with most States bracketed between 96 and 98 percent. Existing-home ratios, reflecting variations in age, condition, and demand are more diffused, extending from 75 to 96 percent with heavier incidence of averages in the 84 to 86 percent and 89 to 94 percent ranges.
Market prices of land involved in the Section 203 transactions of 1954 averaged about $1,450 for new homes, or 13 percent of total property value, and nearly $1,600 for existing homes, slightly more than 13 percent of total value.16 Land prices of both new and existing properties moved upward as property values increased. However, land prices of the higher-value properties ($14,000 or more) accounted for somewhat larger proportions of total value as compared with lower-price homes, possibly because of the larger size, better dimensions, and more desirable location of the sites. Frequently the higher priced new homes were contract-built on lots available in fully, de- 18
18 Land prices of Hawaiian properties are excluded from the United States summary poition of Tables. 68 and 69 because the inordinately high land costs of that Territory create a bias in average land prices in those value groups where the proportion of Hawaiian cases was relatively high. With Hawaii included, the average land price for new homes in the $13,000 value group would have been $300 more, and in the $18,000 and $20,000 or more groups $200 to $300 more.
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HOUSING AND HOME FINANCE AGENCY
veloped neighborhoods and having higher market values. In the value groups below $9,000, existing homes had higher land prices than new homes, probably because of their being located in neighborhoods closer to the centers of cities and having better shopping, transportation, and community facilities. In these same groups the higher ratios of land price to total value for the existing homes are indicative of a minimum of depreciation in land value compared with the more substantial depreciation in the structure value.
Also affecting the averages of market price and land shown in the United States summary portion of the tables are variations in land prices throughout the country. For the Nation proper, land prices for new homes ranged from $694 in New Hampshire to $1,879 in Missouri and for existing homes from $949 in Maine to $2,171 in Louisiana. In most States, land prices averaged between $1,000 and $1,500 for new homes and $1,250 to $1,750 for existing properties, with new-home averages exceeding existing-home averages in all but a few States. The land proportion of property value for new homes ranged from 7% percent in New Hampshire to 15 percent in California, averaging in the greater number of States from 10 to 14 percent. Similarly for existing homes, the average ratio of land price to total value in most States ranged from 10 to 14 percent, with a high of 17% percent in Louisiana and a low of 10 percent in Idaho and Maine.
Special terrain problems in Hawaii and Puerto Rico account for the exceedingly high land prices representing substantially larger proportions of total property value. Although land prices are unusually high in Alaska, the ratio of land price to property value is not above average.
In most States, land for existing-home properties represented larger proportions of total property value than in new-home transactions, primarily because of the comparatively greater depreciation of existing structures as compared with land.
Other property characteristics information presented in Tables 68 and 69 are averages of calculated area, number of rooms and number of bedrooms, and percentage of structures provided with garage facilities. The data dealing with the size of the structure, i. e., area, room count and bedroom count, are discussed in more detail in a subsequent portion of this report dealing with the size of the FHA homes in 1954 and the relation of size to property values.
Garage facilities were provided in two-thirds of the new homes and in nearly four-fifths of the existing, the frequency increasing as property values rose. Within virtually all value groups, the proportion of existing homes with garages exceeded the new.
Generally, the highest proportions of new homes with auto shelters were found in the Southern and Western States, where they also may
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FEDERAL HOUSING ADMINISTRATION
have included storage facilities, since most of these homes have no basements.17 The lowest proportion with garages occurred in the Northeastern and North Central States. In 20 States, less than 50 percent of the new homes had garage facilities, contrasted with only 3 States—Delaware, Maryland, and Virginia—in which the number of existing homes with garages fell below the 50 percent mark.
Financial Characteristics.—As property values increased, mortgage payments, real property taxes, housing expenses, and mortgagors’ incomes also advanced. Average mortgage payments (covering debt, service, property taxes, and insurance) did not vary materially for new and existing homes in comparable value groups below $12,000. Although the average principal amount of existing-home mortgages-in these groups was smaller, their typically shorter durations made for interest and principal payments which when coupled with the higher property taxes resulted in total payments not much different than for similarly valued new homes. In the value groups above $12,000, the higher monthly payment level of existing homes is largely the result of the larger debt service arising from the shorter amortization period of the mortgages.
Average monthly payments, by States and Territories, ranged from $59 in Florida to $129 in Alaska for new homes, and from $56 in Puerto Rico to $131 in Alaska for existing homes. In most States, mortgage payments on new homes averaged from $65 to $79, and on existing properties from $70 to $84. Reflecting the shorter average amortization periods of existing-home mortgages and higher average tax rates, existing-home payments were generally higher than for new homes within the same State.18
As shown in Tables 70 and 71, the average durations of FHA mortgages insured in 1954 ranged for new homes from 20 years in South Dakota to nearly 25 years in Alaska, with mortgages in most States having averages of 22 and 23 years. Existing-home mortgage terms—shorter than new in every State and Territory—ranged from 18 years in South Dakota to about 22% years in Delaware, with averages of 19 and 20 years in most States and Territories. Existing-home average durations in excess of 20 years are indicative of the presence of structures originally constructed under the FHA inspection system and, to a very limited extent, transactions processed under provisions of the new legislation of August 2, 1954, permitting durations in excess, of 20 years. * is
17 According to a nationwide survey conducted by the Bureau of Labor Statistics of new nonfarm 1-family houses started in the.first quarter of 1954, 73 percent in the South and 79 percent in the West had no basements, compared with 21 percent in the Northeast and 44 perce ,t in the North Central States.
is Monthly payment data'for Maryland and Hawaii reflect inclusion of ground rents in connection with: leasehold estates in many of the transactions.
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HOUSING AND HOME FINANCE AGENCY
TABLE 70
Financial characteristics by property value and by States, new 1-family homes, Sec. 203, 1954
FHA estimate of property value Percentage distribution Average Monthly average Percent ratio of
Property value Term of loan (years) Total payment Estimated taxes Prospective housing expense Mortgagor’s income Mortgage payment to income Housing expense to income
Less than $7,000 0.6 $6, 524 NA $48.26 $5.62 $61. 68 $346.36 13.9 17.8
$7 000 to $7 999 6.0 7,447 NA 52.05 6. 77 69. 82 370. 88 14.0 18.8
$8 000 to $8,999 18.8 8i 259 NA 58.31 8.32 76.70 403.55 14.4 19.0
$9,000 to $9^999 15.7 9,346 NA 63.21 8.96 83. 31 431. 52 14.6 19.3
$10,000 to $10,999 12.4 10; 429 NA 68.64 10.19 89. 48 446. 83 15.4 20.0
$11,000 to $1L999 12.8 11,326 NA 72.27 11.20 93.39 470. 53 15.4 19.8
$12^000 to $12^999 10.1 12,421 NA 75.32 11.89 97. 93 495.17 15.2 19.8
$13J)00 to $13,999 7.8 13,407 NA 80.89 12.85 104. 46 523. 55 15.5 20.0
$14',000 to $1<999 5.5 14, 386 NA 86.10 14. 54 109. 40 554. 57 15.5 19.7
$15^000 to $15^999 3.8 15,329 NA 93.59 15. 56 116. 30 605. 44 15.5 19.2
$16,000 to $17,999 3.8 16, 705 NA 101.11 17.18 126. 90 664.08 15.2 19.1
$18,000 to $19^999 1.4 18, 695 NA 109.37 18.32 139.93 748. 43 14.6 18.7
$20,000 or more 1.3 22,273 NA 126.99 17.92 167.16 871.45 14.6 19.2
Total 100.0 11,120 22.9 71.36 10.86 92.58 472. 66 15.1 19.6
Averages by States
Alabama. 1.0 $11,839 22.2 $71. 07 $6.05 $93.31 $508.14 14.0 18.4
Arizona _ 2.4 9,980 23.6 73. 88 17.18 94.52 502. 32 14.7 18.8
Arkansas .8 10,457 22.9 65.04 4. 61 85.35 455. 68 14.3 18.7
California 20.3 10,298 22.0 70.44 12. 34 88.90 468.27 15.0 19.0
Colorado .9 12, 873 23.3 88.28 15. 94 107. 95 559. 38 15.8 19.3
Connecticut .8 13, 365 24.3 81. 38 14.84 105.16 556.93 14.6 18.9
Delaware .1 10,118 24.7 62.69 4.33 (2) (2) (2) (2)
District of Columbia (*) («) (>) (2) (2) (2) (2) (2) (2)
Florida 4.7 9,378 23.6 59.39 3. 86 78.03 432.26 13.7 18.1
Georgia 1.2 10,315 22.4 62. 55 4. 56 81.14 455. 58 13.7 17.8
Idaho .3 12,463 21.7 76.68 10. 34 106. 51 510. 73 15.0 20.9
Illinois 3.3 12, 556 22.7 76.73 11.58 98.88 480. 92 16.0 20.6
Indiana 3.0 10, 575 22.5 66.05 7.16 93.80 451.91 14.6 20.8
Iowa 1.1 10, 505 22.1 66.84 8.58 89. 39 425. 30 15.7 21.0
Kansas 1.6 10, 832 23.8 74. 26 13. 55 92.38 484. 37 15.3 19.1
Kentucky .4 11,411 22.1 73.30 9.09 91.38 528. 70 13.9 17.3
Louisiana 1.5 11,435 23.2 67.60 5.25 82.29 475.45 14.2 17.3
Maine .2 9,616 22.1 64. 97 10.48 85. 79 405. 52 16.0 21.2
Maryland 1.4 10,554 23.6 64. 64 11.55 93.18 452. 73 14.3 20.6
Massachusetts .4 11, 066 24.2 74. 75 17. 69 97. 61 477.15 15.7 20.5
M ichigan 8.1 12, 659 23.8 78.17 13.58 99.11 483.01 16.2 20.5
Minnesota .7 13,016 23.7 78.19 12. 79 98.43 467.07 16.7 21.1
Mississippi . .6 10,284 22.8 64.24 5. 33 75.95 443.90 14.5 17.1
Missouri - 2.2 12, 765 23.7 76.09 9.43 96.29 498.17 15.3 19.3
Montana .3 12, 874 21.8 80.08 12.33 108. 47 531. 72 15.1 20.4
Nebraska .9 10, 790 23.3 71.75 13.76 92. 80 444. 07 16.2 20.9
Nevada . 1.6 10,775 23.1 66. 31 8.43 90. 03 619. 47 10.7 14.5
New Hampshire .1 < 310 23.8 66.28 15.13 94.82 409. 62 16.2 23.1
New Jersey 2.6 10, 462 24.2 65. 66 12. 22 90.15 489. 76 13.4 18.4
New Mexico .7 9,406 22.9 63.00 6. 99 89.16 484. 82 13.0 18.4
New York 4.0 12, 685 24.2 82.36 18.06 107. 68 522.32 15.8 20.6
North Carolina 1.9 9,139 22.1 60.10 6.22 83.29 422.89 14.2 19.7
North Dakota .1 11,761 20.5 77.69 12.90 102.08 521.95 14.9 19.6
Ohio 5.4 11,966 22.3 73.68 9.84 97.82 457.90 16.1 21.4
Oklahoma 1.5 10,220 22.8 67.18 6.69 82. 30 448.29 15.0 18.4
Oregon 1.2 10; 009 21.7 66.59 9. 81 92. 71 446.20 14.9 20.8
Pennsylvania 4.1 11, 636 24.4 72.39 13.96 93.24 474.02 15.3 19.7
Rhode Island .3 11, 669 21.2 75.68 12.62 101.01 457.07 16.6 22.1
South Carolina .5 10,254 22.1 64.08 4.08 84. 81 440. 01 14.6 19.3
South Dakota .6 10, 700 20.0 49.11 14.16 99.48 491.70 16.1 20.2
Tennessee 2.0 10,441 24.0 67.32 8.32 86.70 448. 49 15.0 19.3
Texas 6.9 9,314 22.8 64. 91 9.32 83.17 441.88 14.7 18.8
Utah .9 12, 767 22.8 75.72 10.15 100. 32 467.74 16.2 21.4
Vermont . 1 10,105 22.3 69.36 12.36 98.45 362 48 19.1 27.2
Virginia .. 2.0 IL 531 23.6 69.15 6. 85 89.98 431.01 16.0 20.9
Washington 1.4 12, 032 21.9 73.02 9. 84 103.80 483. 45 15.1 21.5
West Virginia .2 12, 612 20.1 73.30 3.35 90.12 480.09 15.3 18.8
Wisconsin .5 12, 729 23.4 84.42 17.34 117,11 408. 94 20.6 28.6
Wyoming .2 IL 445 20.3 76. 49 12.02 98.92 494.12 15.5 20.0
Alaska .6 22, 582 24.9 129. 44 13.82 183.98 (2) (2) (2)
Hawaii 1.9 14,451 23.5 75.86 7.67 104. 27 545. 86 13.9 19.1
Puerto Rico .5 11,075 20.3 78. 47 13.22 88.01 485.09 16.2 18.1
> Less than 0.05 percent.
1 Inadequate sample.
NA—not available.
210
FEDERAL HOUSING ADMINISTRATION
TABLE 71
Financial characteristics by property value and by States, existing 1-family homes, Sec. 203, 1954
FHA estimate of property value Percentage distribution Average Monthly average Percent ratio of
Property value Term of loan (years) Total payment Estimated taxes Prospective housing expense Mortgagor’s income Mortgage payment to income Housing expense to income
Less than $7,000 2.6 $6,117 NA $44.46 $6.45 $63.19 $371. 23 12.0 17 0
$7,000 to $7,999 5.5 <408 NA 52.43 7.02 71.36 399.32 13.1 17 9
$<000 to $<999 10.1 8,403 NA 58.73 8.97 79.95 424. 79 13 8 18 8
$9! 000 to $9,999 11.1 9,345 NA 62. 79 9.22 84.13 442.65 14 2 19 0
$10,000 to $10,999 12.6 10, 332 NA 68.27 10.23 90.59 460.10 14.8 19 8
$11',000 to $1<999 12.1 11,326 NA 73.39 11.05 96.33 485.37 15 1 19 8
$12,000 to $12,999 11.8 12', 332 NA 78.94 11.95 102.27 515.41 15.3 19 8
$13J)00 to $13,999 9.1 13^ 343 NA 84.01 12.94 108.40 554.30 15. 2 19 6
$14,000 to $14,999 6.6 14,300 NA 89.20 13.62 114.63 584.08 15. 3 19 6
$15,000 to $15,999 5.8 15,259 NA 95.14 14.66 121. 74 645.05 14.7 18 9
$16,000 to $17,999 7.0 16,726 NA 104.49 16.38 131. 66 704.98 14 8 18 7
$l<000 to $19,' 999 3.1 18! 620 NA 116. 58 17.65 146. 91 788.94 14.8 18 6
$20,000 or more 2.6 2< 526 NA 129.42 20. 57 163. 20 946. 66 13.7 1<2
Total 100.0 11,934 20.1 77.10 11.68 100.70 525. 67 14.7 19.2
Averages by States
Alabama 1.0 $11,509 20.7 $71.82 $5.90 $91. 68 $533. 64 13 5 17 2
Arizona .8 10, 694 20.1 82.40 18.41 106.89 585. 00 14 1 18 3
Arkansas .9 10,342 20.9 64.73 4.92 87.16 504. 53 12 8 17 3
California 12.2 IL 739 19.3 79. 46 14.06 99. 08 547.88 14 5 18 1
Colorado .6 12, 543 21.4 82. 51 16.03 104.37 599. 49 13 8 17 4
Connecticut _ __ __ 2.6 13! 308 20.8 85.44 15.18 110.07 554. 56 15 4 19 8
Delaware .3 12', 987 22.4 75.24 5.90 101.03 516.18 14 6 19 6
District of Columbia .1 14! 761 20.0 89.13 13.30 117.17 557. 26 16 0 21 0
Florida 1.1 10; 522 21.0 66.82 5.10 89.95 522. 67 12 8 17 2
Georgia 2.0 11, 976 20.9 72.42 5. 96 92.82 552 25 13 1 16 8
Idaho 1.1 10! 341 19.6 65.60 9. 26 94.18 502 66 13 1 18* 7
Illinois 4.3 13! 683 19.7 85.90 13.74 109.96 562.13 15 3 19 6
Indiana 3.6 11,418 19.7 72. 99 8.61 102.02 505. 74 14 4 20. 2
Iowa _ __ 1.4 11,741 20.2 75.48 11 10 101.52 490.34 15 4 20 7
Kansas - 2.1 11,485 20.6 77. 59 12. 55 100.94 536. 75 14 5 18 8
Kentucky. _ 1.2 12,192 20.1 77.27 9.91 96. 36 509 09 15 2 18 9
Louisiana 1.5 1< 423 20.8 75.53 6. 26 90.73 573. 46 13 2 15 8
Maine .. .8 9,485 19.9 64.89 10. 91 85.91 441 17 14 7 19 5
Maryland . 9 12,375 20.6 81.50 13.51 106. 51 530 07 15 4 20 i
Massachusetts .8 1L317 20.8 78.87 18.17 103.16 492. 22 16 0 21 0
Michigan 6.2 12, 718 19.9 80.14 13. 39 102. 20 520 58 15 4 19 6
Minnesota . 1.5 13', 535 20.0 86. 95 15.29 110. 51 509 71 17 1 21 7
Mississippi .4 io; 265 21.0 63. 55 6.29 76.11 451.98 14 1 16 8
Missouri ... 4.1 12, 770 20.3 78. 70 9.95 100. 54 539 33 14 6 18 6
Montana .8 12,015 19. 5 76.37 12.15 100.16 568 72 13 4 17 6
Nebraska 1.2 10, 775 19.8 77.23 16. 02 96.66 494. 94 15 6 19 5
Nevada __ .4 14i 209 19. 5 88. 58 12. 55 112. 60 869 33 10 2 13 0
New Hampshire . 1 10,943 21.4 76.97 18.69 108. 91 529 72 14 5 20 6
New Jersey .. . 2. 7 12,359 20.3 81.85 16.38 109.88 561 94 14 6 19 6
New Mexico .2 1< 010 21.0 71.44 8. 25 95.31 573 89 12 4 16 6
New York. 5.7 11! 682 20.7 79. 62 17.05 109. 51 517.11 15 4 21 2
North Carolina. 1.0 li; 837 20.2 73.33 81.10 101.16 537 79 13 6 18' 8
North Dakota .3 12, 739 20.0 83.92 15.81 111. 48 583 67 14 4 19 1
Ohio . . 7. 2 13,126 19.5 82.63 10. 59 106. 61 501 26 16 5 21 3
Oklahoma 1.6 9,939 21. 2 65.17 6.49 80 51 475 65 13 7 16 9
Oregon . . ... _ 2.0 11,167 19.5 72.41 11.61 101.10 526.01 13 8 19 2
Pennsylvania 3.0 11, 727 20.8 74.91 13. 53 97.47 503 51 14 9 19 4
Rhode Island . ._ .6 12,476 19. 7 79.74 13. 25 107.80 487 86 16 3 22 1
South Carolina. _ .7 10', 793 20.6 65.31 4.12 87.09 479 33 13 6 18 2
South Dakota __ .6 10,060 18.1 71. 74 14 08 95.91 507 47 14 1 18 9
Tennessee . _ 1.4 10! 609 21,6 68.43 8.39 88.92 474 33 14 4 18 7
Texas 5.4 9! 460 20.9 66. 52 9. 72 83 66 486 96 13 7 17 2
Utah 1.1 13! 176 21.3 80. 51 10.63 102.04 509 19 15 8 20 0
Vermont .2 9'. 496 20.4 63. 43 11.62 92.55 365.48 17.4 25.3
Virginia 2.8 12,433 20.3 75.79 8.48 100. 24 520 32 14 6 19 3
Washington 6.4 12, 011 19. 5 74.34 8. 56 107 25 533 60 13 9 20 1
West Virginia .8 12,037 19.0 68.70 3.36 88. 53 490 45 14 0 18 1
Wisconsin .9 13,353 20.4 87.33 18.46 115.42 490 82 17 8 23 5
Wyoming . . . 2 12,151 18.6 77.77 11.72 100 10 566 83 13 7 17 7
Alaska • 2 20; 459 19.6 131.35 16.28 184.95 1,014. 25 13.0 18.2
Hawaii . . . _ . 5 16, 215 20.1 85.33 7. 97 107 76 585 36 14 6 18 4
Puerto Rico .5 8,000 20.0 56. 20 10. 29 66. 56 412.11 13.6 16.2
NA—Not available
211
HOUSING AND HOME FINANCE AGENCY
Next to debt service, property taxes (including special assessments, if any) were the most important item included in total monthly payment. As estimated by FHA, property taxes in the Section 203 transactions of 1954 averaged about $11 for new homes and $12 for existing homes. Despite wide divergence in tax rates, in amounts of special assessments, and in bases of assessments in the various localities, (evident from comparison of average taxes and property values shown for individual States in the lower portion of Tables 70 and 71), average taxes on a national summary basis were directly related to property values and moved upward as property values increased. Variations in local tax levels were probably primarily responsible for differences in the average taxes of new and existing properties in the same value classes, namely, those valued at less than $9,000 and those with values of $14,000 or more.
Average monthly real-estate taxes, by States and Territories, reflecting the variation in typical values of properties, assessment policies, rates of taxation, and amounts of special assessments ranged from $3.35 for new homes and $3.36 for existing homes in West Virginia to $18.06 on new homes in New York and $18.69 on existing properties in New Hampshire. The largest proportion of States had average new-home taxes of $9 to $13, and existing property taxes of $8 to $13. Lowest tax rates were indicated for a band of States starting with West Virginia and running south along the Atlantic Coast through Florida and thence west along the Gulf of Mexico to Louisiana and Arkansas. Taxes in these States reflect homestead exemptions and lower assessment rates as well as lower tax rates. The highest tax rates were evident in the Northeastern States, Wisconsin, South Dakota, Nebraska, Colorado, and Arizona.
Housing expense—principally mortgage payment, plus estimated operating costs and maintenance and repair expense—averaged more for existing homes in all value classes probably because of the greater expense estimated to be required for heating and maintaining the older existing properties. By States and Territories, average prospective monthly housing expenses ranged in new-home transactions from nearly $76 in Mississippi to $184 in Alaska and in existing homes from $66.50 in Puerto Rico to $185 in Alaska. Most States had new-home expenses of $85 to $99 and existing-home expenses of $95 to $109. With few exceptions, average expenses on existing homes exceeded averages for new homes in the same States, reflecting larger average size of existing houses, greater operating and maintenance costs, and generally higher mortgage payments.
The proportions of mortgagors’ incomes allocable to monthly payments and housing expense do not vary appreciably in the different value groups—from 13.9 to 15.5 percent of income for monthly payment in new-home transactions, and from 17.8 to 20 percent for hous
212
FEDERAL HOUSING ADMINISTRATION
ing expense; in existing homes, from 12 to 15.3 percent for monthly payment and from 17 to 19.8 percent for housing expense. Despite larger monthly payments and housing expenses indicated for the existing-home transactions, in nearly all value classes new-home mortgagors devoted slightly larger shares of their incomes to monthly payments and housing expenses than did owners of existing homes in the same value groups, reflecting the consistently higher level of incomes of the latter.
New-home mortgagors in most States devoted on the average from 14 to 16.9 percent of their incomes to mortgage payments and from 18 to 20 percent for housing expense. Existing-home mortgagors in the greater number of the States were spending somewhat smaller shares of their incomes on the average—13 to 15.9 percent for mortgage payments and 17 to 19.9 percent for housing expense. Mortgagors in Nevada, with the largest average incomes, allotted the smallest portions of incomes for monthly payments (11 percent in new homes and slightly less in existing homes) and housing expense (14^ percent in new homes and 13 percent in existing). On the other hand, mortgagors in Wisconsin have the highest payment-income ratios in both new (21 percent) and existing home transactions (18 percent) and the highest housing expense-income ratios for new homes (29 percent), with Vermont registering the highest existing-home expense-income ratio of 25 percent.
Relation of Size of House to Property Value.—Amons the major factors affecting the value of FHA properties is the size of the house, i. e., the calculated area of the structure, and the number and type of rooms available. Generally speaking, FHA estimated values rise with increases in the calculated area and the number of rooms in the structure.
The ^interrelationship between calculated area of the structure and property value for Section 203 single-family home transactions insured in 1954 is shown in Table 72. In most property value groups the area of both new and existing homes varies considerably, reflecting differences in construction costs and home prices caused by such factors as geographical location; types, materials, and quality of construction; neighborhood characteristics; number of bedrooms; and, for existing properties, condition and age of structure. As indicated by the median calculated areas for comparable value intervals, the areas of existing homes were typically larger than those of new homes. Only in the case of the $8,000 and $9,000 property values were new homes larger than existing homes, possibly because most of these new-home properties were located in areas where lower construction costs prevailed. Table 72 also shows median property values for each of the calculated area intervals. In the area groups of less than 1,200 square feet, the
350920—56----16
213
HOUSING AND HOME FINANCE AGENCY
214
TABLE 72
Calculated area by property value of single-family homes, Sec. 203, 1954
Median Calculated area (square feet)—Percentage distributions
Percent- calculated________________________________________________;____________
FHA estimate of property value age dis- area T „o„ tribution (square 7n0to7q9 8nntoSnq witoW) L000 to 1,100 to 1,200 to 1,400 to 1,600 to 2,000 or T t .
feet) 70a0n 700 to 799 800 to 899 900 to 999 1099 1)199 lj399 1>599 1>999 more lotai
New homes
Less than $7,000________ 0.6 711 45.3 43.4 6.9 3.8 0. 6 _____________________________ 100.0
$7,000 to $7,999________ 6.0 760 19.5 46.0 26.0 6.5 2.0 (') _________________________ 100.0
$8,000 to $8,999________ 18.8 918 2.3 12.7 25.8 46.6 11.4 0.8 0.4 __________________ 100.0
$9,000 to $9,999________ 15.7 932 1.6 14.1 27.8 19.9 13.1 18.2 5.3 __________________ 100.0
$10,000 to $10,999______ 12.4 940 1.3 12.6 25.9 22.7 22.3 10.0 5.0 0.1 0.1 _____ 100.0
$11,000 to $11,999______ 12.8 999 . 4 8.3 22.9 18.6 23.6 17.2 8.1 .8 .1 _____ 100.0
$12,000 to $12,999______ 10.1 1,026' .6 4.9 15.5 24.1 24.7 14.6 13.0 2.4 . 2 (>) 100.0
$13,000 to $13,999______ 7.8 1,025 .1 6.8 12.4 22.8 23.8 15.5 15 3 3.0 . 3 ____ 100.0
$14,000 to $14,999 _____ 5.5 1,087 ___ 1.6 7.8 12.3 33.4 14.6 24.3 5.2 . 6 . 2 100.0
$15,000 to $15,999______ 3.8 1,157 ____ .8 6.6 8.2 25.3 16.9 33.5 6.7 1.8 .2 100.0
$16,000 to $17,999______ 3.8 1,210 ____ .9 1.2 7.3 15.4 23.8 32.8 13.8 4.3 . 5 100.0
$18,000 to $19,999______ 1.4 1,336 .2 1.4 5.1 2.2 6.3 11.3 30.4 29.5 12.6 1.0 100.0
$20,000 or more_________ 1.3 1,249 ___ 6.6 18.9 7.6 5.5 6.8 13.1 15.2 21.8 4.5 100.0
Total_______________ 100.0 961 2.4 11.5 20.5 23.1 18.0 11.7 9.6 2.3 . 8 .1 100.0
Median property value___ $10,678 $7,806 $9,167 $9,874 $9,753 $11,625 $11,727 $13,760 $16,015 $18,569 $20,167 -
Existing homes
Less than $7,000 ________ 2.6 820 15.1 25.1 30.3 8.7 6.4 5.5 4.8 2.4 1.6 .1 100.0
$7,000 to $7,999_________ 5.5 813 9.0 36.7 27.7 9.1 5.7 3.3 4.8 1.5 1.7 .5 100.0
$8,000 to $8,999________ 10.1 863 6.8 26.1 25.0 16.3 9.4 5.0 6.5 2.3 2.2 . 4 100.0
$9,000 to $9,999________ 11.1 925 4.7 18.6 21.3 19.2 13.4 8.3 8.4 3.4 2.1 .6 100.0
$10,000 to $10,999______ 12.6 979 2.5 17.1 17.2 16.9 16.6 11.2 10.4 4.5 2.9 . 7 100.0
$11,000 to $11,999______ 12.1 1,018 1.5 12.5 17.3 15.6 16.9 13.8 13.8 4.6 3.1 .9 100.0
$12,000 to $12,999______ 11.8 1,076 . 4 8.5 15.5 14.5 14.5 13.5 18.8 7.9 4.9 1.5 100.0
$13,000 to $13,999_______ 9.1 1,112 .4 5.0 13.0 15.9 13.9 15.1 22.9 7.3 5.1 1.4 100.0
$14,000 to $14,999_______ 6.6 1,164 .1 3.5 8.8 14.7 15.0 12.3 24.5 11.7 6.9 2.5 100.0
$15,000 to $15,999_______ 5.8 1,221 .3 1.5 7.1 10.6 14.9 13.5 23.3 15.9 10.2 2.7 100.0
$16,000 to $17,999______ 7.0 1,292 .1 . 5 2.8 6 3 10 1 15.5 28.2 16.9 14.8 4.8 100.0
$18,000 to $19,999______ 3.1 1,408 ____ .2 1.6 2.7 6.0 11.2 27.4 20.7 21.4 8.8 100.0
$20,000 or more_________ 2.6 1,603 ____ .5 1.1 1.2 3.7 3.8 19.1 20.4 31.0 19.2 100.0
Total_______________ 100.0 1,035 2.7 12.9 15.7 13.8 12.9 10.9 15.6 7.5 5.9 2.1 100.0
Median property value__ $11,549 $8,679 $9,545 $10,303 $11,148 $11,701 $12,402 $13,298 $14,395 $15,249 $16,472 -
i Less than 0.05 percent.
FEDERAL HOUSING ADMINISTRATION
median values of new homes were lower than for existing homes of comparable size, but for the structures with 1,200 or more square feet the situation was reversed, with new-home values exceeding those for existing dwellings in the same area ranges. This reflects the significant proportions of existing properties with calculated areas of 1,200 or more square feet valued at less than $10,000, probably because of higher rates of depreciation.
The data in Table 72 indicate that the ranges of reported areas for new homes increased with increases in property value, and that in comparable value groups below $18,000 the existing home variation was somewhat greater than for new homes.
The room count for the 1-family properties securing Section 203 mortgages insured in 1954 is shown in the upper part of Tables 73 (new homes) and 74 (existing homes) by property value groups for the nation as a whole. For new homes, 5-room structures predominated in all value groups except those of less than $8,000 where 3- and 4-room houses were most numerous; and those valued at $18,000 or more, where 6-room structures were almost as numerous. Significant proportions of structures with 7 or more rooms were in the properties valued at $18,000 or more. The comparatively large portion of 3- and 4-room houses shown for properties valued at $20,000 or more were for the most part properties located in Alaska.
In existing-home transactions, structures of all sizes were reported in all value groups and the room-count distributions were consequently more dispersed than for new homes. Four-room structures predominated in the properties valued at less than $9,000, 5-room structures in the $9,000 to $14,999 range, and 6-room houses in the properties valued at $15,000 or more. Significant proportions of the existing-home properties with values at $12,000 or more had 7 or more rooms.
Property value is also affected by the number of bedrooms provided in a structure. The top portions of Tables 75 and 76 indicate that 2-bedroom structures predominated in new homes valued at less than $8,000 and existing properties under $.11,000, and that most of the structures in the higher valued classes provided three bedrooms Four-bedroom dwellings, appearing in virtually all value ranges of new and existing properties, constituted significant proportions of the new homes in the $9,000 class (principally in California) and those valued at $20,000 or more, and of the existing homes with values of $15,000 or more.
Size of House
Number of Rooms and Bedrooms.—Well over half of the new 1-family homes in Section 203 transactions insured during 1954 had 5 rooms compared with 39 percent of the existing properties. The proportion of 4-room structures was nearly identical in both new and
215
HOUSING AND HOME FINANCE AGENCY
existing transactions—24 percent—but houses with 6 or more rooms were relatively more numerous in the existing properties.
Typical room counts exhibited little change from 1953 to 1954— the new home median inching up from 5.3 to 5.4 rooms while the typical existing home remained at 5.6 rooms. On the other hand, there were pronounced upward shifts in the room count distributions— more so in the new than in the existing. The proportion of new homes with four rooms or less dropped from over a third to about one-fourth, while the proportion with 5 rooms rose from 48 percent to 57 percent, and the proportion with 6 or more rooms rose from 14 percent to 18 percent. Existing properties with 4 rooms or less declined from 28 percent to 25 percent, with virtually no change in the 5-room proportion; those with 6 rooms or more increased slightly to 36 percent.
More bedrooms were available in FHA homes of 1954 than in the previous year—the new-home median number increasing from 3.1 to 3.3 and the corresponding existing-home figure from 3.0 to 3.1 bedrooms. Nearly two-thirds of the new homes had 3 bedrooms, compared with just over one-half in 1953 and about 6 percent had 4 or more bedrooms—more than double the 1953 proportion. Offsetting these increases was the decline in the proportion of new 2-bedroom structures from 44 percent to 29 percent. In existing properties, the proportion of 3-bedroom houses increased slightly to 47 percent and that of four or more bedroom houses to about 8 percent, while 2-bedroom structures declined from 49 percent to 46 percent.
The room count distributions within the individual States and Territories for transactions insured under Section 203 in 1954 are shown in Tables 73 and 74 (lower portions). In the majority of the States and Territories most of the new homes were five-room structures. New houses with 4 rooms or less were predominant in only 9 States. The largest proportions of new six-room structures occurred in Alabama, Maryland, New Mexico, New York, and Pennsylvania. Existing homes were more evenly distributed by room count in most of the States. Although 5-room structures accounted for the largest share of the existing homes in most States and Territories, the proportions of structures with 6 rooms and 7 rooms or more were appreciably larger than for new homes.
Tables 75 and 76 indicate that 3-bedroom structures predominated in FHA new-home transactions insured in 1954 in 3 of every 4 States and constituted significant proportions of the total in those States in: which 2-bedroom houses were most frequent. Higher than average* proportions of four or more bedroom structures are evident in California, Kansas, New Mexico, South Carolina, and Puerto Rico.
Existing-home transactions in most States, as contrasted with new-home transactions involved materially more 2-bedroom and 4-or-more* bedroom structures. Nevertheless, three-bedroom houses were the
216
FEDERAL HOUSING ADMINISTRATION
TABLE 73
Number of rooms by property value and by States, new 1-family homes, Sec. 203, 1954
FHA estimate of property value Percentage distribution Average number of rooms Median number of rooms Number of rooms—Percentage distribution
3-4 5 6 7-9 Total
Less than $7,000... - 0.6 4.3 4.6 80.6 11. 9 7. 5 100 0
$7,000 to $7,999 6.0 4. 2 4. 6 80. 8 18 9 . 3 100 0
$8,000 to $8,999 18.8 4. 8 5 4 21 5 76 1 2 4 (1) 100 0
$9,000 to $9,999 15. 7 5.1 5. 5 24. 8 45 9 26 8 2 5 100 0
$10,000 to $10,999 12.4 4. 8 5 3 31 3 54 0 14 4 3 100 0
$11,000 to $11,999 12. 8 4 9 5 4 24 5 58 5 16 8 .2 100 0
$12,000 to $12,999 10.1 5.0 5 5 18 7 62 1 18 6 6 100 0
$13,000 to $13,999 7.8 5.1 5 5 15 8 62 8 20 6 8 100 0
$14,000 to $14,999 5. 5 5. 2 5 6 10 3 64 9 23 5 1 3 100 0
$15,000 to $15,999 3. 8 5 2 5 7 8 2 62 8 27 1 1 9 100 0
$16,000 to $17,999 3.8 5.4 5.9 5. 5 50.1 40 6 3 8 100 0
$18,000 to $19,999 1. 4 5 5 5 9 5 7 45 5 40 4 8 4 100 0
$20,000 or more 1.3 5.5 5.9 11.1 39.1 38.4 11.4 10(10
Total 100.0 4.9 5.4 24.7 57.1 17.1 i.r 100.0
By States
Alabama 1.0 5. 5 6 2 7 5 32 6 55 2 4 7 100 0
Arizona 2.4 5 0 5 5 19 8 61 1 19 0 11 100 0
Arkansas . . 8 4. 8 5 3 34 8 54 6 10 1 5 100 0
California 20.3 5 1 5 6 9 6 70 9 17 6 1 9 100 0
Colorado. _ __ . 9 4 9 5 4 29 3 57 4 12 2 1 1 100 0
Connecticut _ . 8 4 9 5 4 28 2 59 1 11 8 9 100 0
Delaware.. . . . 1 4 6 5 1 43.6 51.3 5A 100 0
District of Columbia (1) (2) (2) (2)
Florida _ 4. 7 4 9 5 4 31 9 51 4 14 9 1 8 100 0
Georgia . 1. 2 5 0 5 5 28 3 48 0 22 0 1 7 100 0
Idaho__ . .3 4. 5 4 9 57 6 37 4 4 0 1 0 100 0
Illinois .. __ 3.3 4. 6 5. 2 40 4 54 9 4 7 100 0
Indiana 3.0 4.8 5.4 23.3 71.4 4.7 .6 100.0
Iowa . _ . 1 1 4 5 4 9 56 6 33 9 9 2 3 ioo 0
Kansas. _ 1 6 5 0 5 5 26 3 44 5 28 8 A JOO 0
Kentucky.. 4 4 6 4 9 55 2 31 2 12 0 1 6 100 0
Louisiana 1. 5 4 7 5 3 34 7 56 9 8 2 2 ion 0
Maine.. . 2 4 4 4 7 67 1 21 9 9 6 1 4 ion 0
Maryland 1.4 5.2 5.9 23.8 28^7 46.8 .7 100.0
Massachusetts . 4 4. 8 5. 4 26 2 67 5 6 3 inn n
Michigan . ... 8 1 4 8 5 3 26 9 68 8 4 0 3 ion 0
Minnesota.._ ..... 7 4 7 5 3 36 0 55 8 7 2 1 0 100 0
Mississippi 6 5 1 5 5 17 8 59 5 18 9 3 8 ion 0
Missouri^ 2.2 5.0 5.5 17.8 66^8 15.2 .2 100.0
Montana _ . 3 4. 6 5 1 47 4 47 4 5 2 inn n
Nebraska... . 9 4 3 4 7 68 1 28 4 3 1 4 100 0
Nevada _ . 1 6 4 6 5 2 39 4 58 1 2 1 4 100 0
New Hampshire . 1 4.4 4. 7 71 8 17 9 10 3 inn n
New Jersey. .. 2. 6 4 8 5 2 39 1 45 1 14 5 1 3 100 0
New Mexico . 7 5 5 6 2 9 4 28 0 61 2 1 4 100 0
New York 4 0 5 2 5 8 23 5 32 4 42 1 2 0 100 0
North Carolina... _ 1 9 4 9 5 4 22 1 63 3 13 3 1 3 100 0
North Dakota . 1 4 5 4 8 59 5 35 7 4 8 100 0
Ohio. ... . 5 4 4 9 5 4 28 7 57 7 13 3 3 100 0
Oklahoma 1. 5 4 9 5 4 29 7 51 7 17 4 1 2 100 0
Oregon. . _ _ _ 1 2 4 9 5 4 26 1 58 4 14 9 inn n
Pennsylvania.. .... _ 4 1 5 2 5 7 20 4 3Q 4 39 4 g inn n
Rhode Island. 3 5 1 5 5 27 6 43 4 25 0 4 0 1UU. u inn n
South Carolina _ . 5 5 2 5 7 116 53 6 33 5 1 3 LUU. u 100 0
South Dakota ... 6 4 6 5 1 42 8 50 6 0 0 g inn n
Tennessee 2 0 5 1 5 6 12 0 63 1 23 5 1 4 LUU. u 100 0
Texas 6.9 5.0 5.5 24.3 55.8 18.2 1.7 100.0
Utah. . ... 9 4 8 5 2 40 8 44 0 14 4 Q inn n
Vermont. . 1 4. 5 5 0 50 0 45 5 4 5 LUU. u 100 0
Virginia... 2.0 4 9 5 4 21 8 68 2 in 0 100 0
Washington 1.4 4.9 5.4 35.8 39^8 22.7 1.7 100.0
West Virginia.. _ . 2 4 9 5 4 25 8 59 1 13 6 1 5 inn a
Wisconsin .5 4.6 5.1 46.6 43.8 8.2 1.4 LUU. u 100.0
Wyoming _ .2 4.4 4 8 66 7 31 4 1 9 inn n
Alaska. . . . 6 5.0 5 5 26 9 46 8 2 -5 7 0 inn n
Hawaii 1.9 4. 7 5. 3 31 4 65 1 3 5 LUU. u 100 0
Puerto Rico .5 5.5 5.7 .7 66.4 23.0 9.9 100.0
1 Less than 0.05 percent. 2 Inadequate sample.
217
HOUSING AND HOME FINANCE AGENCY
TABLE 74
Number of rooms by property value and by States, existing 1-family homes, Sec. 203, 1954
FHA estimate of property value Percentage distribution Average number of rooms Median number of rooms Number of rooms—Percentage distribution
3-4 5 6 7-9 Total
Less than $7,000 2.6 4.7 5.1 46.1 38.8 10.5 4.6 100.0
$7,000 to $7,999 5.5 4.6 4.9 54.5 30.6 11.3 3.6 100.0
$8,000 to $8,999 10.1 4.8 5.1 44.8 36.6 14.1 4.5 100.0
$9,000 to $9,999 11.1 4.9 5.4 35.8 39.1 20.2 4.9 100.0
$10,000 to $10,999 12.6 5.1 5.5 29.2 41.6 22.9 6.3 100.0
$11,000 to $11,999 12.1 5.1 5.6 25.6 43.6 24.0 6.8 100.0
$12,000 to $12,999 11.8 5.3 5.7 19.2 42.1 29.3 9.4 100.0
$13,000 to $13,999 9.1 5.4 5.8 15.1 44.1 32.6 8.2 100.0
$14,000 to $14,999 6.6 5.5 5.9 11.7 42.5 34.9 10.9 100.0
$15,000 to $15,999 5.8 5.6 6.1 7.3 39.4 41.2 12.1 100.0
$16,000 to $17,999 7.0 5.8 6.3 5.0 32.0 45.2 17.8 100.0
$18,000 to $19,999 3.1 6.0 6.5 3.8 23.6 47.6 25.0 100.0
$20,000 or more 2.6 6.3 6.7 4.1 17.1 . 40.7 38.1 100.0
Total 100.0 5.2 5.6 24.9 38.7 27.2 9.2 100.0
By States
Alabama 1.0 5.6 6.2 10.0 32.2 44.8 13.0 100.0
Arizona .8 5.1 5.6 25.2 42.2 26.4 6.2 100.0
Arkansas .9 5.2 5.7 20.4 45.0 25.7 8.9 100.0
California 12.2 5.1 5.6 21.7 49.9 23.5 4.9 100.0
Colorado.. .6 4.8 5.3 37.3 48.7 10.8 3.2 100.0
Connecticut 2.6 5.4 5.9 24.1 30.1 33.8 12.0 100.0
Delaware .3 5.4 5.8 4.1 57.1 30.6 8.2 100.0
District of Columbia .1 6.2 6.6 21.8 47.8 30.4 100.0
Florida 1.1 5.3 5.9 19.7 34.9 37.8 7.6 100.0
Georgia . 2.0 5.5 6.0 10.0 38.5 41.3 10.2 100.0
Idaho 1.1 4.7 5.0 50.0 35.0 12.4 2.6 100.0
Illinois .. 4.3 5.1 5.5 28.5 42.0 21.6 7.9 100.0
Indiana 3.6 5.0 5.4 33.4 41.9 19.2 5.5 100.0
Iowa 1.4 4.9 5.2 43.3 31.3 15.5 9.9 100.0
Kansas 2.1 5.2 5.6 22.1 43.0 26.3 8.6 100.0
Kentucky 1.2 5.2 5.6 24.9 42.7 21.9 10.5 100.0
Louisiana _ 1.5 5.1 5.6 23.5 45.5 25.3 5.7 100.0
Maine.. .8 5.5 5.9 26.8 23.8 31.1 18.3 100.0
Maryland .9 5.2 5.7 27.0 34.1 31.1 7.8 100.0
Massachusetts .8 5.6 5.9 21.7 30.3 26.0 22.0 100.0
Michigan. ... 6.2 5.3 5.7 23.9 37.5 28.0 10.6 100.0
Minnesota 1.5 5.3 5.6 19.2 49.0 21.6 10.2 100.0
Mississippi .4 5.4 5.8 14.2 46.0 28.3 11.5 100.0
Missouri." 4.1 5.4 5.8 15.2 45.0 27.4 12.4 100.0
Montana .8 5.0 5.3 37.8 35.5 18.7 8.0 100.0
Nebraska . __ 1.2 5.0 5.3 40.5 33.8 14.8 10.9 100.0
Nevada .4 5.0 5.4 30.9 43.9 20.9 4.3 100.0
New Hampshire .. .1 5.9 6.1 12.5 34.4 31.2 21.9 100.0
New Jersey . 2.7 5.6 6.1 21.7 24.5 34.8 19.0 100.0
New Mexico .. .2 5.7 6.3 9.9 25.3 52.1 12.7 100.0
New York 5.7 5.4 5.9 28.6 24.3 32.5 14.6 100.0
North Carolina 1.0 5.5 5.9 11.4 43.1 35.0 10.5 100.0
North Dakota .3 5.0 5.4 32.7 41.6 14.8 10.9 100.0
Ohio 7.2 5.2 5.7 29.4 30.0 32.4 8.2 100.0
Oklahoma 1.6 5.1 5.5 27.5 45.3 20.8 6.4 100.0
Oregon .. 2.0 5.1 5.6 29.3 37.6 25.1 8.0 100.0
Pennsylvania 3.0 5.7 6.3 11.9 24.7 51.9 11.5 100.0
Rhode Island. .6 5.5 5.8 22.5 35.3 22.5 19.7 100.0
South Carolina .7 5.5 6.1 10.7 33.7 46.3 9.3 100.0
South Dakota .6 5.2 5.5 33.3 31.6 20.5 14.6 100.0
Tennessee 1.4 5.3 5.7 19.4 41.4 31.9 7.3 100.0
Texas 5.4 5.0 5.5 28.2 47.9 21.3 2.6 100.0
Utah 1.1 4.8 5.2 44.6 34.7 15.3 5.4 100.0
Vermont. .2 5.6 5.8 17.9 41.0 17.9 23.2 100.0
Virginia 2.8 5.4 5.8 12.8 46.1 31.8 9.3 100.0
Washington 6.4 5.2 5.6 29.6 33.4 25.1 11.9 100.0
West Virginia .8 5.6 5.9 13.8 36.4 30.5 19.3 100.0
Wisconsin .9 4.9 5.2 43.4 30. 7 19.7 6.2 100.0
Wyoming .2 4.7 4.9 55.7 25.7 14.3 4.3 100. 0
Alaska _ .2 4.7 4.9 54.4 31.6 5.2 8.8 100.0
Hawaii .5 5.0 5.5 21.7 61.5 11.9 4.9 100.0
Puerto Rico u .5 5.2 5.6 .6 88.4 5.8 5.2 100.0
218
FEDERAL HOUSING ADMINISTRATION
TABLE 75
Number of bedrooms by property value and by States, new 1-family homes, Sec. 203,1954
FHA estimate of property value Percentage distribution Average number of bedrooms Median number of bedrooms Number of bedrooms—Percentage distribution
1-2 3 4 or more Total
Less than $7,000 0.5 2.1 2.6 85.2 14.8 100.0
$7,000 to $7,999 5. 9 2 1 2 6 82 8 17 1 0 1 100 0
$8,000 to $8,999 18.8 2 7 3 4 21 7 77 9 0 4 100 0
$9,000 to $9,999 15. 7 2. 9 3 5 27 9 46 7 25 4 100 0
$10,000 to $10,999 12.3 2.6 3 2 36 0 61 0 3 0 100 0
$11,000 to $11,999 12. 7 2. 6 3. 3 32 0 65 2 2 8 100 0
$12,000 to $12,999 10.2 2. 7 3 3 25 7 72 7 1 6 100 0
$13,000 to $13,999 7.9 2. 8 3 4 22 7 75 7 1 6 100 0
$14,000 to $14,999 5.6 2.8 3.4 18 5 80 1 14 100 0
$15,000 to $15,999 3. 9 2.8 3 4 16 9 80 2 2 9 100 0
$16,000 to $17,999 3.9 2. 9 3. 4 12 4 84 3 3 3 100 0
$18,000 to $19,999 1.4 2. 9 3 5 11 3 80 9 7 8 100 0
$20,000 or more 1.2 2.5 3.3 25.4 64.3 10.3 100.0
Total 100.0 2.7 3.3 29.4 65.0 5.6 100.0
By States
Alabama 1.0 2 8 3 3 26 2 73 4 0 4
Arizona 2.4 2 8 3 4 21 3 72 9 5 8
Arkansas _ .8 2 5 3 1 47 1 52 0 q
California 20 3 3 0 3 5 11 9 75 3 12 8
Colorado .9 2 7 3 2 36 1 62, 7 1 2
Connecticut .8 2 7 3 3 31 0 64 4 4.6
Delaware .1 2.6 3 1 43.6 5<4
District of Columbia _ (1) (2) (2)
Florida 4 7 2 8 3 3 27 2 65 9 6 9
Georgia 1. 2 2 6 3 2 37 0 62 4 6
Idaho. . 3 2 3 2 4 73 7 25 3 1 0
Illinois 3 3 2 6 3 1 46 0 52 6 1 4
Indiana 3.0 2 8 2 4 20 7 77 1 2 2
Iowa 1 1 2 5 2 9 58 7 32 7 8 6
Kansas _ 1. 6 2 9 3 4 31 3 51 5 17 2
Kentuckv . 4 2.4 2 7 59 2 38 4 2 4
Louisiana 1. 5 2 6 3 1 42 0 57 1 9
Maine .2 2 3 2 4 73 6 20 8 5* 6
Maryland 1.4 2 6 3 2 41 0 58 5 5
Massachusetts .4 2.7 3 2 34 9 62 7 2 4
Michigan 8 1 2 6 3 3 31 1 68 2 7
Minnesota . 7 2 5 3 1 45* 2 53 8 1 0
Mississippi .6 2 8 3 3 26 0 69 7 4 3
Missouri 2. 2 2 5 3 1 47 1 52 8 1
Montana . .3 2.4 2.7 59 4 40 6
Nebraska .9 2.3 2 4 70 8 28 1 1 1
Nevada 1.6 2. 6 3 2 40 7 58 6 ’ 7
New Hampshire... ... . 1 2. 2 2 3 79 5 17 9 2 6
New Jersey 2.6 2 6 3 2 40 8 58 8 4
New Mexico .7 3 2 3 7 11 7 53 3 35 0
New York 4.0 2. 7 3 3 31 5 66 2 2~ 3
North Carolina 1.9 2.7 3 2 34 7 63 5 1.8
North Dakota... .1 2.3 2. 5 66. 7 33 3
Ohio 5.4 2.7 3 3 34 4 60 9 4 7
Oklahoma 1. 5 2. 6 3 2 35 8 64 0 ^2
Oregon 1.2 2.8 3 3 30 6 63 5 5 9
Pennsylvania 4.1 2.8 3.3 28. 7 67 4 3 9
Rhode Island .3 2.7 3.2 39 5 56 6 3 9
South Carolina . .5 2.9 3. 4 20 7 69 0 10 3
South Dakota .6 2. 5 2 9 52 4 46 4 1 2
Tennessee 2.0 2.8 3 4 18 7 79 7 1 6
Texas 6.9 2.8 3. 3 30 1 61 5 8 4
Utah .9 2. 6 3 0 50 8 41 6 7 6
Vermont .1 1. 5 3. 5 9 1 81 8 9 1
Virginia 2.0 2. 7 3 3 27 4 71 8 8
Washington 1.4 2.6 3.1 47.0 51 0 2 0
West Virgin!^. . .2 2.7 3.3 33.3 65 2 1 5
Wisconsin .5 2.6 3 1 47 3 50 7 2 0
Wyoming.. .2 2.3 2.5 68.0 32 0
Alaska.. . .6 2.4 2 8 56 8 42 3 9
Hawaii 1.9 2.7 3.3 32 9 66 0 1’ 1
Puerto Rico .5 3.1 3.6 2.1 85.6 12.3
1 Less than 0.05 percent. 3 Inadequate sample.
100.0
100.0
100.0
100.0
100.0
100.0
100.0
(2)
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
219
HOUSING AND HOME FINANCE AGENCY
TABLE 76
Number of bedrooms by property value and by States existing 1-family homes, Sec. 203, 1954
FHA estimate of property value Percentage distribution Average number of bedrooms Median number of bedrooms Number of bedrooms—Percentage distribution
1-2 3 4 or more Total
Less than $7,000 -- 2.6 2.3 2.7 65.8 30.5 3.7 100.0
$7,000 to $7,999 . 5.6 2.2 2.6 80.5 15.4 4.1 100.0
$8,000 to $8,999 9.9 2.3 2.7 70.9 25.0 4.1 100.0
$9,000 to $9,999 11.1 2.4 2.8 61.6 33.7 4.7 100.0
$10,000 to $16,999 12.5 2.5 2.9 52.6 41.5 5.9 100.0
$11,000 to $11,999 12.0 2.6 3.1 47.4 46.7 5.9 100.0
$12,000 to $12,999 - 11.8 2.7 3.2 38.8 53.7 7.5 100.0
$13,000 to $13;999 9.1 2.7 3.3 35.4 57.0 7.6 100.0
$14,000 to $14,999 6.7 2.8 3.3 30.3 60.9 8.8 100.0
$15^000 to $15,999 5.9 2.9 3.4 26.4 63.8 9.8 100.0
$16^000 to $17/199 7.1 3.0 3.4 19.5 68.5 12.0 100.0
$18,000 to $19,999 3.1 3.1 3.5 13.3 68.6 18.1 100.0
$20,000 or more 2.6 3.3 3.6 11.4 62.4 26.2 100.0
Total 100.0 2.6 3.1 45.8 46.7 7.5 100.0
By States
Alabama 1.0 2.6 3.2 41.5 53.8 4.7 100.0
Arizona. .8 2.7 3.2 39.8 52.7 7.5 100.0
Arkansas. .9 2.5 2.8 55.8 39.4 4.8 100.0
California 12.4 2.6 3.1 42.6 53.9 3.5 100.0
Colorado - .6 2.5 2.9 53.5 44.3 2.2 100.0
Connecticut 2.6 2.9 3.3 34.9 46.2 18.9 100.0
Delaware .3 2.9 3.4 21.7 68.0 10.3 100.0
District of Columbia .1 2.9 3.4 21.7 69.6 8.7 100.0
Florida .. . 1.1 2.6 3.2 38.3 59.8 1.9 100.0
Georgia. - 2.1 2.6 3.2 41.5 55.5 3.0 100.0
Idaho . _ 1.1 2.4 2.5 67.1 27.3 5.6 100.0
Illinois 4.4 2.5 2.9 52.4 40.7 6.9 100.0
Indiana 3.3 2.6 3.1 44.8 49.8 5.4 100.0
Iowa .6 3.1 3.6 4.1 75.9 20.0 100.0
Kansas 2.2 2.5 2.8 55.4 38.2 6.4 100.0
Kentucky 1.2 2.5 2.7 57.4 35.1 7.5 100.0
Louisiana. 1.5 2.5 3.0 48.6 48.6 2.8 100.0
Maine .8 2.9 3.3 36.8 44.0 19.2 100.0
Maryland _ 1.0 2.7 3.1 44.3 45.7 10.0 100.0
Massachusetts - _________ .8 2.9 3.3 36.0 44.6 19.4 100.0
Michigan _ _______________ 6.2 2.7 3.2 37.8 54.1 8.1 100.0
Minnesota 1.5 2.7 3.2 37.2 55.0 7.8 100.0
Mississippi .4 2.7 3.2 37.2 59.3 3.5 100.0
Missouri 4.1 2.5 2.8 55.9 35.6 8.5 100.0
Montana .9 2.6 2.9 53.4 36.7 9.9 100.0
Nebraska 1.3 2.5 2.7 58.9 32.2 8.9 100.0
Nevada. _ .5 2.6 3.2 41.3 55.1 3.6 100.0
New Hampshire .1 3.1 3.5 21.9 56.2 21.9 100.0
New Jersey 2.7 2.8 3.2 39.3 46.5 14.2 100.0
New Mexico .2 2.8 3.4 24.0 73.2 2.8 100.0
New York _ ______________ 5.7 2.7 3.2 39.9 47.3 12.8 100.0
North Carolina 1.0 2.7 3.3 32.8 61.6 5.6 100.0
North Dakota. .3 2.6 3.0 48.5 42.6 8.9 100.0
Ohio 7.3 2.6 3.1 45.9 48.1 6.0 100.0
Oklahoma 1.6 2.4 2.7 60.5 37.3 2.2 100.0
Oregon . . 2.1 2.6 2.9 51.4 40.3 8.3 100.0
Pennsylvania 3.0 2.9 3.4 25.4 65.1 9.5 100.0
Il ho de Island______________ .4 3.3 3.7 5.3 67.3 27.4 100.0
South Carolina .7 2.7 3.2 35.8 61.3 2.9 100.0
South Dakota .6 2.7 3.0 49.7 35.7 14.6 100.0
Tennessee 1.4 2.5 2.9 52.7 42.7 4.6 100.0
Texas . 5.5 2.3 2.4 69.1 29.8 1.1 100.0
Utah 1.2 2.4 2.6 63.7 29.8 6.5 100.0
Vermont .1 3.2 3.6 14.0 65.1 20.9 100.0
Virginia _ 2.8 2.6 3.1 44.2 49.3 6,5 ■ 100.0
Washington 6.5 2.6 2.9 50.5 37.5 12.0 100.0
West Virginia. .8 2.7 3.2 41.0 44.8 14.2 100.0
Wisconsin .9 2.5 2.8 56.2 39.1 4.7 100.0
Wyoming .2 2.4 2.5 68.1 24.6 7.3 100.0
Alaska .2 2.4 2.4 71.9 19.3 8.8 100.0
Hawaii .5 2.7 3.3 25.9 72.7 1.4 100.0
Puerto Rico .5 3.0 3.5 2.0 93.5 4.5 100.0
220
FEDERAL HOUSING ADMINISTRATION
most numerous in nearly three-fifths of the States. Existing homes with 4 or more bedrooms represented at least one-tenth of the total in 14 States.
Calculated Area Distribution.—FHA single-family homes in the Section 203 transactions insured during 1954 were typically larger than in any previous years since 1948 when the calculated area data first became available (Table 77). The median area for new homes was 961 square feet—7 percent less than the existing-home median of 1,035 square feet.
TABLE 77
Calculated area of single-family homes, Sec. 203, selected years
Percentage distributions
Calculated area (square feet) New homes Existing homes
1954 1953 1952 1950 1948 1954 1953 1952 1950 1948
Less than 600 (i) 0.1 0.1 0. 5 0 9 0. 2 0. 2 0.3 0. 5 0.9
600 to 699 2.4 2.7 2.9 7.6 4.6 2.5 3.0 3.3 3.3 4.7
700 to 799 11.5 19.5 18.7 30.6 20.6 12.9 13.7 14.6 14.4 16.3
800 to 899 20.5 22.1 23.7 25.4 22 0 15.7 17. 5 18.0 16. 5 18. 5
900 to 999 23.1 20.6 16.4 13.0 16. 2 13. 8 13.9 14.8 14.1 13.3
1,000 to 1,099 18.0 15.4 15. 5 9. 9 11.2 12 9 13 5 13. 2 11.7 10.9
1,100 to 1,199 11.8 10.2 10.8 5.3 8. 7 10. 9 10.8 10. 3 9.3 8.0
1,200 to 1,299 6.9 4.5 4.9 3.2 6.4 8.8 8.4 7.7 7.6 6.8
1,300 to 1,399 2.6 2.3 3.5 2.0 3.4 6.8 5. 9 5.6 5.8 5.1
1,400 to 1,499 1.6 1.4 1.7 .9 2. 2 4. 3 3 9 3.6 4. 3 3. 7
L500 to L599 .7 .5 . 9 .6 1. 5 3. 2 2.6 2. 5 3. 2 2.9
1,600 to 1,799 .6 . 4 .6 • .6 1.4 3 9 3 3 3.1 4. 2 3. 7
1,800 to 1,999 .2 .2 .2 .2 .4 2 0 1 6 1. 5 2. 2 2.2
2,000 or more .1 .1 .1 .2 .5 2.1 1.7 1.5 2.9 3.0
Total 100.0 100.0 100.0 100.0 100.0 100 0 100 0 100 0 100 0 100.0
Average 990 953 968 894 972 1 104 1 075 1 060 1 100 1,075
Median 961 924 923 838 912 1,035 1,008 992 1,006 972
1 Less than 0.05 percent.
As is evident in Chart 36 and Table 77, the calculated area distribution of existing homes was more widely dispersed than was that for new homes. Nearly two-thirds of the new houses were concentrated in a range of 800 to 1,099 square feet, compared with only 42 percent of the existing houses. However, another 42 percent of the existing homes had areas of 1,100 square feet or more, including 11 percent with 1,500 square feet or more. New homes in the 1,100 or more square foot range represented a somewhat smaller proportion— slightly less than one-fourth—most of which were in the 1,100 to 1,299 square-foot range. In the smaller area ranges of less than 800 square feet, the existing home proportion was comparatively greater— 16 percent, against 14 percent of the new homes. Compared with 1953, the principal changes in the calculated area distributions were declines in the proportion of new houses of less than 900 square feet and of existing houses of less than 1,100 square feet, and increases in
221
HOUSING AND HOME FINANCE AGENCY
CALCULATED AREA IN SQUARE FEET
SINGLE-FAMILY HOME MORTGAGES, SECTION 203, 1954
PERCENT
301.......................................................
25 LI NEW HOMES ______
■ M existing HOMES
20--------------r~i— -------------------------------------
15--------------■- ---------------------------------------
1
'o---------ri-'B- 1- B-Fta--------------------■—b—
■ f 'I I J I i
ol ftii I a I B r ■ ? ■ ■ I ffi l il J
699 700 800 900 1,000 1,100 1,200 1,300 1,500
OR TO TO TO TO TO TO TO OR
LESS 799 899 999 1,099 1,199 1,299 1,499 MORE
CALCULATED AREA IN SQUARE FEET
CHART 36
the relative number of new homes in the 900 to 1,799-square-foot-area groups and all ranges of existing homes above 1,100 square feet.
Some indication of the geographical variation in calculated area of FHA single-family homes involved in Section 203 transactions insured in 1954 is provided by the data in Tables 68 and 69 (6th column). Average areas of new structures ranged from 831 square feet in New Hampshire to 1,133 square feet in Arizona. In most States and Territories, new-home sizes averaged from 900 to 1,099 square feet; from 800 to 899 square feet in 9 States and Alaska, and from 1,100 to 1,199 square feet in 3 States.
Existing-home calculated areas averaged larger than those of new homes in all States and Territories but 4, and by more than 100 feet in most areas. The largest average area (1,284 square feet) was recorded in West Virginia, the smallest (889 square feet) in Puerto Rico. Existing homes in the greater number of the States averaged from 1,000 to 1,199 square feet; in 7 States and the District of Columbia from 1,200 to 1,299 square feet; and from 800 to 999 square feet in Wyoming, Alaska, and Puerto Rico.
The close relationship between calculated area and the number of rooms in a structure is demonstrated by the data in Table 78, showing room count distributions by calculated area for the FHA single-family homes covered by Section 203 transactions insured in 1954. Generally
222
FEDERAL HOUSING ADMINISTRATION
speaking, 4-room dwellings were predominant in the area ranges below 800 square feet; 5-rooms in the new home ranges of 800 to 1,199 square feet and existing homes of 900 to 1,199 square feet; 6 rooms in new homes of 1,200 to 1,999 square feet and existing homes of 1,200 to 1,599 square feet; and 7 or more rooms in new homes of 2,000 or more square feet and existing homes of 1,600 or more square feet.
TABLE 78
Number of rooms by calculated area of single-family homes, Sec. 203, 1954
Calculated area (square feet) Percentage distribution Average number of rooms Median number of rooms Number of rooms—Percentage distributions
3 4 5 6 7-9 Total
New homes
Less than 700 2.4 4.1 4.5 1.8 93.0 3.6 1.6 100.0
700 to 799 11.5 4.1 4.6 .3 86.6 12.5 .5 0.1 100.0
800 to 899 20.5 4.6 5.2 .2 38.3 60.3 1.1 . 1 100.0
900 to 999 23.1 5.0 5.5 .1 11.8 81.0 7.0 . 1 100.0
1,000 to 1,099 18.0 5.2 5.6 . 1 4.9 73.6 21.2 . 2 100.0
1,100 to 1,199 11.8 5.4 5.9 (') 2.7 51.9 43.5 1.9 100.0
1,200 to 1,399 1,400 to 1,599 9.5 5.5 6.1 . 1 3.1 43.7 49.2 3.9 100.0
2.3 5.6 6.2 .4 2.0 38.8 51.4 7.4 100.0
1,600 to 1,999 .8 6.0 6.5 1.3 3.0 21.0 46.4 28.3 100.0
2,000 or more . 1 6.5 7.5 — 18.7 21.9 59.4 100.0
Total 100.0 4.9 5.4 .2 24.3 57.2 17.1 1.2 100.0
Existing homes
Less than 700 2.7 4.2 4.6 4.8 76.9 14.6 3.6 0.1 100.0
700 to 799 12.9 4.3 4.7 .5 73.4 21.6 4.3 .2 100.0
800 to 899 15.7 4.6 5.1 .4 46. 2 46.0 6.3 1.1 100.0
•900 to 999 13.8 4.9 5.4 .2 24.1 62.0 12.4 1.3 100.0
1,000 to 1,099 1,100 to 1,199 12.9 5.2 5.6 .3 10.6 63.4 23.3 2.4 100.0
10.9 5.5 5.9 .2 4.5 47.5 43.8 4.0 100.0
1,200 to 1,399 15.6 5.8 6.3 . 1 1.9 30.9 58.1 9.0 100.0
1,400 to 1,599 7.5 6.1 6.6 .2 1.2 15.2 58.7 24.7 100.0
1,600 to 1,999 5.9 6.6 7.2 . 2 1.0 6.9 39.2 52.7 100.0
2,000 or more 2.1 7.3 8. 2 2.0 1.4 2.3 12.8 81.5 100.0
Total. 100.0 5.2 5.6 .4 24.4 38.8 27.2 9.2 100.0
1 Less than 0.05 percent.
Characteristics by Calculated Area.—Selected characteristics of FHA home transactions insured in 1954 are summarized by calculated floor area groups in Table 79. For example, new homes in the 1,100-1,199-square foot group had an average area of 1,146 square feet, providing about 5% rooms, including 3 bedrooms, and in 85 percent of the cases these homes included garage facilities. The average FHA appraised value was $12,000, prospective monthly housing expense $99 (covering debt service, property taxes, insurance costs, and maintenance and operating expense), and the estimated monthly rental value nearly $97. For the overwhelming majority of the cases which were purchase transactions, as contrasted with those where homes were built for owners on a contract basis, the average total requirements (sale price plus
223
HOUSING AND HOME FINANCE AGENCY
TABLE 79
Property characteristics by calculated area of single-family homes, Sec. 203, 1954
Calculated area (square feet) Percentage distribution Average
Calculated area (square feet) FHA value Total requirements 1 Housing expense Rental value Number of rooms Number of of bedrooms Percent age of structures with garage
New homes
Less than 700 2.4 668 $8, 085 $8, 443 $74.05 $65.17 4.1 1.9 31.1
700 to 799 11.5 751 9, 429 9,355 81.44 75.42 4.1 1.9 42.3
800 to 899 20.5 853 Mi 214 10; 228 86. 89 81. 60 4.6 2.5 48.9
900 to 999 23. 1 945 10^ 263 io; 336 87.34 83.15 5.0 2.8 68.5
1,000 to 1,099 18.0 1,046 IL 761 11X31 95. 26 94.73 5.2 2.9 69.6
L100 to 1,199 11.8 L 146 12' 105 12; 320 99.14 96. 96 5.4 3.1 84.7
1,200 to 1,399 9.5 1'269 13,669 14; 214 108. 72 107. 25 5.5 3.0 87.9
1,400 to 1,599 2.3 L473 16' 156 16; 998 125.13 124. 98 5. 6 3.0 91.4
1,600 to 1'999 .8 I 735 18X19 19; 322 137. 74 138. 62 6.0 3.1 89.5
2,000 or more .1 2i 186 is; 759 18; 609 145.97 143. 75 6.5 3.4 81.5
Total 100.0 990 11,120 11,185 92.58 88.99 4.9 2.7 66.6
Existing homes
Less than 700 2.7 659 $8,663 $9,015 $76. 43 $70. 24 4.2 1.9 59.5
700 to 799 12. 9 753 9; 628 10,062 85. 90 77.38 4.3 2.0 60.8
800 to 899 15.7 847 10; 423 10, 805 89.28 83. 03 4.6 2.2 74.1
900 to 999 13.8 947 11, 250 11,850 94. 99 89. 48 4. 9 2.4 75.9
1,000 to 1,099 12.9 1,045 11, 864 12,562 98.73 94. 80 5. 2 2.6 82.0
1,100 to 1,199 10.9 L 146 12; 577 13, 250 103.49 99.31 5.5 2.7 84.2
1,200 to L399 15. 6 1,289 13,383 14, 219 109. 82 105. 69 5.8 2.9 87.9
L400 to L599 7.5 L487 14; 286 15; 291 118. 28 112. 49 6.1 3.1 91.6
1,600 to 1,999 5. 9 1,752 14; 984 15; 969 125. 91 118.13 6.6 3.3 90.6
2j000 or more 2.1 2,376 16; 516 17; 990 140. 46 130. 77 7.3 4.0 91.9
Total 100.0 1,104 11,934 12,578 100. 70 94.98 5.2 2.6 79.6
1 Data reflect purchase transactions only.
costs incidental to closing) was $12,300. Comparable data are presented for new and existing properties in the other area classes.
As would be expected, increases in calculated area of both new and existing properties were accompanied by increases in property value, total requirements, housing expense, rental value, room and bedroom count, and the proportion with garages.
In the calculated area groups below 1,200 square feet property values, total requirements, housing expense, and rental values of new-home properties were lower than for existing homes. The comparatively higher property and rental values and consequently total requirements of the existing homes may have resulted from their location in more highly developed neighborhoods near the hearts of cities. In contrast, most of the new homes with less than 1,200 square feet were probably built in newly developed subdivisions located in outlying areas with fewer commercial and community facilities than are typical of existing home neighborhoods. Geographical location was probably another contributory factor—substantial numbers
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FEDERAL HOUSING ADMINISTRATION
of existing homes being located in communities where construction costs and property values were typically higher. Improvements frequently made to the structures and land of existing properties also tended to raise their values and prices. The larger housing expenses of these existing homes were probably attributable to the generally higher heating and maintenance and repair costs usually experienced in older properties.
Where structural areas were 1,200 square feet or more, the situation was reversed—value, total requirements, and housing expense being usually higher in new homes than in existing properties of corresponding sizes. In view of the area limitations imposed on new-home construction during the war and the early postwar years, it is probable that most of the larger existing homes involved in Section 203 transactions insured in 1954 were built in the years preceding World War II. The greater age of structures and shorter remaining economic life, compared with newly constructed properties of the same size, would tend to offset any advantage the existing properties would have with respect to location. Furthermore, a considerable number of the larger new homes were probably built individually on vacant lots in developed neighborhoods, thus approaching the location advantage of existing properties.
With respect to the average number of rooms per structure, there was little or no difference between new and existing properties having calculated areas of less than 1,200 square feet. The average bedroom count of existing structures, however, was less than for new homes in the area classes under 1,400 square feet, reflecting the tendency in recent years to provide more bedrooms and eliminate separate dining rooms. The statutory mortgage amount advantages provided for new low-value homes of 3 and 4 bedrooms under the legislation in effect prior to August 2, 1954 was probably also an influence in the higher bedroom count of the new homes. Garages were more frequently provided for existing properties with areas of less than 1,100 square feet than for new homes in comparable area classes with no appreciable difference apparent in connection with most of the larger size properties.
Total Transaction Requirements
For most persons contemplating the purchase of a home, the amount of downpayment is a primary consideration. The assets required of FHA home buyers to meet the downpayments and costs incidental to closing are almost invariably more than is evident from a comparison of mortgage amounts and property values. This is because the total requirements of a home purchase transaction, i. e., the sale price plus costs incidental to making the purchase, most frequently exceed the FHA estimate of property value. Moreover, sale prices alone generally are higher than FHA appraised values.
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HOUSING AND HOME FINANCE AGENCY
Amount of Mortgage by Total Requirements.-—Table 80 indicates the relationship between mortgage amount and total requirements for FHA home purchase transactions insured under Section 203 in 1954. Within each total requirements group, most of the mortgages were for amounts at or near the maximum permitted under the applicable legislation for the valuations of the properties as determined by FHA. In transactions involving total requirements of $15,000 or more—both new and existing homes—the mortgage amounts appear to be somewhat more broadly distributed than in the lower requirement groups, probably reflecting greater differences between sale prices and FHA property valuations and the smaller amounts of mortgage financing required by higher income buyers of the more expensive homes, as well as the influence of the higher maximum mortgage amounts allowed on properties in Alaska, Hawaii, and Guam.
It is also apparent that for transactions with requirements of less than $13,000 existing-home mortgage amounts tend to cluster less than those for new homes in comparable requirements classes. Several factors may account for this, including the presence of existing structures originally built under FHA inspection and qualifying for larger mortgage amounts than other existing structures; existing-home mortgages approved under the liberalized provisions of Section 203 after the enactment of the Housing Act of 1954; and, due to varying ages of existing properties and amounts of depreciation, the greater disparity in property values.
Although the median mortgage amount for all existing-home purchase transactions ($9,100) exceeded that for new homes ($8,800), the new home median mortgages were larger than those for existing homes in most corresponding total requirement intervals, the differences being materially greater where total requirements were below $12,000. Higher maximum loan-value ratios for new homes valued at less than $12,000 and the generally higher ratio of value to price for new homes at all price levels appear to have been the chief reasons for the larger new home medians.
Characteristics by Total Requirements.—Averages of selected characteristics of the purchase transactions insured by FHA under Section 203 in 1954, arranged by total requirements, are presented in Table 81. Included are averages of total requirements, sale prices, mortgage amounts, FHA-estimated property values, sizes of houses in square feet, annual effective income of buyers, and amounts of their current investments, i. e., cash required over and above the mortgage amount. The current investment data, however, exclude prepayable expense items, such as unaccrued taxes and insurance premiums.
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FEDERAL HOUSING ADMINISTRATION
227
TABLE 80
Amount of mortgage by total requirements for single-family home purchase transactions, Sec. 203, 1954
Amount of mortgage—Percentage distributions
Percent- Median------------------------------------------—-----—-----------------
. a tJiccuL amount
Total requirements dis- ofmort- Less $5,000 $6,000 $7,000 $8,000 $9,000 $10,000 $11,000 $12,000 $13,000 $14,000 $16,000
rrinuiion gage than t0 t0 t0 £0 t0 t0 t0 t0 t0 or Total
$5,000 $5,999 $6,999 $7,999 $8,999 $9,999 $10,999 $11,999 $12,999 $13,999 $15,999 more
New homes
Less than $7,000__________ 0.5 $6,201 0.9 30.6 68.5 ________________________________________________ 100.0
$7,000 to $7,999__________ 5.7 6,909 .1 .5 59.9 39.5 ________________________________________ 100.0
$8,000 to $8,999__________ 20.3 7, 722 .2 .1 1.4 94.0 4.3 ___________________ __________________ 100.0
$9,000 to $9,999__________ 15.5 8,462 .1 .3 1.1 16.1 81.8 0.6 ______________________________ 100.0
$10,000 to $10,999________ 11.8 8,855 .2 .6 1.2 4.4 56.3 36.8 0.5 ________________________ 100.0
$11,000 to $11,999________ 12.3 9,215 .3 .4 .9 2.2 16.1 74.6 5.2 0.3 ______________________ 100.0
$12,000 to $12,999________ 9.3 9,463 .3 .5 1.1 2.5 8.1 62.3 22.9 2.0 0.3 _________________ 100.0
$13,000 to $13,999________ 7.4 10,250 . 5 . 6 1.0 2.1 5.5 25.0 54.4 10.0 . 7 0.2 ________ 100.0
$14,000 to $14,999__________ 5.9 10,948 .3 .8 .5 2.1 3.0 11.1 33.9 42.2 5.9 .1 0.1 100.0
$15,000 to $15,999__________ 4.2 11,662 .4 .4 .6 1.0 1.7 4.8 17.6 38.1 32.9 2.4 .1 100.0
$16,000 to $16,999________ 2.9 12,309 .1 .3 .3 1.3 1.2 3.1 8.9 21.3 43.6 18.3 1.6 100.0
$17,000 to $17,999__________ 1.6 12,962 .3 .3 .3 1.3 1.6 2.4 . 3.5 12.9 28.5 37.4 11.5 100.0
$18,000 to $19,999________ 1.6 13,848 ________ .3 .8 1.3 .8 3.7 6.6 13.5 27.1 44.8 1.1 100.0
$20,000 or more___________ 1.0 15,433 ________ .4 ______ 1.2 1.6 2.1 2.5 6.6 9.1 37.0 39.5 100.0
Total__________________ 100.0 8,849 .2 .5 4.7 25.3 23.7 22.3 10.0 6.0 3.8 1.8 1.3 .4 100.0
Existing homes
Less than $7,000__________ 2.4 $5,492 29.3 51.2 19.5 _____________________________ _______________ 100.0
$7,000 to $7,999__________ 4.7 6,512 1.8 21.3 57.9 19.0 ___________________________________________ 100.0
$8,000 to $8,999__________ 9.1 7,144 .6 4.0 38.5 54.0 2.9 ______________________________________ 100.0
$9,000 to $9,999________ 9.7 7,677 .1 1.1 13.0 53.4 31.9 0.5 ______________________________ 100.0
$10,000 to $10,999________ 11.8 8,256 .2 .9 3.5 24.8 59.7 10.3 0.6 ___________________________ 100.0
$11,000 to $11,999________ 11.1 8,885 .1 .1 1.1 7.7 47.8 40.2 2.1 0.9 ______________________ 100.0
$12,000 to $12,999 _______ 11.2 9,468 .1 .3 1.1 4.0 17.5 57.2 18.9 .5 0.4 _________ _______ 100.0
$13,000 to $13,999________ 9.4 10,144 .1 .1 .5 1.9 7.4 29.4 54.0 6.0 .3 0.3 ____ ____ 100.0
$14,000 to $14,999________ 7.6 10,758 .1 .1 .1 .9 3.7 12.9 42.7 36.1 3.0 .1 0.3 ....._ 100.0
$15,000 to $15,999________ 6.1 11,464 .1 .3 .3 .9 2.1 5.5 22.3 38.8 28.6 .7 .4 ____ 100.0
$16,000 to $16,999 _______ 4.9 12,197 __ .1 .4 .6 1.3 2.7 11.3 25.2 42.7 14.8 .7 0.2 100.0
$17,000 to $17,999________ 3.5 12,782 __ .1 _______ .4 .9 2.2 7.7 12.0 34.1 33.3 9.3 ___ 100.0
$18,000 to $19,999________ 4.4 13,813 .1 ____ .2 .3 .7 1.1 3.1 5.7 16.7 27.2 44.2 .7 100.0
$20,000 or more___________ 4.1 15,560 __ .1 .1 .1 .2 .6 .9 1.7 4.7 7.4 44.6 39.6 100.0
Total__________________ 100.0 9,146 .9 2.9 8.7 15.6 18.9 16.5 13.1 7.7 6.3 3.5 4.2 1.7 100.0
HOUSING AND HOME FINANCE AGENCY
TABLE 81
Transaction characteristics by total requirements for single-family homes, Sec. 203, 1954
Total requirements Percentage distribution Average Current investment as a percent of
Total requii e-ments Sale price Mortgage amount Property value Area in square feet Annua income Current investment 1 Total requirements Annual income
New homes
Less than $7,000 0.5 $6, 684 $6, 632 $6,134 $6, 796 733 $3,829 $550 8.2 14.4
$7,000 to $7,999 5.7 7,487 7,362 6, 906 7,425 771 4,463 581 7.8 13.0
$8,000 to $8,999 20.3 8,337 8, 222 7, 581 8,240 903 4,816 756 9.1 15.7
$9,000 to $9,999 15.5 9,389 9, 215 8, 265 9,292 959 5,147 1,124 12.0 21.8
$10,000 to $10,999... 11.8 10, 504 10,356 8, 771 10, 296 955 5,371 1,733 16.5 32.3
$11,000 to $11,999... 12.3 11,447 11,244 9,192 11,104 976 5,502 2,255 19.7 41.0
$12,000 to $12,999... 9.3 12,465 12, 257 9,485 11, 971 1,008 5,800 2,980 23.9 51.4
$13,000 to $13,999. __ 7.4 13,463 13, 239 10,003 12, 899 1, 053 6,088 3,460 25.7 56.8
$14,000 to $14,999... 5.9 14,458 14, 201 10, 602 13,848 1,082 6,425 3,856 26.7 60.0
$15,000 to $15,999. __ 4.2 15,434 15,162 11,282 14, 761 1,134 6,867 4,152 26.9 60. 5
$16,000 to $16,999... 2.9 16, 465 16,142 11, 950 15, 598 1,162 7,672 4,515 27.4 58.9
$17,000 to $17,999... 1.6 17, 431 17, 088 12, 514 16, 535 1,231 7,894 4, 917 28.2 62.3
$18,000 to $19,999... 1.6 18, 798 18, 405 13, 399 17, 559 1,999 8,702 5,399 28.7 62.0
$20,000 or more 1.0 21, 965 21,451 14, 696 19, 741 1, 397 10, 425 7,269 33.1 69.7
Total 100.0 11,185 10, 985 9,038 10,847 984 5,600 2,147 19.2 38.3
Existing homes
Less than $7,000 2.4 $6, 261 $6, 213 $5, 293 $6, 417 867 $4, 366 $968 15.5 22.2
$7,000 to $7,999 4.7 7, 519 7,349 6,337 7,518 868 4, 653 1,182 15.7 25.4
$8,000 to $8,999 9.1 8, 522 8, 336 7,019 8,363 911 4, 946 1,503 17.6 30.4
$9,000 to $9,999 9.7 9,466 9,266 7,556 9,141 965 5,116 1,910 20.2 37.3
$10,000 to $10,999... 11.8 10, 484 10,288 8,124 10, 099 1,010 5,348 2,360 22.5 44.1
$11,000 to $11,999... 11.1 11,466 11, 251 8, 760 10, 975 1,029 5,606 2,706 23.6 48.3
$12,000 to $12,999... 11.2 12, 482 12, 278 9,282 11, 930 1,090 5,981 3,200 25.6 53.5
$13,000 to $13,999... 9.4 13,470 13, 230 9,898 12, 768 1,112 6,325 3,572 26.5 56. 5
$14,000 to $14,999... 7.6 14, 452 14, 210 10, 536 13, 645 1,165 6, 727 3,916 27.1 58.2
$15,000 to $15,999... 6.1 15, 430 15,163 11,148 14, 522 1,219 7, 285 4,282 27.8 58.8
$16,000 to $16,999... 4.9 16, 458 16,139 11,823 15, 443 1, 274 7,816 4,635 28.2 59.3
$17,000 to $17,999... 3.5 17,453 17,129 12,440 16,195 1,317 8,022 5,013 28.7 62.5
$18,000 to $19,999... 4.4 18, 898 18, 537 13,389 17,415 1,414 8, 951 5,509 29.2 61.5
$20,000 or more 4.1 22, 364 21, 845 15,012 19, 610 1,607 10, 673 7,352 32.9 68.9
Total 100.0 12, 578 12,344 9,398 11, 919 1, 098 6,233 3,180 25.3 51.0
1 Total requirements less mortgage amount.
Data on current investments or down payments plus incidental costs afford another means for measuring the extent to which FHA-insured financing assisted home buyers in the various price levels during 1954. Not only did downpayments in both new- and existing-home cases increase as price levels advanced, but the ratios of downpayments to total requirements also rose, although the rate of increase was comparatively slower in the price classes above $13,000. In new-home transactions, current investments averaged about $2,100 or 19 percent of total requirements, ranging from $550 or 8 percent in the lowest price group to about $7,300 or one-third of total costs. Buyers of existing homes made larger downpayments representing larger proportions of total requirements—averaging overall nearly $3,200 (one-fourth of total requirements) and ranging from just under $1,000 (15% percent of total investment) for the least expensive properties to
228
FEDERAL HOUSING ADMINISTRATION
$7,350 (nearly one-third of the total outlay) for the highest priced homes. The spread between the larger current investments of existing-home transactions and new-home transactions fell off sharply when total requirements amounted to $13,000 or more. Comparable reductions occurred in the deviations between the downpayment ratios for corresponding price classes of new and existing homes. As pointed out previously, the same maximum loan-value ratio applied to most of the surveyed new and existing homes in the higher value categories.
Inasmuch as the downpayments made by most home buyers are largely savings accumulated out of their incomes, the relationship between current investments of the FHA home buyers of 1954 and their annual effective incomes is of particular interest. On the average current investments of new-home buyers amounted to 38 percent of their annual incomes, compared with the considerably higher 51 percent for existing-home buyers. The greatest divergence between the new- and existing-home ratios of investment to income occurred in those transactions with total requirements of less than $13,000. Above this level, the proportion of income required for downpayments was approximately the same for new and existing homes in corresponding price classes. The initial current investments required of both new- and existing-home buyers increased at rates exceeding the relative advances in home prices and buyers’ incomes. For example, comparing new home transactions in the $16,000 and $8,000 price ranges, total requirements for the more expensive homes were only about twice as large, but downpayments were 6 times as great, the ratio of downpayments to total requirements triple that for the lower price transactions, and the proportion of income required for downpayment (59 percent) nearly 4 times greater.
Mortgagor’s Income and Housing Expense
A fundamental part of the FHA underwriting system is the procedure for evaluating the risk involved in the mortgage credit elements of each transaction. The major items receiving consideration are the mortgagor’s income, his financial assets, the current and anticipated demands upon his income and assets, and the mortgagor’s primary motivation in applying for the loan.
An estimate is made of the mortgagor’s probable earning capacity during the first third of the mortgage term, which is likely to be the most hazardous in the life of the mortgage. The estimated earning capacity so established is called the mortgagor’s effective income. Incomes of co-mortgagors or endorsers may be included partially, wholly, or not at all, depending on specific circumstances.
The Section 203 single-family transactions insured in 1954 wherein mortgagors were the owner-occupants are analyzed in the following
350920—56----17
229
HOUSING AND HOME FINANCE AGENCY
paragraphs in the light of their mortgage credit aspects. As pointed out earlier in this discussion, owner-occupants were the mortgagors in 94 percent of the new and practically all of the existing singlefamily cases insured in 1954.
Annual Income Distribution.—As depicted in Chart 37 and Table 82, the largest segments of homeowners assisted by FHA-insured financing under Section 203 during 1954 had annual effective incomes of $4,000 to $5,999—nearly one-half of the new-home and more than two-fifths of the existing homeowners. The proportion of existing-home mortgagors in the higher income brackets was substantially greater than of the new—28 percent with incomes of $6,000 to $7,999 compared with 24 percent of the new-home buyers in this range; 18 percent earned $8,000 or more as against one-tenth of the new homeowners. Of the remaining mortgagors, about one-sixth of the new- and one-ninth of the existing-home purchasers had annual incomes of $3,000 to $3,999.
MORTGAGOR’S EFFECTIVE ANNUAL INCOME
SINGLE- FAMILY HOME MORTGAGES, SECTION 203, 1954
PERCENT
30 —————rj-n------------------------------------------------
M NEW HOME BUYERS
--- EXISTING HOME BUYERS
20 --------------- f| --------------------------------------
IQ _ ./>?•%%*' .j.v.v
™ H il ill H
0 < Um_________________________g:g____igg___ijgg
$2,999 $3,000 $4,000 $5,000 $6,000 $7,000 $8,000 $10000
OR TO TO TO TO TO TO OR
LESS 3,999 4,999 5,999 6,999 7999 9,999 MORE
MORTGAGOR'S EFFECTIVE ANNUAL INCOME
CHART 37
Table 82 compares the mortgagor income distributions for 1954 with those of previous selected years. The major changes in income distributions from 1953 to 1954 were the reductions in the proportions of both new and existing homeowners with incomes in the $3,000 to
230
FEDERAL HOUSING ADMINISTRATION
TABLE 82
Income of single-family home mortgagors, Sec. 203, selected years
Percentage distributions
Mortgagor’s effective annual income New homes Existing homes
1954 1953 1950 1946 1940 1954 1953 1950 1946 1940
Less than $l,500._ (i) (!) 0.2 2.7 5.0 23.4 0.1 .3 0.3 4. 2 5.3 20 5
$1,500 to $1,999 (>) (>) 0.2 (') ’(>)
$2,000 to $2,499. 0.2 0.2 2.6 16.0 28.3 0.2 0.2 2.4 19. 4 25.0
$2,500 to $2,999 .8 1.4 9.4 15.8 15.4 A .9 6.5 14.8 13 9
$3,000 to $3,499 4.0 6.5 21.5 19.7 12.0 2.8 3.9 15.3 19.3 11. 6
$3,500 to $3,999 11.5 14.1 21.9 17.6 6.2 7.8 10.3 18.2 14.5 6. 9
$4,000 to $4,499 14.9 16.8 13.7 8.8 3.2 11.7 13.1 12.6 7.1 4 O’
$4,500 to $4,999 15.3 15.2 10.3 7.5 2.0 12.6 12.3 11.5 6. 7 3 1
$5,000 to $5,999 19.2 18.3 9.7 4.1 1.9 18.4 19.1 11.9 4.3 3. £
$6,000 to $6,999 14.8 12.8 5.8 4.3 1.2 16.6 15.6 9.4 4. 4 2 5
$7,000 to $7,999 9.0 7.5 2.5 1.7 .5 11.6 10.5 4.9 1. 9 1.2:
$8,000 to $9,999 7.0 4.9 1.6 .7 .4 10.8 8.7 3.8 1.6 1.2;
$10,000 or more 3.3 2.3 .8 .9 .5 6.9 5.4 3.1 1.5 1.5>
Total 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0
Average $5, 633 $5,284 $4,213 $3, 619 $2, 665 $6,245 $5, 938 $4, 837 $3, 640 $3,012
Median $5,139 $4,880 $3,861 $3,313 $2, 416 $5, 696 $5,396 $4,274 $3; 101 $2,490
1 Less than 0.05 percent.
$4,499 range and the substantial increase in the relative number of those earning $6,000 or more. These upward shifts in income were not typical of the change in overall national income levels since the estimated average income for nonfarm families declined somewhat during 1954. In contrast, incomes of FHA new-home mortgagors of 1954 averaged nearly 7 percent above those of the 1953 mortgagors and existing homeowners’ incomes were 5 percent higher.
Mortgagor’s Monthly Income by States.—Tables 83 and 84 show by States and Territories the medians and percentage distributions of the monthly effective incomes of owner-occupant mortgagors in the FHA new- and existing single-family home transactions insured under Section 203 during 1954. The greater number of new-home mortgagors in 7 of 8 States and existing-home mortgagors in half of the States had monthly incomes of $300 to $499. In most States the income distributions of existing-home mortgagors were generally more dispersed, with larger proportions in the higher brackets than was true for new-home buyers. As evidenced by the medians, incomes of existing-home mortgagors were typically higher than those of new-home owners in all areas except Connecticut, Idaho, Montana, New York, and Puerto Rico. In continental United States, Nevada had the highest median incomes for both new- ($530) and existing-home mortgagors ($725). Vermont reported the lowest median incomes, $360 for new-home owners and $363 for existing-home mortgagors.
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HOUSING AND HOME FINANCE AGENCY
Incomes of less than $300 monthly were reported for 10 percent or more of the new-home mortgagors in 12 States principally in the New England and South Atlantic areas but in only 5 States for existing-home mortgagors.
TABLE 83
Mortgagor's monthly income by States, new 1-family homes, Sec. 203, 1954
Mortgagor’s effective monthly income—Percentage distribution
State Median monthly income Less than $300 $300 to $399 $400 to $499 $500 to $599 $600 to $699 $700 to $799 $800 to $999 $1,000 or more Total
Alabama _ ___ __ $467.12 465.27 5.3 26.3 27. 5 15. 4 10.5 7.1 4.5 3.4 100.0
Arizona _ _ 5.3 25.0 30.2 19.2 6.8 5.9 3.0 4.6 100.0
Arkansas. 436.29 9.6 30.1 28.3 17.4 8.2 3.2 2.3 .9 100.0
California 433.31 5.5 35.6 26.9 14.6 9.0 4.6 2.5 1.3 100.0
Colorado 492. 86 .8 18.5 33.1 19.3 11.8 9.5 3.5 3.5 100.0
Connecticut 517.92 1.4 22.1 22.1 24.5 9.2 7.8 7.8 5.1 100.0
Delaware __ (i) (>)
District of Columbia _ (!) C)
Florida 402. 03 15.2 34.3 26.0 12.1 6.4 2.8 2.1 1.1 100.0
Georgia 429. 37 13.6 30.4 20.4 19.7 6.2 5.5 1.9 2.3 100.0
Idaho 471. 43 1.1 27.6 29.8 17.0 13.8 4.3 4.3 2.1 100.0
Illinois 467. 39 2.3 28.3 28.9 21.8 10.8 4.9 2.3 .7 100.0
Indiana 428. 89 4.6 37.7 26.5 16.2 9.0 3.8 1.9 .3 100.0
Iowa. 397. 58 10.7 40.3 24.0 14.0 7.1 1.3 1.3 1.3 100.0
Kansas 442.11 5.0 34.0 26.0 16.2 8.9 5.3 3.0 1.6 100.0
Kentucky 450. 00 3.3 35.8 22.0 24.4 8.9 1.6 2.4 1.6 100.0
Louisiana .. 445.79 9.8 29.2 23.9 16.5 10.9 5.4 2.5 1.8 100.0
Maine _ _ ___ 396. 00 15.7 35.7 27.2 15.7 4.3 1.4 100.0
Maryland. 418. 63 10.9 34.9 22.3 16.2 7.4 4.8 3.1 .4 100.0
Massachusetts 448. 81 2.4 30.9 34.2 18.7 7.3 .8 4.1 1.6 100.0
Michigan 462. 27 1. 5 29.3 30.9 20.7 10.1 3.9 2.4 1.2 100.0
Minnesota 443.28 5.4 30.4 32.9 18.6 2.9 4.4 2.9 2.5 100.0
Mississippi 409.09 11.4 36.4 23.9 11.4 7.6 4.9 2.7 1.7 100.0
Missouri 466.21 3.1 27.6 29.2 19.7 12.4 4.0 2.4 1.6 100.0
Montana. 516.00 1.1 10.8 33.7 27.2 16.3 6.5 2.2 2.2 100.0
Nebraska 428. 45 11.8 31.4 23.7 19.2 9.0 2.5 1.6 .8 100.0
N evada 529. 87 2.0 19.7 22.4 19.7 14.0 8.9 5.6 7.7 100.0
New Hampshire 391.18 10. 2 43.6 35.9 2.6 7.7 100.0
New Jersey 453.24 5.3 32.9 22.1 18.1 10.3 5.9 3.5 1.9 100.0
New Mexico 462.14 3.3 26.3 32.9 16.9 10.3 6.1 3.7 .5 100.0
N ew York _ 486. 85 3.8 27.2 21.9 18.2 13.6 6.0 6.1 3.2 100.0
North Carolina 406. 65 13.0 35.1 29.3 11.9 6.7 1.8 1.7 .5 100.0
North Dakota 426. 92 2.7 37.9 35.1 8.1 5.4 8.1 2.7 100.0
Ohio 426. 48 3.3 38.8 30.0 15.5 6.9 2.5 2.1 .9 100.0
Oklahoma 424. 76 9.9 34.0 24. 4 14.7 10.6 3.3 2.1 1.0 100.0
Oregon 418. 75 4.1 40.6 28.1 15.2 8.8 1.2 1.4 .6 100.0
Pennsylvania 442. 81 4.3 34.3 26.8 18.4 8.3 3.9 2.6 1.4 100.0
Rhode Island 413.16 6. 7 40.0 25.4 16.0 5.3 5.3 1.3 100.0
South Carolina 419. 35 16.9 29.2 20.1 22.1 6.5 3.2 1.3 .7 100.0
South Dakota 469.23 3.1 30.0 24. 4 22.5 11.9 4. 4 3.7 100.0
Tennessee 432.04 9.1 31.7 28.7 15.8 9.0 3.3 2.1 .3 100.0
Texas .. 414. 86 8.3 37.8 26.4 14.5 7.8 2.8 1.8 .6 100.0
Utah 444. 38 1.8 32.6 35.2 14.5 7.5 4.4 4.0 100.0
Vermont 360.00 12.5 62.5 18.8 6.2 100.0
Virginia 402.00 12. 4 37.2 23.2 15.2 7.7 2.8 .9 .6 100.0
Washington 456.12 3.5 30.7 28.2 19.3 7.2 6.3 3.4 1.4 100.0
West Virginia 447.06 9.1 28.8 25.7 12.1 6.1 10.6 6.1 1.5 100.0
Wisconsin 387. 50 5. 9 50.4 29.6 8.9 3.0 .7 1.5 100.0
Wyoming. 473. 81 2.0 16.3 42.9 18.4 12.3 2.0 4.1 2.0 100.0
Alaska (') (1)
Hawaii... 511.90 6.2 17.5 24. 5 15.3 15. 7 8.0 9.1 3.7 100.0
Puerto Rico 400.00 17.1 32.9 17.1 10.3 9.6 6.2 4.1 2.7 100.0
Total 428.26 6.0 32.8 27.0 16.6 9.1 4.3 2.7 1.5 100.0
’Inadequate sample.
232
FEDERAL HOUSING ADMINISTRATION
TABLE 84
Mortgagor’s monthly income by States, existing 1-family homes, Sec. 203, 1954
Mortgagor’s effective monthly income—Percentage distribution
State monthly income Less than $300 $300 to $399 $400 to $499 $500 to $599 $600 to $699 $700 to $799 $800 to $999 $1,000 or more Total
Alabama $489.83 7.2 24.5 20.3 13.5 15.9 7.2 6.9 4.5 100.0
Arizona 475. 44 6.2 24.8 25.2 11.1 8.8 7.5 5.8 10.6 100.0
Arkansas 465. 94 9.2 23.4 26.4 20.3 10.7 2.7 4.6 2.7 100.0
California . 501.33 2.8 21.7 25.2 18.5 13.9 8.5 6.2 3.2 100.0
Colorado 516. 67 .6 22.7 23.9 17.0 14.8 6.3 10.2 4.5 100.0
Connecticut Delaware.- 508.86 481. 48 3.2 21.0 27.1 24.0 28.1 20.3 16.7 13.1 10. 4 6.8 6. 2 6.8 11.5 4.8 100.0 100.0
District of Columbia 558.33 4.3 13.1 17.4 26.1 17.4 17.4 4.3 100.0
Florida 472.09 4.5 27.8 24.4 14.8 11.1 6.3 6.0 5.1 100.0
Georgia 491.41 5.9 20.1 26.2 19.4 10.0 7.1 7.9 3.4 100.0
Idaho 463. 07 6.4 26.5 27.1 19.4 8.6 4.0 4.3 3.7 100.0
Illinois 517. 97 1.6 16.1 28.7 20.0 15.1 7.3 6.6 4.6 100.0
Indiana 479. 82 4.5 25.1 25.5 19.1 12.6 6.8 4.5 1.9 100.0
Iowa 448.65 7.2 30.2 25.8 18.6 6.1 6.3 3.5 2.3 100.0
Kansas 494. 56 4.4 24.0 22.9 18.7 11.2 6.8 8.3 3.7 100.0
Kentucky.... 493. 24 8.7 21.9 20.8 20.0 12.6 8.7 5.3 2.0 100.0
Louisiana 519. 54 5.2 19.7 21.3 19.7 14.7 7.0 7.7 4.7 100.0
Maine 402. 83 13.7 35.6 22.8 13.7 7.3 3.0 3.5 .4 100.0
Maryland 513. 49 5.9 20. 4 20.8 21.8 14.2 7.9 7.3 1.7 100.0
Massachusetts 472.39 5.1 25.7 26.5 22.9 10.3 4.7 2.8 2.0 100.0
Michigan 478. 56 2.7 26.5 26.5 18.2 10.8 5.7 6.2 3.4 100.0
Minnesota 485. 92 1.5 21.8 31.0 21.2 12.2 4.6 5.3 2.4 100.0
Mississippi 428.13 9.1 32.7 29.1 11.8 8.2 5.5 2.7 .9 100.0
Missouri 487. 54 3.3 25.5 24.3 18.3 12.3 6.8 5.6 3.9 100.0
Montana 500. 00 2.0 18.3 29.8 19.8 12.3 6.7 4.4 6.7 100.0
Nebraska 464. 71 5.5 27.0 27.0 20.1 9.3 3.2 4.2 3.7 100.0
Nevada 725.00 .8 1.5 9.2 19.1 16.0 13.7 19.1 20.6 100.0
New Hampshire _. 395.83 13.0 38.7 6.4 13.0 9.7 6.4 6.4 6.4 100.0
New Jersey..- 523. 70 2.4 19.4 23.3 20.9 16.0 6.4 7.6 4.0 100.0
New Mexico 563.16 15. 7 17 1 27.2 19.3 18 6 11. 4 5 7 4. 3 100.0
New York.. - 479. 96 2.1 25.8 27.6 11.1 6.1 5.7 2.3 100.0
North Carolina 507.14 4.0 17.4 27.1 21.1 10.7 9.4 8.0 2.3 100.0
North Dakota 487. 93 6.1 18.2 29.3 21.2 14.1 2.0 5.1 4.0 100.0
Ohio 472. 60 3.1 28.1 25.9 19.6 11.3 6.4 4.0 1.6 100.0
Oklahoma 439.41 11.0 29.6 23.9 16.6 7.7 4.7 3.9 2.6 100.0
Oregon 486.13 2.7 25.6 25.1 21.4 10.4 7.0 5.1 2.7 100.0
Pennsylvania 456.99 6.4 28.9 25.9 17.0 10.7 4.2 4.7 2.2 100.0
Rhode Island 462. 20 7.1 29.2 22.2 18.9 14.6 3.2 3.2 1.6 100.0
South Carolina 444.12 12.9 25.9 25.4 12.4 9.9 6.5 5.5 1.5 100.0
South Dakota 474. 39 5.0 26.1 25.5 21.1 13.6 5.0 1.2 2.5 100.0
Tennessee 448. 61 8.8 29.1 24.9 15.7 11.6 4.4 3.9 1.6 100.0
Texas 452.64 6.4 29.8 26.2 17.0 9.3 5.2 3.7 2.4 100.0
Utah Vermont 467.02 362. 50 3.6 23.4 27.5 42.6 28.1 23. 4 18.0 6. 4 7.2 2.1 7.8 2.1 4.2 3.6 100.0 100.0
Virginia 486.29 6.1 25.9 20.9 15.4 15.4 7.0 7.8 1.5 100.0
Washington 492.12 2.6 23.7 25.7 19.8 14.0 6.3 4.9 3.0 100.0
West Virginia 463. 28 6.9 25.8 27.5 19.3 9.4 6.4 1.3 3.4 100.0
Wisconsin 471.92 2.6 28.0 26.9 19.6 14.4 4.8 3.0 .7 100.0
Wyoming Alaska 536.84 860. 00 6.1 16.7 16.7 5. 8 28.8 17. 3 13.6 7. 7 4.5 13. 4 9.1 17.3 7.9 4.5 38.5 4.3 100.0 100.0 100.0
Hawaii 557.14 2.8 16.4 19.3 20.0 18.6 10.7
Puerto Rico 345.45 33.5 36.2 11.2 10. 5 2.0 1.3 2.0 3.3 100.0
Total 474. 68 4.4 24.6 25.2 18.6 12.0 6.5 5.6 3.1 100.0
Characteristics by Mortagagor’s Monthly Income.—Characteristics of the Section 203 transactions insured in 1954 corresponding to monthly income groups of the owner-occupant mortgagors are shown in Table 85 (transaction and property characteristics) and Table 86 (financial characteristics). For example Table 85 shows that new-home mortgagors with monthly incomes in 1954 of $350 to $399 purchased properties averaging $10,149 in sale price and valued by FHA at $10,161 or nearly 2.3 times their average annual income.
233
HOUSING AND HOME FINANCE AGENCY
TABLE 85
Transaction and property characteristics by income of single-family home mortgagors, Sec. 203, 1954
Mortgagor’s effective monthly income Percentage distribution Average Mortgage as a percent of FHA value Ratio of FHA value to amount of income
Total requirements 1 Sale price 1 Property value Mortgage amount Calculated area Number of rooms
(square feet)
New homes
Less than $250.00 0.9 $8,316 $8,162 $8,208 $7,041 832 4.5 85.8 3. 03
$250.00 to $299.99 . .. 5.1 8.732 8, 569 8, 611 7, 555 869 4.6 87.7 2. 59
$300.00 to $349.99 15.5 <581 9,401 9, 424 8,109 907 4.8 86.0 2. 43
$350.00 to $399.99 17.3 10,310 10,149 10,161 8,546 950 4.9 84.1 2. 28
$400.00 to $449.99 . 16. 8 10,912 10, 715 10, 754 8,918 979 4.9 82.9 2.14
$450.00 to $499.99 10. 2 IL 543 li; 308 IL 269 9; 251 1,011 5.0 82.1 2.00
$500.00 to $549.99 10.5 11, 952 11', 749 11', 756 9, 555 1,033 5.0 81.3 1.90
$550.00 to $599.99 6.1 12, 245 12, 039 12, 056 9, 771 1,041 5.0 81.0 1.76
$600.00 to $649.99 5.4 12', 696 12', 565 12,479 10, 061 L 072 5.1 80.6 1.68
$650.00 to $699.99 3. 7 13,442 13; 125 13,151 10,473 1,106 5.2 79.6 1.64
$700.00 to $799.99 4.3 13, 886 13', 663 13; 777 io; 893 L 160 5.2 79.1 1.56
$800.00 to $999.99 . _ 2.7 14; 673 14; 488 14; 455 li; 398 1,179 5.3 78.9 1.40
$1,000.00 or more 1.5 1< 416 15', 001 15,012 IL 776 L 245 5.3 78.4 1.01
Total 100.0 11,185 10, 985 11,024 9,108 995 5.0 82.6 1.96
Existing homes
Less than $250.00 0.8 $8, 077 $7,930 $8,036 $6,060 925 4.7 75.4 3.03
$250.00 to $299.99 3.6 8, 973 8, 699 8, 762 6, 851 922 4.8 78.2 2. 65
$300.00 to $349.99 10.9 9', 900 9, 689 9,601 7; 518 963 4.9 78.3 2.47
$350.00 to $399.99 13.7 10, 721 10, 519 io; 317 8,053 997 5.0 78.1 2.32
$400.00 to $449.99 15.0 11, 552 11,324 11,074 8,600 1,042 5.1 77.7 2.20
$450.00 to $499.99 . 10. 2 12,183 11,960 11,610 9, 058 1,078 5.2 78.0 2.06
$500.00 to $549.99 _ 11. 5 1< 880 12, 611 12, 256 9; 492 1,114 5.3 77.4 1.97
$550.00 to $599.99 7.1 13, 412 13,184 12, 685 9; 856 1,149 5.4 77.7 1.85
$600.00 to $649.99 6.9 13; 954 13, 749 13; 177 10, 269 1,185 5.4 77.9 1.78
$650.00 to $699.99 5.1 14, 648 14,419 13; 788 10, 727 1,206 5.4 77.8 1.72
$700.00 to $799.99 6. 5 15; 510 15,303 14, 533 11, 280 1,278 5.6 77.6 1.64
$800.00 to $999.99 5.6 16; 743 16; 413 15, 622 12,090 L367 5.8 77.4 1.51
$1,000.00 or more... 3.1 18; 485 18,100 1< 873 12,936 L507 5.9 76.7 1.13
Total 100.0 12, 578 12, 344 11, 950 9,291 1,108 5.2 77.7 1.91
1 Based on purchases only.
The buyers’ cash investment (total requirements of $10,310 less the mortgage of $8,546) averaged about $1,760 or 17 percent of total requirements. The houses contained on the average 950 square feet and nearly 5 rooms. As indicated in Table 86, of the average monthly income of $371 for the mortgagors in this group, 23 percent was required for monthly housing expense including 18 percent of income for monthly mortgage payment. Had these mortgagors been renting their homes, their monthly rentals would likely have averaged about $82.
For both new- and existing-home transactions, the price levels and amounts of obligation assumed by the home buyers did not increase proportionately with income. This is demonstrated by comparing the data for the $350 to $399 income group with those for the $700 to $799 group. Although the average income in the higher bracket was double that in the lower class, the averages of total requirements,
234
FEDERAL HOUSING ADMINISTRATION
mortgage amount, and monthly housing expense were only 1.3 times greater. Further evidence of this disproportionate relationship between the increases in income and the other items is the steady downward trend in the property value-income ratios shown in Table 85 and the ratios of housing expense to income and monthly payment to income presented in Table 86 and Chart 38. This situation was not unique with transactions for the year 1954; it has been apparent in other years when comparable data on FHA transactions were available for analysis.
Although these relationships between buyers’ incomes, total requirements, and monthly housing expenses may have been generally comparable in non-FHA transactions, the FHA experience varies in two respects: First, very few of the more expensive home transactions utilize FHA-insured financing, since buyers in the higher income brackets can more readily obtain satisfactory financing with conventional loans; second, most of the properties eligible for the more favorable FHA financing terms, and hence most likely to be purchased
TABLE 86
Financial characteristics by income of single-family home mortgagors, Sec. 203, 1954
Mortgagor’s effective monthly income Percentage distribution Monthly average Percent ratio of
Income Housing expense Mortgage payment Rental value Housing expense to income Mortgage payment to income Payment to rental value
New homes
Less than $250.00. _ 0.9 $225 58 $69 74 $52 76 $66 25 30 Q 23 4 70 a
$250.00 to $299.99 5.1 276.66 75.86 57.83 70 30 27 4 20 9 zy. o 09 Q
$300.00 to $349.99 15.5 323.65 81.24 61 65 76 17 25 1 19 0 OZ. 0 co o
$350.00 to $399.99 17.3 371.17 86 26 65 90 82 42 23 2 17 8 oU. y on o
$400.00 to $449.99 . 16.8 418 80 89 55 69 05 86 03 21 4 1Z. 0 16 5 oU. U
$450.00 to $499.99 10. 2 468 93 92 57 71 78 90 32 19 7 15 3 80.3 70 K
$500.00 to $549.99 10.5 516 69 96. 20 74 81 93 39 18 6 J4 5 zy. 0 CO 1
$550.00 to $599.99 6.1 571.34 98.63 76 59 96 39 17 3 13 4 oU. 1 70 X
$600.00 to $649.99 5.4 617 82 101 84 80 33 98 24 16 5 13 0 zy. 0 QI Q
$650.00 to $699.99 3.7 667.42 104.96 83 41 102 98 15 7 12 5 ol. O QI A
$700.00 to $799.99 4.3 737.95 111 60 86 80 107 77 15 1 11 8 ol. U QO X.
$800.00 to $999.99 2. 7 860 18 116. 44 92 15 112 78 13 5 11.0 10 7 oU. O QI 7
$1,000.00 or more 1.5 1,243.62 122.67 95.83 118.62 <9 7.7 ol. Z 80.8
Total 100.0 469.41 91.77 70.90 88.16 19.6 15.1 80.4
Existing homes
Less than $250.00 0.8 $220.96 $68.16 $50 35 $65 71 30 8 22 8 7A A
$250.00 to $299.99 3.6 275.95 76.37 55.71 71 04 27 7 20 2 ZO. O 7ft d.
$300.00 to $349.99 10.9 324.18 . 83.51 61.81 77 44 25 8 19 1 / O. t: 79 ft
$350.00 to $399.99 13.7 370.83 88.70 66.33 82 96 23 Q 17 9 z y. 0 QO O
$400.00 to $449.99 15.0 419.15 93.68 71.06 88 55 22 3 17 0 oU. U ftO 9
$450.00 to $499.99 10.2 469. 79 97.87 74.68 92. 73 20 8 15 9 oU. Z 80 5
$500.00 to $549.99 11.5 517.36 103.05 78. 71 97 08 19 9 15 2 81 1
$550.00 to $599.99 7.1 571.20 106.45 81.87 100 26 18 6 14 3 fti 7
$600.00 to $649.99 6.9 617.27 109.63 85.90 103 53 17 8 13 9 ol. Z 83 0
$650.00 to $699.99 5.1 668.00 113.63 88 63 108 24 17 0 13 3 81 9
$700.00 to $799.99 6.5 738.61 119. 76 93 57 114 12 16 2 12 7 82 0
$800.00 to $999.99 5.6 863. 73 128. 53 101 53 121 74 14 9 11 8 83 4
$1,000.00 or more 3.1 1,245.43 140.85 112.40 132.66 n! 3 9.0 84.7
Total 100.0 520.42 100.71 77.08 94.93 19.4 14.8 81.2
235
HOUSING AND HOME FINANCE AGENCY
MORTGAGE PAYMENT AND HOUSING EXPENSE AS A PERCENT OF INCOME BY MORTGAGOR’S INCOME
SINGLE-FAMILY HOME MORTGAGES, SECTION 203,1954
PERCENT 401 ----------------------
30 —----------------------------------------------------------------
20 | HOUSING EXPENSE
MORTGAGE PAYMENT”*' --------------------
l0 --------------------------------------------------
0 ------------------------------------------------------
$300 $400 $500 $600 $700 $800 $900 $1,000
MORTGAGOR'S EFFECTIVE MONTHLY INCOME
CHART 38
regardless of the buyer’s income, were in the low and middle price brackets. It is interesting to note that in several States median incomes of new-home mortgagors were higher than the national average but median property values were lower.
As shown in Table 85, existing-home averages exceeded those for new homes in corresponding income groups with respect to total requirements, sale price, property value, and rental value. On the other hand, new-home mortgage amounts were higher than existing in the monthly income classes under $550 because most of the properties were in value groups where new homes were eligible for relatively larger mortgage amounts. In the monthly income groups from $550 upward, the values of existing properties were sufficiently greater than those reported for newly constructed dwellings to yield larger average mortgage amounts. With the exception of the two lowest income classes, monthly payments on existing-home mortgages exceeded those on new-home mortgages principally because of the shorter loan duration in all income groups and the relatively larger mortgages undertaken by existing-home mortgagors in the higher income brackets. Reflecting the higher average monthly payment on existing-home
236
FEDERAL HOUSING ADMINISTRATION
mortgages and the generally larger operating, maintenance, and repair costs for existing properties, the average monthly housing expenses of existing-home mortgagors were above those of new home owners in virtually all income classes. As shown in Table 86, the proportion of income required for housing expense averaged slightly higher for new-home transactions than for existing-home transactions, although within most of the individual income classes the reverse is true.
Housing Expense by Mortgagor’s Monthly Income.—As stated in the FHA Underwriting Manual, “One of the principal problems in mortgage credit analysis is to determine whether a mortgage obligation will be within the mortgagor’s financial ability to pay. . . . Specific maximum ratios (of mortgage payments or value to income) for all mortgagors are not practicable because of variations in local conditions, living standards, differing family housing needs, and other conditions affecting ability to pay. ... A general principle to be followed is that the relationship of a mortgagor’s prospective housing expense to effective income should be kept within limits found to be favorable through experience in mortgage lending.”
Table 87 shows distributions of monthly housing expense by income classes of owner-occupant mortgagors involved in Section 203 transactions insured in 1954. These data emphasize the general tendency of families with higher incomes to purchase more expensive homes, necessarily entailing higher housing expenses. However, housing expense increases at a progressively slower rate than does income, as indicated by the medians in the second column of Table 87 and more vividly by the declining ratio of housing expense as depicted in Chart 38. For new-home buyers, typical expenses ranged from $71 for those with monthly incomes of less than $250 to $117 for those earning $1,000 or more, compared with existing home expenses of $68 in the lowest income group and about $139 in the highest. Within corresponding income groups from $300 upward, median housing expenses of existing-home buyers exceeded those of new-home buyers in line with higher mortgage payments and estimated costs of operation and expenses of maintenance and repair.
Housing expenses within individual income classes displayed significant variation, becoming more evenly distributed as monthly incomes of new- and existing-home buyers were $350 or more. Chart 39 depicts the range of housing expense in the various income brackets of FHA home buyers in 1954 (new and existing homes combined), and the increased dispersion accompanying higher incomes.
Total Monthly Mortgage Payment
About three-fourths of the estimated housing expense for both new-and existing-home buyers in 1954 was accounted for by the monthly
237
HOUSING AND HOME FINANCE AGENCY
j
<
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r
1 i
1
i
I
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2
TABLE 87
Housing expense by income of single-family home mortgagors, Sec. 203, 1954
Monthly housing expense—Percentage distributions
Per- Median ______________________________________________________________
Mortgagor’s effective monthly eentage monthly income distri- housing Less $50.00 $60.00 $70.00 $80.00 $90.00 $100.00 $110.00 $120.00 $140.00
button expense than to to to to to to to to or Total $50.00 $59.99 $69.99 $79.99 $89.99 $99.99 $109.99 $119.99 $139.99 more
New homes
Less than $250.00---- 0.9 $70.85 0.4 11.5 33.9 44.6 9.2 0.4 _________ _____ 100.0
!239'99 £99-99------- 5'1 75'49 -2 3.6 16.9 50.2 23.6 4.6 0.4 ____ 0.2 0.3 100.0
£49'99--------- 15-5 81-61 • 3 1.4 8.5 33.9 36.9 16.4 2.3 0.1 .1 .1 100.0
$350.00 to $399.99--- 17.3 85.94 .2 .6 5.2 24.4 33.0 26.3 8.5 1.4 .2 .2 100.0
$400.00 to $449.99--- 16.8 89.90 . 2 . 4 3.9 18.6 27.2 28.3 15.6 4.7 . 9 . 2 100.0
^SO.OO!° !499'99----- 10-2 92-52 •1 •5 3-0 15-4 24.6 25.7 17.4 10.0 3.2 .1 100.0
$500.00 to $549.99--- 10.5 94.81 .2 .2 2.1 14.2 22.3 22.9 17.3 12.7 7.5 .6 100.0
£50.00!° £"" -------- 6.1 96.63 --- .4 2.2 11.0 21.0 23.2 16.8 12.6 11.1 1.7 100.0
$600.00 to $649.99---- 5.4 98.54 . 4 . 2 2.3 10.0 19.7 20.3 16.2 13.3 14.7 2.9 100.0
$222'22!° ?*"•"------ 3.7 102.11 .1 ---- 1.7 8.0 18.0 18.9 15.4 13.4 17.1 7.4 100.0
£22'22!° $122'22------ 4-3 107.97 - 3 .1 1.1 7.1 12.8 15.4 16.5 15.4 19.7 11.6 100.0
$?2?a2°2° $999'99----- 2'7 112-80 -3 -5 L3 6.4 10.5 14.3 13.2 12.6 21.9 19.0 100.0
$1,000.00 or more---- 1.5 117.44 . 5 --- 1.2 7.0 9.0 11.6 12.9 10.4 19.2 28.2 100.0
Total------------- 100.0 88.91 .2 . 8 5.0 20.7 26.1 21.6 11.8 6.5 5.1 2.2 100.0
Existing homes
Less than $250.00---- 0.8 $67.57 3.0 23.8 30.7 32.3 6.4 3.8 ___________ ... 100.0
$250.00 to $299.99.-- 3.6 75.89 .7 7.4 19.8 35.2 26.9 8.1 1.2 0.3 0.1 0.3 100.0
$300.00 to $349.99--- 10.9 83.42 . 4 2.9 10.4 25.1 32.8 22.0 5.1 .8 . 2 . 3 100.0
$350.00 to $399.99--- 13.7 89.64 .1 1.6 6.3 17.1 25.8 29.0 15.3 4.0 . 6 . 2 100.0
$400.00 to $449.99--- 15.0 94.23 . 2 . 9 3.9 12.7 21.3 26.1 21.4 10.9 2.4 . 2 100.0
$450.00 to $499.99--- 10.2 98.70 . 3 . 6 3.7 9.7 17.2 21.3 22.6 15.7 8.2 . 7 100.0
$500.00 to $549.99--- 11.5 102.53 .4 .6 2.7 7.6 13.7 19.9 20.3 16.3 16.3 2.2 100.0
$550.00 to $599.99--- 7.1 105.61 .1 .5 3.2 6.8 12.5 17.0 17.5 14.6 22.6 5.2 100.0
$600.00 to $649.99---- 6.9 109.25 .1 .2 1.6 6.2 10.5 16.0 16.6 15.8 23.1 9.9 100.0
$650.00 to $699.99--- 5.1 113.75 . 3 . 2 1.4 4.0 8.9 14.8 14.9 14.6 25.7 15.2 100.0
$700.00 to $799.99--- 6.5 119.46 .1 .2 . 9 3.4 6.4 11.6 13.1 15.1 27.4 21.8 100.0
$800.00 to $999.99--- 5.6 128.36 (') .1 .6 2.3 4.8 8.1 10.5 13.3 25.1 35.2 100.0
$1,000.00 or more---- 3.1 139.30 .2 .1 .6 1.8 3.0 5.7 7.0 9.5 22.9 49.2 100.0
Total------------- 100.0 97.41 .3 1.3 4.7 11.8 17.4 19.5 15.4 10.7 11.7 7.2 100.0
percent.
1 Less than 0.05
238
FEDERAL HOUSING ADMINISTRATION
RANGE OF HOUSING EXPENSE BY MONTHLY INCOME
SINGLE-FAMILY HOME MORTGAGES, SECTION 203, 1954
MONTHLY HOUSING EXPENSE $ 1801--------------------------------------------------
5% OF > MORTGAGORS ABOVE $ iso---------------------------------
_^T*\20% °F f MORTGAGORS $ 140---------------------—
OF T
$120------------
1I1^BOWv5%0F I ; ,
i? ( MORTGAGORS -> &-X'
$ 100--- ' ’___L----------------------------'
__________ —— -' 20% OF M-______________—(MORTGAGORS ________
$ 80 ■■ ;■■ —.---I.-—---f-L ....~."....
_______________•___ " 1 5% OF | --> MORTGAGORS
$ 60 ——————————— BELOW-------------------------
$ 40 -------1------1-----1-------1---1-----1-1--------
$ 200 $ 300 $ 400 $ 500 $ 600 $ 700 $ 800 $ 900 $ 1,000
MORTGAGOR’S EFFECTIVE MONTHLY INCOME |
CHART 39
mortgage payment covering interest, principal amortization, property taxes and special assessments, hazard insurance, FHA mortgage insurance premiums, and ground rent, if any. In Chart 38, the converging tendency of the curves stems from the rise in the mortgage payment proportion of housing expense as mortgagors with higher incomes undertook larger mortgage, insurance, and tax obligations.
The distribution of total monthly mortgage payments for new- and existing-home transactions insured under Section 203 in 1954 is pictured in Chart 40. New-home mortgage payments were predomi-nantly (nearly three-fourths) in the $50 to $79.99 brackets, while nearly three-fifths of existing-home payments were reported in the somewhat higher range of $60 to $89.99. Payments of $90 or more were required in about one-ninth of the new-home cases and in more than twice that proportion of existing-home transactions. Only about 3% percent of the new-home mortgages and 5 percent of those on existing homes specified total monthly payments of less than $50.
Reflecting the higher level of FHA mortgage amounts in 1954, the typical monthly payment was 4 percent more for new homes and 5 percent higher for existing homes than in 1953. Table 88 reveals that the principal changes from the previous year in the mortgage payment distribution were declines in the new-home proportion with payments of less than $55, and gains in the proportion ranging from $80 upward;
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HOUSING AND HOME FINANCE AGENCY
TOTAL MONTHLY MORTGAGE PAYMENT
SINGLE-FAMILY HOME MORTGAGES. SECTION 203, 1954
PERCENT
30 —————————---------------------------------------
I I NEW HOMES
IM EXISTING HOMES
20 n b|
M ■ —
■ r1 rt vri
■i । ■ w, ■ । ■ 11 a ri I
$49:99 $5000 $60.00 $70.00 $8000 $90.00 $10000
OR TO TO TO TO TO OR
LESS 59.99 69.99 79.99 89.99 99.99 MORE
MONTHLY MORTGAGE PAYMENT
CHART 40
and, in existing homes, declines in the proportion of payments of less than $75 and gains in the proportion of payments of $90 or more.
TABLE 88
Monthly mortgage payment for single-family homes, Sec. 203, selected years
Percentage distributions
Total monthly mortgage payment New homes Existing homes
1954 1953 1950 1946 1941 1954 1953 1950 1946 1941
Less than $25.00 0.1 (>) 0.1 1.3 11.0 0.1 (>) 1.2 5.5 15.8
$25.00 to $29.99 (*) (i) .1 4.1 17.1 . 1 (>) 1.1 9.0 15.2
$30.00 to $34.99 (') 0.1 .6 11.3 21.1 .2 0.1 2.3 16.0 16.3
$35.00 to $39.99 .1 .2 3.4 13.7 18.8 .5 .6 5.4 18.3 14.4
$40.00 to $44.99 .8 2.5 12.9 16.6 13.0 1.2 1.7 9.2 15.3 11.0
$45.00 to $49.99 2.5 6.3 16.9 14.5 6.7 3.1 4.7 12.6 11.6 7.8
$50.00 to $54.99 6.6 10.7 18.6 17.1 4.1 5.5 7.3 13.9 7.8 5.1
$55.00 to $59.99 13.9 13.3 16.6 10.0 2.9 8.3 10.0 13.3 5.0 3.6
$60.00 to $64.99 15.2 14.0 12.2 5.8 1.9 9.8 11.6 10.8 3.5 2.6
$65.00 to $69.99 14.8 15.3 8.2 3.2 1.2 11.7 12.1 8.5 2.2 1.8
$70.00 to $74.99 13.6 12.8 4.8 1.4 .8 10.9 11.4 5.9 1.6 1.4
$75.00 to $79.99 9.7 8.8 2.4 .4 .4 10.4 10.4 4.3 1.2 1.0
$80.00 to $89.99 11.5 9.6 1.7 .3 .4 15.3 14.2 5.3 1.2 1.4
$90.00 to $99.99 6.0 4.0 .7 .2 .2 9.4 7.7 2.6 .6 .9
$100.00 or more 5.2 2.4 .8 .1 .4 13.5 8.2 3.6 1.2 1.7
Total 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0
Average $71.36 $67.05 $55. 38 $46. 06 $36. 88 $77.10 $72. 79 $58.94 $43. 25 $39. 50
Median $68.62 $65.95 $54.31 $46.18 $35. 21 $74.34 $70.84 $56.65 $40. 83 $53.91
1 Less than 0.05 percent.
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FEDERAL HOUSING ADMINISTRATION
Characteristics of Section 8 Home Mortgage Transactions
Section 8, enacted in April 1950, was intended to assist in providing adequate housing for families of low and moderate income in rural areas and small communities as well as urban and suburban areas. It authorized the insurance of mortgages covering properties in areas where it is not practicable to obtain conformity with many of the requirements essential to the insurance of mortgages on properties in built-up urban areas. Although Section 8 itself was repealed by the Housing Act of 1954, its essential provisions were continued in the new Subsection (i) of Section 203 enacted in that Act.
The volume of insurance written under Section 8 in 1954 was the largest for any year since its enactment—nearly 15,900 mortgages amounting to over $89 million, or about half of the cumulative volume of insurance written during the four years of its existence. The following tables present data on certain of the more significant characteristics of Section 8 transactions insured in 1954. The outstanding feature of the program revealed by these characteristics was its concentrated utilization in that segment of the housing market involving properties in the relatively narrow value bracket of $5,000 to $7,000. This, of course, was the consequence of the limitation in insurable mortgage amount to a maximum of $5,700 for owner-occupant mortgagors.19
In accordance with legislative specification, homes covered by Section 8 mortgages were all single-family structures. Most (89% percent) of the transactions in 1954 were of the purchase type, with slightly over 10 percent involving the financing of construction on the owners’ lots. The mortgagors were owner-occupants in 98 percent of the cases and builders in only slightly over 1% percent.
Typical Section 8 Home Mortgage Transaction
The typical Section 8 transaction insured in 1954 covered a property valued by FHA at $6,072, including land with a market price of $700 or 11% percent of value. The typical structure had a calculated area of 706 square feet and provided about 4% rooms of which 2 were bedrooms. The typical mortgage amounted to $5,737—about 92 percent of property value—and was repayable at the rate of $42
19 For builder mortgagors, the maximum mortgage amount was $5,100. The maximum ratio of loan to value for owner-occupant mortgagors was 95 percent and for builder mortgagors 85 percent. Mortgages financing the reconstruction or replacement of housing destroyed by a catastrophe declared by the President to be a major disaster were eligible for higher amounts up to a maximum of $7,000 and ratios of loan to value up to 100 percent. The maximum amortization period for all Section 8 loans was 30 years. These maxima were effective from July 1953 until repeal of Section 8 in August 1954. FHA approval of plans and specifications before the beginning of construction and FHA inspection during construction were required in Section 8 transactions. Construction must have begun after April 20, 1950.
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HOUSING AND HOME FINANCE AGENCY
monthly over a period of 25)£ years. The mortgage payment covered, in addition to interest and principal, premiums on hazard and FHA mortgage insurance, and real estate taxes and assessments averaging about $5 monthly. Frequently a mortgagee’s service charge, not exceeding one-half of 1 percent of the average outstanding balance, was also included.20 Housing expenses—mortgage payment plus operating costs and maintenance and repair expense—averaged about $59 monthly.
The typical Section 8 mortgagor in 1954 had a monthly effective income of $329. Housing expenses in Section 8 transactions insured in 1954 averaged about 17 percent of mortgagors’ incomes, including 12 percent for mortgage payment. Of the average total transaction requirements of nearly $6,300, 11 percent or about $670 represented the average initial cash investment made by the buyer.
Mortgage Amount and Duration
The following table indicates that roughly 7 of every 8 mortgages insured under Section 8 in 1954 had principal amounts of $5,500 to $5,999.
Mortgage amount
Percentage distribution
Average duration of loan (years)
Less than $4,500__________________________________________________________________
$4,500 to $4,999__________________________________________________________________
$5,000 to $5,499__________________________________________________________________
$5,500 to $5,999__________________________________________________________________
$6,000 or more____________________________________________________________________
Total________________________________________________________
Median mortgage amount.............................................
0.5
3.8
9.0
86.2 .5
21.9
21.1
25.2
25.7
28.8
100.0 $5,737
25.5
Durations of the Section 8 mortgages generally were longer as mortgage amounts increased, ranging from an average of 21.1 years to 28.8 years, with an overall average of 25.5 years.
Property Characteristics
Table 89 shows that about three-fourths of the properties in Section 8 transactions insured in 1954 had FHA-estimated values of $6,000 to $6,499 and nearly 95 percent were in the $5,500 to $6,999 value ranges—undoubtedly the consequence of the fact that the combination of maximum mortgage amount and lowest down payment was available under this section for properties valued at or near $6,000.
20 To encourage participation of lending institutions in the Section 8 program, the Administrative Rules were amended in January 1953 to permit lending institutions to charge the mortgagor a service charge not exceeding one-half of one percent of the outstanding balance of the mortgage to compensate for the extra costs of handling quantities of small mortgages.
242
FEDERAL HOUSING ADMINISTRATION
Mortgage amounts in the various value classes were near the maximum permissible for properties in each value group.
TABLE 89
Characteristics by property value of single-family homes, Sec. 8, 1954
FHA estimate of property value Percentage distribution Average Loan as percent of value Average Average monthly
Property value Mortgage amount Land price Calculated area (square feet) Room count Total payment Taxes and assessments Housing expense
Less than $5,000 0.1 (■) $4, 664 (>) (’) (>) (>) (>) (>) (*)
$5,000 to $5,499 2.7 $5, 236 4,807 $538 91.8 665 3.9 $37.86 $4.02 $52.46
$5,500 to $5,999 10.6 5,743 5,355 674 93.2 687 4.0 41.09 4.38 57.50
$6,000 to $6,499 75.4 6,077 5,676 699 93.4 734 4.4 42.33 5. 06 59.03
$6,500 to $6,999 8.5 6,599 5, 594 777 84.8 762 4.4 44.50 6.38 63.22
$7,000 to $7,499 2.1 7,132 5, 770 768 80.9 837 4.5 47.17 6. 67 65.44
$7,500 or more .6 7,865 5,742 843 73.0 906 4.7 48.73 6.11 67.94
Total 100.0 6,093 5,612 700 92.1 732 4.3 42.40 5.11 59.23
1 Inadequate data.
Land prices for Section 8 properties averaged between 10 and 12 percent of property value, ranging from an average of $538 in the lowest value group to $843 in the highest. The overall average of $700 was less than half the land price average of $1,456 for Section 203 new home transactions in 1954. Moreover, land prices represented smaller proportions of total property value in Section 8 transactions (11% percent) than in Section 203 (13 percent). These data are indicative of the less stringent site and location requirements for Section 8, as well as the substantially higher value level of Section 203 properties.
Table 89 also shows the expected correlation between size of structure and value of property. The following data indicate that most of the Section 8 homes had calculated areas of 600 to 799 square feet, with over one-fifth having areas of 800 or more square feet:
Calculated area of structure (square feet) Percentage distribution Calculated area of structure (square feet) Percentage distribution
Less than 500 500 to 599 600 to 699 700 to 799 800 to 899 0.1 4.2 34.2 40.1 16.3 900 to 999 1,000 or more Total Median area: (square feet) 4.1 1.0
100.0 706
The size distributions of Section 8 structures exhibited comparable concentrations when measured in terms of number of rooms and bedrooms. As shown by the following tables, 3 of 4 Section 8 homes contained 4 rooms and 5 of every 6 had 2 bedrooms:
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HOUSING AND HOME FINANCE AGENCY
Number of rooms per structure Percentage distribution Number of bedrooms per structure Percentage distribution
3 4 5 6 or more Total Median room count 3.0 75.2 13.8 8.0 1 2 3 or more Total Median bedroom count 0.3 83.9 15.8
100. ft 2.6
100.0 4.6
Monthly mortgage payments in Section 8 transactions, following the trend of mortgage amounts, increased as property values rose and were concentrated in a narrow band ranging from an average of $38 for properties in the lowest value class to $49 for those with highest values. Monthly housing expenses averages, reflecting limited spread of the mortgage payment component, ranged only from $52 for properties in the $5,000 to $5,499 range to $68 for those valued at $7,500 or more. Monthly taxes and assessments included in the total mortgage payment averaged about $5 for all Section 8 transactions insured in 1954, with the averages by value groups generally conforming with the level of property values.
Characteristics by Mortgagor’s Monthly Income
Over three-tenths of the Section 8 occupant-mortgagors in 1954 had monthly effective incomes (before taxes) of less than $300 and nearly three-fifths were earning under $350 monthly. (See Table 90.) This was over 5 times the proportion of owner-occupants of Section 203 new homes with monthly incomes of less than $300, and almost 3 times the proportion with incomes of less than $350. The typical Section 8 mortgagor had a monthly effective income of $329, or about $100 less than the $428 median income for the Section 203 new home mortgagors of 1954. It is likely that some of the Section 8 transactions in the higher income brackets included part or all the incomes of comortgagors or co-signers whose participation was required because the income of the principal mortgagor was not considered sufficient.
As Table 90 indicates, property value and mortgage amount, averages for most of the income groups of Section 8 mortgagors varied only slightly. Moreover, total monthly mortgage payments and housing expenses were roughly the same for all income classes with the exception of those below $250 and those of $600 or more. This, of course, is a reflection of the limited price class of housing for which Section 8 mortgage financing terms were the most favorable.
Section 8 mortgagors were devoting, on the average, somewhat smaller proportions of their incomes for mortgage payment (12 percent) and housing expense (17 percent) than their Section 203 compatriots (15 percent for monthly payment and 20 percent for housing
244
FEDERAL HOUSING ADMINISTRATION
expense). Moreover, in corresponding income brackets, the Section 8 payment-income and housing expense-income ratios were also smaller.
The share of Section 8 mortgagors’ incomes required for mortgage payment ranged from 7 percent in the highest income bracket to 23 percent in the lowest, while the housing expense portion ranged from. 9 percent to 30 percent.
TABLE 90
Characteristics by income of single-family home mortgagors, Sec. 8, 1954
Mortgagor’s monthly effective income Percentage distribution Average Average monthly Percent ratio of
Total requirements Property value Mortgage amount Mortgagor’s income Total payment Housing expense Loan to value Payment Housing expense
To in come
Less than $200.00.._ 1.8 $6,035 $5,957 $5,461 $178. 26 $40.86 $53.91 91.7 22.9 30.2-
$200.00 to $249.99... 9.0 6,198 6, 031 5, 601 224. 55 41.37 55.93 92.9 18.4 24.9
$250.00 to $299.99... 20.4 6, 252 6,116 5,628 271. 59 41.98 58. 28 92.0 15.5 21.5
$300.00 to $349.99... 28.6 6,311 6,108 5, 630 320. 63 42.31 59. 53 92.2 13.2 18.6
$350.00 to $399.00... 17.0 6, 301 6,161 5, 631 368. 57 42.81 60.06 91.4 11.6 16.3
$400.00 to $449.99... 11.0 6,292 6,114 5, 627 416. 53 42. 45 60. 21 92.0 10.2 14.5
$450.00 to $499.99... 4.5 6, 373 6, 203 5, 622 468. 31 42.42 59.78 90.6 9.1 12.8
$500.00 to $599.99... 5.2 6, 348 6,190 5. 622 531.86 43.62 60.24 90.8 8.2 11.3
$600.00 or more 2.5 6,802 6,154 5, 628 724. 56 46.91 63. 92 91.5 6.5 8.8
Total 100.0 6,297 6,119 5,623 345.86 42. 42 59.17 91.9 12.3 17.1
Characteristics of Project Mortgage Transactions
An analysis of the characteristics of projects for which commitments for mortgage insurance were issued by the FHA during 1954 (280 projects containing 24,000 dwelling units) is presented in the following pages. Rental housing project data are based on commitments issued under the Section 207 rental housing program (15,000 units), the Section 803 military housing program (3,000 units), and the Section 908 defense housing program (less than 100 units). The project program analysis also covers the Section 213 cooperative housing program which included 3,000 units in sales-type projects and an additional 3,000 units in management-type projects. Other project programs, including the Section 220 urban renewal program and the Section 221 program for relocation housing, were included in the legislation approved August 2, 1954, but being in effect during only a brief period of 1954 had no commitment activity during the year.
Typical Project Mortgage Transaction
The typical project approved for mortgage insurance by the FHA during 1954 consisted of 41 dwelling units. The typical dwelling unit contained 4.8 rooms, rented for $95.02, and secured a mortgage of' $8,162, representing 79.3 percent of the estimated replacement cost.
Considerable differences existed between the typical rental housing project and the typical cooperative housing project covered by com
350920—5’
■18
245
HOUSING AND HOME FINANCE AGENCY
mitments issued during the year. The typical rental project was larger, containing 77.5 dwelling units, with a median room count of 4.7 rooms, which rented for $102.72. The typical unit mortgage of $8,041 represented 74.7 percent of replacement cost. In contrast, the typical cooperative project included only 28.4 units of 5.4 rooms involving monthly charges to the cooperative member of $75.77. The median unit mortgage involved in these cooperative projects was $8,650, which approximated 90.8 percent of replacement cost.
As shown in Table 91, the typical rental project under Section 207 consisted of 76 dwelling units and that under Section 803 contained 162.5 dwelling units. The typical unit for Section 207 projects had 4.6 rooms and rented for $115.60, while those under Section 803 had 4.9 rooms with a monthly rental of $72.13. This seeming disparity of the monthly rental for Section 207 is caused in part by the high percentage of dwelling units—more than one-half—in elevator-type structures which characteristically are smaller and rent for more. Four-fifths of the Section 803 units were in 1-family structures.
The typical management-type cooperative project on which a commitment for mortgage insurance was issued in 1954 consisted of 127.5 dwelling units with a median room count of 4.8 rooms, involved a monthly charge of $93.66, and secured a mortgage of $8,807— 80.7 percent of replacement cost—substantially the same as for 1953. The sales-type cooperative projects covered by 1954 commitments, however, showed some differences in 1954. The typical project was less than half as large, containing 25.8 dwelling units, and the typical
TABLE 91
Characteristics of multifamily housing transactions, by section, 1954
Item Total rental and cooperative housing 1 Rental housing Cooperative housing, Sec. 213
Total1 Sec. 207 Sec. 803 Total Management type Sales type
Projects: Median size (in units) Average size (in units) Units: Median size (in rooms)23 Median monthly rental24 Median mortgage amount25 Median mortgage-cost ratio 41.0 85.3 77.5 116.8 76.0 108.0 162.5 213.5 28.4 46.7 127.5 147.4 25.8 28.4
4.8 $95.02 $8.162 79.3 4.7 $102. 72 $8,041 74.7 4.6 $115. 60 $8,031 72.9 4.9 $72.13 $8,053 81.2 5.4 $75. 77 $8, 650 90.8 4.8 $93. 66 $8,807 80.7 5.8 $53. 41 $7,848 94.1
1 Includes data for commitments issued under Sec. 908.
2 Tables covering size of units, monthly rental, and amount of mortgage exclude data for projects in Alaska (none committed in 1954), Guam, and Hawaii. In recognition of higher costs, liberalized legislative provisions were enacted—for Alaska in 1949, Guam in 1952, and Hawaii in 1953.
3 In determining the number of rooms per unit, baths, closets, halls, and similar spaces were excluded.
4 Data on monthly rental for emits in cooperative projects refer to monthly charges. Monthly charges include, in management-type projects, member’s pro rata share of estimated monthly debt service and project operating and maintenance costs; and, in sales-type projects, estimated total monthly mortgage payment (including real estate taxes. FHA mortgage premiums, and hazard insurance premiums) of purchaser-member.
3 Amount of mortgage allocable to dwelling use.
The information in the footnotes apply to this and to all subsequent tables in this section of the report.
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FEDERAL HOUSING ADMINISTRATION
dwelling unit was smaller with 5.8 rooms as compared to 6.1 rooms for 1953. Monthly charges of $53.41 were considerably smaller than the $76.51 reported for 1953, and the amount of mortgage—$7,848— was less than the previous $10,071. The ratio of the mortgage to replacement cost remained about the same at 94.1 percent for 1954.
^Yearly Trend
The trends of selected characteristics for rental housing projects (Section 213 cooperatives excluded) through 1954 are shown in Chart 41 and Table 92.
The median project for 1954 contained 77.5 dwelling units, a 27-percent decrease from 1953. Project sizes have varied greatly from year to year since 1950.
TREND OF CHARACTERISTICS OF RENTAL PROJECTS, 1935 - 54
NUMBER OF UNITS PER PROJECT NUMBER OF ROOMS PER UNIT
(MEDIAN) | (MEDIAN)
ioo----------------/ — 8---------------------------------
\ I 6
50-------------L__________ ------~ t ~ ' -
2 -
ol---1---i---I----i---1_______।____ o-------1__i________।___।_______।___
MONTHLY RENTAL MORTGAGE PER UNIT * (MEDIAN) (AVERAGE)
$ 100-----------------------$8,000------------------- Z
$ 50---------------------------------$4,000 ---------------------
Ol---i---i—.—_____i___i_______>____ 01______।__i________i___।_______i___
TYPE OF STRUCTURE MORTGAGE PER ROOM * (PERCENT OF UNITS) (AVERAGE)
80%-------ST----1-------------------$2000---------------------------------
° V. I-FAMILY _
WALK-UP | TYPE < /
TYPE \ X Z
«*-«««» ------------------------------------------------------------------
0----i*»Z ।_______J___।_;_|___।___ o_______i___i_______।____।_______।___
1935" 1942- 1947 'e i 'co 'kx 'sd 1935" 1942" 1947"
1941 1946 1949 3' ^4 OO 04 1941 |946 l949 50 51 52 53 54
*AMOUNT ALLOCABLE TO DWELLING USE
CHART 41
247
HOUSING AND HOME FINANCE AGENCY
The median monthly rental per unit increased 17 percent over 1953 to $102.72—an all time high—despite the fact that the typical unit— 4.7 rooms—remained virtually unchanged. This, coupled with the increased average mortgage allocable to dwelling use—$7,821 per unit, also an alltime high—points up the fact that nearly one-half of the units approved during 1954 were in elevator structures.
TABLE 92
Characteristics of mortgages and projects in rental project transactions, by years, 1935-54
Year 1
item 1954 1953 1952 1951 1950 1947-49 1942-46 1935-41
Projects: Median size (in units) 77.5 106.8 87.5 112.5 48.6 24.0 41.0 72.2
Average size (in units) 116.8 150.1 154.8 182.4 97.6 55.8 75.9 121.1
Percent with: Walkup structures 54.6 55.8 53.5 49.4 59.0 78.6 81.6 82.6
Elevator structures 27.6 22.1 5.6 10.1 18.0 6.8 9. 9
1-family structures 17.8 22.1 40.9 40.5 23.0 14.6 18.4 7.5
Units: Median size (in rooms) 4.7 4.6 4.8 4.6 4.2 4.4 4.0 3.9
Average size (in rooms) 4.3 4.3 4.5 4.4 3.9 4.0 3.7 3.7
Median monthly rental $102. 72 $87. 95 $75.38 $71.10 $78. 87 $84.43 $56.45 $53.09
Average mortgage amount $7, 821 $7,679 $7,179 $7,133 $7,140 $7,382 $4, 427 $3,725-
Percent in: Walkup structures 35.8 39.4 39.4 35.0 40.0 68.3 79.4 79.0
Elevator structures 44.4 30.0 4.4 12.8 30.8 18.2 14.0
1-family structures 19.8 30.6 56.2 52.2 29.2 13.5 20.6 7.0
Rooms: Average monthly rental $24.39 $21.34 $16. 77 $16.91 $20.06 $20. 72 $15.10 $14. 54
Average mortgage amount $1, 817 $1, 778 $1, 579 $1,619 $1, 835 $1, 832 $1,187 $1,009
1 Based on insurance written in 1935-41 under Sec. 207, in 1942-46 under Sec. 608, and on commitments issued in 1947-49 under Sec. 608, in 1950-51 under Secs. 207, 608, 803, and in 1952-54 under Secs. 207, 803, 908.
Type of Structure
The three principal types of structure into which FHA classifies large-scale developments are walkup, elevator, and 1-family (row, semidetached, and detached houses). Nearly one-half of all rental and cooperative projects approved for mortgage insurance during 1954 consisted primarily of 1-family houses—a distinct departure from the trend of other recent years when walkups were the most popular. However, it should be noted that more units-—43 percent of the total—were provided in elevator buildings than in either of the other types of structure. See Table 93 and Chart 42 for a detailed comparison of the relative proportions of projects and dwelling units by principal type of structure.
Walkup-type structures predominated for rental housing projects, accounting for 55 percent of the total number of projects, about the same as in the past 2 years. However, because of the decrease in Section 803 activity, the proportion of projects consisting of 1-family structures declined and the proportion consisting of elevator-type structures increased.
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FEDERAL HOUSING ADMINISTRATION
TABLE 93
Type of structure for multifamily housing, by section, 1954
Nearly one-half of the dwelling units provided in rental housing projects approved during 1954 were in elevator-type structures. This is the highest proportion to date for this type of project, reflecting
Type of structure Total rental and cooperative housing Rental housing Cooperative housing, Sec. 213
Total Sec. 207 Sec. 803 Total Management type Sales type
Projects—Percentage distribution
Walkup 31.9 54.6 58.2 13.3 4.0 26.3
Elevator 19.6 27.6 31.3 9.7 63.1
1-family 48.5 17.8 10.5 86.7 86.3 10.6 100.0
Allprojects __ 100.0 100.0 100.0 100.0 100.0 100.0 100.0
Dwelling units- -Percentage distribution
Walkup 28.9 35.8 38.9 20.3 7.4 15.3
Elevator 42.7 44.4 54. 5 37.6 77. 7
1-family 28.4 19.8 6.6 79.7 55.0 7.0 100.0
All units 100.0 100.0 100.6 100.0 100.0 100.0 100.0
PROJECTS AND DWELLING UNITS BY TYPE OF PROJECT, 1954
COMMITMENTS ISSUED ON PROJECT MORTGAGES
J___i____i____i____i___i i i j i
0 5 IO I5 20 25 30 35 40 45 50%
CHART 42
249
PROJECTS
UNITS
PROJECTS
UNITS
PROJECTS
UNITS
32%
20%
; 48%
ELEVATOR STRUCTURES
WALK-UP STRUCTURES
ONE-FAMILY STRUCTURES
HOUSING AND HOME FINANCE AGENCY
Section 207 activity which accounted for the major proportion of operations during 1954.
For Section 213 cooperative housing, projects consisting of 1 -family homes—86 percent—were most prevalent and accounted for more than half the dwelling units approved in 1954. This was a reflection of the increased proportion of sales-type cooperative housing, consisting entirely of 1-family homes. Management-type cooperatives, as heretofore, were predominantly elevator-type structures.
Size of Project
The median project for 1954 contained 41 dwelling units—a decrease of 60 percent from 1953. In line with this trend, 59 percent of the projects approved during the year had less than 50 dwelling units and only 26 percent contained more than 100 dwelling units, as compared to 27 percent and 51 percent respectively for 1953.
More than two-thirds of the dwelling units provided were in projects of 100 units or more, while only 18 percent were in projects having less than 50 units.
TABLE 94
Size of project for multifamily housing, by section, 1954
Number of dwelling units per project Total rental and cooperative housing Rental housing Cooperative housing, Sec. 213
Total Sec. 207 Sec. 803 Total Management type Sales type
8 to 24 Projects—Percentage distribution
29.7 29.0 15.6 9.4 7.6 3.3 2.6 1.4 1.4 20.4 18.4 23.0 12.5 11.9 5.9 3.3 2.0 2.6 21.6 17.9 24.6 12.7 12.7 5.2 3.0 .8 1.5 6.7 13.3 13.3 13.4 6.7 13.3 6.7 13.3 13.3 41.1 41.9 6.5 5.7 2.4 5.3 21.0 5.3 36.8 15.8 47.6 45.7 6.7
25 to 49
50 to 99
100 to 149
150 to 199
200 to 299
300 to 399 1.6 .8 10.5 5.3
400 to 499
500 or more . _ __
Total
100.0 41.0 100.0 77.5 100.0 76.0 100.0 162.5 100.0 28.4 100.0 127.5 100.0 25.8
Median
8 to 24
Dwelling units—Percentage distribution
6.2 11.9 13.5 13.1 15.4 9.0 9.9 7.5 13.5 2.9 5.7 15.1 12.5 17.4 12.0 9.1 7.4 17.9 3.2 6.3 17.5 13.7 20.3 11.9 9.2 2.9 15.0 0.6 1.7 4.5 7.5 4.7 12.5 9.4 27.9 31.2 16.4 30.8 8.7 15.2 9.1 0.6 5.5 2.6 31.3 18.9 31.1 54.5 14.4
25 to 49 .
50 to 99
100 to 149
150 to 199
200 to 299
300 to 399 12.1 25.1 16.0
400 to 499
500 or more .
Total _
100.0 85.3 100.0 116.8 100.0 108.0 100.0 213.5 100.0 46.7 100.0 147.4 100.0 28.4
Average
250
FEDERAL HOUSING ADMINISTRATION
One project for 1,668 units, sponsored by a State supervised redevelopment agency, was approved in 1954. With this exception, all other rental projects ranged in size from 12 units to 504 units with the typical project having 78 units. Rental projects having more than 100 units each contained the greater share of the total number of units—more than three-fourths—with 18 percent of the units concentrated in projects of 500 units or more. See Table 94 for the percentage distribution of projects and units by size of project for each program.
The median project for Section 213 cooperatives contained 28 dwelling units. The typical management-type project—128 units— was substantially larger than the typical sales-type project of 26 units. Over 90 percent of the dwelling units in management-type cooperatives (predominantly elevator buildings) were in projects of 100 or more units, while all units in sales-type cooperatives were in projects with less than 100 units—86 percent in projects having less than 50 units.
Size of Dwelling Unit
The median unit for projects committed for insurance during 1954 contained 4.8 rooms—equaling the previous high which was established in 1952. The typical unit in rental housing projects, containing 4.7 rooms, was slightly larger than in 1953, while the typical unit in cooperatives, with 5.4 rooms, was larger than that reported for any previous year. This is another reflection of the increased proportion of sales-type cooperative units approved during 1954, since management-type cooperative units duplicated the 1953 median of 4.8 rooms and sales-type cooperative units were smaller—5.8 rooms as compared to 6.1 rooms in 1953.
See Table 95 for the percentage distribution of dwelling units by number of rooms for individual project programs. Reflecting the 1953 legislative change which based the maximum mortgage on a dollar amount per room as well as on a percentage of value, Section 207 showed a shift toward larger units—those having 5 or more rooms accounting for 30 percent of the 1954 total as compared to 15 percent for 1953, despite the fact that 55 percent of these units were in elevatortype structures. One-fourth of Section 207 units in elevator structures contained 5 or more rooms, an increase over the 14 percent reported for 1953.
Chart 43 presents graphically the size of dwelling units by type of structure for all project sections combined. There was little change over 1953 for all types combined with the exception of a shift of approximately 6 percent from units of 4% rooms to those of 5 or more rooms. The proportion of units in walkup-type structures—predominantly under Section 207—containing 4 or less rooms decreased from about
251
HOUSING AND HOME FINANCE AGENCY
TABLE 95
Size of dwelling units for multifamily housing, by section, 1954
Rooms per unit Total rental and cooperative housing Rental housing Cooperative housing, Sec. 213
Total Sec. 207 Sec. 803 Total Management type Sales type
Dwelling units—Percentage distribution
Less than 3 4. 2 5.2 6 4 1 0 2 0
3 6.4 8. 5 8 7 7 6 2 3
3J4 . 10.6 11. 4 13. 7 1 8 8 2 16 8
4 15 1 16 1 16 3 14 6 12 1 13 0 11 2
4^ 22. 8 25 4 24 7 27 7 15 1 2Q ft 1 *
5 22 1 23 3 23 3 24. 2 18 2 23 0 13 7
5^ 7. 4 2 6 2 0 5* 5 21 9 7 8 3^ 3
6 or more 11.4 7.5 4.9 18.6 23I3 7.5 38.3
Total 100. 0 100 0 100 0 100 0 100 0 100 0 100 0
Median 4.8 4.7 4.6 4.9 5.4 4.8 5.8
SIZE OF DWELLING UNIT BY TYPE OF PROJECT, 1954
DISTRIBUTION OF UNITS COVERED BY COMMITMENTS ISSUED * 40
CHART 43
40 percent in 1953 to about 24 percent in 1954, while those of 4% rooms or more increased correspondingly. Units in elevator structures, as noted above, showed an increased proportion with 5 or more rooms (11 percentage points greater than in 1953). However, units containing 3% rooms were most popular under Section 207, accounting
252
ALL TYPES WALK-UP TYPE
40%----------------------------------- 40%-------------------——--------------
20%------------------ -I -r^-- 20%---------------------- - 37 % - ------
— - 22% - 22% - |9% _----------------|9% _ _ - j —
H% 11% ° 3% 2% 11%
o LJ____LJ___LJ____LJ___...... .... o f i r—; II |l ..........
ELEVATOR TYPE ONE-FAMILY TYPE
40%-----------------------------------40%------------------------------- -
20%—r—-11-1 p"]------™1-r—]----------- 20%------------------------PT1- 4S? -
- 20% - 22% 20% - 20% ----- ----------------- -j j- 21% - —
o n 11.. 11'i I I o a i I I 111 i....) (3) 1.2 0.3 5.1 4.3 8.6 2.6 71.6 (2) (3) 7.5
100.0 36.4 100.0 36.4 100.0 36.3 100.0 30.6 100.0 36.0 100.0 35.4 100.0 100.0 100.0 100.0 100.0 100.0
Average 31.1 31.4 30.9 28.3 28.8 31.8
1 Data for 1951-54 are based on net proceeds; data for earlier years are based on face amount.
2 Less than 0.05 percent.
3 Included in “over 63 months.”
During 1954 the 36-month loans constituted the bulk of insured transactions (69 percent of the number of loans) and accounted for $8 out of every $10 insured under the property improvement program. Only a small share—one-half of 1 percent—of the 1954 loans insured had maturities longer than 36 months.
Type of Property and Improvement
Table 105 shows the types of property and improvements financed with the proceeds of Title I loans. Nine out of every 10 loans, constituting 82 percent of the total net proceeds insured, were used by borrowers to repair or modernize single family homes. An additional 10 percent of the proceeds disbursed covered repairs or alterations to multifamily structures. The remaining amount was evenly distributed among the construction or repair of garages, farm buildings, and commercial and industrial structures. (Also see Table 106 showing amount of property improvement loans by type of property.)
These properties were improved in various ways as indicated in Table 105 and shown graphically in Chart 46. The distributions by
263
HOUSING AND HOME FINANCE AGENCY
TABLE 105
Type of improvement by type of property for property improvement loans, 1954
Major type of improvement Type of property improved
Total Singlefamily dwellings Multifamily dwellings Commercial and industrial Farm homes and buildings Garages and other
Number of loans—Percentage distribution
Additions and alterations 14.0 14.1 11.8 20. 2 13.3 11 8
Exterior finish _ 11.1 11.1 14. 2 7.1 10.0 1.6
Interior finish 7.1 6.9 10. 5 13.0 2.8 1.5
Roofing ... 5. 6 5.6 6.8 5. 9 9.4 1.4
Plumbing 9.4 9.6 8.6 8. 2 15.0 1.3
Heating 13.9 13. 7 22.1 13. 9 8.3 2 2
Insulation 19.8 20.9 17.5 5.6 8.3 1.5
New nonresidential construction 2.1 10.0 26.6 75.4
Miscellaneous— 17.0 18.1 8.5 16.1 6.3 3.3
Total 100.0 100.0 100.0 100.0 100.0 100.0
Percent of total.. 100.0 88.4 6.7 1.2 1.6 2.1
Net proceeds—Percentage distribution
Additions and alterations 21.6 18.3 1.8 0.7 0.4 0.4
Exterior finish 14.1 11.9 1.7 .2 .3 (0
Interior finish 8.6 6.8 1.2 .4 .1 .1
Roofing 4.5 3.7 .5 .1 .2 (1)
Plumbing 8.1 6.7 .9 .2 .2 .1
Heating 14.7 11.7 2.5 .3 .1 .1
Insulation _. 12.1 10.9 1.0 .1 .1 (1)
New nonresidential construction.. 3.4 .3 .9 2.2
Miscellaneous 12.9 11.5 .8 .4 .1 .1
Total 100.0 81.5 10.4 2.7 2.4 3.0
Net proceeds—Average
Additions and alterations $917 $870 $1,407 $1,687 $1,095 $860
Exterior finish _ 754 717 R048 1X87 '934 911
Interior finish 718 658 L 039 1,502 870 1,291
Roofing.. 473 449 ' 619 '969 544 685
Plumbing . 506 465 907 1,187 671 905
Heating 626 574 972 1, 226 640 1,150
Insulation 362 351 506 794 378 508
New nonresidential construction 966 1,531 1,303 832
Miscellaneous 450 422 883 L 193 '689 920
Total 591 546 922 1,349 890 847
1 Less than. 0.05 percent.
type of improvement refer only to the major purpose of the loan. Therefore, when a loan is disbursed by a lender for several purposes, the whole loan is reported for the principal type of improvement only. Thus, a loan reported to FHA as financing exterior finishing may also include, for example, minor work on the insulation of the structure and interior decorating.
This is the fourth consecutive year that insulation work constituted the most frequently reported type of improvement. About 1 out of every 5 loans insured during J954 was used to finance the installation or repair of home insulation. These loans, typically inexpensive, averaged $362 in 1954 and accounted for only one-eighth of the total
264
FEDERAL HOUSING ADMINISTRATION
TABLE 106
Amount of property improvement loans by type of property, 1954
Net proceeds of individual loan Total Type of property improved
Single family dwellings Multifamily dwellings Commercial and industrial Farm homes and buildings Garages and other
Number of loans—Percentage distribution
Less than $100 1.5 1.6 0 6 0 2 0 7 0 3
$100 to $199 12.8 13 8 6 4 3 3 6 8 3 2
$200 to $299 16.6 17 7 10 2 4 5 9 4 4 9
$300 to $399 2 15 9 16 7 11 3 6 3 11 1 6* 7
$400 to $499 10.7 11.0 8 3 5 5 4 8* 0
$500 to $599 9.0 9.0 9 3 6 1 8 1 11*3
$600 to $799 10.7 10 3 11 7 9 0 12 3 20 6
$800 to $999 6.5 6.1 8 4 6 6 8 4 15 6
$1,000 to $1,499 8.9 8.0 14.6 15 7 15 9 18 2
$1,500 to $1,999 3.6 3.1 7.3 10 3 7 6 5 8
$2,000 to $2,499 1. 7 1.4 4. 4 8 9 4 4 2 4
$2,500 to $2,999 __ 1.9 1.3 5 2 21 9 5 7 215
$3,000 to $3,999 . 1 1. 2 1.7 1 2 JL
$4,000 to $4,999 . (1) .5
$5,000 or more .1 .6
Total 100.0 100.0 100.0 100 0 100 0 100 0
Median ___ $430 $403 $666 $1 269 $689 $752
Average $591 $546 $922 $L 349 $890 $847
1 Less than 0.05 percent.
TYPE OF IMPROVEMENTS FINANCED
BY FHA INSORED PROPERTY IMPROVEMENT LOANS, 1954
CHART 46
265
LEGEND ADDITIONS PLUMBING ROOFING
TYPE OF IMPROVEMENT 8 ALTERATIONS
100.0% - 100.0% 9*4- 8.1% 5.64-4.54
OF NUMBER OF NET 1*1.0 4-21.0 4 \ /
OF LOANS PROCEEDS 1 yK.-.—\ HT /
INSULATION MISCELLANEOUS HEATING INTERIOR FINISH
I9.8%-I2.l% I7O%-I2.9% 13,9%- 14.7% 7.1%- 8.6%
EXTERIOR FINISH
V 11.1%-14.1%
\ NEW
NON-RESIDENTIAL CONSTRUCTION
2.1% - 3.4%
HOUSING AND HOME FINANCE AGENCY
dollar volume of Title I loans insured. Another indication of the popularity of these loans can be seen in Table 107, which shows that nearly one-half of the loans for home insulation were in the $200-399 range and that nine-tenths involved net proceeds of less than $600.
As shown in Table 105, structural additions and alterations ranked second in the number of loan transactions. Work of this type accounted for 14 percent of the total loans insured—the highest proportion recorded for additions and alterations expenditures since 1939. These loans, averaging $917, account for the largest share of the total dollar amount (21.6 percent) of insurance written under the Title I program during 1954. They continued to be one of the most expensive type insured, as shown by Table 107. which indicates that the typical loan for this purpose amounted to $742 and that two-thirds of the dollar volume insured was accounted for in loans of $1,000 or more.
Another important type of work financed in 1954 was the installation and repair of heating systems. Although dropping in relative
TABLE 107
Amount of property improvement loans by type of improvement, 1954
Net proceeds of individual loan Total Major type of improvement
Additions and alterations Exterior finish Interior finish Roofing Plumbing Heating Insulation New non-residen-tial construction Miscellaneous
Number of loans—Percentage distribution
Less than $200 14.3 5.2 4.8 11.2 15.3 17.6 9.4 22.9 1 9 22 6
$200-$399 32.5 17.2 18.8 25.4 42.6 40.4 27.3 44.6 10 0 42 0
$400-$599 19.7 18.1 22.1 19.9 19.8 16.2 21.7 22.0 18 0 17 0
$600-$799 10.7 13.4 17.4 11.5 8.2 8.6 15.7 5.8 18 9 6 2
$800-$999 6.5 8.6 12.6 6.4 4.6 4.7 10. 7 2.1 14. 9 3 1
$1,000-$1,499 8.9 17.2 15.5 12.6 5.8 7.1 10.0 1. 7 19 4 4 4
$1,500-$!,999 3.6 9.1 5.3 6.1 2.1 2.7 2. 7 . 5 7 2 2 1
$2,000-$2,499 1.7 5.0 1.9 3.0 .9 1.3 1.1 . 2 3 6 1 1
$2,500-$2,999 1.9 5.7 1.5 3.7 .7 1.4 1.0 . 2 4 4 1 5
$3,000 or more .2 .5 .1 .2 (>) (*) .4 (*) 1.7 (*)
Total 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0
Median $430 $742 $649 $541 $359 $356 $521 $321 $816 $320
Average $591 $917 $754 $718 $473 $506 $626 $362 $966 $450
Net proceeds—Percentage distribution
Less than $200. 3.5 0.8 0.9 2.1 4.7 5.0 2.3 9.0 0.3 7 3
$200-$399 15.9 5.4 7.5 9.8 25.8 22. 9 12.9 36.3 3.2 26 7
$400-$599 15.9 9.4 14.3 13.2 19.9 15.2 16.8 28. 8 9 2 17 9
$600-$799 12.2 9.8 15.9 10.6 11.8 11.4 17.2 10.7 13 4 9 2
$800-$999 9.6 8.2 14.8 7.8 8. 5 8.1 14.9 5.1 13 6 6 1
$1,000-$1,499 17.2 21.3 24.0 19.6 14.1 15.8 18.3 5.5 23 3 11.3
$l,500-$l,999 10.0 16.1 11.7 13.6 7.2 8.6 7.0 2.2 12.4 L4
$2,000-$2,499 6.2 11.4 5.3 8.7 3.9 5.4 3.9 1.2 7 9 4 9
$2,500-$2,999 8.1 15.6 4.9 12.8 3.7 6.8 4.1 1.0 11 5 8 5
$3,000 or more 1.4 2.0 .7 1.8 .4 .8 2.6 .2 5.2 .7
Total 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0
1 Less than 0.05 percent.
266
FEDERAL HOUSING ADMINISTRATION
importance from 1953, heating loans ($626) were reported almost as frequently as those for additions and alterations.
The remaining loans covered the financing of interior and exterior finishes, roofing, plumbing, and some new nonresidential construction, as well as miscellaneous types of work. It is of interest to note that loans in the miscellaneous category have again become more prevalent, increasing for the eighth consecutive year and accounting for 17 percent of the total. The reason may be partly the increases in the types of jobs falling into this category, such as electric wiring, and also the more frequent use of loans for more than one type of improvement which cannot be easily classified elsewhere.
The year 1954 marks the first time that State distributions by type of improvement have been available. The greater number of States show a tendency to conform to the national pattern; however, there are some notable exceptions. For example, insulation loans make up one-fifth of the national total, but Table 108 reveals an expected concentration of such loans in the Northern States, especially in New England. Vermont, and New Hampshire report over half of their volume as being for insulation while the remaining New England States report more than one-third of their total number of loans devoted to this type of work.
Another exception is noted in the data for New Mexico where more than 40 percent of the loans were reported for additions and alterations—3 times the national average.
Table 108 shows that 12 States reported approximately one-fourth of their loans as being for new nonresidential construction and miscellaneous loans. Arizona, California, Georgia, Louisiana and Texas reported over 30 percent for this type of improvement, and it is considered possible that the classification included the installation of various types of cooling equipment not elsewhere classified.
With but a few exceptions, the State distributions for plumbing, roofing, and finishing did not vary substantially from the national distribution.
Claims Paid by Type of Property and Improvement
The average claim paid during 1954 was $443—one-tenth larger than the $400 reported for 1953. Data on claims paid on defaulted loans during 1954 are presented in Table 109, which contains percentage distributions by type of property and type of improvement financed. The greater numbei of the claims paid in any year are in settlement of defaulted notes insured in a prior year. In 1954, almost seven-eighths of the claims paid involved loans originated within the two preceding years.
As in 1953, the bulk of the claims paid in 1954 were on defaulted loans covering improvements to single-family residences.
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HOUSING AND HOME FINANCE AGENCY
TABLE 108
Type of improvement insured by FHA, by State location of property, 1954
State Major type of improvement
Total Additions and alterations Exterior finish Interior finish Roofing Plumbing Heating Insulation Newnon-residen-tial construction and miscellaneous
Alabama Number of loans—Percentage distribution
100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 14.2 19.5 24.9 13.0 13.8 11.9 17.8 7.3 22.9 11.5 21.1 13.5 12.2 11.1 15.5 14.4 20.0 5.8 7.6 5.6 11.9 16.7 19.5 13.4 16.5 12.7 21.7 4.3 14.5 42.2 12.7 14.8 12.7 11.9 23.7 16.3 6.2 9.0 16.9 16.4 17.0 23.1 15.9 4.1 11.5 16.4 11.7 12.2 18.0 30.9 28.2 43.4 70.4 13.0 6.2 15.2 7.2 10.3 10.3 14.1 11.5 8.8 11.2 10.5 8.5 11.6 13.6 12.2 10.6 16.5 8.0 8.8 10.5 8.9 12.8 16.1 9.8 19.0 11.3 12.0 8.4 10.1 3.8 9.9 19.6 12.0 9.9 19.4 14.0 11.1 11.0 12.3 11.4 11.3 12.0 6.1 12.1 11.8 13.7 9.5 20.1 10.9 7.1 19.1 15.0 6.1 8.9 10.5 7.6 7.0 8.2 3.1 13.9 7.0 4.5 6.4 6.1 4.7 5.3 6.0 6.0 6.3 4.3 7.2 6.7 6.4 10.0 6.1 5.9 9.9 8.6 6.0 4.7 8.3 5.6 8.6 6.2 6.1 5.7 9.1 9.6 8.1 7.5 6.3 5.6 7.0 7.3 8.8 2.1 5.5 9.1 5.5 5.3 4.7 7.5 7.3 22.9 11.1 9.7 3.9 6.1 6.9 4.1 3.4 7.0 6.6 7.3 7.9 7.7 4.5 4.4 7.1 5.3 3.7 4.7 7.4 4.5 8.2 3.7 4.5 7.2 4.5 7.9 8.0 5.0 4.6 4.9 2.3 4.8 5.2 8.2 5.2 6.2 15.4 6.4 10.7 6.6 4.1 6.4 5.2 5.9 6.9 4.0 11.0 4.4 7.3 4.8 3.9 17.7 4.9 13.0 11.1 14.7 12.5 15.6 6.9 5.8 5.8 8.8 7.6 11.8 10.1 9.2 11.7 11.8 7.3 10.9 7.5 4.1 5.3 9.1 16.9 21.4 13.4 9.1 9.7 11.7 4.4 8.9 17.3 6.2 11.2 11.6 7.2 9.3 9.5 9.2 4.0 9.0 11.4 9.5 7.6 10.3 2.9 5.3 9.6 15.8 6.9 14.7 20.6 4.2 2.0 14.8 14.0 18.9 5.3 5.6 8.0 13.6 11.9 13.2 3.8 6.5 12.6 17.9 16.9 24.1 7.5 12.8 2.6 20.1 10.4 18.6 14.3 16.0 5.7 15.9 10.3 19.3 5.4 16.1 18.3 3.6 17.2 12.9 11.6 21.8 2.8 16.5 23.0 14.5 9.1 13.4 10.3 5.5 18.6 12.9 8.1 18.5 12.9 19.0 4.8 12.9 1.6 0.2 3.7 5.3 0.4 3.9 10.5 16.8 36.0 22.3 28.4 17.7 10.0 15.9 27.0 30.3 17.3 25.1 32.3 5.3 42.1 32.3 40.3 25.3 10.5 4.7 20.6 15.1 21.1 11.5 53.8 27.9 1.0 30.4 19.5 23.7 25.3 5.9 7.0 28.2 38.9 13.8 19.8 11.8 2.3 14.2 54.6 39.9 8.9 28.2 15.2 26.5 6.4 0.7 0.6 24.7 31.1 19.4 36.7 24.4 9.7 18.0 13.3 23.7 40.8 14.0 12.4 10.7 9.8 16.6 12.9 33.7 4.8 25.1 4.8 20.4 12.6 19.3 16.5 12.2 9.3 26.7 3.7 7.1 24.2 10.2 10.6 14.1 13.0 23.6 11.7 7.8 4.4 26.0 17.9 26.7 37.0 20.2 4.4 13.9 12.8 12.0 14.0 15.6 10.7 21.2 11.0
Arizona .
Arkansas
California
Colorado
Connecticut
Delaware __ _ __
District of Columbia
Florida
Georgia.-
Idaho -
Illinois
Indiana
Iowa
Kansas
Kentucky
Louisiana
Maine
Maryland
Massachusetts
Michigan
Minnesota
Mississippi
Missouri
Montana
Nebraska
Nevada
New Hampshire
New Jersey
New Mexico
New York
North Carolina
North Dakota
Ohio
Oklahoma
Oregon____________________
Pennsylvania
Rhode Island
South Carolina South Dakota.-
Tennessee
Texas
Utah __________________
Vermont
Virginia
Washington
West Virginia
W isconsin
Wyoming
Alaska
Hawaii
Puerto Rico
Gnani
Total
100.0 14.0 11.1 7.1 5.6 9.4 13.9 19.8 19.1
Approximately one-third of the number and dollar amount of defaults were accounted for by two types of notes—those financing exterior finishes and insulation work. The relative experience for exterior finishing jobs was less satisfactory than for insulation work. In fact, during the last several years exterior finish has made up about one-eighth of the volume of loans—one-sixth of the dollar amount—
268
FEDERAL HOUSING ADMINISTRATION
and has accounted for nearly one-fifth of the claims and between 20 and 25 percent of the amount of claims paid. The experience with insulation loans has been much better, despite the fact that this type of improvement ranks second in the distribution of claim volume. For example, insulation has accounted for 1 out of every 5 loans insured in the last few years and has averaged slightly more than 11 percent of the net proceeds insured. Claim submissions based on insulation notes have averaged only about 14 percent of the number and less than 10 percent of the dollar volume.
Claims resulting from loans for the other types of improvements are all about proportionate to the volume of loans insured.
TABLE 109
Type of improvement by type of property for claims paid on property improvement loans, 1954
Major type of improvement Type of property improved
Total Single family dwellings Multifamily dwellings Commercial and industrial Farm homes and buildings Garages and other
Number of claims paid —Percentage distribution
Additions and alterations. _ __ __ .. 12.7 12.5 12.6 20.6 20.6 9 6
Exterior finish_ __ _ 18.6 19.4 17.1 5.9 13.8 2 3
Interior finish _ 7.6 7.4 10.0 16.8 7.1 1.3
Roofing... - 8.0 8.0 7 9 5.1 13. 8 2 0
Plumbing _ 10.6 10.7 10.5 8.4 13. 4 1 2
Heating - _ 12. 1 11.6 23.0 14. 7 7.9 1 8
Insulation, _ 14.1 14.8 10.9 4.1 8.1 2 7
New nonresidential construction _ ___ 1.6 7.4 17.0 76.6
Miscellaneous 14.7 15.6 8.0 17.0 6.6 2.5
Total - _ - _ _ 100.0 100.0 100.0 100.0 100.0 100 0
Percent of total 100.0 87.9 6.0 1.8 3.0 1.3
Amount of claims paid- —Percentage distribution
Additions and alterations-, . 18.3 14.8 1.7 1.0 0. 6 0 2
Exterior finish.. . 23.5 20.7 1.9 .2 .6 . 1
Interior finish _ 7.9 6.2 .9 .7 . 1 (!)
Roofing - . .. 5.8 4.9 .5 . 1 .3 (1)
Plumbing.. _ _ __ - - __ 9.0 7.3 1.0 .2 .5 (1)
Heating- „ ----------- 11.4 8.7 2.0 .4 . 2 . 1
Insulation. _ _ . _ _ _ 9.1 8.2 .6 .1 . 2 (1)
New nonresidential construction.. 3.1 .3 1. 4 1.4
Miscellaneous 11.9 10.6 .6 .5 .2 (*)
Total 100.0 81.4 9.2 3.5 4.1 1.8
Claim paid—Average
Additions and alterations. - $642 $598 $988 $1.141 $753 $625
Exterior finish _ _ 560 540 821 927 636 821
Interior finish . .. 459 420 681 977 266 813
Roofing __ __ . - 321 309 419 602 347 518
Plumbing 377 346 692 635 508 658
Heating _ 415 378 655 670 282 942
Insulation _ _ _ 286 279 390 539 336 395
New nonresidential construct ion. _ . __ __ 863 1,113 1, 211 641
Miscellaneous 359 342 572 '661 505 677
Total 443 411 677 853 604 643
1 Less than 0.05 percent.
269
SECTION 4
ACTUARIAL ANALYSIS OF INSURING OPERATIONS
This section of the report contains analyses of (1) the reserves of the insurance funds of the Federal Housing Administration and (2) the termination experience of FHA-insured home mortgages. The analysis of the reserves includes the results of the annual valuation of the reserve liabilities of the mortgage insurance funds. For insurance organizations, the purposes of such valuations generally are to establish whether a fund is solvent and to determine how much of surplus may be available for distribution. Although the method used in making valuations of FHA’s insurance funds is in accordance with standard insurance practice, there is a noteworthy distinction between the reserve liabilities of FHA’s insurance funds and those of insurance organizations underwriting conventional risks. Unlike the policy reserves of insurance organizations which measure liabilities of a fund based in part on expected mortality, the reserve liabilities of FHA’s funds are a measure of the contingent liabilities in the event adverse economic conditions of approximately depression magnitude develop immediately. FHA’s reserve liabilities, therefore, are not designed to measure solvency according to its accepted meaning in the underwriting of conventional risks. For FHA’s funds underwriting risks which are predominantly economic in nature and cyclical in pattern, the reserve liabilities are designed to appraise the ability of the surplus of a fund to meet such future losses and expenses as might be incident to a general deterioration of economic conditions. For only one of FHA’s funds the reserve liabilities are used to determine how much of surplus may be distributed. This is the Mutual Mortgage Insurance Fund from which the National Housing Act authorizes the Federal Housing Administration to distribute a participating share to a mortgagor upon the termination of a mortgage insurance contract provided such a termination did not involve the payment of an insurance claim. FHA’s other funds are not authorized by the statute to make such distributions.
The analysis of the termination experience covers the estimated life expectancy of Section 203 home mortgages and includes the actuarial schedules on survivorship and rates of termination by policy year. The life expectancy is estimated in part from the survivorship schedule. The rates of termination for the various types of terminations of mortgages insured under Section 203 are discussed in connection with the schedule on termination rates.
270
FEDERAL HOUSING ADMINISTRATION
Analysis of Reserves of Insurance Funds
There is herewith presented an analysis of the annual valuation of the reserve liabilities of the insurance funds of the Federal Housing Administration. There are eleven such insurance funds under which the fiscal provisions of the separate insurance programs are administered. Each of the insurance funds was created by specific provision in the National Housing Act. The first, the Mutual Mortgage Insurance Fund, was provided for in the original National Housing Act, approved June 27, 1934; and the most recently established funds were provided for by the Housing Act of 1954 amendments, approved August 2, 1954, namely, the Section 220 Housing Insurance Fund, the Section 221 Housing Insurance Fund, and the Servicemen’s Mortgage Insurance Fund. Each of the separate insurance funds is credited with fee, premium, and investment income and charged with administrative expenses and insurance losses with respect to loan and mortgage insurance contracts assigned to the fund. The following listing identifies the various insurance funds, the date of their establishment, and the FHA insurance programs which are operated through the respective funds:
Insurance fund Date established Insurance program
Title I Insurance Fund.,- June 3, 1939 Apr. 30, 1950 June 27, 1934 Feb. 3, 1938 Aug. 2, 1954 Sec. 2. Sec. 8. Secs. 203, 207 1, and 225. Secs. 207, 210, and 213. Sec. 220. Sec. 221. Sec. 222. Sees. 603, 603-610, 608, 608- 610,609, and 611. Title VII. Title VIII. Secs. 903 and 908.
Title I Housing Insurance Fund Mutual Mortgage Insurance Fund Housing Insurance Fund. _ -
Sec. 220 Housing Insurance Fund Sec. 221 Housing Insurance Fund
Servicemen’s Mortgage Insurance Fund War Housing Insurance Fund Housing Investment Insurance Fund Military Housing Insurance Fund National Defense Housing Insurance Fund do Mar. 28,1941 Aug. 10, 1948 Aug. 8, 1949 Sept. 1, 1951
1 Insured prior to Feb. 3,1938.
Each is established to be self-supporting from its own earnings and from capital contributed by one FHA insurance fund to another FHA insurance fund. All advances by the Government to the insurance funds have been repaid with accrued interest to the United States Treasury out of earned surplus, in accord with legislation adopted March 10, 1953, and June 30, 1953, the final payment being made on March 11, 1954. There were 6 funds which received such advances and the total amount which they repaid was $85,882,961.52.
Nature of Reserve Liabilities
The earned surplus of these funds, representing the accumulation of net income after administrative expenses and insurance losses and the capital contributed by some funds to establish and operate other
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funds, constitutes the resources of each fund available to cover future net insurance losses and administrative expenses. Recently established funds have, of course, accumulated little in the way of earned surplus, while the accumulation in older funds is comparatively substantial.
An appraisal of the ability of the earned surplus of a fund to meet the future losses and expenses of its insurance programs depends largely on the extent to which these future liabilities of the fund may be accurately measured. Unlike life or casualty insurance, the catastrophe hazard in FHA’s mortgage insurance programs, and in FHA’s property improvement loan insurance program to a somewhat different degree, represents the major part of the risk which is underwritten. The catastrophe hazard is reflected in the past experience of mortgage lending which discloses periodic investment losses of substantial magnitudes incident to a general deterioration of economic conditions. The major liabilities which the mortgage insurance funds can be expected to incur would result from such adverse economic conditions. Because such economic reversals cannot be predicted either in point of time or in magnitude, the measurement of the future liabilities for a mortgage insurance fund involves use of specially developed appropriate assumptions of contingent possibilities. The Federal Housing Administration has made an effort to measure such liabilities—an effort which is unique in the measurement of risks which are predominantly economic in nature.
For life and casualty organizations underwriting conventional risks, the liabilities for the insurance contracts in force are classified as policy reserves or policy reserve liabilities. For FHA’s insurance, such liabilities are classified as reserve liabilities for insurance contracts in force, or “required reserves.” Unlike those of private insurance organizations, which underwrite risks whose frequency of occurrence is reasonably certain, however, FHA’s required reserves are a measure of the contingent liabilities of the insurance funds in the event of a cyclical reversal in which adverse economic conditions of approximately depression magnitude develop immediately. The required reserves are a measure of contingent liabilities for the reason that they measure the discounted net losses and expenses contingent upon the development of adverse economic conditions. Since such a contingency cannot be predicted, FHA’s required reserves are computed on the assumption that such a contingency may develop at any time, and, therefore, may occur immediately. When the reserve liabilities of each of the insurance funds are so valued, they can be compared with the capital and surplus of each fund to show the status of the reserve requirements of the fund.
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Valuation of Reserve Liabilities
Although such valuations of reserve liabilities are unique, the basis of the technique used by FHA is in accordance with standard insurance practice. The reserve liabilities for mortgage insurance contracts in force represent the difference between the present value of expected future income and the present value of expected future insurance losses and expenses with respect to the insurance contracts in force at any point in time. The technique for adapting this basic concept of reserves, briefly, involves a cyclical framework of defined amounts representing phases of assumed unfavorable and favorable experience for a hypothetical number of insurance contracts. When these amounts for premium and investment income, on the one hand, and insurance loss and administrative expenses, on the other, are both discounted to present values, their difference for each year in the history of the hypothetical group of insurance contracts is the reserve factor used in measuring the required reserve liabilities for the insurance contracts in force. When the accumulated surplus and capital of the fund is equal to or exceeds these required reserves, the insurance program may be described as adequately protected by its own resources. Thus, the reserve factor, which is expressed as a given number of dollars per $1,000 of original face amount of mortgage insured, represents the reserve liability for a group of mortgages exposed to a cyclical risk beginning with unfavorable experience first, followed by favorable experience, and then by similar phases of unfavorable and favorable experience until the maturity of that group of mortgage insurance contracts is reached. By beginning the exposure with the unfavorable phase of the cyclical framework, the concept of an immediate economic reversal is accommodated.
The defined amounts for future premium and investment income, on the one hand, and future insurance loss and administrative expenses, on the other, used in computing reserve factors for various types of insured mortgages at each duration, i. e., the number of years of insurance after endorsement, represent estimates of experience of insured mortgages which could be expected if these mortgages were exposed to the risk of title transfer and loss during periods of unfavorable and favorable economic conditions. These estimates for the favorable economic conditions are based in part on FHA’s own experience with insured mortgages, which have been exposed to risk during a period of largely favorable economic conditions. Estimates of unfavorable experience are based on a variety of sources of information and analyses of mortgage experience during the 1930’s and adapted for high-percentage, long-term amortized mortgages of the kind FHA insures. Recorded experience with such mortgages during periods of unfavorable economic conditions is very limited in scope
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since it was not until the time of the initiation of FHA’s insurance programs that the high-percentage, long-term amortized mortgage was widely popularized.
Reserve Factors
The experience information which FHA uses in its determination of reserve factors is conceptually similar to mortality experience used by private insurance organizations. Like that of private insurance organizations, there is a continuous effort to improve the information on the basis of experience.
The reserve factor for a mortgage insurance contract in force is highest in its first policy year and declines with the duration of the insurance contract. These factors decline with duration because the amount at risk (i. e., the unpaid insured loan balance) and incidence of default and foreclosure involving insurance claim both decrease as the policy year increases. Thus the reserve liabilities for a group of contracts which are, say, only a year old are greater than for a group of contracts of similar maturity and risk which are 5 years old. If both groups of these contracts are in force and are evaluated at the end of the same accounting period, their reserve liabilities will reflect exposure to the same successive phases of, first, expected unfavorable experience, and then, expected favorable experience until their respective maturities are reached.
The financial status of a fund covering two such groups may be established by comparing the accumulated earned surplus for these two groups of contracts with their reserve liabilities. If both groups have had comparable experience in the way of income, losses, and expenses, the accumulated earned surplus for the younger group would be smaller than for the older group and the reserve liability for the younger group would be larger than for the older group. The difference between the earned surplus of both groups and their combined reserve liabilities reflects the financial status of their fund. If the actual experience for both groups of mortgages were such that their insurance losses were of modest proportion, at some point in time the hypothetical fund would reach a balance status, i. e., where the earned surplus is equal to the required reserves with respect to the insurance contracts in force. At this point, the earned surplus would be sufficient to cover adverse experience of approximately depression magnitude.
For illustrative purposes, Table 110 shows the calendar year (as distinct from fiscal year) reserve factors for typical mortgage insurance contracts in the three oldest mortgage insurance funds of the Federal Housing Administration: the Mutual Mortgage Insurance Fund, the Housing Insurance Fund and the War Housing Insurance Fund.
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These factors were used to compute the required reserves shown in Table 112. They are shown for both home and project mortgages for the first 5 policy years or durations. As between home mortgages insured under the Mutual Mortgage Insurance Fund and the War Housing Insurance Fund (authority under Section 603 to insure mortgages on new homes was terminated on April 30, 1948, and to insure refinanced Section 603 mortgages on existing homes was terminated on August 2, 1954), the differences in the reserve factors are substantial, as they also are between project mortgages insured under the Housing Insurance Fund (Section 207 and Section 213 programs) and the War Housing Insurance Fund (authority under Section 608 to insure new mortgages was terminated April 20, 1950, and authority to insure refinanced Section 608 mortgages was transferred to Section 207 on August 2, 1954). The differences in the reserve factors shown represent differences in risk reflecting a number of elements of risk, among them, loan-value ratio, term of mortgage, amortization basis, rate of insurance loss, rate of title transfer (foreclosure involving claim for insurance), rate of prepayment, and rate of withdrawal (foreclosure not involving claim for insurance).
Estimates for several of the more important elements of mortgage risk, namely, the rate of title transfer and the rate of insurance loss for typical insured mortgages, are shown in Table 111 to provide some indication of the magnitudes which go into the determination of the reserve factors. The rates shown are only for the unfavorable phase of the title transfer cycle (i. e., depression period) and for the same types of mortgages and durations as shown in Table 110. These rates reflect the estimates of the title transfer and loss experience which could be expected in the case of these typical insured mortgages if they were exposed during unfavorable economic conditions. The
TABLE 110
Calendar year reserve factors per $1,000 of original face amount of insurance in force for typical home and project mortgages insured under 3 FHA insurance funds
Duration Home mortgages Project mortgages
Mutual mortgage insurance fund 1 War housing insurance fund3 Housing insurance fund 3 War housing insurance fund 4
0 $32.147 $46. 850 $35.572 $67. 827
1 29. 881 43.454 31.786 63. 847
2 27. 401 39.757 28.069 59. 986
3 . 24. 716 35.812 24 375 56 130
4 21.730 31. 613 20. 616 52.223
1 Under Sec. 203, term of 25 years, 90 percent loan-value ratio, and mortgage pattern rating of 60-100.
3 Under Sec. 603, term of 25 years.
3 Under Sec. 207, declining annuity basis of amortization and term of 40 years.
4 Under Sec. 608, level annuity basis of amortization and term of 32 years and 7 months.
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rates for the favorable phase of the title transfer cycle are, of course, lower. Differences in these rates as between funds and type of mortgage account in part for the differences in reserve factors shown in Table 110.
TABLE 111
Standard rates of title transfer and insurance loss per $1,000 of original face amount of insurance in force for typical home and project mortgages insured under 3 FHA insurance funds during the unfavorable phase of the title transfer cycle
Duration. Home mortgages Project mortgages
Mutual Mortgage Insurance Fund, i War Housing Insurance Fund 2 Housing Insurance Fund 3 War Housing Insurance Fund <
Rate of title transfer Rate of loss Rate of title transfer Rate of loss Rate of title transfer Rate of loss Rate of title transfer Rate of loss
0 0.0375 $326 0.0425 $351 0. 0475 $339 0.0525 $412
1 .0370 316 .0422 339 .0467 325 .0522 405
2 .0365 305 .0418 327 .0458 310 .0518 397
3 .0359 293 .0412 312 .0448 295 .0513 388
4 .0353 279 .0404 296 .0437 279 .0507 378
1 Under Section 203, term of 25 years, 90 percent loan-value ratio, and mortgage pattern rating of 60-100. 2 Under Section 603, term of 25 years.
8 Under Section 207, declining annuity basis of amortization and term of 40 years.
4 Under Section 608, level annuity basis of amortization and term of 32 years and 7 months.
To illustrate the significance of the rates as shown in Table 111, if there were 100,000 home mortgage contracts insured under Section 203 and exposed at the beginning of their first policy year to adverse economic conditions, 3.75 percent of these contracts or 3,750 could be expected to be title transfers during that year. Since for purposes of computations, each such contract has a unit original face amount of $1,000 and the standard rate of loss in the first policy year is $326 per $1,000, the total amount of insurance losses expected during the first year from the initial group is $1,222,500, or the product of the number of title transfers and the rate of loss. The insurance losses in the second policy year are the amount based on the surviving mortgage contracts at the beginning of the second policy year, or 95,100 (the initial 100,000 less the sum of the 3,750 title transfers and 1,150 other terminations of contracts). The standard rate of title transfer for the second policy year is 3.70 percent, and the product of the survivors and this rate is 3,519 title transfers. With a loss rate of $316 per $1,000 of original face amount of mortgage insurance, insurance losses during the second policy year are $1,112,004. For the unfavorable phase of the title transfer cycle, the average annual title transfer rate during the first five years is assumed to be 3.65 percent of insurance contracts in force at the beginning of each year and average annual insurance losses during this period are computed at $1,006,388 per $100,000,000 of original insurance in force for these
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Section 203 mortgages for which the reserve factors are shown. These assumptions would reflect for cases insured immediately before a depression (1) 5-year foreclosure and FHA acquisition of 16.48 percent of the insured cases; (2) net FHA losses on these cases totaling 5.03 percent of the original amount of insured mortgages; and (3) average losses per property acquired of $305 per $1,000 of mortgage. For these properties, FHA net disposal prices are assumed to average only $695 per $1,000 of original mortgage amount or about 62.6 percent of the original FHA valuation.
It should be noted that, in this discussion of reserves, consideration is given only to reserves for mortgage insurance contracts in force. Reserves for other purposes, such as reserves for future losses on properties and mortgage notes already on hand, are set up in the separate insurance funds and these are the more familiar types of business reserves. With this brief explanation of the nature of reserves for insurance contracts in force, attention may be directed to a valuation of the reserve liabilities for the separate insurance funds as of December 31, 1954.
Financial Status of Mortgage Funds
Table 112 summarizes some of the salient information on the financial status of the 11 funds. It first shows the outstanding balance of the insurance in force with respect to the loan or mortgage insurance contracts assigned to the funds and in force as of December 31, 1954. It also shows their respective earned surpluses and capital contributions from other funds. The capital contribution to one FHA fund from the earned surplus of another FHA fund for the purpose of establishing and operating that fund is provided for by general authority in Section 219 of the National Housing Act and under explicit direction in Sections 8, 207, 220, 221, 222, and 903. Seven of the insurance funds have received capital contributions in the amount of $17,500,000 as of December 31, 1954. The bulk of this amount, or $16,500,000, was contributed by the earned surplus of the War Housing Insurance Fund, and of this amount approximately $5.8 million went to the Housing Insurance Fund and $6.8 million to the National Defense Housing Insurance Fund. The figures for earned surplus of the contributing funds do not include the amount of these contributions.
The third column of figures shows the required reserves, or reserve liabilities for mortgage insurance contracts in force adjusted for the unearned premiums. Because FHA’s accounting system is on an accrual basis, the earned surplus does not include the unearned premiums. The reserve requirements are adjusted for the estimated unearned premiums to be retained after refunds of unearned premiums upon prepayment of insured mortgages prior to maturity.
350920—56——20
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TABLE 112
Outstanding balance of insurance in force, earned surplus, and estimated reserve requirements in the insurance funds of the Federal Housing Administration
As of Dec. 31, 1954
Outstanding balance of insurance in force Earned surplus and contributions from other insurance funds 1 Estimated reserve requirements, adjusted 3 Excess of earned surplus over estimated reserve requirements, adjusted
Title I Housing Insurance Fund Mutual Mortgage Insurance Fund Housing Insurance Fund Sec. 220 Housing Insurance Fund $162,147,887 10,458, 216,177 553, 965,272 $1, 490,880 ’ 215, 757,547 7,181,905 985, 951 987,573 997,006 109,101,491 842,810 10,481,958 7,631,579 $7, 780,402 202,396, 873 24,941,343 -$6,289,522 13,360,674 -17,759,438 985,951 987,573 991,382 -85,660,705 842,810 -29,260,795 -15,668,272
Sec. 221 Housing Insurance Fund ... ...
Servicemen’s Mortgage Insurance Fund War Housing Insurance Fund Housing Investment Insurance Fund 141,336 4,543, 280,867 5,624 194, 762,196
Military Housing Insurance Fund National Defense Housing Insurance Fund. Total all mortgage insurance funds... Title I Insurance Fund 635, 796,593 520, 202, 759 39, 742, 753 23, 299, 851
16, 873, 750, 891 1,392,428,933 355,458,700 4 34,133,423 492, 929,042 (’) -137,470,342
Total all funds
18, 266,179,824 389,592,123
1 Contributions represent earned surplus of certain insurance funds transferred to other FHA insurance funds as contributed capital in the amount of $17,500,000.
’ For mortgage insurance contracts in force. Adjusted for estimated unearned premiums in 6 insurance funds in the amount of $47,040,814 to be retained after refunds of unearned premiums upon prepayment.
’ Includes $52,621,898 as of Dec. 31, 1954 in the Participating Reserve Account, representing balances available for participations, which account may be charged with any net loss sustained by the Mutual Mortgage Insurance Fund in any semiannual period.
4 Does not include unearned premiums in this fund amounting to $29,625,922 as of Dec. 31,1954.
s Reserve requirements are not estimated for the Title I Insurance Fund. The maximum potential liability under this fund was $237,148,026 as of Dec. 31,1954, representing the balance of reserves available to qualified lending institutions for the payment of claims. This potential liability was calculated at 10% of net proceeds of insurance written less claims paid and semiannual reserve adjustments.
The comparative financial status of each of the insurance funds may be analyzed from the figures for earned surplus and estimated reserve requirements, adjusted, and the excess of earned surplus over estimated reserve requirements, adjusted, which is also shown.
Analysis of Table 112 discloses that with respect to the mortgage insurance contracts in force only, five funds have a balance status, that is, the earned surplus is in excess of the estimated reserve requirements, adjusted. Of these, the Mutual Mortgage Insurance Fund is the only one with a significant amount of insurance in force. The others have no insurance in force, as in the case of the Section 220 Housing, the Section 221 the Housing, and Housing Investment Insurance Funds, or very little as yet, as in the case of the Servicemen’s Mortgage Insurance Fund.
Of the remaining funds in which the adjusted reserve liabilities exceed the earned surplus, the largest excess is in the War Housing Insurance Fund. This fund is younger than the Mutual Mortgage Insurance Fund, having been established in 1941 first as the Defense Housing Insurance Fund. Because no new insurance can be written under this fund, its reserve requirements will decline as a result of
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both the duration of insurance contracts in force and because of terminations of insurance contracts.
The 4 remaining funds in which required reserves exceed earned surplus are comparatively young funds, all but one of these having been established in 1949 or later. They are the Title I Housing Insurance Fund, the Military Housing Insurance Fund, and the National Defense Housing Insurance Fund. The exception is the Housing Insurance Fund. Although established in 1938, the bulk of the insurance in force in this fund is likewise of recent origin.
In connection with the status of insurance funds in which the estimated reserve requirements, adjusted exceed the earned surplus, the device of flexibility in the use of resources of the separate funds to assist other funds is noteworthy. This device is provided for in Section 219 of the National Housing Act, as amended, which was first approved by the Congress on June 30, 1953. On August 2, 1954, the Congress authorized an additional insurance fund to be included with the 6 insurance funds originally authorized to provide financial assistance to one another. This section of the statute reads as follows:
Notwithstanding limitations contained in any other sections of this Act as to the use of moneys credited to the Title I Housing Insurance Fund, the Housing Insurance Fund, the War Housing Insurance Fund, the Housing Investment Insurance Fund, the Military Housing Insurance Fund, the Defense Housing Insurance Fund, or the Section 220 Housing Insurance Fund, the Commissioner is hereby authorized to transfer funds from any one or more of such Insurance Funds to any other such Fund in such amounts and at such times as the Commissioner may determine, taking into consideration the requirements of such Funds, separately and jointly to carry out effectively the insurance programs for which such Funds were established.
In order to provide some perspective on the financial status of the separate insurance funds, Table 113 has been prepared. This table compares the earned surplus with the estimated reserve requirements, adjusted at the end of 1952, 1953, and 1954. Because of the fiscal requirements of recent amendments to the National Housing Act, as amended, a number of adjustments in balance sheet information have been made in this table in the interest of year to year comparability of the figures shown. These adjustments are explained in the footnotes to the table. For example, the figures of earned surplus in the funds as of the end of 1952 do not include the advances of principal by the Government with interest accrued to that date. The principal amounts were subsequently repaid to the United States Treasury with interest accrued to the date of payment.
Among the more significant facts disclosed by the table is the improvement over the 3-year period in the financial status of the 2 largest funds, the Mutual Mortgage Insurance Fund and the War Housing Insurance Fund. This improvement is reflected in the increase in the excess of earned surplus over estimated reserve require-
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TABLE 113
Earned surplus and estimated reserve requirements in the insurance funds of the Federal Housing Administration, as of Dec. 31, 1952-54 Government advances of principal with
Earned surplus and contributions Estimated reserve requirements, Excess of earned surplus over estimated ^lOS^not
from other funds,1 as of— adjusted,2 as of— reserve requirements, adjusted, as of— included’ in earned
surplus as of Dec. 31, 1952 3
Dec. 31, Dec. 31, Dec. 31, Dec. 31, Dec. 31, Dec. 31, Dec. 31, Dec. 31, Dec. 31, t,„,_, Accrued
1952 1953 1954 1952 1953 1954 1952 1953 1954 principal interest
Title I Housing Insurance Fund_ $938,585 $1,132,692 $1,490,880 $2,839,272 $3,722,188 $7,780,402 -$1,900,687 -$2,589,496 -$6,289,522 _
Mutual Mortgage Insurance Fund.... <135,062,209 <169,952,425 < 215,757,547 186,242,503 202,859,167 202,396,873 - 51,180,294 - 32,906,742 13,360,674 $41,994, 095 $16,134, 070
Housing Insurance Fund__________ 497,762 5,410,647 7,181,905 14,375,335 19,143,338 24,941,343 -13,877,573 -13,732,691 -17,759,438 4,170,024 1,321,892
Sec. 220 Housing Insurance Fund___________________ 985, 951 _________________________________________________ 985,951 _____________________
Sec. 221 Housing Insurance Fund___________________ 987, 573 _________________________________________________ 987, 573 -■_______________•__
Servicemen’s Mortgage Insurance Fund______________________________________________ 997,006 ___________________ 5,624 ________________________ 991,382 _____________________
War Housing Insurance Fund______ 114, 952, 703 121, 603, 296 109,101, 491 248,470,133 221,060,126 194,762,196 -133, 517,430 -99, 456, 830 -85, 660, 705 5,000, 000 1, 317, 680
Housing Investment Insurance Fund. —95,572 822,951 842,810 _________________________ —95,572 822,951 842,810 1,000,000 94,769
Military Housing Insurance Fund_ 5,362,890 9,564,286 10,481,958 30,798,669 36,454,599 39,742,753 -25,435,779 -26,890,313 -29,260,795 5,000,000 357,371
National Defense Housing Insurance
Fund________________________ 956,489 8,155,595 7,631,579 6,148,602 16,632,261 23,299,851 -5,192,113 -8,476,666 -15,668,272 __________
Total all mortgage insurance funds_____________________ 257,675,066 316, 641,892 355, 458, 700 488, 874, 514 499,871,679 492, 929, 042 - 231,199, 448 -183, 229, 787 -137, 470,342 57,164,119 19, 225, 782
Title I Insurance Fund________ 18,669,028 27,104,491 34,133,423 («) («) («) ___________________________ 8,333,314 ________
Total all funds________ 276,344,094 343,746,383 389,592,123 65,497,433 19,225,782
1 Contributions represent earned surplus of certain FHA insurance funds transferred as contributed capital to other FHA insurance funds in the amounts of $3,000,000 as of
Dec. 31, 1952, $16,100,000 as of Dec. 31, 1953, and $17,500,000 as of Dec. 31, 1954.
2 For mortgage insurance contracts in force. Adjusted for estimated unearned premiums to be retained after refunds of unearned premiums upon prepayment. For purposes of comparability, estimated reserve requirements for the Mutual Mortgage Insurance Fund as of Dec. 31, 1952-53, are adjusted for the previously required 10 percent premium transfer to the General Reinsurance Account.
3 Advances of the Government with accrued interest in the amount of $85,882,962 were repaid in full to the U. S. Treasury, the first payment being made July 1, 1953, and the final payment being made Mar. 11,1954. The earned surplus of the insurance funds concerned as of Dec. 31, 1952, exclude these advances with accrued interest which Public Law 5 and Public Law 94, 83d Cong., authorized FHA to recognize as indebtedness. For purposes of comparability in this table, the earned surplus of the funds concerned as of Dec. 31, 1952, are adjusted by deducting the principal amount of the advances with interest accrued to Dec. 31, 1952, as shown. The total amount of accrued interest repaid was $20,385,529. < Includes $52,621,898, as of Dec. 31, 1954, in the Participating Reserve Account representing balances available for participations, which account may be charged with any net loss sustained by the Mutual Mortgage Insurance Fund in any semiannual period. The comparable figure for Dec. 31, 1953, is $54,554,818. The comparable figure for Dec. 31, 1952, without allowance for the premium limitation required by Public Law 94, approved June 30, 1953, is $64,529,196.
5 Reserve requirements are not estimated for the Title I Insurance Fund. Unearned premiums in this fund amounted to $20,825,535 as of Dec. 31, 1952, $30,787,037 as of Dec. 31, 1953, and $29,625,922 as of Dec. 31, 1954. The maximum potential liability under this fund representing the balance of reserves available to qualified lending institutions for the payment of claims was $233,252,136 as of Dec. 31,1952, $261,310,506 as of Dec. 31, 1953, and $237,148,026 as of Dec. 31, 1954. This potential liability was calculated at 10 percent of net proceeds of insurance written less claims paid and semiannual reserve adjustments.
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ments, adjusted. For the former fund, the increase is of such an order of magnitude that the fund attained a balance status with respect to insurance contracts in force by the end of 1954. For the latter, the increase in the excess is from approximately —$133.5 million to —$85.7 million at the end of 1954. For two funds with a significant volume of insurance in force, there has been a moderate decrease in the excess of earned surplus over required reserves. These are the Housing Insurance Fund and Military Housing Insurance Fund. For two other funds with a relatively less significant volume of insurance in force, there has been an appreciable decrease in this excess. They are the Title I Housing Insurance Fund and the National Defense Housing Insurance Fund.
Financial Status of Title I Insurance Fund
Reserve requirements like those for the mortgage insurance programs discussed in the foregoing paragraphs have not yet been estimated for the loan insurance in force under the Title I Insurance Fund. This fund was established by the amendment of June 3, 1939, to the National Housing Act. As of December 31, 1954, the estimated outstanding balances of loans in force amounted to $1,392,428,933. The earned surplus and the unearned premium income on that date was $63,759,345 or 4.58 percent of the outstanding balance of insurance in force. The earned surplus and unearned premium income do not include $8,333,314 representing the Government investment in the capital account of the Fund which was repaid to the United States Treasury as required by the legislation of March 10, 1953. The figure also does not include a capital contribution of $1,000,000 to the Title I Housing Insurance Fund. The maximum potential liability under this fund at the year end was $237,148,026 which represents the balance of reserves outstanding to the credit of qualified lending institutions for future insurance claims on loans outstanding. This maximum potential liability is calculated in accordance with the Administrative Regulations for Property Improvement Loans under Title I, Section 2 at 10 percent of the net proceeds of insurance written less claims paid and semiannual reserve adjustments. The total amount of claims paid through the end of 1954 amounted to $138,676,532 or 1.81 percent of the net proceeds of loans insured under the Fund. Recoveries on defaulted notes on which claims were paid amounted to $51,154,717. Actual losses on defaulted notes amounted to $28,557,868 and reserves for future losses on such notes amounted to $40,817,629. The balance, i. e., between claims paid, on the one hand, and recoveries, actual losses, and reserves for losses, on the other, represents principally the notes in process of collection. The adequacy of the earned surplus and the unearned premiums on December 31, 1954, is evident when compared with the maximum claims paid under Title I since 1934 which
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amounted to 4.04 percent for insurance written in the period from 1934 to June 30, 1939. After allowing for recoveries by collection efforts after payment of these claims, the gross claim payments of 4.04 percent were reduced to 1.89 percent net claims.
Analysis of Termination Experience
Life Expectancy
On the basis of the 1935-53 experience of terminations of 1- to 4-family home mortgages insured under Section 203, it is estimated that the life expectancy of such mortgages is 7.99 years. The life expectancy of a mortgage is the period of time for which the mortgage can, on the average, be expected to remain in force. This estimated figure is based on the cumulative termination experience of the first of the FHA home mortgage insurance programs and on a projection of this experience to reflect the life expectancy for mortgages with maturities of 20 years. This termination experience has been observed over an 18-year period since the inauguration of the program operating under the Mutual Mortgage Insurance Fund, and includes all home mortgage insurance contracts written under Section 203 from 1935 through 1952 and exposed to their policy anniversaries in 1953 or prior termination dates. A projection of this cumulative experience through 2 additional years gives the estimated life expectancy of approximately 8 years for these home mortgages.
The estimated life expectancy of Section 203 home mortgages on the basis of the 1935-53 termination experience represents an increase of 0.11 year over the comparable figure reported in the 1953 annual report. The following data summarize the estimated life expectancies of these mortgages based on observed and projected termination experience shown in this and previous annual reports:
Observed experience Period of observation Period of projection Estimated life expectancy
Mortgages insured 1935-49 and exposed to policy anniversaries in 1950 or prior termination dates -- - - -- Years 15 Years 5 Years 7.55
Mortgages insured 1935-50 and exposed to policy anniversaries in 1951 or prior termination dates 16 4 7.70
Mortgage’s insured 1935-51 and exposed to policy anniversaries in 1952 or prior termination dates 17 3 7.88
Mortgages insured 1935-52 and exposed to policy anniversaries in 1953 or prior termination dates 18 2 7.99
These data reflect a trend toward longer life expectancies for Section 203 mortgages, which can be expected to continue as the effects of the relatively high levels of terminations in the late war and early postwar years continue to be offset by the relatively lower levels which have been obtaining since then. The relatively high levels of terminations, i. e., terminations in relation to insurance in force, occurred
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in the period 1944-48, with the peak rate obtaining in 1946. Prepayments accounted for most of these terminations and were the result of mortgagors paying off their mortgages or selling their homes— both developments reflecting a combination of the high personal savings and incomes and the shortages of consumer goods and housing in that war and postwar period.
Mortgage Survivors and Mortgage Termination Rates
The life expectancy of the Section 203 mortgages is estimated in part from the survivorship table presented in Actuarial Schedule 1. This table summarizes the 1935-53 termination experience for these 1- to 4-family home mortgages in terms of total annual termination rates by policy year and shows how these rates apply to an initial hypothetical group of 100,000 mortgages. When such termination rates are applied to the initial group, the number of mortgages terminating during each policy year and the number of mortgages surviving at the beginning of each policy year may be determined.
ACTUARIAL SCHEDULE 1
Survivorship table of a group of 1- to 4-family home mortgages based on aggregate termination experience by policy year for Sec. 203 mortgages insured from 1935 through 1952 and exposed to policy anniversaries in 1953 or prior termination dates
Policy year Mortgage survivors at the beginning of policy year Annual termination rates 1 Mortgage terminations during the policy year Policy year Mortgage survivors at the beginning of policy year Annual termination rates 1 Mortgage terminations during the policy year
1st 100, 000 0. 0256461 2, 565 10th 34,712 0.1515096 5, 259
2d 97,435 .0481429 4, 691 11th. 29', 453 .1385949 4,082
3d 92, 744 .0697818 6; 472 12th... 25; 371 . 1362391 3,457
4th 86 272 .0971486 8,381 13th.. 21,914 . 1349346 2, 957
5th 77,891 .1275363 9,934 14th 18:957 . 1392411 2; 640
6th 67,957 .1477010 10; 037 15th 16,317 .2346911 Si 829
7th 57,920 . 1575944 9; 128 16th... 12,488 . 2414897 3', 016
8th 48. 792 . 1594173 7,778 17th 9', 472 . 1511497 L432
9th 41,014 . 1536527 6i 302 18th < 040 . 6161137 4,954
1 The method of determining these rates is identical with the standard method of computing probabilities.
A policy year covers the annual period beginning with the date on which a mortgage contract is endorsed for insurance. Thus a mortgage insurance contract which has not passed its first anniversary is in force or exposed to the risk of termination during its first policy year. If the contract is terminated before this anniversary, it is terminated during its first policy year. Determined by the standard method of computing probabilities, the rate of termination for the first policy year is the number of mortgage insurance contracts terminated during this policy year divided by the number of mortgage insurance contracts in force (i. e., exposed to the risk of termination) at the beginning of the first policy year. Likewise, the rate of termination for the second policy year is the number of mortgages ter-
283
HOUSING AND HOME FINANCE AGENCY
]
] (
1 t
2
minated during the second policy year divided by the number of mortgages in force at the beginning of the second policy year.
The figures on mortgage survivors and mortgage terminations presented in Actuarial Schedule 1 are interpreted in the following manner: Based on the 1935-53 termination experience of Section 203 mortgages, the annual rate of termination in the first policy year is 0.0256461. When the initial hypothetical group of 100,000 home mortgages is multiplied by this rate, the product is 2,565 mortgages, which is the number of such mortgages which can be expected to terminate for various reasons within the first policy year after the date of their insurance. If these terminations during the first policy year are subtracted from the initial number of home mortgages, it leaves 97,435 mortgage survivors at the beginning of the second policy year. The annual rate of terminations in the second policy year is 0.0481429. Applied against the survivors at the beginning of the second policy year, this rate gives 4,691 mortgages, the number which can be expected to terminate during the second policy year. Subtracting these from the 97,435 mortgages in force at the beginning of the second policy year leaves 92,744 mortgage survivors at the beginning of the third policy year.
Termination Rates for Various Types of Terminations
The annual termination rates shown in the survivorship table are composed of rates for the different types of terminations. They include the two types of prepayments—prepayments in full and prepayments by supersession; the two types of titles acquired—titles retained by mortgagees and titles transferred to FHA; and other types of termination, which are predominantly maturities. These annual rates by policy year for the different types of terminations are shown in Actuarial Schedule 2. They are determined by the same method of computing probabilities as are the total annual termination rates and are, therefore, additive. Thus, the annual rate of prepayment in full for a given policy year can be added to the annual rate of prepayment by supersession for the same policy year to give the total rate of prepayment for the given policy year. The rate for a particular policy year for titles acquired by mortgagees and retained by mortgagees can be combined with the rate for the same policy year for titles acquired by mortgagees and transferred to FHA to give a total foreclosure rate for that policy year. When the annual rates for the different types of termination are added together, they give the total annual termination rates shown in both actuarial schedules.
The annual rates by policy year for the different types of termination measure the distribution of terminations during a policy year. Their interpretation is the same as for total annual termination 284
FEDERAL HOUSING ADMINISTRATION
ACTUARIAL SCHEDULE 2
Annual termination rates 1 for 1- to ^-family home mortgages by type of termination based on aggregate termination experience by policy year for Sec. 203 mortgages insured from 1935 through 1952 and exposed to policy anniversaries in 1953 or prior termination dates
Type of termination
Policy year Prepayments in full Prepayments by supersession Titles acquired by mortgagees Others Total
Retained by mortgagee Transferred to FHA
0.0186729 . 0363777 .0543432 .0793514 .1095452 . 1311986 . 1429515 . 1459328 . 1403058 . 1361349 . 1232253 . 1242402 . 1223345 . 1330144 . 1812685 . 1260138 . 1448786 . 5687204 0.0067905 .0107009 .0140208 . 0165957 . 0167993 .0158434 . 0142475 . 0128936 .0127610 .0112712 . 0098488 .0085173 . 0066086 .0054041 . 0029610 . 0016552 . 0022512 . 0047393 0.0000708 .0003383 .0004375 .0004050 .0002538 .0001677 .0000988 . 0000860 .0000715 .0000510 .0000453 .0000431 .0000151 . 0000380 0.0000777 . 0006972 .0009204 . 0006813 .0004220 .0002337 .0000929 .0000262 .0000115 .0000028 0.0000342 .0000288 .0000599 .0001152 .0005160 .0002576 .0002037 . 0004787 . 0005029 .0040497 .0054755 .0034385 . 0059689 . 0007846 . 0504616 . 1137104 . 0040199 .0402844 0.0256461 .0481429 .0697818 . 0971486 . 1275363 . 1477010 . 1575944 . 1594173 . 1536527 . 1515096 . 1385949 . 1362391 . 1349346 .1392411 .2346911 . 2414897 . 1511497 . 6161137
2d
3d
4th
5th
6th
7th
Sth
9th
10th
11th
12th
13 th .0000075
14th
15th
16 th .0001103
17th
18th . 0023696
i The method of determining these rates is identical with the standard method of computing probabilities
rates shown in Actuarial Schedule 1, and may be illustrated by the use of the same initial hypothetical group of 100,000 home mortgages. Based on the 1935-53 termination experience for Section 203 mortgages, if 100,000 such mortgages are in force at the beginning of the first policy year, a total of 2,565 mortgages can be expected to terminate during the first policy year of their endorsement. This figure is the product of the initial number of mortgages and the total annual rate of termination for the first policy year. How these 2,565 mortgages can be expected to be distributed among the separate types of terminations can be determined by multiplying their respective rates of termination for the first policy year by the number of mortgages in force at the beginning of the year. According to Actuarial Schedule 2, of these 2,565 terminations during the first year, 1,867 can be expected to be prepayments in full and 679 can be expected to be prepayments by supersession. These two types of prepayments thus account for the bulk of the terminations during the first policy year. The 19 remaining terminations can be expected to consist of 15 foreclosures, with 7 of the properties retained by mortgagees and 8 transferred to FHA, and 4 other terminations. For further illustration, at the beginning of the tenth policy year, 34,712 of the initial group of 100,000 mortgages are in force and 5,259 such mortgages can be expected to terminate for various' reasons during the tenth policy
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year. Of these terminations, 4,726 can be expected to be prepayments in full, 391 prepayments by supersession, 2 foreclosures, and 140 other terminations, principally maturities.
The extent to which the annual rates of prepayment in full by policy year largely determines the total annual rates of termination is disclosed by a comparison of these two sets of rates. In 13 of the 18 policy years for which rates of termination are shown, the rate of prepayment in full for each policy year accounts for more than four-fifths of the total annual termination rate. It accounts for more than half in the remaining policy years, which are at the early and later durations (i. e., the number of policy years during which an insurance contract is exposed to the risk of termination). The emerging pattern of the rates of prepayment in full which the 1935-53 experience reflects is one of a steady increase in the rates by duration of the insurance contract until about the eighth policy year when the rates tend to level out for about the next 6 years. After the fourteenth year, the rates fluctuate sharply reflecting both the thinness of the termination experience and the approach of the insurance contracts to their maturities when the cumulative effects of partial prepayments during the life of the mortgage result in accelerated termination before maturity.
Of secondary importance in the determination of the total annual termination rates by policy year for Section 203 mortgages are the rates of prepayment by supersession. The emerging pattern of these rates is one in which the rates rise sharply with duration until about the fifth policy year, after which they gradually decline until the sixteenth policy year, when they turn up again.
The annual rates of termination are “crude” or actual rates as distinguished from “graduated” or smoothed rates. They are based on number of mortgages only, and include mortgages with the various terms of financing eligible for insurance under the administrative rules and regulations for Title II, Section 203. Because this insurance program has not been in operation long enough for many of its longer-term mortgages to mature, the rates of termination for the later policy years are based on a smaller aggregate amount of experience than those for earlier policy years. The rates of termination for the first policy year are based on the terminations from contracts endorsed for insurance in each calendar year from 1935 through 1952. For the second policy year, they are based on the terminations from endorsements in each calendar year from 1935 through 1951. Thus, for the eighteenth policy year they are based on terminations from endorsements of the calendar year 1935 only. With time, the accumulation of termination data will provide the merged experience of home mortgage insurance contracts through that policy year which will represent the longest maturity eligible for insurance under this program.
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FEDERAL HOUSING ADMINISTRATION
It should be noted, therefore, that the pattern of termination rates shown in the actuarial schedules is only an emerging one and cannot be said to be definitive for total terminations or the different types of terminations. Table 114 shows the annual termination rates for all types of terminations based on the 1935-53 experience and those shown in previous annual reports where the periods of observed experience are shorter. A comparison of these total annual termination rates for the same policy year discloses changes produced by additional experience. Not only can additional termination experience influence their rates by duration, particularly in the later durations where the aggregate experience is smaller, but changing economic conditions can also influence the rates of termination.
TABLE 114
Annual termination rates 1 for 1- to 4-family home mortgages based on aggregate termination experience for Sec. 203 mortgages insured from 1935 through 1949, 1950, 1951, or 1952 and exposed to policy anniversaries in 1950, 1951, 1952, or 1953 or prior termination dates, respectively
Policy year Mortgages insured 1935-49 and exposed to policy anniversaries in 1950 or prior termination dates Mortgages insured 1935-50 and exposed to policy anniversaries in 1951 or prior termination dates Mortgages insured 1935-51 and exposed to policy anniversaries in 1952 or prior termination dates Mortgages insured 1935-52 and exposed to policy anniversaries in 1953 or prior termination dates
1st 0.0285040 0.0267311 0.0262079 0.0256461
2d . 0552852 . 0531523 .0492760 .0481429
3d . 0804727 . 0797239 .0749205 .0697818
4th . 1074291 . 1066581 . 1039655 . 0971486
5th . 1344691 . 1333261 . 1315634 . 1275363
6th . 1537240 .1516930 . 1502859 . 1477010
7th .1636703 .1608247 . 1595251 . 1575944
8th . 1654034 .1619905 . 1605922 . 1594173
9th . 1628393 . 1557526 . 1546551 . 1536527
10th . 1740603 . 1578571 . 1523362 . 1515096
11th . 1718533 . 1512604 . 1421310 . 1385949
12th . 1876187 . 1536535 .1431409 . 1362391
13th . 1628588 . 1573791 .1432536 . 1349346
14 th . 1714530 . 1623134 .1532564 . 1392411
15th . 3595019 . 2720614 .2570375 . 2346911
16th . 4449153 . 2627400 . 2414897
17th . 3511450 . 1511497
18th . 6161137
1 The method of determining these rates is identical with the standard method of computing probabilities.
287
SECTION 5
ACCOUNTS AND FINANCE
The figures for 1953 and 1954 in the financial statements of this report are on an accrual basis and are shown for the fiscal year rather than the calendar year. Section 2 of the report, Volume of Mortgage and Loan Insurance Operations, is on a calendar-year basis to coincide with the housing year. In order to provide comparable figures, those statements in the Accounts and Finance section which are coordinated with the statistical tables shown in Section 2 have been prepared on a calendar-year basis.
Prior to July 1, 1939, there was no provision in the National Housing Act for collecting premiums on insurance granted under Title I, Section 2; therefore, moneys for salaries and expenses and for the payment of insurance claims were advanced by the Federal Government, and recoveries of claims paid were required to be deposited to the general fund of the Treasury. The account established in connection with insurance operations prior to July 1, 1939 is identified in the accounting records as the Title I Claims Account. The Housing Act of 1954, approved August 2, 1954, provided that the Title I Claims Account should be terminated as of August 1, 1954, at which time all the remaining assets and liabilities of such account were transferred to and merged with the Title I Insurance Fund.
An amendment of June 3, 1939, to the National Housing Act, created the Title I Insurance Fund and authorized the collection of premiums, and the amendment of June 28, 1941 authorized the retention of recoveries on insurance granted on and after July 1, 1939. Therefore, only the results of operations with respect to insurance granted on and after July 1, 1939, are included in the June 30, 1954, combined statement of financial condition (Statement 1) and the combined statement of income and expense (Statement 2). Transactions on insurance granted before July 1, 1939, have been shown separately in a statement of accountability for funds advanced (Statement 8).
Combined Funds
Gross Income and Operating Expenses, Fiscal Year 1954
Gross income of combined FHA funds for fiscal year 1954 under all insurance operations totaled $125,223,448 and was derived from fees, insurance premiums, and income on investments. Operating expenses of the FHA during the fiscal year 1954 totaled $31,365,885.
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FEDERAL HOUSING ADMINISTRATION
Cumulative Gross Income and Operating Expenses, by Fiscal Years
From the establishment of FHA in 1934 through June 30, 1954, gross income totaled $882,770,694, while operating expenses totaled $346,098,702. Gross income and operating expenses for each fiscal year are detailed below:
Income and operating expenses through June 30, 1954
Fiscal year Income from fees, premiums, and investments Operating expenses
1935 $539,609 $6,336,905
1936 2,503', 248 12; 160; 487
1937 5,690,268 10', 318', 119
1938 7,874,377 9; 297; 884
1939 11,954,056 12; 609; 887
1940 17,860, 296 13', 206; 522
1941 24; 126; 366 13; 359; 588
1942 28; 316', 764 13; 47i; 496
1943 25; 847,785 li;i60; 452
1944 28', 322; 415 11; 148; 361
1945 29; 824; 744 10; 218; 995
1946 30; 729; 072 ll,19i; 492
1947 26; 790; 341 16,063,870
1948 5i; 164; 456 20; 070; 745
1949 63; 983; 953 23; 378; 496
1950 85,705,342 27; 457; 889
1951 98; 004; 922 3i; 314; 754
1952 103,021,039 30', 622; 925
1953 115; 288; 193 3i; 343', 950
1954 125,223,448 31,365,885
Total 882, 770,694 346,098,702
The above income was derived from the following insurance operations: Title I Insurance Fund (property improvement loans), $116,-486,382; Title I Housing Insurance Fund (home mortgages), $2,296,-222; Title II Mutual Mortgage Insurance Fund (home mortgages), $489,316,291; Title II Housing Insurance Fund (rental housing projects), $16,851,403; Title VI War Housing Insurance Fund (war and veterans’ emergency housing), $238,411,594; Title VII Housing Investment Insurance Fund (yield insurance), $70,263; Title VIII Military Housing Insurance Fund (rental housing projects), $13,773,-743; and Title IX National Defense Housing Insurance Fund (home mortgages and rental housing projects), $5,564,796.
Salaries and Expenses
The current fiscal year is the fifteenth in which the Federal Housing Administration has met all expenditures for salaries and expenses by allocation from its insurance funds.
The amount that may be expended for salaries and expenses during a fiscal year is fixed by Congress. Under the terms of the National Housing Act, expenditures for the operations of each title and section are charged against the corresponding insurance fund.
The amounts charged against the various titles and sections of the Act during the fiscal year 1954 to cover operating costs and the purchase of furniture and equipment are as follows:
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HOUSING AND HOME FINANCE AGENCY
Salaries and expenses, fiscal year 1954 (July 1, 1953 to June 30, 1954)
Title and Section Amount Percent
Title I:
Sec. 2 $3,339, 547 10. 67
See. 8-_. _ _ . 828, 585 2. 65
Title II:
Sec. 203 20, 847,300 66. 61
Sec. 207-210 1,180,045 3. 77
Sec. 213 1,001, 966 3.20
Title VI:
Sec. 603. _ _ 654,027 2. 09
Sec. 608 1,212, 088 3. 87
Sec. 609 2,185 .01
Sec. 611 7i 129 .02
Title and Section Amount Percent
Title VIII: See. 803 900,512 991,938 331,943 2.88
Title IX: Sec. 903 3.17
Sec. 908 - - _ -_ 1.06
Total 31,297,265 100.00
Capital and Statutory Reserves of Combined FHA Funds
The combined capital and statutory reserves of all FHA funds on June 30, 1954, amounted to $354,026,126, and consisted of $226,267,-394 capital ($15,200,000 capital contributions from other FHA Insurance Funds and $211,067,394 earned surplus), and $127,758,732 statutory reserves as shown in Statement 1.
STATEMENT 1
Comparative statement of financial condition, all FHA funds combined, as of June 30, 1953, and June 30, 1954
June 30, 1953 June 30, 1954 Increase or decrease (—)
ASSETS Cash with U. S. Treasury $55,869,788 $134,710,027 $78, 840, 239
Investments: U. S. Government securities (amortized) Other securities (stock in rental housing corporations) Total investments
343, 639,929 452,800 257,081,124 473,200 -86,558,805 20,400
344, 092,729 257, 554,324 -86,538,405
Loans receivable: Mortgage notes and contracts for deed Less reserve for losses
37,410,588 633,893 43,937, 505 1,149,386 6, 526,917 515,493
Net loans receivable
36,776, 695 42,788,119 6, Oil, 424
Accounts and notes receivable: Accounts receivable—Insurance premiums Accounts receivable—Other Total accounts and notes receivable Accrued assets: Interest on U. S. Government securities Land, structures, and equipment: Furniture and equipment Less reserve for depreciation Net furniture and equipment Acquired security or collateral: Real estate (at cost plus expenses to date) Less reserve for losses
9,852,552 97,648 4,738,857 124,320 -5,113,695 26,672
9,950, 200 4,863,177 -5,087,023
667,205 589,809 -77,396
2,140, 299 1,129,802 « 2,124,969 1, 230, 278 -15,330 100,476
1,010,497 894, 691 -115,806
62, 200,931 11,151, 255 67,150,084 23, 656,483 4,949,153 12,505, 228
Net real estate
51,049, 676 43,493, 601 -7,556,075
Mortgage notes acquired under terms of insurance (at cost plus expenses to date) Less reserve for losses
51, 200, 873 9, 291,780 65,359, 007 26, 548, 225 14,158,134 17,256,445
Net mortgage notes acquired under terms of insurance..
41,909,093 38, 810,782 -3,098,311
See footnotes at end of table.
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FEDERAL HOUSING ADMINISTRATION
STATEMENT 1—Continued
Comparative statement of financial condition, all FHA funds combined, as of June 30, 1953, and June 30, 1954—Continued
June 30, 1953 June 30, 1954 Increase or decrease (—)
assets—C on tinned Acquired security or collateral—continued Defaulted Title I notes Less reserve for losses $49, 926,575 35, 222,799 $55,719, 524 38, 416,180 $5,792, 949 3,193,381
Net defaulted Title I notes 14, 703, 776 17,303,344 2, 599, 568
Net acquired security or collateral 107,662, 545 99,607,727 -8,054,818
Other assets—held for account of mortgagors .... 40,116 52,164 12,048
Total assets .. 556,069,775 541,060,038 -15,009,737
,, LIABILITIES Accounts payable: Bills payable to vendors and Government agencies Group account participations payable 3,096,006 1, 762,175 2 4,165,147 1, 524, 660 1,069,141 -237,515
Total accounts payable 4,858,181 5, 689,807 831, 626
Accrued liabilities: Interest on debentures Interest on funds advanced by U. S. Treasury . 1,026,147 19,868,878 1, 246,945 220, 798 -19,868,878
Total accrued liabilities. 20, 895,025 1, 246,945 -19,648,080
Trust and deposit liabilities: Fee deposits held for future disposition... Excess proceeds of sale Deposits held for mortgagors, lessees, and purchasers Undistributed receipts Due general fund of the U. S. Treasury Employees’ payroll deductions for taxes, etc 5,696,878 1,341, 714 1,169, 544 8,532 14 942,821 5, 604,333 1, 752, 844 1,779, 693 7,932 25 828, 767 -92,545 411,130 610,149 - 600 11 -114,054
Total trust and deposit liabilities 9,159, 503 9,973, 594 814, 091
Deferred and undistributed credits: Unearned insurance premiums Unearned insurance fees Other $69, 253,730 319,641 $74, 514, 461 511,733 5, 884 $5, 260,731 192, 092 5,884
Total deferred and undistributed credits 69,573,371 75,032,078 5,458,707
Bonds, debentures, and notes payable: Debentures payable.. 79,010,736 94,436, 436 15,425,700
Other liabilities: Funds advanced by U. S. Treasury Reserve for foreclosure costs—mortgage notes 65,497,433 509, 515 655,052 -65,497,433 145,537
Total other liabilities 66,006,948 655,052 -65,351,896
Statutory reserves: For transfer to general reinsurance account Net balances of group accounts available for contingent losses, expenses, other charges, and participations 30,966,814 117,301,384 26,105,714 101,653,018 -4,861,100 -15,648,366
Total statutory reserves.... 148, 268,198 127, 758, 732 -20,509,466
Total liabilities 397, 771, 962 314,792,644 -82,979,318
CAPITAL Capital contributions from other FHA insurance funds 12,000, 000 15, 200,000 3, 200,000
Earned surplus: Insurance reserve fund (cumulative earnings) available for future losses and related expenses General reinsurance reserve fund (cumulative earnings) available for future losses and related expenses 142,612, 264 3,685, 549 146,869,031 64,198,363 4, 256,767 60, 512, 814
Total earned surplus 146, 297,813 211, 067,394 64,769, 581
Total capital 158, 297, 813 226, 267, 394 67,969, 581
Total liabilities and capital 556,069, 775 541,060, 038 -15,009,737
Contingent liability for certificates of claim on properties of hand 2, 582,396 2,975, 511 393,115
1 Excludes unfilled orders in the amount of $3,657.
2 Excludes unfilled orders in the amount of $70,134.
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The contributed capital of $15,200,000 and the earned surplus of $211,067,394 are available for future contingent losses and related expenses. The statutory reserves of $127,758,732 represent the net balances of the group accounts under the Mutual Mortgage Insurance Fund, and are earmarked for participation payments to mortgagors under the mutual provision of Title II of the National Housing Act after providing for contingent insurance losses, expenses, and related charges.
The capital and statutory reserves of each fund are given below:
Fund Capital and statutory reserves
Title I Insurance Fund Title I Housing Insurance Fund Mutual Mortgage Insurance Fund Housing Insurance Fund War Housing Insurance Fund Housing Investment Insurance Fund Military Housing Insurance Fund National Defense Housing Insurance Fund $29,387,380 1,449, 262 191, 957,095 7,166,328 106,498,018 832,880 9,895,918 6,839, 245
Total 354,026,126
In addition, the various insurance funds had collected or accrued $511,733 unearned insurance fees and $74,514,461 unearned insurance premiums as shown below. Since the accounts are on an accrual basis, these fees and premiums have been deferred and will be allocated to income each month as they are earned.
Deferred fee income Deferred premium income Total deferred fee and premium income
Title I Insurance Fund $31, 272,484 274,890 26,757,435 1,389,783 12,050,152 1,525,508 1,244,209 $31,272,484 274,890 26,757,435 1,897,893 12,050,176 1, 529,107 1,244,209
Title I Housing Insurance Fund
Mutual Mortgage Insurance Fund
Housing Insurance Fund $508,110 24 3,599
War Housing Insurance Fund Military Housing Insurance Fund National Defense Housing Insurance Fund
Total 511, 733 74,514,461 75,026,194
Combined Income, Expenses, and Losses, all FHA Funds
Total income from all sources during the fiscal year 1954 amounted to $128,484,763, while total expenses and insurance losses amounted to $40,704,536, leaving net income, before adjustment of valuation and statutory reserves, of $87,780,227. Increases in valuation reserves for the year amounted to $33,470,547, leaving $54,309,680 net income for the period. Cumulative income from June 30, 1934, through June 30, 1954, was $896,857,075, and cumulative expenses were $398,927,909, leaving net income of $497,929,166 before adjustment of valuation reserves.
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FEDERAL HOUSING ADMINISTRATION
STATEMENT 2
Combined statement of income and expenses for all FHA funds through June 30, 1953, and June 30, 1954
June 30, 1934, to June 30, 1953 July 1, 1953, to June 30, 1954 June 30, 1934, to June 30, 1954
Income: Interest and dividends: Interest on U. S. Government securities Interest on mortgage notes and contracts for deed Interest and other income on defaulted Title I notes. _ Interest—Other. ... $47,336,467 80,774 2,998,378 7, 728,440 9,426 $7,869,234 20,869 729, 245 2,319,588 2,812 $55, 205,701 101,643 3,727,623 10,048,028 12, 238
Dividends on rental housing stock Insurance premiums and fees: Premiums _
58,153,485 10,941, 748 69,095, 233
564,311,297 144,062,491 103,352,824 14,388,245 667,664,121 158,450,736
Fees .
Other income: Profit (or loss —) on sale of investments Miscellaneous income Total income.. .. . _
708,373, 788 117,741,069 826,114,857
1,827,565 17,474 -389,667 191, 613 1,437,898 209,087
1,845,039 -198,054 1,646,985
768,372,312 128,484, 763 896,857,075
Expenses: Interest expenses: Interest on funds advanced by IT. S. Treasury Interest on debentures Administrative expenses: Operating costs (including adjustments for prior years) .....
19,868,878 4,609,923 516, 651 509,020 20,385,529 5,118,943
24,478,801 1,025, 671 25,504,472
306,397,139 1 31,315,938 337, 713,077
Other expenses: Depreciation on furniture and equipment Miscellaneous expenses Losses and chargeoffs: Loss on sale of acquired properties Loss (or profit —) on equipment Loss on defaulted Title I notes Total expenses
1,670,545 274, 515 147,916 247, 341 1,818,461 521,856
1,945,060 395, 257 2,340,317
5, 322,866 —4, 382 20,083,889 1,421, 779 3, 736 6,542,155 6,744,645 -646 26, 626,044
25,402,373 7,967, 670 33,370,043
358, 223, 373 40, 704,536 398,927,909
Net income before adjustment of valuation reserves Increase (—) or decrease (+) in valuation reserves: Reserve for loss on loans receivable Reserve for loss on real estate Reserve for loss on mortgage notes acquired under terms of insurance ... ... ._ . . _ __
410,148,939 87, 780, 227 497,929,166
-633,893 -11,151,255 -9, 291,780 -35, 222, 799 -515,493 -12, 505,228 -17,256,445 -3,193,381 -1,149,386 -23,656,483 -26,548, 225 -38, 416,180
Reserve for loss on defaulted Title I notes Net adjustment of valuation reserves Net income ..
-56, 299, 727 -33,470, 547 -89,770, 274
353,849, 212 54,309, 680 408,158,892
1 Excludes unfilled orders in the amount of $66,477.
350920—56----21
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HOUSING AND HOME FINANCE AGENCY
STATEMENT 2—Continued
Combined statement of income and expenses for all FHA funds through June SO, 1953, and June 30, 1954—Continued
ANALYSIS OF EARNED SURPLUS
June 30, 1934, to June 30, 1953 July 1, 1953, to June 30, 1954 June 30, 1934, to June 30, 1954
Distribution of net income: Statutory reserves: Balance at beginning of period $148, 268,198 -62,410,303 48, 750,402
Adjustments during period. . .
Net income for period Total statutory reserves Participations in mutual earnings distributed Balance at end of period Earned surplus: Balance at beginning of period _ _ _ _ $195, 551,399 $181,891,498
195,551,399 -47, 283, 201 134,608,297 -6,849, 565 181,891,498 -54,132,766
148,268,198 127, 758,732 127, 758, 732
146, 297,813 62,410,303 5,559, 278
Adjustments during period
Net income for period - - - 158, 297,813 226, 267,394
Total earned surplus Capital contributions to other FHA insurance funds.. Balance at end of period
158,297,813 -12,000,000 214, 267,394 -3,200,000 226,267,394 -15, 200,000
146, 297,813 211,067,394 211,067,394
Contributed Capital
The contributed capital of $15,200,000 shown on Statement 1 represents funds transferred from earnings of insurance funds to establish other insurance funds and transfers under the provisions of Section 219 of the National Housing Act, as amended. The contributed capital had increased from $15,200,000 to $17,500,000 at December 31, 1954. An analysis of capital contributions at December 31, 1954, is shown in Statement 3.
General Mortgage Insurance Authorization
Section 217 of the National Housing Act, as amended by Public Law 560, 83d Congress, approved August 2, 1954, provided for a general mortgage insurance authorization to consolidate and merge all existing mortgage insurance authorizations or existing limitations with respect to any section or title of the Act (except Title I, Sec. 2) into one general insurance authorization to take the place of all existing authorizations or limitations. The general insurance authorization provides that the aggregate amount of principal obligations of all mortgages which may be insured and outstanding at any one time under insurance contracts or commitments to insure pursuant to any section or title of the Act (except Title I, Sec. 2) shall not exceed the sum of (a) the outstanding principal balances, as of July 1, 1954, of all insured mortgages (as estimated by the Commissioner based on scheduled amortization payments without taking into account prepayments or delinquencies), (6) the principal amount of all outstand-
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STATEMENT 3
Analysis of capital contributions to FHA insurance funds from other FHA insurance funds as of Dec. 31, 1954
Fund Capital contributions Total contributions Contributions returned Contributed capital
To establish insurance funds Pursuant to sec. 219
Title I Housing Insurance
From: Title I Insurance $1,000,000 — $1,000,000 — $1,000,000
Housing Insurance From: Mutual Mortgage Insurance National Defense Housing Insurance Housing Investment Insurance War Housing Insurance 1,000, 000 $3, 200,000 90,000 2, 500,000 1,000,000 3,200,000 90,000 2, 500,000 —$1,000,000 1,000,000 2,200,000 90,000 2, 500,000
Total 1, 000,000 5, 790, 000 6, 790,000 -1,000,000 5, 790,000
Section 220 Housing Insurance - -
From: War Housing Insurance 1,000,000 — 1,000,000 — 1,000,000
Section 221 Housing Insurance
From: War Housing Insurance 1,000,000 — 1,000,000 — 1,000,000
Servicemen’s Mortgage Insurance
From: War Housing Insurance 1,000,000 — 1,000,000 — 1,000,000
Housing Investment Insurance
From: National Defense Housing Insurance-To: Housing Insurance — 1,000,000 -90,000 1,000,000 -90,000 — 1, 000,00 -90,000
Total 910,000 910,000 — 910,000
Military Housing Insurance
From: War Housing Insurance 1,900, 000 1, 900,000 -1,900,000
National Defense Housing Insurance — —
From: War Housing Insurance To: Housing Insurance Housing Investment Insurance 10, 000,000 -3, 200,000 -1,000,000 10,000, 000 -3,200,000 -1,000,000 1,000,000 10,000,000 -2,200,000 -1,000,000
Total 10,000,000 -4, 200,000 5,800,000 1,000,000 6,800,000
Total all funds 15,000,000 4,400,000 19, 400, 000 -1,900,000 17, 500,000
ing commitments to insure on that date, and (c) $1,500,000,000, except that with the approval of the President such aggregate may be increased by not to exceed $500,000,000. The general mortgage insurance authorization at July 1, 1954 was established as follows:
Insurance in force-------------------------------------- $16, 493> 192; 800
Commitments outstanding_________________________________ 2, 349 669 800
Additional authorized amount____________________________ i, 5Q9) qqq qqq
Total authorization------------------------------------ 20, 342, 862, 600
On December 28, 1954, the President increased the authorization by $500,000,000, thereby making a total authorization of $20,842,862,600 at December 31, 1954.
The status of the general mortgage insurance authorization at December 31, 1954, is shown in Statement 4 below.
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STATEMENT 4
Status of general mortgage insurance authority as of Dec. 31, 1954
Estimated outstanding balance of insurance in force Outstanding commitments for insurance
Sec. 217 General Mortgage Insurance Authorization ‘$20,842,862,600 20,192, 996, 418
Title I, Sec. 8__ $162,147,887 $54,088,189
Title II: Sec. 203
10,457, 206, 257 245,360, 603 309,614, 589 2 3,022,357,074 2 91,470,300 < 77,459, 750
Sec. 207-210
Sec. 213 .
Sec. 220
Sec. 221
Sec. 222 141,336 3, 218,352
Total
11,012,322, 785 3,194, 505,476
Title VI: Sec. 603
1, 572, 788,017 2, 952,474,112 100,000 139,843 11,463, 273 5, 547,102 768, 520 4, 543,280,867
Sec. 608
Sec. 609: Manufacturer’s loan Purchasers’ loans Sec. 610 (Sec. 603) Sec. 610 (Sec. 608) Sec. 611 .
Total
Title VIII, Sec. 803
635, 796, 593 18, 732, 700
Title IX: Sec. 903
460,333, 618 59,869,141 50,995,762 923.400
Sec. 908 -
Total _
520, 202, 759 51, 919,162
Total charges to Sec. 217 Unused insurance authorization
16,873, 750,891 3,319, 245,527
649,866,182
1 Increased $500,000,000 by the President on Dec. 28,1954, pursuant to Sec. 217 of the National Housing Act.
2 Includes statements of eligibility in the amount of $17,950,700. Also includes $17,550 commitments outstanding on farm mortgages chargeable against limitation of $100,000,000.
2 Includes statements of eligibility in the amount of $3,981,100.
< Includes statements of eligibility in the amount of $63,968,950.
Cost Certifications on Multifamily Projects
To prevent the possibility of the builder’s “mortgaging out” on multifamily housing projects financed with FHA-insured mortgages, the mortgagor is now required to certify, before final endorsement of the mortgage for insurance, to the actual cost of the project; and, if the mortgage amount is more than the statutory ratio applied to such actual costs, the mortgage amount must be correspondingly reduced.
During 1954, cost certifications were received on projects which were completed during the year and had mortgages insured by the Federal Housing Administration, as follows:
Number Amount of cost certified by builder or sponsor Amount of mortgage at final endorsement
Sec. 207 1 $136,116 $124,800
Sec. 803 6 17,893,200 16,007,143
Sec. 908 16 9,124,483 8,879,949
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FEDERAL HOUSING ADMINISTRATION
On one Section 908 mortgage, the amount of the insured mortgage at final endorsement was reduced by $32,300 as a result of cost certification by the builder.
Title I: Property Improvement Loons
Loans Insured and Claims Paid
Operations under Section 2 of Title I cover the insurance of qualified institutions against loss on loans made to finance the alteration, repair, and improvement of existing structures, and loans not exceeding $3,000 for the construction of new nonresidential structures.
Loans aggregating 18,117,994 in number and $8,425,982,359 in amount (net proceeds) had been reported for insurance under this section through December 31, 1954. Through that date, 523,205 claims had been paid for $170,160,738 and there was 1 claim payable on real property acquired in the amount of $4,508. The total claims paid and payable, numbering 523,206 in the amount of $170,165,246, represent approximately 2.02 percent of the total net proceeds of loans insured, as shown in Statement 5.
In the calendar year 1954, 1,506,480 loans were insured for an aggregate of $890,606,372, and 47,488 claims were paid for $21,047,414.
STATEMENT 5
Summary of Title I notes insured, claims for insurance paid, and recoveries on defaulted notes purchased by calendar years, 1934—54
Year Notes insured (net proceeds) Claims for insurance paid Recoveries on defaulted notes purchased
Total recoveries Cash receipts Real properties
On notes On sales of repossessed equipment
1934 $27,405,525 201, 258,132 221,534, 922 54,344,338 150, 709,152 203,994,512 241, 734,821 248,638,549 141.163,398 87,194,156 113, 939,150 170, 823, 788 320,593,183 533, 604,178 621, 612,484 607,023, 920 700, 224,528 706, 962, 734 848,327,393 1,334, 287,124 890,606,372
1935 $447,448 5,884, 885 6, 890,897 6,016,306 4, 728,346 6,543,568 7, 265,059 7,132,210 3, 718, 643 1, 939, 261 1,588, 875 2,435, 964 5,829, 750 14,345,659 17, 493,909 18,168,052 12,164,740 11,524,344 14,995,408 > 21,051, 922 $9, 916 293, 207 942, 295 1,552, 417 1, 941, 953 1,902,540 2,539, 496 2,831, 754 4,168, 859 3,597, 858 2,851,513 3,058,351 2,346,108 2,503,044 3,414, 216 5, 208,863 6, 711,469 7,459, 729 7, 605,902 1 6,967, 256 $9, 916 272, 694 913, 758 1,489,044 1,919,524 1, 888, 681 2,335,107 2, 795, 685 4,024,096 3,558,901 2, 775,337 2, 772, 487 2,345,022 2,499,536 3,413,258 5,187, 283 6,510,589 7, 202,020 7,533, 730 6,949,184
1936
$20,513 28,537 63,373 22, 429 13,859 11, 853 -1,524 717 -159 1,093 7,270 239 752 657
1937 .
1938
1939
1940
1941
$192,536 37,593 144,046 39,116 75,083 278,594 847 2,756 301 21,580 200,930 256,807 72,172 1 18,072
1942
1943
1944
1945
1946
1947
1948
1949
1950
1951 -50 902
1952
1953
1954
Total
8,425,982,359 170,165,246 67, 906, 746 66,395, 852 170,461 1,340, 433
1 Includes claim payable on real property acquired in the amount of $4,508.
Notes.—In addition to the above recoveries, $6,391,011 interest and other income on outstanding balances of Title I notes, and $153,533 interest on mortgage notes had been collected through Dec. 31,1954.
Equipment in the total amount of $4,475,792 (claim amount) had been repossessed by FHA. However, only the cash recovery of $170,461 from sales is shown as a recovery, the balance of $4,305,331 having been treated as a loss. Of this amount, $3,979,705 represents equipment transferred to other Government agencies without exchange of funds; $322,833 loss on sale of equipment and $2,793 equipment destroyed as worthless.
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Recoveries
Upon payment of insurance claims, the notes and other claims against the borrowers become the property of the Federal Housing Administration for collection or other disposition.
Real properties acquired are managed and sold by the Property Management Division of the Federal Housing Administration, which also handles the acquisition, management, and disposition of real properties acquired under the various other FHA insurance programs.
Through December 31, 1954, there had been acquired under the terms of insurance a total of 542 real properties at a total cost of $1,520,718. All but 7 of these, with a cost of $32,142, had been sold at a net loss of $53,921, including all expenses (such as taxes, repairs, and sales commissions) incurred by FHA in acquiring, managing, and disposing of the properties.
Insurance losses through December 31, 1954, amounted to $84,084,054. These losses represent 1.00 percent of the total amount of loans insured ($8,425,982,259). A summary of transactions through December 31, 1954, follows:
Summary of Title I transactions for the period June 30, 1934, to Dec. 31, 1954
Total Title I transactions to Dec. 31, 1954 Percent to notes insured
Total notes insured $8,425, 982,359 100.000
Total claims paid
1 170,165, 246 2.020
Recoveries: Cash collections: On notes _ _ _
66,395, 852 170,461 Percent to claims paid
39. 018 .100
On sale of repossessed equipment
Total cash
66,566,313 39.118
Real properties (after deducting losses and reserve for losses on real properties and mortgage notes)
> 1,340, 433 .788
Total recoveries
67,906, 746 39. 906
Net notes in process of collection
18,174,446 10. 681
Losses: Loss on sale of real properties
53,921 4,305,331 38, 907,173 12,508 40, 805,121 .032 2. 530 22. 864 .007 23.980
Loss on repossessed equipment
Loss on defaulted Title I notes _
Reserve for loss on real properties and mortgage notes
Reserve for loss on defaulted Title I notes
Total losses .
84,084,054 49.413
i Includes 1 claim payable on real properties acquired in the amount of $4,508.
Note.—Included in the loss on repossessed equipment is $3,979,705 representing the cost (claim amount) of equipment repossessed by FHA and subsequently transferred to other Government agencies for their use. Although the Federal Government has received the benefit of the residual value of this equipment, the cost to Title I is shown as a loss, since the equipment was transferred without exchange of funds.
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FEDERAL HOUSING ADMINISTRATION
Title I Insurance Fund
The Title I Insurance Fund was established by amendment of June 3, 1939, to the National Housing Act for the purpose of carrying out the provisions of Title I (Sec. 2) on insurance granted on and after July 1, 1939.
This is not a mutual insurance fund in the sense that any portion of the net income from operations will be shared by the mortgagors in the form of participation payments.
Section 2(f) of the Act provides that moneys in the Title I Insurance Fund shall be available for defraying the operating expenses of the Federal Housing Administration under this title, and any amounts which are not needed for such purpose may be used for the payment of claims in connection with the insurance granted under this title. Section 2(f) of the Act as amended August 2, 1954, provides that moneys in this fund not needed for current operations may be invested in bonds or other obligations of, or in bonds or other obligations guaranteed as to principal and interest by the United States Government. At December 31, 1954, this fund held $38,000,000 Special Series 2 percent Treasury notes.
Since the establishment of the Title I Insurance Fund, all operating expenses have been paid out of earnings of the fund, and since July 1, 1944, all insurance claims relating to this fund have been paid out of accumulated earnings and recoveries in the fund. Prior to July 1, 1944, a portion of the insurance claims was met from income and recoveries while the remainder was paid from funds advanced by the Federal Government.
The total capital of the Title I Insurance Fund as of June 30, 1954, as shown in Statement 6, was $29,387,380, consisting entirely of earned surplus. In accordance with Public Law 5, 83d Congress, approved March 10, 1953, the amount of capital contributed to this fund by the United States Government, $8,333,314 was established as a liability of the fund as of June 30, 1953. On July 1, 1953, the entire amount was repaid and the liability liquidated.
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HOUSING AND HOME FINANCE AGENCY
STATEMENT 6
Comparative statement of financial condition, Title I Insurance Fund, as of June 30, 1953, and June 30, 1954
June 30, 1953 June 30, 1954 Increase or decrease (—)
ASSETS Cash with U. S. Treasury ___________ _________ $36,662,362 $41, 309, 647 $4,647, 285
Loans receivable: Mortgage notes and contracts for deed Less reserve for losses
522, 421 7,836 526,489 7,897 4,068 61
Net loans receivable . .. ..
514,585 518,592 4,007
Accounts and notes receivable: Accounts receivable—Insurance premiums Accounts receivable—Other Accounts receivable—Interfund Total accounts and notes receivable Acquired security or collateral: Real estate (at cost plus expenses to date) Less reserve for losses ....
8,002, 635 26, 851 149, 749 3,093,370 38,101 137,995 —4, 909, 265 11,250 -11,754
8,179, 235 3, 269, 466 -4,909, 769
72,812 10,655 38, 446 5,514 -34,366 -5,141
Net real estate . ..
62,157 32,932 -29, 225
Defaulted Title I notes Less reserve for losses ..
49, 926,575 35,222, 799 55, 719,524 38, 416,180 5, 792,949 3,193,381
Net defaulted Title I notes Net acquired security or collateral Total assets _ ..
14,703, 776 17,303,344 2, 599,568
14, 765, 933 17,336, 276 2,570.343
60,122,115 62, 433, 981 2,311,866
LIABILITIES Accounts payable: Bills payable to vendors and Government agencies _ __
729. 941 1, 757, 658 1,027, 717
Trust and deposit liabilities: Deposits held for mortgagors, lessees, and purchasers . _
8,800 10,575 1,775
Deferred and undistributed credits: Unearned insurance premiums Other
29,073,351 31, 272, 484 5, 884 2,199,133 5,884
Total deferred and undistributed credits.. Other liabilities: Funds advanced by U. S. Treasury Total liabilities
29,073,351 31, 278, 368 2, 205,017
8,333,314 — -8,333,314
38,145,406 33,046,601 -5,098,805
CAPITAL Earned surplus: Insurance reserve fund (cumulative earnings) available for future losses and related expenses Total liabilities and capital
21, 976, 709 29,387,380 7,410,671
60,122,115 62,433, 981 2,311,866
For the fiscal year 1954, Title I Insurance Fund income totaled $20,493,395, while expenses and losses amounted to $9,874,458, leaving $10,618,937 net income before adjustment of valuation reserves. After the valuation reserves were increased by $3,188,031, there remained $7,430,636 net income for the year.
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FEDERAL HOUSING ADMINISTRATION
STATEMENT 7
Income and expenses, Title I Insurance Fund, through June 30, 1953, and June 30, 1954
June 3, 1939, to June 30, 1953 July 1, 1953, to June 30, 1954 June 3, 1939, to June 30, 1954
Income: Interest and dividends: Interest on mortgage notes and contracts for deed Interest and other income on defaulted Title I notes.. Insurance premiums and fees: Premiums. . $80, 774 2, 998,378 $20, 869 729,245 $101,643 3, 727,623
3, 079,152 750,114 3, 829,266
96,370, 835 369, 304 19, 746,243 116,117,078 369,304
Fees
Other income: Miscellaneous income Total income .
96, 740,139 19, 746, 243 116,486,382
2,962 -2,962 —
99, 822, 253 20, 493,395 120,315, 648
Expenses: Administrative expenses: Operating costs Other expenses: Depreciation on furniture and equipment Miscellaneous expenses Losses and chargeoffs: Loss on sale of acquired properties Loss on equipment Loss on defaulted Title I notes Total expenses
21, 086,364 3, 295,824 24, 402,153
113,897 256,189 15, 546 16, 762 129, 443 272,951
370,086 32,308 402,394
21,876 42,039 20,083,889 3, 779 392 6, 542,155 25, 655 42,431 26,626,044
20,147,804 6, 546, 326 26, 694,130
41, 604,254 9, 874, 458 51,498, 677
Net income before adjustment of valuation reserves Increase (—) or decrease (+) in valuation reserves: Reserve for loss on loans receivable Reserve for loss on real estate Reserve for loss on defaulted Title I notes Net adjustment of valuation reserves Net income
58, 217, 999 10,618,937 68, 816, 971
-7,836 -10, 655 -35, 222, 799 -61 +5,141 -3,193,381 -7, 897 -5,514 -38,416,180
-35,241, 290 -3,188,301 -38, 429, 591
22,976, 709 7,430, 636 30,387,380
ANALYSIS OF EARNED SURPLUS
Distribution of net income: Earned surplus: Balance at beginning of period $21,976, 709 -19,965 7,430, 636
Adjustments during the period _
Net income for the period $22,976, 709 $30,387,380
Total . 22, 976, 709 -1,000, 000 29,387,380 30,387,380 -1,000,000
Capital contributions to other FHA insurance funds
Balance at end of period 21,976, 709 29,387,380 29,387,380
Title I Insurance Authority
An amendment to Section 2(a) of the National Housing Act approved April 20, 1950, provides for a revolving type of insurance authorization. Section 2(a) of the Act, as amended, provides that
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HOUSING AND HOME FINANCE AGENCY
the aggregate amount of obligations that may be outstanding at any one time shall not exceed $1,750,000,000. The status of the Title I, Section 2 insurance authority as of December 31, 1954, is given below:
Status of Title I insurance authority, as of Dec. 31, 1954
Insurance authority_______________________________________________________________.... $1,750,000,000
Charges against insurance authority:
Estimated outstanding balance of insurance in force:
Amendment of June 3, 1939________________________________________ $1, 529,826
Reserve of July 1, 1947__________________________________________ 15,361,867
Reserve of Mar. 1, 1950 (including 53,765 notes on loan reports in process)________________________________________.________________ 1,375,537,240
Total charges against authority_________________________________________________ 1,392,428,933
Unused insurance authority______________________________________________________ 357,571,067
Title I Insurance Liability
The maximum amount of claims that a qualified institution may present for payment is limited to 10 percent of the eligible loans reported by that institution for insurance. Section 2(a) of the Act, as amended August 2, 1954, provides that with respect to any loan, advance of credit, or purchase made after the effective date of the Housing Act of 1954, the amount of any claim for loss on such individual loan, advance of credit, or purchase paid by the Commissioner under the provisions of this section to a lending institution shall not exceed 90 per centum of such loss. This new coinsurance provision of Title I became effective October 1, 1954, and from that date the lender has been required to bear 10 percent of the loss sustained on any one loan. As of December 31, 1954, the maximum possible liability of the Title I Insurance Fund for claims was $237,148,026.
Insurance reserves under Title I, established, released, and outstanding at Dec. 31, 1954, as provided under Secs. 2 and 6, National Housing Act
Item Gross reserves established Reserves released Semiannual reserve adjustments Claims paid Outstand ing contingent liability
Insurance reserves: Sec. 2: 20 percent, original act 10 percent, amendment Apr. 3, $66, 331, 509 $50, 769, 729 $15, 561, 780 —
1936 10 percent, amendment Feb. 3, 17, 257, 563 10,647, 672 — 6, 609, 891 —
1938 - ----- 10 percent, amendment June 3, 1939 10 percent, reserve of July 1,1944._ 10 percent, reserve of July 1,1947- -10 percent, reserve of Mar. 1,1950.-Estimated loan reports in process, Sec. 6: 20 percent, amendment Apr. 22, 27, 302,148 86,068,194 85,459, 950 163,065,172 430,118, 858 3,166, 759 18,041, 547 64,120,045 61, 227,415 101, 641,055 $165, 070,368 9, 260, 601 20,418, 323 24, 232, 535 46,062, 250 47,958, 916 $1, 529, 826 15,361,867 217,089, 574 3,166, 759
1937 10 percent, amendment Apr. 17, 297, 366 246, 498 — 50, 868 —
1936 11, 913 6,339 — 5, 574 —
Total 879,079, 432 306, 700, 300 165,070, 368 1170,160,738 237,148,026
1 Excludes 1 claim payable on real property acquired in the amount of $4,058.
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FEDERAL HOUSING ADMINISTRATION
Title I Claims Account
Through June 30, 1954, the Federal Government had advanced a total of $38,243,525 to cover operations under Title I (Sec. 2) on insurance granted prior to July 1, 1939. Of this amount, $6,613,811 had been advanced for salaries and expenses and the remaining $31,629,714 for the payment of insurance claims and loans to insured institutions. In addition, $2,327,473 had been collected as interest and other income, making a total of $40,570,998 accountable funds.
Funds accounted for at June 30, 1954, amounted to $40,506,511: $19,184,143 representing recoveries and interest on claims deposited in the general fund of the Treasury, and $21,322,368 representing expenses and losses, leaving a balance to be accounted for of $64,487. This balance is accounted for by the net assets on hand at June 30, 1954, which consisted of $24,202 cash, $798 real property, $40,107 accounts and notes receivable, and $620 trust liabilities. In accordance with a provision of the Housing Act of 1954, this account was merged with the Title I Insurance Fund as of August 1, 1954.
STATEMENT 8
Title I Claims Account—Statement of accountability for funds advanced as of June 30, 1954
Advances from RFC for:
Payment of claims_________________________________________________$31,488,714
Loans to insured institutions_____________________________________ 141,000
Payment of salaries and expenses__________________________________ 6,613,’ 811
T . x. , --------’--- $38,243,525
Income from operations: Interest and other income on defaulted notes, 2,327,473
Total funds available_________________________________________________________
Recoveries on claims and loans to insured institutions deposited in
the general fund of the Treasury_________________________________________ $19 ig4 143
Salaries and expenses_______________________________________________________ 6* 613’ 811
Losses, including estimated future losses: ’ ’
Sale of real property___________________________________________ $26 747
Repossessed equipment____________________________________ 4 259’ 330
Defaulted notes_________________________________________________2 10^ 422,’ 283
Provision for loss on real property on hand_____________________ ’ ’ 197
’----------- 14,708,557
Total funds used.
Balance of funds to be accounted for.
Accountability represented by:
Assets on hand:
Cash_________________________________
Accounts receivable and accrued assets.
Mortgage notes___________________________Z2ZZZZZZZZZZZZZZZZZZZ $4 640
Less estimated future losses____________________________1ZZZZ ’ 69
Real property_______________________________________________ 995
Less estimated future losses__________________________ZZZZZ 197
Defaulted notes___________________________________________________737 794
Less estimated future losses.-..____________________________Z-ZZZZZ 754’ 859
40, 506, 511
64,487
$24,202 2,601
4,571
798
32,935
Total assets on hand..._________________ . rk 107
Liabilities: ’107
Deposits held for account of mortgagors and lessees__________________________ 620
Net assets on hand.
$40,570,998
64,487
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HOUSING AND HOME FINANCE AGENCY
Title I Housing Insurance Fund
An amendment of April 20, 1950, to the National Housing Act (Public Law 475, 81st Cong.) created the Title I Housing Insurance Fund to be used by the FHA Commissioner as a revolving fund for carrying out the provisions of Section 8 of Title I of the Act. This section provided for the insurance of mortgages to assist families of low and moderate income, particularly in suburban and outlying areas. For the purposes of this fund, the Act authorized the Commissioner to transfer the sum of $1,000,000 from the Title I Insurance Fund.
This is not a mutual insurance fund in the sense that any portion of the net income from operations will be shared by mortgagors in the form of participation payments.
Title I Housing Insurance Fund Capital and Net Income
Assets of the Title I Housing Insurance Fund at June 30, 1954 totaled $2,446,075, against which there were outstanding liabilities of $996,813, leaving $1,449,262 capital. Included in the capital is the sum of $1,000,000 which was transferred from the Title I Insurance Fund in accordance with Section 8(h) of the Act, and earned surplus of $449,262.
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FEDERAL HOUSING ADMINISTRATION
STATEMENT 9
Comparative statement of financial condition, Title I Housing Insurance Fund, as of June 30, 1953, and June 30, 1954
June 30, 1953 June 30, 1954 Increase or decrease (—)
ASSETS Cash with U. S. Treasury ._ . . $310,350 $743,349 $432, 999
Investments: U. S. Government securities (amortized)
957, 209 1,406, 788 449, 579
Loans receivable: Mortgage notes and contracts for deed
228, 269 3,424 228, 269 3,424
Less reserve for losses .
Net loans receivable
224,845 224,845
Accounts and notes receivable: Accounts receivable—Insurance premiums
6,194 9,639 3,445
Accrued assets: Interest on U. S. Government securities
990 989 -I
Acquired security or collateral: Real estate (at cost plus expenses to date)
24, 439 3,448 70,582 10,117 46,143 6, 669
Less reserve for losses
Net acquired security or collateral .
20,991 60, 465 39, 474
Total assets .
1, 295, 734 2, 446,075 1,150,341
LIABILITIES Accounts payable: Bills payable to vendors and Government agencies
170 1, 728 170 1, 694
Interfund _. ... 34
Total accounts payable
34 1,898 1,864
Accrued liabilities: Interest on debentures
286 969 683
Trust and deposit liabilities: Fee deposits held for future disposition 79, 547 652, 735 391 2, 830 573,188 391 2,830
Excess proceeds of sale ..
Deposits held for mortgagors, lessees, and purchasers _
Total trust and deposit liabilities
79,547 655, 956 576, 409
Deferred and undistributed credits: Unearned insurance premiums
172, 758 274,890 102,132
Bonds, debentures and notes payable: Debentures payable... Total liabilities _
22, 850
63,100 40, 250
275,475 996,813 721,338
CAPITAL Capital contributions from other FHA insurance funds.
1, 000,000 1,000, 000
Earned surplus: Insurance reserve fund (cumulative earnings) available for future losses and related expenses. ...
20, 259 449, 262 429,003
Total capital
1, 020, 259 1,449, 262 429,003
Total liabilities and capital 1, 295, 734 2,446,075 1,150, 341
Contingent liabilities for certificates of claim on properties on hand . . 1, 723 3,500 1,777
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The total income of the Title I Housing Insurance Fund for fiscal year 1954 amounted to $1,081,665, while expenses and losses totaled $650,871, leaving net income of $430,794 before adjustment of the valuation reserves. The valuation reserves were increased $10,093, resulting in a net income of $420,701 for the year.
STATEMENT 10
Income and expenses, Title I Housing Insurance Fund, through June 30, 1953, and June 30, 1954
April 20, 1950, to June 30, 1953 July 1, 1953, to June 30, 1954 April 20, 1950, to June 30, 1954
Income: Interest and dividends: TnfprAst. on IT S Government securities $63,726 $26,337 967 $90, 063 967
Interest—Other
Insurance premiums and fees: Premiums -
63,726 27,304 91, 030
461,117 690, 681 397,267 657,094 858,384 1,347, 775
Fees - -
Total income —-
1,151,798 1,054,361 2, 206,159
1, 215,524 1,081,665 2, 297,189
Expenses: Administrative expenses: Operating costs 1,186,181 639,136 1,817,015
Other expenses: Depreciation on furniture and equipment -
5,882 3,017 8,899
Losses and chargeofls: Loss nn sale. of acquired properties _
8,642 76 8, 642 -170
Loss (or profit—) bn equipment -246
Total expenses -246 8,718 8,472
1,191,817 650,871 1, 834,386
Net income before adjustment of valuation reserves Increase (—) or decrease (+) in valuation reserves: 23,707 430,794 462,803
-3,424 -6,669 -3,424 -10,117
Reserve for loss on real estate -3,448
Net adjustment of valuation reserves -3,448 -10,093 -13,541
20, 259 420,701 449,262
ANALYSIS OF EARNED SURPLUS
Distribution of net incomeEarned surplus: $20, 259 8,302 420,701
Net income for the period $20, 259 $449, 262
20, 259 449, 262 449,262
306
I
FEDERAL HOUSING ADMINISTRATION
Investments
Section 8(i) of the Act provides that moneys in the Title I Housing Insurance Fund not needed for current operations shall be deposited with the Treasurer of the United States to the credit of the fund, or invested in bonds or other obligations of, or in bonds or other obligations guaranteed as to principal and interest by the United States; or the Commissioner may, with the approval of the Secretary of the Treasury, purchase debentures issued under the fund, provided that such purchases are made at a price that will produce an investment yield not less than the yield obtainable from other authorized investments. During fiscal year 1954, $4,550 of Series L 2% percent debentures were purchased from FNMA and $225,350 were called for redemption. During the fiscal year 1954, net investments amounting to $450,000 were made for the account of this fund, and at June 30, 1954 the fund held bonds in the principal amount of $1,400,000, yielding 2.30 percent, as follows:
Investments of the Title I Housing Insurance Fund, June 30, 1954
Series Interest rate (percent) Purchase price Par value Book value (amortized)
1958 2 2H $450,000 958,367 $450,000 950,000 $450,000 956,788
1967-72
Average annual yield 2.30 percent
1,408,367 1,400,000 1,406,788
Properties Acquired Under the Terms of Insurance
During the calendar year 1954, 25 properties insured under Title I, Section 8, were acquired by the Commissioner under the terms of insurance. Through December 31, 1954, a total of 82 homes had been acquired under the Title I Housing Insurance Fund at a total cost of $411,740, and 62 were sold at prices which left a net charge against the fund of $13,104, or an average of $211 per case.
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STATEMENT 11
Statement of profit and loss on sale of acquired properties, Title I Housing Insurance Fund, through Dec. 31, 1954
Items Total TIHI Fund (62 properties)
Proceeds of sales: Sales price 1 - $294, 690 9,279
Less commission and other selling expense -
Net proceeds of sales - _ —
285, 411
Income: Rental and other income (net) _ __ _
686 9,221
Mortgage note income _ _ _______ - __ _
Total income _ __ _
9,907
Total proceeds of sold properties ______
295,318
Expenses: Debentures and cash adjustments - - —
275,515 11, 786 3, 561 16,508
Interest on debentures _ _ _ __________
Taxes and insurance __ _ _ _ _ __ _ _
Maintenance and operating expense _ ______ _ ___ _
Total expenses
307,370
Net profit (or loss before distribution of liquidation profits -
-12,052 912 13 127
Less distribution of liquidation profits: Certificates of claim _ _ _ _ - - - - -
Increment on certificates of claim -
Refunds to mortgagors
Loss to Title I Honsing Insurance Eund __ _
13,104
Average loss to Title T Housing Insurance Eund __ -
211
i Analysis of terms of sales:
Terms of sales Number of properties Number of notes Cash Mortgage notes Sales price
Properties sold for all cash Properties sold for cash and notes (or contracts for deed) Properties sold for notes only Total 1 60 1 60 1 $3, 800 16,915 $266, 975 7,000 $3,800 283,890 7,000
62 61 20, 715 273, 975 294,690
The turnover of Section 8 properties acquired and sold, by calendar year, is given below:
STATEMENT 12
Turnover of properties acquired under Sec. 8 of Title I, through Dec. 31, 1954
Properties acquired Properties sold, calendar years Properties on hand Dec. 31, 1954 1 2 17
Year 1952 Number 2 55 25 1952 1953 1954 1 46 8
1953 __ -- 7
1954
82 7 55 20
Note.—On the 62 properties sold, the average time between acquisition and sale by the Federal Housing Administration was 5.83 months.
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FEDERAL HOUSING ADMINISTRATION
On December 31, 1954, there remained on hand 20 properties insured under the Title I Housing Insurance Fund. The cost of these properties was:
Title I Housing Insurance Fund, statement of properties on hand at Dec. 31, 1954
Title I Sec. 8 (20 properties)
Expenses: Acquisition costs $96, OH 2,981 2,207 2, 747
Interest on debentures _
Taxes and insurance _ _
Maintenance and operating expenses.._
Net cost of properties on hand
103, 946
Section 8 of the Act provides that if the net amount realized from any property acquired by FHA under the terms of insurance with respect to which Section 8 is applicable, after deducting all expenses incurred in handling, dealing with, and disposing of such property, exceeds the face value of debentures issued and cash paid in exchange for such property plus all interest paid on such debentures, such excess shall be applied to the certificate of claim issued to the mortgagee, and that any excess remaining after paying the certificate of claim and increment thereon shall be refunded to the mortgagor.
Certificates of claim issued in connection with the 62 Section 8 properties which had been acquired and sold through 1954 totaled $13,571. The amount to be paid on these certificates of claim totaled $912, while certificates of claim totaling $12,659 will be canceled.
In addition there were excess proceeds on 2 of the 62 properties sold, amounting to $127 for refund to the mortgagors.
Title II: Mutual Mortgage Insurance Fund
The Mutual Mortgage Insurance Fund was established by Section 202 of the National Housing Act of June 27, 1934, as a revolving fund for carrying out the provisions of Title II with respect to insurance under Section 203 (mortgages on 1- to 4-family homes) and Section 207 (rental housing projects). An amendment to the Act approved February 3, 1938, established the Housing Insurance Fund to carry the insurance on rental housing projects insured under Section 207 after that date.
In accordance with Section 202 of the Act, the Mutual Mortgage Insurance fund was originally allocated the sum of $10,000,000 by the Federal Government. It has been credited with all income received in connection with insurance granted under Section 203, and that received with respect to insurance granted under Section 207 before February 3, 1938.
Prior to the amendment of August 2, 1954, Section 205 of the Act, as amended, provided that mortgages insured under Section 203 should
350920—56---22 309
HOUSING AND HOME FINANCE AGENCY
be classified into groups in accordance with sound actuarial practice and risk characteristics. Each group account was credited with the income and charged with the expenses and losses of the mortgages in the group. If such income exceeded the expenses and losses, the resultant credit balance was distributed in the form of participation payments to mortgagors of the group upon payment in full of their mortgages, or upon termination of the group account, except that a mortgagor might not receive an amount in excess of the aggregate scheduled annual premiums to the year of termination of the insurance.
The general reinsurance account was established by Section 205(b) of the Act and, in accordance with this section, was credited with the original allocation of $10,000,000 provided by Section 202 of the Act.
The amendment to Section 205 of the Act approved August 2, 1954, provided as follows: The Commissioner shall establish as of July 1, 1954, a General Surplus Account and a Participating Reserve Account. The balance of the General Reinsurance Account shall be transferred to the General Surplus Account, whereupon the General Reinsurance Account shall be abolished. There shall be transferred from the various group accounts to the Participating Reserve Account as of July 1, 1954, an amount equal to the aggregate amount which would have been distributed under the provisions of Section 205 in effect on June 30, 1954, if all outstanding mortgages in the group accounts had been paid in full on that date. All the remaining balances of the group accounts shall be transferred to the General Surplus Account, whereupon all the group accounts shall be abolished. The aggregate net income received or net loss sustained thereafter by the Mutual Mortgage Insurance Fund in any semiannual period shall be credited or charged to the General Surplus Account and/or the Participating Reserve Account in such manner and amount as the Commissioner may determine to be in accord with sound actuarial and accounting practice. Upon termination of the insurance obligation of the Mutual Mortgage Insurance Fund by payment of any mortgage insured thereunder, the Commissioner is authorized to distribute to the mortgagor a share of the Participating Reserve Account in such manner and amount as the Commissioner shall determine to be equitable and in accordance with sound actuarial and accounting practice, except that a mortgagor may not receive an amount in excess of the aggregate scheduled annual premium to the year of termination of the insurance.
Mutual Mortgage Insurance Fund Capital
As of June 30, 1954, the assets of the Mutual Mortgage Insurance Fund totaled $235,362,240, against which there were outstanding liabilities of $171,163,877, leaving $64,198,363 capital. Included in the liabilities are the statutory reserves of $127,758,732. This figure includes $26,105,714 for transfer to the general reinsurance account
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STATEMENT 13
Comparative statement of financial condition, Mutual Mortgage Insurance Fund, as of June 30, 1953, and June 30, 1954
June 30,1953 June 30,1954 Increase or decrease (—)
ASSETS
Cash with U. S. Treasury $6, 963, 330 $13, 275,595 $6,312,265
Investments: U. S. Government securities (amortized) 234, 304,182 212,178, 240 —22,125,942
Loans receivable: Mortgage notes and contracts for deed Less reserve for losses 5,223,347 78,351 5,373,045 80,593 149, 698 2,242
Net loans receivable 5,144,996 5,292,452 147,456
Accounts and notes receivable: Accounts receivable—Insurance premiums Accounts receivable—Other Accounts receivable—Interfund 1,245,813 856,088 995,226 167 777,490 -250,587 167 -78,598
Total accounts and notes receivable 2,101,901 1,772,883 -329,018
Accrued assets: Interest on U. S. Government securities 528, 507 511,320 -17,187
Acquired security or collateral: Real estate (at cost plus expenses to date) Less reserve for losses 1, 406, 294 188,959 2, 730, 841 399,091 1,324, 547 210,132
Net acquired security or collateral 1, 217,335 2,331, 750 1,114, 415
Total assets 250, 260, 251 235,362,240 -14,898,011
LIABILITIES Accounts payable: Bills payable to vendors and Government agencies Group account participations payable 881 1, 762,175 4,303 1, 524,660 3,422 -237,515
Total accounts payable — 1, 763,056 1, 528,963 -234,093
Accrued liabilities: Interest on debentures Interest on funds advanced by U. S. Treasury 128,027 16,606, 504 190,043 62,016 -16,606,504
Total accrued liabilities 16,734,531 190,043 -16, 544,488
Trust and deposit liabilities: Fee deposits held for future disposition Excess proceeds of sale Deposits held for mortgagors, lessees, and purchasers 4, 648,458 217, 896 99,344 4, 577, 257 299, 464 87,997 -71, 201 81, 568 -11,347
Total trust and deposit liabilities 4,965, 698 4,964, 718 -980
Deferred and undistributed credits: Unearned insurance premiums _ 24,440,438 26, 757,435 2, 316, 997
Bonds, debentures, and notes payable: Debentures payable—. 8, 408,686 9, 963, 986 1,555, 300
Other liabilities: Funds advanced by the U. S. Treasury 41,994,095 — -41,994,095
Statutory reserves: For transfer to general reinsurance reserve Net balances of group accounts available for contingent losses, expenses, other charges, and participations 30, 966,814 117,301, 384 26,105, 714 101,653,018 -4,861,100 -15,648,366
Total statutory reserves 148, 268,198 127,758, 732 -20, 509,466
Total liabilities 246, 574, 702 171,163,877 -75,410,825
CAPITAL
Earned surplus: General reinsurance reserve fund (cumulative earnings) available for future losses and related expenses 3,685, 549 64,198,363 60, 512,814
Total liabilities and capital 250,260,251 235,362, 240 -14,898,011
Contingent liability for certificates of claim on properties on hand 68,367 120,435 52,068
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and $101,653,018 available for contingent losses, expenses, other charges, and participation payments to mortgagors under the mutual provision of the Act.
In accordance with Public Law 94, 83d Congress, approved June 30, 1953, the amount of capital contributed to this fund by the United States Government in the amount of $41,994,095, $10,000,000 to establish the fund and $31,994,095 for salaries and expenses, was established as a liability of the fund as of June 30, 1953. The principal liability of $41,994,095, together with interest thereon in the amount of $17,059,847, was repaid during fiscal year 1954, the final payment being made on March 11, 1954.
Income and Expenses
During fiscal year 1954 the income to the fund amounted to $69,630,208, while expenses and losses amounted to $22,459,380, leaving $47,170,828 net income before adjustment of valuation reserves. After the valuation reserves had been increased $212,374, the net income for the year was $46,958,454.
The cumulative income of the Mutual Mortgage Insurance Fund from June 30, 1934, to June 30, 1954, amounted to $493,962,994 while cumulative expenses amounted to $246,393,449, leaving $247,569,545 net income before adjustment of valuation reserves. After $479,684 had been allocated to valuation reserves, the cumulative net income amounted to $247,089,861.
STATEMENT 14
Income and expenses, Mutual Mortgage Insurance Fund, through June 30, 1953, and June 30, 1954
June 30,1934, to June 30, 1953 July 1,1953, to June 30,1954 June 30,1934, to June 30, 1954
Income: Interest and dividends: Interest on U. S. Government securities Interest—Other _ -- $37,089,118 3,965,457 286 $5,436,832 472, 539 $42, 525,950 4,437,996 286
Dividends on rental housing stock Insurance premiums and fees: Premiums - - - ------ --
41,054,861 5,909,371 46,964,232
294,879,136 86, 799,363 52,402,479 10,879, 262 347,281,615 97,678,625
Fees - -- -
Other income: Profit on sale of investments • Miscellaneous income
381,678,499 63, 281,741 444,960,240
1, 585, 294 14,132 244,521 194,575 1,829,815 208, 707
Total income -
1,599,426 439,096 2,038, 522
424,332,786 69,630, 208 493,962,994
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FEDERAL HOUSING ADMINISTRATION
STATEMENT 14—Continued
Income and expenses, Mutual Mortgage Insurance Fund, through June 30, 1953, and June 30, 1954—Continued
June 30,1934, to June 30,1953 July 1, 1953, to June 30, 1954 June 30,1934, to June 30,1954
Expenses: Interest expense: Interest on funds advanced by U. S. Treasury Interest on debentures Administrative expenses: Operating costs Other expenses: Depreciation on furniture and equipment Miscellaneous expenses Losses and chargeoffs: Loss on sale of acquired properties Loss (or profit —) on equipment Total expenses. .. . $16,606,504 4,609,923 $453,343 509,020 $17,059,847 5,118, 943
21, 216,427 962, 363 22,178,790
198,758,886 21,078,029 219,942,456
1,092,856 18,226 99,385 201,372 1,192, 241 219, 598
1,111,082 300,757 1,411,839
2,767,323 -25,190 115,721 2, 510 2,883,044 -22, 680
2,742,133 118, 231 2,860,364
223,828, 528 22,459,380 246, 393,449
Net income before adjustment of valuation reserves. Increase (—) or decrease (+) in valuation reserves: Reserve for loss on loans receivable Reserve for loss on real estate Net adjustment of valuation reserves Net income ....
200,504,258 47,170,828 247, 569, 545
-78,351 -188,959 -2,242 -210,132 -80, 593 -399,091
-267,310 -212,374 -479,684
200, 236,948 46,958,454 247,089,861
ANALYSIS OF EARNED SURPLUS
Distribution of net income: Statutory reserves: Balance at beginning of period $148, 268,198 -62,410,303 48, 750,402
Adjustments during period .........
Net income for period _ ... $195, 551,399 $181,891,498
Participations in mutual earnings distributed
195,551,399 -47,283, 201 134,608, 297 -6,849, 565 181,891,498 -54,132,766
Balance at end of period
148,268,198 127,758, 732 127, 758,732
Earned surplus: Balance at beginning of period... .. ... ..
3,685,549 62,304, 762 -1,791,948
Adjustments during period . . ...
Net income (or loss —) for period 4, 685, 549 65,198,363
Capital contributions to other FHA insurance funds
4,685, 549 -1,000,000 64,198,363 65,198,363 -1,000,000
Balance at end of period
3,685, 549 64,198,363 64,198,363
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Investments
Section 206 of the Act provides that excess moneys in the Mutual Mortgage Insurance Fund not needed for current operations shall be deposited with the Treasurer of the United States to the credit of the fund, or invested in bonds or other obligations of, or in bonds or other obligations guaranteed as to principal and interest by the United States; or the Commissioner may, with the approval of the Secretary of the Treasury, purchase debentures issued under the fund, provided that such purchases are made at a price which will produce an investment yield not less than the yield obtainable from other authorized investments.
During the fiscal year 1954, $76,550 of Series A 3-percent Mutual Mortgage Insurance Fund debentures matured and were paid and $152,000 were redeemed in payment of mortgage insurance premiums; $62,800 of Series E 2% percent were purchased from FNMA, $314,750 were redeemed in payment of mortgage insurance premiums, and $227,900 were called for redemption; $78,500 Series K 2% percent were redeemed in payment of mortgage insurance premiums, $49,800 were purchased from FNMA, and $71,500 were called for redemption.
Net sales of United States Government securities made during the year decreased the holdings of the fund by $22,400,000 (prinicpal amount). These transactions did not change the average annual yield, which remained at 2.49 percent. On June 30, 1954, the fund held United States Government securities in the amount of $212,667,000, principal amount, as follows:
Investments of the Mutual Mortgage Insurance Fund, June 30, 1954
Series Interest rate (percent) Purchase price Par value Book value (amortized)
1958 2 $9, 800,000 $9, 800,000 $9, 800,000
1962-67 2‘4 5,000,000 5,000,000 5,000,000
1963-68 2^ 4, 500,000 4, 500,000 4, 500,000
1964-69 - 2 >4 21,038, 603 21,400,000 21,080,136
1965-70 2^ 25, 546, 515 25,900,000 25, 580,448
1966-71 - _ 2# 21, 737, 555 22,100,000 21,766, 727
1967-72 2^ 124, 636,165 123, 967,000 124,450, 929
Average annual yield 2.49 percent. — 212, 258,838 212, 667,000 212,178,240
314
FEDERAL HOUSING ADMINISTRATION
Properties Acquired Under the Terms of Insurance
Four hundred and twenty-seven homes insured under Section 203 were acquired by the Commissioner during the calendar year 1954 under the terms of insurance. During 1953, 263 foreclosed properties had been transferred to the Commissioner, and in 1952 there had been 282. Through 1954, a total of 5,712 small homes had been acquired under the Mutual Mortgage Insurance Fund at a total cost of $34,439,679. Statement 15 shows the turnover of Section 203 acquired properties since the acquisition of the first such property in 1936.
STATEMENT 15
Turnover of properties acquired under Sec. 203 of Title II contracts of insurance by years, and cumulative through Dec. 31, 1954
Notes.—On the 5,282 properties sold, the average time between acquisition and sale by the Federal Housing Administration was 6.41 months. The number of properties sold has been reduced by 22 properties repossessed because of default on mortgage notes. Of these reacquisitions, 19 had been sold by Dec. 31, 1954.
Through December 31, 1954, 5,282 acquired properties insured under Section 203 had been sold at prices which left a net charge against the fund of $2,968,293, or an average of approximately $562 per case. One Section 207 rental housing project, insured under the Mutual Mortgage Insurance Fund prior to February 3, 1938, had been acquired and sold in 1941 at no loss to the fund.
315
Properties acquired Properties sold by calendar years Properties on hand Dec. 31, 1954
Year Number 1936- 37 1938 1939 1940 1941 1942 1943 1944 1945 1946 1947 1948 1949 1950 1951 1952 1953 1954
1936... 1937... 1938... 1939... 1940... 1941... 1942... 1943... 1944... 1945... 1946... 1947... 13 98 324 753 1,123 1,044 502 168 33 8 • 1 11 13 2 67 139
7 99 278 5 50 331 611 6 28 110 448 754
6 28 46 257 355 2 3 14 29 139 140 -1 2 3 2 8 27 26 1 1 1 2
1 7 7
1 1
1948... 1949... 1950... 1951... 1952... 1953... 1954... Total.. 4 37 225 407 282 263 427 2 2 17
19 65 1 102 188
25 173 142 11 17 86 88 8 10 13 84 162 14 19 41 91 265
5,712 24 208 384 997 1,346 692 327 67 20 2 .... 2 19 84 291 340 202 277 430
HOUSING AND HOME FINANCE AGENCY
STATEMENT 16
Statement of profit and loss on sale of acquired properties, Mutual Mortgage Insurance Fund, through Dec. 31, 1954
Item See. 203 (5,282 properties) Sec. 207 (1 property, 265 units) Total MMI Fund (5,283 properties)
Proceeds of sales: $28,645, 290
Sales price 1 $27,645, 290 $1,000,000
Less commission and other selling expenses 1,282,847 — 1,282,847
Net proceeds of sales 26,362,443 1,000,000 27,362,443
Income: 466, 453
Rental and other income (net) 466, 453
Mortgage note income 3,191,214 — 3,191,214
Total income 3, 657,667 — 3, 657, 667
Total proceeds of sold properties 30,020,110 1,000,000 31,020,110
Expenses: 27,461,505
Debentures and cash adjustments 26, 519,360 942,145
Interest on debentures 3,655,846 18, 387 3, 674, 233
Taxes and insurance 526,678 5,012
Additions and improvement 75, 782 75, Z82
Maintenance and operating expense 1, 278,456 1,669 1,278, 456
Miscellaneous expense 4,945 6, 614
Total expenses 32,061,067 967,213 33,028, 280
Net profit (or loss —) before distribution of liquidation 32, 787 -2,008,170
profits Less distribution of liquidation profits: -2,040,957
Certificates of claim 603,347 31, 532 634,879
Increment on certificates of claim 39, 421 1, 255 40, 676
Refunds to mortgagors 284, 568 — 284, 568
Loss to Mutual Mortgage Insurance Fund 2,968, 293 — 2,968, 293
Average loss to Mutual Mortgage Insurance Fund 562 —
1 Analysis of terms of sales—
Terms of sales Number of properties Number of notes Cash Mortgage notes Sales price
Properties sold for all cash Properties sold for cash and notes (or contracts for deed) Properties sold for notes only Total 830 4,435 17 4,425 17 $5,144, 660 2, 554, 873 $20,884, 781 60,976 $5,144, 660 23, 439, 654 60,976
5,282 4,442 7,699, 533 20,945,757 28, 645,290
On December 31, 1954, 430 properties insured under the Mutual Mortgage Insurance Fund were held by the FHA. The cost of these properties was:
Mutual Mortgage Insurance Fund, statement of properties on hand at Dec. 31, 1954
Sec. 203 (430 properties)
Expenses: $3, 508, 534
Acquisition costs ___________ _ ___ _ -
Interest on debentures _ 179,195 87,333
Taxes and insurance _ -
Additionsand improvements _ _______ 15,524
Maintenance and operating expenses — 142,348
Total expenses _ 3, 932,934
Income: Rental and other income (net) 106,838
Net cost of properties on hand 3,826,096
316
FEDERAL HOUSING ADMINISTRATION
Certificates of Claim and Refunds to Mortgagors
Section 204(f) of the Act provides that if the net amount realized from any property acquired by the FHA under the terms of insurance with respect to which Section 204(f) is applicable, after deducting all expenses incurred in handling, dealing with, and disposing of such property, exceeds the face value of debentures issued and cash paid in exchange for such property plus all interest paid on such debentures, such excess shall be applied to the certificate of claim issued to the mortgagee, and that any excess remaining after paying the certificate of claim and increment thereon shall be refunded to the mortgagor.
Certificates of claim issued in connection with the 5,282 Section 203 properties which had been acquired and sold through 1954 totaled $2,210,296. The amount paid or to be paid on these certificates of claim totaled $603,347 (approximately 27 percent), while certificates of claim totaling $1,606,949 (approximately 73 percent) had been or will be canceled.
In addition, there were excess proceeds on approximately 17 percent (or 879) of the 5,282 sold properties amounting to $284,568, for refund to mortgagors. The refund to mortgagors on those 879 cases averaged $324.
Mutual Mortgage Participation Payments
In carrying out the mutual provisions of Title II prior to enactment of the Housing Act of 1954, the Administration had established through June 30, 1954, a total of 324 group accounts, of which 188 had developed credit balances for distribution and 136 had deficit balances. The 188 group accounts which had credit balances included 48 from which participation payments had been made at the time of termination.
Of the 136 deficit balance groups at June 30, 1954, 73 had been terminated with deficits totaling $158,247, and these deficits had been charged against the general reinsurance account. The income of the remaining 63 groups had not yet been sufficient to offset the expenses and reserves for losses.
The credit balances of the 48 group accounts which had matured and from which participation payments had been made at termination amounted to $1,797,146, and these balances were shared by 14,124 mortgagors. Payments to mortgagors ranged from $1.89 to $78.59 per $1,000 of original face amount of mortgage.
The first participation payments in connection with insured loans prepaid in full were made as of January 1, 1944, and during the 10% years following that date total payments of $54,132,767 were made or accrued on 423,815 insured loans.
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HOUSING AND HOME FINANCE AGENCY
The credit balances of the 140 groups, from which participation payments would have been made as insured loans were paid in full, amounted to $68,275,799 on June 30, 1954. On that date there were still in force in these group accounts approximately 472,176 insured mortgages on which the original face amount had been $2,684,677,109.
Title II: Housing Insurance Fund
The insurance risks on rental and group housing insured under Sections 207 and 210 after February 3, 1938, and on cooperative housing insured under Section 213 are liabilities of the Housing Insurance Fund, which was established by the amendment to the National Housing Act approved February 3, 1938.
Section 213, which was added to the Act by an amendment approved April 20, 1950, authorized the insurance of mortgages on cooperative housing projects. To be eligible for insurance under Section 213, the mortgagor must be a nonprofit cooperative ownership housing corporation, the permanent occupancy of the dwellings being restricted to members, or a nonprofit corporation organized for the purpose of building homes for members. In the latter instance provision is made for the release from the blanket mortgage of individual properties for sale to members and for the insurance of individual mortgages under Section 213 on such released properties.
Appraisal fees, insurance premiums, interest on investments, and income from projects acquired under the terms of insurance are deposited with the Treasurer of the United States to the credit of the Housing Insurance Fund. Foreclosure losses and general operating expenses of the Federal Housing Administration under Sections 207 and 210 since February 3, 1938, and under Section 213 are charged against the fund.
This is not a mutual insurance fund in the sense that any portion of the net income from operations will be shared by mortgagors in the form of participation payments. Any increase in the fund resulting from operations is retained as a general reserve to meet possible insurance losses and future expenses in connection with Sections 207, 210, and 213 insurance. In accordance with Section 207 (h) of the Act, the excess proceeds, if any, from the sale of an acquired project, after deducting all costs incident to the acquisition, handling, and final disposition of such project, are applied to the mortgagee’s certificate of claim and increment thereon, and any balance is credited to the Housing Insurance Fund, except that with respect to individual mortgages insured under the provisions of Section 213(d) any excess remaining after payment of the certificate of claim and increment thereon is for refund to the mortgagor. Prior to enactment of the amendments of August 10, 1948, to the National Housing Act, any excess remaining
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FEDERAL HOUSING ADMINISTRATION
after payment of the certificate of claim and increment thereon was refunded to the mortgagor.
Housing Insurance Fund Capital and Net Income
Assets of the Housing Insurance Fund as of June 30, 1954, totaled $12,339,262, against which there were outstanding liabilities of $5,172,934. The capital of the fund amounted to $7,166,328, represented by $6,490,000 capital contributions from other FHA insurance funds and earned surplus of $676,328.
In accordance with Public Law 94, 83d Congress, approved June 30, 1953, the amount of capital contributed to this fund by the United States Government for salaries and expenses in the amount of $4,170,024 was established as a liability of the fund as of June 30, 1953. This amount, together with interest thereon in the amount of $1,386,666, was repaid during fiscal year 1954, the final payment being made on October 31, 1953.
STATEMENT 17
Comparative statement of financial condition, Housing Insurance Fund, as of June 30, 1953, and June 30, 1954
June 30, 1953 June 30, 1954 Increase or decrease (—)
ASSETS Cash with U. S. Treasury _____________________________ $650, 452 $3,172,288 $2, 521,836
Investments: U. S. Government securites (amortized) Other securities (stock in rental housing corporations) Total investments
5,001,010 27, 400 3, 300,951 43, 500 -1,700,059 16,100
5,028,410 3,344,451 -1,683,959
Loans receivable: Mortgage notes and contracts for deed Less reserve for losses
2, 571,640 38, 575 3,999,389 146,656 1, 427, 749 108, 081
Net loans receivable
2, 533,065 3, 852,733 1,319,668
Accounts and notes receivable: Accounts receivable—Insurance premiums. Accounts receivable—Interfund Total accounts and notes receivable Accrued assets: Interest on U. S. Government securities Acquired security or collateral: Real estate (at cost plus expenses to date) Less reserve for losses
31, 623 15,470 35, 428 7, 200 3,805 -8,270
47,093 42, 628 -4, 465
3, 437 3,438 1
1,699, 502 669,290 1,699, 502 669,290
Net real estate
1,030,212 1,030,212
Mortgage notes acquired under terms of insurance (at cost plus expenses to date) Less reserve for losses.
1, 871, 947 271, 725 1,471,506 577, 994 -400,441 306,269
Net mortgage notes acquired under terms of insurance.. Net acquired security or collateral Total assets
1, 600, 222 893, 512 -706, 710
1, 600,222 1, 923, 724 323, 502
9, 862,679 12,339,262 2,476, 583
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STATEMENT 17—Continued
Comparative statement of financial condition, Housing Insurance Fund, as of June 30, 1953, and June 30, 1954—Continued
June 30, 1953 June 30, 1954 Increase or decrease (—)
LIABILITIES
Accounts payable: Bills payable to vendors and Government agencies $10 $49 $39
Accrued liabilities: Interest on debentures Interest on funds advanced by IT. S. Treasury 21, 079 1,368,805 44, 533 23,454 -1,368,805
Total accrued liabilities 1,389, 884 44, 533 -1,345,351
Trust and deposit liabilities: Excess proceeds of sale Deposits held for mortgagors, lessees, and purchasers 87,450 79, 864 128,606 172,400 41,156 92, 536
Total trust and deposit liabilities 167, 314 301,006 133, 692
Deferred and undistributed credits: Unearned insurance premiums Unearned insurance fees 926, 510 288,458 1, 389, 783 508,110 463,273 219,652
Total deferred and undistributed credits 1, 214,968 1,897, 893 682, 925
Bonds, debentures, and notes payable: Debentures payable.. 1, 794,000 2,916, 250 1,122,250
Other liabilities: Funds advanced by U. S. Treasury Reserve for foreclosure costs—Mortgage notes 4,170,024 17,159 13,203 —4,170,024 -3,956
Total other liabilities 4,187,183 13,023 -4,173, 980
Total liabilities 8, 753,359 5,172,934 -3, 580,425
CAPITAL
Capital contributions from other FHA insurance funds 1, 000,000 6, 490, 000 5, 490,000
Earned surplus: Insurance reserve fund (cumulative earnings) available for future losses and related expenses 109, 320 676,328 567,008
Total capital 1,109, 320 7,166, 328 6,057,008
Total liabilities and capital 9, 862, 679 12, 339, 262 2,476, 583
Contingent liability for certificates of claim on properties on hand 35, 520 58, 791 23,271
During the fiscal year 1954 the income of the fund amounted to $3,725,196, while expenses and losses amounted to $2,080,172, leaving $1,645,024 net income before adjustment of valuation reserves. After the valuation reserves had been increased by $1,083,640, there remained $561,384 as net income for the year.
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STATEMENT 18
Income and expenses, Housing Insurance Fund, through June 30, 1953, and June 30, 1954
Feb. 3,1938, to June 30,1953 July 1,1953, to June 30,1954 Feb. 3,1938, to June 30,1954
Income: Interest and dividends: Interest on U. S. Government securities Interest—Other... _. $926,126 122, 535 1,638 $85, 305 10, 885 143 $1,011,431 133, 420 1,781
Dividends on rental housing stock Insurance premiums and fees: Premiums.. . _
1,050, 299 96,333 1,146,632
8,041,081 4,079,679 1,809,368 1,819,495 9, 850,449 5,899,174
Fees..
Other income: Profit on sale of investments Total income
12,120, 760 3, 628,863 15, 749,623
88, 568 — 88, 568
13, 259, 627 3, 725,196 16, 984,823
Expenses: Interest expenses: Interest on funds advanced by U. S. Treasury
1, 368,805 17,861 1,386, 666
Administrative expenses: Operating costs Other expenses: Depreciation on furniture and equipment Miscellaneous expenses
11, 472, 496 2,159,025 13, 625,897
70, 495 100 10,191 80, 686 100
Losses and chargeoffs: Loss (or profit —) on sale of acquired properties Loss (or profit —) on equipment Total expenses
70,595 10,191 80, 786
-70,872 -1,017 -107,163 258 -178, 035 -759
-71, 889 -106,905 -178,794
12,840, 007 2,080,172 14,914, 555
Net income (or loss —) before adjustment of valuation reserves. Increase (—) or decrease (+) in valuation reserves: Reserve for loss on loans receivable Reserve for loss on real estate _
419, 620 1, 645,024 2,070, 268
-38,575 -21,416 -634,392 -265, 269 -146,656 -669, 290 -577, 994
Reserve for loss on mortgage notes acquired under terms of insurance .. -271, 725
Net adjustment of valuation reserves Net income before extraordinary nonrecurring expenses. Extraordinary nonrecurring expenses: Reserve for loss on loans receivable.
-310,300 -921,077 -1,393, 940
109,320 723, 947 676,328
-86,665 -34,898 -41, 000
Reserve for loss on real estate _. .. .
Reserve for loss of mortgage notes acquired under terms of insurance. - _
Total nonrecurring expenses
-162, 563
Net income
109,320 561, 384 676,328
ANALYSIS OF EARNED SURPLUS
Distribution of net income: Earned surplus: Balance at beginning of period _ _ $109,320 5, 624 561, 384
Adjustments during period
Net income for period Balance at end of period $109, 320 $676, 328
109, 320 676, 328 676, 328
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Investments
Section 207 (p) of the National Housing Act provides that excess moneys not needed for current operations under the Housing Insurance Fund shall be deposited with the Treasurer of the United States to the credit of the Housing Insurance Fund or invested in bonds or other obligations of, or in bonds or other obligations guaranteed as to principal and interest by the United States, or, with the approval of the Secretary of the Treasury, used for the purchase of debentures issued under Section 207 and Section 204. In the fiscal year 1954, $1,177,650 of Series M 2% percent debentures were purchased from FNMA and $139,550 were redeemed in payment of mortgage insurance premiums; and $370,000 of Series Q 2% percent debentures were redeemed in payment of mortgage insurance premiums. During the fiscal year 1954, net sales of United States Government securities decreased the holdings of the fund $1,700,000 (principal amount). These transactions resulted in an increase in the average annual yield from 2.33 percent to 2.50 percent. On June 30, 1954, the fund held United States Government securities in the principal amount of $3,300,000, as follows:
Investments of the Housing Insurance Fund, June 30, 1954
Series Interest rate (percent) Purchase price Par value Book value (amortized)
1962-67 . 2^ 2)4 $1, 500,000 1,801, 438 $1, 500,000 1,800,000 $1, 500,000 1.800,951
1967-72
Average annual yield 2.50 percent
3,301, 438 3,300,000 3,300,951
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Property Acquired Under the Terms of Insurance
During 1954, no additional project mortgage notes insured under Section 207 or Section 213 were assigned to the FHA Commissioner. Title to 1 project (214 units) insured under Section 207 and 3 home properties insured under Section 213 were acquired under the terms of insurance, and in addition 2 Section 207 mortgage notes previously assigned to the Commissioner were acquired by foreclosure in 1954. Through December 31, 1954, a cumulative total of 20 rental housing projects and two mortgage notes insured under Section 207-210 of the Housing Insurance Fund, 3 project mortgage notes and 3 home properties insured under Section 213 had been acquired under the terms of insurance. Sixteen projects and 1 of the mortgage notes insured under Sections 207-210, and 1 project mortgage note and 1 home property insured under Section 213 had been sold at no loss to the Housing Insurance Fund. There remained on hand at December 31, 1954, 4 projects and 1 mortgage note insured under Section 207 and 2 mortgage notes and 2 home properties insured under Section 213, as follows:
Housing Insurance Fund, statement of properties on hand as of Dec. 31, 1954
Sec. 207 Sec. 213 Total, 6 properties 3 notes (462 units)
Projc 4 properties (345 units) sets 1 mortgage note (48 units) Projects, 2 mortgage notes (67 units) Homes, 2 properties (2 units)
Expenses: Acquisition costs Interest on debentures Taxes and insurance. $1,836, 891 70, 368 34,911 1,252 41,454 1, 557 $598, 290 26,063 $683, 369 26,855 $15,135 469 121 $3,133, 685 123, 755 35,032 1, 252 41,454 2,801
Additions and improvements
Maintenance and operating expenses
Miscellaneous expenses Total expenses Income: Rental and other income (net) ... Collections on mortgage notes 955 289 —
1, 986, 433 625, 308 710, 513 15, 725 3,337,979
101,065 322 31,067 8,153 — 132,454 8,153
Total income and recoveries Net cost of properties on hand
101,065 322 39, 220 — 140, 607
1,885,368 624, 986 671, 293 15, 725 3,197,372
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In addition to the rental housing projects acquired under the Housing Insurance Fund, 1 Section 207 project insured under the Mutual Mortgage Insurance Fund had been acquired and sold at no loss to that fund.
STATEMENT 19
Statement of profit and loss on sale of acquired property, Housing Insurance Fund, through Dec. SI, 1954
Secs. 207-210, (16 projects and 1 mortgage note, 3,870 units) Sec. 213 Total Housing Insurance Fund, 17 properties, 2 mortgage notes (4,015 units)
Projects, 1 mortgage note, 144 units Homes, 1 property, 1 unit
Proceeds of sales: Sales price (or proceeds of mortgage note)1 Less commissions _ $15,099,886 4,539 $1, 529,150 $10,800 540 $16,639,836 5,079
Net proceeds of sales
15, 095, 347 1, 529,150 10, 260 16, 634, 757
Income: Rental and other income (net) Mortgage note income. - .. .. .. ..
1, 667, 737 2, 726, 918 35, 260 122, 685 7 215 1, 703,004 2,849,818
Total income
4,394, 655 157,945 222 4, 552,822
Total proceeds of sold properties Expenses: Debentures and cash adjustments .
19, 490,002 1, 687,095 10, 482 21,187, 579
14, 661, 895 2, 759,030 469, 595 211, 660 753, 910 32, 259 1,492,130 111, 907 9,055 341 5 16,163,080 2,871, 278 469, 600 211,660 754, 795 32, 293
Interest on debentures .
Taxes and insurance.
Additions and improvements Maintenance and operating expense Miscellaneous expense ..
885
34
Total expenses Net profit before distribution of liquidation profits Less distribution of liquidation profits: Certificates of claim Increment on certificates of claim.
18,888,349 1, 604,071 10, 286 20, 502, 706
601, 653 212, 500 41,317 172, 289 83,024 30, 242 2,393 196 196 684,873 242, 938 43, 710 172, 289
Refunds to mortgagors .
Excess credited to fund
175, 547 50,389 225, 936
1 Analysis of terms of sales—
Terms of sales Number of properties Number of notes Cash Mortgage notes Sales Price
Properties sold for all cash Properties sold for cash and notes (or con- 2 — $3,062,401 — $3,062, 401
tracts .for deed) Properties sold for mortgage notes or contracts for deed only 14 3 14 146 229,890 $10,158, 983 3,188, 562 10,388, 873 3,188, 562
Total 19 160 3, 292, 291 13, 347, 545 16,639,836
Certificates of Claim and Refunds to Mortgagors
Certificates of claim issued in connection with the 16 projects and 1 mortgage note insured under Section 207-210 which had been sold through December 31, 1954, totaled $290,400. The amount paid or to be paid on these certificates totaled $212,500, and the amount canceled or to be canceled $77,900. In addition, excess proceeds on 3
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FEDERAL HOUSING ADMINISTRATION
projects had been refunded to mortgagors in the amount of $172,289, in accordance with provisions of the Act prior to amendment of August 10, 1948.
As a result of insurance under Section 213, a certificate of claim had been issued in connection with one project acquired under the terms of insurance and subsequently sold. The total amount, $30,242, is to be canceled. In addition, a certificate of claim in the amount of $382 was issued on one Section 213 home. Of this total $196 is to be paid and $186 is to be canceled.
The certificate of claim issued in connection with the only rental housing project acquired under the Mutual Mortgage Insurance Fund amounted to $31,532. This certificate of claim had been paid in full, with increment thereon in the amount of $1,255.
Title II: Section 220 Housing Insurance Fund
The Section 220 Housing Insurance Fund was created by Section 220 of the National Housing Act, as amended August 2, 1954 (Housing Act of 1954, Public Law 560, 83d Cong.), which authorizes insurance by the FHA of mortgages on homes and rental properties located in an urban redevelopment area for which a Federal-aid contract was executed or approved before August 2, 1954, or in an urban renewal area which the Housing and Home Finance Administrator has determined to be appropriate for an urban renewal project and located in a city for which the Administrator has approved a workable program presented by the local authorities for preventing the spread of blight and eliminating and preventing slum conditions. Terms of insurance are similar to those under Sections 203 and 207, and in addition provide for the insurance of mortgages of dwellings with more than 4 units but fewer than 12.
This is not a mutual insurance fund in the sense that any portion of the net income from operations will be shared by mortgagors in the form of participation payments.
Title II: Section 221 Housing Insurance Fund
Section 221 Housing Insurance Fund was created by Section 221 of the National Housing Act as amended August 2, 1954 (Housing Act of 1954, Public Law 560, 83d Cong.), which authorizes the insurance, in communities that have requested it, of mortgages on low-cost housing for families displaced because of urban renewal projects. The maximum mortgage for owner-occupant mortgagors is $6,700, or $8,600 in high cost areas, and 95 percent of appraised value. Mortgages in amounts up to $6,800 ($7,650 in high-cost areas) or 85 percent of value may be insured on single-family homes built, or acquired and rehabilitated, for sale to owner-occupants. Insurance under this section may also cover mortgages up to $5 million in amount to finance
350920—56----23
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HOUSING AND HOME FINANCE AGENCY
the construction or rehabilitation of rental accommodations for 10 or more displaced families when the mortgagor is a private nonprofit organization subject to Government supervision. The Housing Administrator will certify to the FHA Commissioner the number of units needed to relocate displaced families, and the number of units financed under Section 221 may not exceed that number.
This is not a mutual insurance fund in the sense that any portion of the net income from operations will be shared by mortgagors in the form of participation payments.
Title II: Servicemen’s Mortgage Insurance Fund
The Servicemen’s Mortgage Insurance Fund was created by Section 222 of the National Housing Act as amended August 2, 1954 (Housing Act of 1954, Public Law 560, 83d Cong.). The purpose of this section is to aid in the provision of housing accommodations for servicemen in the Armed Forces of the United States and in the Coast Guard of the United States, and their families. Section 222 provides for the insurance of mortgages which would be eligible for insurance under Section 203, except that when executed by a mortgagor who is a serviceman and who, at the time of insurance, is the owner-occupant of the property the maximum ratio of loan to value may, in the discretion of the Commissioner, exceed the maximum ratio of loan to value prescribed in Section 203 but not to exceed in any event 95 per centum of the appraised value of the property and not to exceed $17,100.
This is not a mutual insurance fund in the sense that any portion of the net income from operations will be shared by mortgagors in the form of participation payments.
Title VI: War Housing Insurance Fund
The insurance risks on privately financed emergency housing loans insured under Title VI are liabilities of the War Housing Insurance Fund, established by an amendment of March 28, 1941 to the National Housing Act. Section 603 of Title VI authorized the insurance of home mortgages (1- to 4-family); Section 608, the insurance of mortgages on rental and group housing; Section 609, the insurance of loans to finance the manufacture of housing; Section 610, the insurance under Sections 603 and 608 of any mortgage executed in connection with sales by the Government of specified types of permanent housing; and Section 611, the insurance of mortgages, including construction advances, on projects of 25 or more single-family dwellings.
The War Housing Insurance Fund was originally allocated the sum of $5,000,000 by the Federal Government. It has been credited with all income received in connection with insurance granted under Title
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FEDERAL HOUSING ADMINISTRATION
VI, and has been charged with all expenses and losses relating to such insurance.
This is not a mutual insurance fund in the sense that any portion of the net income from operations will be shared by mortgagors in the form of participation payments.
War Housing Insurance Fund Capital
Assets of the War Housing Insurance Fund as of June 30, 1954, totaled $202,295,054, against which there were outstanding liabilities of $95,797,036. The fund had capital of $106,498,018, consisting entirely of earned surplus.
In accordance with Public Law 94, 83d Congress, approved June 30, 1953, the amount of capital contributed by the United States Government to establish this fund in the amount of $5,000,000 was established as a liability as of June 30, 1953. This principal amount, together with interest thereon in the amount of $1,390,010, has been repaid, the final payment being made on September 30, 1953.
STATEMENT 20
Comparative statement of financial condition, War Housing Insurance Fund, as of June 30, 1953, and June 30, 1954
June 30, 1953 June 30, 1954 Increase or decrease (—)
ASSETS Cash with U. S. Treasury $6, 806,152 $71, 249, 220 $64,443,068
Investments: U. S. Government securities (amortized) Other securities (stock in rental housing corporations) Total investments
78, 236,665 403,600 20, 773,009 401,000 -57,463, 656 -2, 600
78, 640, 265 21,174,009 -57,466, 256
Loans receivable: Mortgage notes and contracts for deed Less reserve for losses
29,093,180 509,131 33,810,313 910,816 4, 717,133 401,685
Net loans receivable ..
28,584,049 32, 899,497 4,315,448
Accounts and notes receivable: Accounts receivable—Insurance premiums Accounts receivable—Other Total accounts and notes receivable Accrued assets: Interest on IT. S. Government securities Acquired security or collateral: Real estate (at cost plus expenses to date) Less reserve for losses
506,326 35 492, 288 7,876 -14,038 7,841
506,361 500,164 -6,197
101,667 46,458 -55,209
60, 697,386 10, 948,193 61, 718, 843 22, 419,165 1,021,457 11,470,972
Net real estate
49, 749,193 39, 299,678 -10,449,515
Mortgage notes acquired under terms of insurance (at cost plus expenses to date) Less reserve for losses
49,328, 926 9.020,055 62,492, 451 25,418,587 13,163,525 16,398,532
Net mortgage notes acquired under terms of insurance.. Net acquired security or collateral Other assets—held for account of mortgagors Total assets .
40,308,871 37,073,864 -3, 235,007
90,058,064 76,373,542 '-13,684,522
40,116 52,164 12,048
204, 736, 674 202, 295,054 -2,441,620
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HOUSING AND HOME FINANCE AGENCY
STATEMENT 20—Continued
Comparative statement of financial condition, War Housing Insurance Fund, as of June 30, 1953, and June 30, 1954—-Continued
June 30, 1953 June 30, 1954 Increase or decrease (—)
LIABILITIES Accounts payable: Bills payable to vendors and Government agencies Interfund.. $9,156 6, 822 $3,868 14, 242 —$5, 288 7,420
Total accounts payable Accrued liabilities: Interest on debentures.__ _
15, 978 876, 755 1,373,929 18,110 981,565 2,132 104, 810 -1,373, 929
Interest on funds advanced by U. S. Treasury Total accrued liabilities
2, 250, 684 981, 565 -1,269,119
Trust and deposit liabilities: Excess proceeds of sale .
1,036,368 981,536 1,324,383 1, 505,144 288,015 523,608
Deposits held for mortgagors, lessees, and purchasers Total trust and deposit liabilities Deferred and undistributed credits: Unearned insurance premiums Unearned insurance fees Total deferred and undistributed credits Bonds, debentures, and notes payable: Debentures payable... Other liabilities: Funds advanced by U. S. Treasury
2, 017, 904 2, 829,527 811, 623
12, 575, 874 23 12,050,152 24 -525, 722 1
12, 575, 897 12,050,176 -525, 721
68, 785, 200 79, 289, 600 10,504, 400
5,000,000 492, 356 -5,000,000 135, 702
Reserve for foreclosure costs—Mortgage notes Total other liabilities Total liabilities 628,058
5,492,356 628,058 -4,864, 298
91,138,019 95, 797,036 4, 659,017
CAPITAL Earned surplus: Insurance reserve fund (cumulative earnings) available for future losses and related expenses Total liabilities and capital Contingent liability for certificates of claim on properties on hand _
113, 598,655 106, 498,018 -7,100,637
204, 736, 674 202, 295,054 -2,441, 620
2, 476, 786 2, 747,970 271,184
Income and Expenses
During the fiscal year 1954 the fund earned $27,439,146 and had expenses of $3,196,926, leaving $24,242,220 net income before adjustment of valuation reserves. After the valuation reserves had been increased by $8,418,638 and extraordinary nonrecurring expenses were taken into account, the net loss for the year amounted to $4,028,969, which was charged to the insurance reserve fund.
The cumulative income of the War Housing Insurance Fund from its establishment March 28, 1941, to June 30, 1954, amounted to $243,887,270, while cumulative expenses were $75,440,684, leaving $168,446,586 net income before adjustment of reserves. Valuation reserves of $48,748,568 were established, leaving cumulative net income of $119,698,018.
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FEDERAL HOUSING ADMINISTRATION
STATEMENT 21
Income and expenses, War Housing Insurance Fund, through June 30, 1953, and June 30, 1954
Mar. 28,1941, to June 30, 1953 July 1,1953, to June 30, 1954 Mar. 28.1941, to June 30, 1954
Income: Interest and dividends: Interest on U. S. Government securities Interest—Other.. . . _ _ __ ..... $8.426,695 3, 640, 448 7, 387 $1, 814, 610 1, 834, 848 2, 509 $10, 241,305 5, 475,296 9,896
Dividends on rental housing stock Insurance premiums and fees: Premiums ... _
12, 074, 530 3, 651, 967 15, 726, 497
159, 081, 526 45,137, 985 24, 461, 220 14, 769 183, 542, 746 45,152, 754
Fees ._
Other income: Profit (or loss —) on sale of investments Miscellaneous income .. _ .. .. ..
204,219, 511 24, 475, 989 228, 695, 500
153, 703 380 -688, 810 -535, 107 380
Total income
154, 083 -688,810 -534, 727
216,448,124 27, 439,146 243, 887, 270
Expenses: Interest expenses: Interest on funds advanced by U. S. Treasury... ... ... _ .
1, 373, 929 68. 053,922 359.123 16. 081 1, 771, 234 8, 594 1,390, 010 69, 696, 824 367, 717
Administrative expenses: Operating costs Other expenses: Depreciation on furniture and equipment. Losses and chargeoffs: Loss on sale of acquired properties Loss (or profit —) on equipment Total expenses
2, 604,539 -19,423 1,400. 800 217 4,005,339 -19, 206
2 585 116 1,401,017 3, 986,133
72,372, 090 3,196, 926 75,440, 684
Net income before adjustment of valuation reserves Increase (—) or decrease (+) in valuation reserves: Reserve for loss on loans receivable Reserve for loss on real estate Reserve for loss on mortgage notes acquired under terms of insurance
144 076, 034 24. 242, 220 168.446, 586
-509,131 -10,948,193 -9, 020,055 -257, 846 -1, 291, 091 -6, 869, 701 -910 816 -22,419,165 -25 418, 587
Net adjustment of valuation reserves Net income before extraordinary nonrecurring expenses ___
-20,477, 379 -8,418, 638 -48, 748,568
123, 598, 655 15.823, 582 119, 698,018
Extraordinary nonrecurring expenses: Reserve for loss on loans receivable
-143, 839 -10,179, 881 -9, 528, 831
Reserve for loss on real estate
Reserve for loss on mortgage notes acquired under terms of insurance ___
Total nonrecurring expenses ...
-19, 852,551
Net income (or loss —)
123, 598, 655 -4,028, 969 119,698,018
ANALYSIS OF EARNED SURPLUS
Distribution of net income: Earned surplus: Balance at beginning of period $113, 598, 655 128, 332 —4,028, 969
Adjustments during period.. . .. .
Net income (or loss —) for period Capital contributions to other FHA insurance funds Balance at end of period $123, 598, 655 $119,698,018
123, 598, 655 -10,000 000 109, 698, 018 -3 200, 000 119. 698,018 -13, 200,000
113, 598. 655 106.498, 018 106,498,018
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Investments
Section 605(a) of Title VI contains a provision similar to that under Title II with respect to investment of moneys not needed for current operations by the purchase of United States Government securities or the retirement of debentures.
During the fiscal year 1954, excess funds not needed for current operations were used to retire $13,831,400 Series H 2%-percent War Housing Insurance Fund debentures, of which $2,480,200 were called for redemption, $4,652,250 were purchased from FNMA, and $6,698,-950 were redeemed in payment of mortgage insurance premiums.
During the fiscal year 1954, net sales of $56,700,000 decreased the United States Government securities held by the fund as of June 30, 1954 to $20,600,000, principal amount. These transactions increased the average annual yield to 2.43 percent.
Investments of the War Housing Insurance Fund, June 30, 1954
Series Interest rate (percent) Purchase price Par value Book value (amortized)
1966-71 1967-72 Average annual yield 2.43 percent 2^ 2J4 $4. 000, 000 16, 867,853 $4.000,000 16,600,000 $4, 000, 000 16, 773,009
20,867,853 20, 600, 000 20, 773, 009
Properties Acquired Under the Terms of Insurance
The Federal Housing Administration acquired title in 1954, under the terms of insurance, to 427 properties (830 units) insured under Section 603 and sold 290 (336 units). Through December 31, 1954, a total of 10,557 Section 603 properties (14,161 units) had been acquired at a cost of $69,307,978, and 9,244 properties (12,117 units) had been sold at prices which left a net charge against the fund of $2,762,808, or an average of $299 per case. There remained on hand for future disposition 1,313 properties having 2,044 living units.
During 1954, 39 rental housing projects (2,199 units) and 31 mortgage notes (2,818 units) insured under Section 608 were assigned to the FHA Commissioner under the terms of insurance, and 44 projects (1,664 units) were sold by the Commissioner. Through December 31, 1954, a total of 202 projects (11,662 units) and 135 mortgage notes (10,316 units) had been assigned to the Commissioner. Seventy-two projects (3,599 units) had been sold, and 1 mortgage note (42 units) had been settled, resulting in a net loss to the War Housing Insurance Fund of $2,141,842, leaving 130 projects (8,063 units) and 134 mortgage notes (10,274 units) still held by the FHA.
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FEDERAL HOUSING ADMINISTRATION
No additional purchasers’ or manufacturers’ notes insured under Section 609 were assigned to the FHA Commissioner during the cal-•endar year 1954. Through December 31, 1954, 2 manufacturers’ notes and 65 discounted purchasers’ notes had been assigned. Sixty-four discounted purchasers’ notes and 2 manufacturers’ notes had been settled with a resultant loss to the Fund of $784,934, leaving 1 purchaser’s note on hand at December 31, 1954.
STATEMENT 22
Statement of profit and less on sale of acquired properties, War Housing Insurance Fund, through Dec. 31, 1954
Sec. 603 (9,244 properties, 12,117 units) Sec. 608 (72 projects and 1 mortgage note, 3,641 units) Sec. 609 (66 notes, 369 units) Total War Housing Insurance Fund (9,383 properties)
Proceeds of sales: Sales price (or proceeds of mortgage)1 Less commissions and other selling expenses Net proceeds of sales Income: Rental and other income (net) Mortgage note income $55,421,731 2,113,910 $17,312,054 4,393 $324, 878 $73,058,663 2,118,303
53,307, 821 17,307, 661 324,878 70,940,360
4,741,473 6, 207,967 5,015, 895 750,366 28, 260 9,757, 368 6,986, 593
Total income
10,949,440 5,766, 261 28,260 16,743,961
Total proceeds of sold properties Expenses: Debentures and cash adjustments
64, 257, 261 23,073,922 353,138 87, 684,321
51,798,768 49,998 6,893, 688 1,532, 202 497,456 3,984,411 2,986 18,868, 633 1,115,807 71,783, 208 49,998 9,008,662 2, 589,800 1,012,785 6,353,645 82,140
Purchase of land held under lease
Interest on debentures Taxes and insurance 2,092,709 1,057, 598 515,329 2,369, 234 79,154 22, 265
Additions and improvements Maintenance and operating expense Miscellaneous expense —
Total expenses Net profit (or loss—) before distribution of liquidation profits
64,759,509 24,982,657 1,138,072 90, 880, 238
-502,248 842,126 102,092 1,316,342 -1,908,735 208,454 24,653 -784,934 -3,195,917 1,050, 580 126,745 1,316,342
Less distribution of liquidation profits: Certificates of claim
Increment on certificates of claim Refunds to mortgagors —
Loss to War Housing Insurance Fund Average loss to War Housing Insurance Fund
2,762,808 2,141,842 784,934 5, 689,584
299
1 Analysis of terms of sales—
Terms of sales Number of properties Number of notes Cash Mortgage notes Sales price
Properties sold for all cash Properties sold for cash and notes (or contracts for deed) Properties sold for notes only Total. 2,159 7,090 134 5,597 9 $13, 656, 857 4,182,486 $53,749, 525 1, 469, 795 $13, 656,857 57,932,011 1,469,795
9,383 5,606 17,839,343 55, 219,320 73,058,663
3 Represents 64 discounted purchasers’ notes and 2 manufacturers’ notes settled in full.
331
HOUSING AND HOME FINANCE AGENCY
STATEMENT 23
Statement of properties on hand, War Housing Insurance Fund, as of Dec. 31, 1954
Section 603 1,313 properties, 2,044 units Sec. 608 Sec. 609 Total, 1,443 properties, 135 notes, 20,382 units
130 properties, 8,063 units 134 mortgage notes,1 10,274 units 1 purchaser’s note,1 1 unit
Expenses: Acquisition costs Interest on debentures Taxes and insurance $10, 268,065 583,879 493, 423 130,988 660,956 356 $57,392,412 4, 649,913 2,603,305 324, 606 4,880, 719 95,875 $74, 238,396 3, 544,883 $3, 278 131 $141, 902,151 8,778,806 3,096, 728 455, 594 5, 541, 675 104, 912
Additions and improvements Maintenance and operating Miscellaneous 8,681
Total expenses Income and recoveries: Rental and other income (net) Collections on mortgage notes
12,137,667 69, 946, 830 77, 791, 960 3,409 159,879,866
1,014, 228 10,193, 534 3, 736, 736 935, 653 — 14,944, 498 935, 653
Total income and recoveries Net cost of properties on hand
1,014, 228 10,193, 534 4, 672, 389 — 15,880,151
11,123,439 59, 753, 296 73,119, 571 3,409 143, 999, 715
1 Acquired in exchange for debentures.
The turnover of Section 603 and Section 608 properties acquired and sold, by calendar year, is given below:
STATEMENT 24
Turnover of properties acquired under Sec. 603 of Title VI, through Dec. 31, 1954
Properties acquired
Properties sold, by calendar years
Year
Number
1943 1944 1945 1946 1947 1948 1949 1950 1951
1952 1953 1954
Properties on hand Dec. 31, 1954
1943______
1944______
1945______
1946______
1947______
1948______
1949______
1950______
1951______
1952______
1953______
1954______
Total...
498
2,542
2,062
998
16
116
507
1,635 735 609
412
427
29 220 110
685
187
139
1,178
1, 050
431
386
317
302
5
140
350
210
9
23
87
139
43
1
21
93
17
6
11
65
243
421
74
431
441
4
28
246 193
209
2
9
103
53
122
56
18
80
27
65
58
42
354
21
213
298
385
10, 557
982 2,798 1,010
732 384 763 964
691 345 290 1,313
7
8
Notes.—On the 9,244 properties sold, the average time between acquisition and sale by the Federal Housing Administration was 17 months.
The number of properties sold has been reduced by 29 properties repossessed because of default on mortgage notes, of which 16 had been resold by Dec. 31, 1954.
332
FEDERAL HOUSING ADMINISTRATION
STATEMENT 25
Turnover of properties acquired and mortgage notes assigned under Sec. 608 of Title VI, through Dec. 31, 1954
Properties and notes acquired Properties and notes sold, by calendar years Properties and notes on hand Dec. 31, 1954
Year Number 1943 1944 1945 1946 1947 1948 1949 1950 1951 1952 1953 1954
1943 1 1 1
1944 1
1945
1946 1 1
1947
1948
1949 16 66 82 37 63 70 11 4 2 1 6 21 10 4 1 4 47 58 27 59 69
1950 7 1 2
1951
1952
1953
1954
Total—
337 1 1 8 2 17 44 264
Certificates of Claim and Refunds to Mortgagors
Section 604(f) of the Act provides that if the net amount realized from any property conveyed to the Commissioner under Section 603, after deducting all expenses incurred in handling, dealing with, and disposing of such property, exceeds the face value of the debentures issued and the cash paid in exchange for such property plus all interest paid on such debentures, such excess shall be applied to the certificate of claim issued to the mortgagee and any excess remaining after paying the certificate of claim and increment thereon shall be refunded to the mortgagor.
Certificates of claim in the total amount of $1,796,832 had been issued through 1954 in connection with the 9,244 properties which had been acquired and subsequently sold. The proceeds of sale were sufficient to provide for the payment in full or in part on these certificates in the amount of $842,126, or approximately 47 percent. Certificates of claim canceled or to be canceled amounted to $954,706, or approximately 53 percent. In addition, the proceeds of sale were sufficient to pay refunds of $1,316,342 to 3,673 mortgagors, or an average of $358 per case.
With respect to the excess proceeds, if any, from the sale of an acquired project insured under Section 608, the Act provides that any amount remaining after the payment of the certificate of claim shall be credited to the War Housing Insurance Fund.
HOUSING AND HOME FINANCE AGENCY
Certificates of claim totaling $452,882 had been issued in connection with the 73 Section 608 acquisitions which had been disposed of by December 31, 1954. The proceeds of sale were sufficient to provide $208,454 for payment in full or in part on these certificates. Certificates of claim canceled or to be canceled amounted to $244,428. Excess proceeds of $460,179 had been credited to the fund, as provided in the Act.
Title VII: Housing Investment Insurance Fund
The Housing Investment Insurance Fund was created by Section 710 of the National Housing Act as amended August 10, 1948 (Housing Act of 1948, Public Law 901, 80th Cong.), which provides that this fund shall be used by the FHA Commissioner as a revolving fund for carrying out the rental housing yield insurance program authorized by Title VII and for administrative expenses in connection therewith.
This is not a mutual insurance fund in the sense that any portion of the net income from operations will be shared by mortgagors in the form of participation payments.
Section 710 further provides that the Secretary of the Treasury shall make available to the Commissioner such funds as the Commissioner may deem necessary, but not to exceed $10,000,000, which amount is authorized to be appropriated out of any money in the Treasury not otherwise appropriated.
One million dollars has been allocated to the fund by the Secretary of the Treasury pursuant to the request of the Federal Housing Commissioner, and the remaining $9,000,000 is being retained in the United States Treasury. Up to December 31, 1954, no applications for insurance under Title VII had been submitted.
Housing Investment Insurance Fund Capital and Net Income
Assets of the Housing Investment Insurance Fund at June 30, 1954 totaled $832,837. There were outstanding liabilities and contributed capital amounting to $909,957, which left an operating deficit of $77,120. The $1,000,000 which was transferred from the United States Treasury to establish the fund in accordance with Section 710 of the Act was established as a liability of the fund as of June 30, 1953,
334
FEDERAL HOUSING ADMINISTRATION
under the provisions of Public Law 94, 83rd Congress. This amount, including interest thereon in the amount of $107,914, was repaid on July 31, 1953.
STATEMENT 26
Comparative statement of financial condition, Housing Investment Insurance Fund, as of June 30, 1953, and June 30, 1954
June 30,1953 June 30,1954 Increase or decrease (—)
ASSETS Cash with U. S. Treasury Investments: U. S. Government securities (amortized) Accrued assets: Interest on U. S. Government securities Total assets LIABILITIES Accounts payable: Interfund Accrued liabilities: Interest on funds advanced by U. 8. Treasury Other liabilities: Funds advanced by U. 8. Treasury. Total liabilities CAPITAL Capital contributions from other FHA insurance funds $57, 201 $29,604 —$27,597
951,910 801, 774 -150,136
1,458 1,459 1
1,010,569 832,837 -177,732
1,128 -43 -1,171
106,019 — -106,019
1,000,000 — -1,000,000
1,107,147 -43 -1,107,190
910,000 910,000
Earned surplus (deficit —): Insurance reserve fund (cumulative earnings or deficit —) available for future losses and related expenses
-96,578 -77,120 19, 458
Total capital
-96,578 832,880 929,458
Total liabilities and capital
1,010,569 832,837 -177, 732
The total income for fiscal year 1954 was $20,117, consisting entirely of interest on United States Government securities, while expenses amounted to $1,898, resulting in a net income for the year of $18,219. The cumulative income of the Housing Investment Insurance Fund from August 10, 1948 to June 30, 1954 amounted to $70,263, while cumulative expenses amounted to $147,383, resulting in a net deficit to the fund of $77,120.
335
HOUSING AND HOME FINANCE AGENCY
STATEMENT 27
Income and expenses, Housing Investment Insurance Fund, through June SO, 195S, and June 30, 1954
Aug. 10,1948, to June 30, 1953 July 1 1953, to June 30, 1954 Aug. 10,1948, to June 30, 1954
Income: Interest and dividends: Interest on U. S. Government securities Total income Expenses: Interest expenses: Interest on funds advanced by U. S. Treasury Administrative expenses: Operating costs Other expenses: Depreciation on furniture and equipment. Losses and chargeoffs: Loss (or profit—) on equipment Total expenses Net income (or loss —) $50.146 $20, 117 $70, 263
50,146 20,117 70,263
106, 019 1,895 107,914
40, 530 3 39,294
180 — 180
-5 — -5
146, 724 1,898 147, 383
-96, 578 18, 219 -77,120
ANALYSIS OF EARNED SURPLUS (OR DEFICIT -)
Distribution of net income: Earned surplus (or deficit —): Balance at beginning of period Adjustments during period Net income (or loss —) for period Balance at end of period.. —$96.578 —$96, 578 1, 239 18. 219 -$77.120
-96,578 -77.120 -77.120
Investments
Section 710 of the Act provides that moneys in the Housing Investment Insurance Fund not needed for current operations shall be deposited with the Treasurer of the United States to the credit of the fund, or invested in bonds or other obligations of, or in bonds or other obligations guaranteed by the United States; or the Commissioner may, with the approval of the Secretary of the Treasury, purchase debentures issued under this fund, provided that such purchases are made at a price which will produce an investment yield of not less than the yield obtainable from other authorized investments. During the fiscal year 1954, $150,000 (principal amount) of United States Government securities were redeemed for the account of this fund. At June 30, 1954, the fund held $800,000, principal amount, of United States Government securities yielding 2.48 percent, as follows:
Investments of the Housing Investment Insurance Fund, June 30, 1954
Series Interest rate (percent) Purchase price Par value Book value (amortized)
1965-70 2H 2H $97,375 704,922 $100. 000 700,000 $97,706 704,068
1967-72
Average annual yield 2.48 percent
802, 297 800, 000 801, 774
336
FEDERAL HOUSING ADMINISTRATION
Title VIII: Military Housing Insurance Fund
An amendment to the National Housing Act approved August 8, 1949 (Public Law 211, 81st Cong.) created the Military Housing Insurance Fund to be used by the FHA Commissioner as a revolving fund for carrying out the provisions of Title VIII of the Act, which provides for the insurance of military housing mortgages. For the purposes of this fund, the Act authorized to be appropriated the sum of $10,000,000, of which $5,000,000 was made available by the Supplemental Appropriation Act, 1950 (Public Law 358, 81st Cong.).
This is not a mutual fund in the sense that any portion of the net income from operations will be shared by mortgagors in the form of participation payments.
Investments
Section 804(a) of the Act provides that moneys not needed for current operations shall be deposited with the Treasurer of the United States to the credit of the fund, or invested in bonds or other obligations of, or in bonds or other obligations guaranteed as to principal and interest by the United States, or, with the approval of the Secretary of the Treasury, used to purchase debentures issued under this title. During the fiscal year 1954, net redemptions of $2,200,000 decreased the United States Government securities held by the fund as of June 30, 1954, to $10,550,000 principal amount. These transactions resulted in an increase in the average annual yield from 2.41 percent to 2.49 percent.
Investments of the Military Housing Insurance Fund, June 30, 1954
Series Interest rate (percent) Purchase price Par value Book value (amortized)
1964-69 2^ 2J4 2M $1,511,820 288,391 1, 063,141 $1, 550,000 300,000 1,100,000 7,600,000 $1,516, 643 289,317 1,066,384 7,677,178
1965-70
1966-71
1967-72 2M 7, 701, 281
Average annual yield 2.49 percent
10, 564,633 10,550,000 10,549, 522
Military Housing Insurance Fund Capital and Net Income
As of June 30, 1954, the assets of the Military Housing Insurance Fund totaled $11,426,964, against which there were outstanding liabilities of $1,531,046, leaving $9,895,918 capital. The capital consists of earned surplus of $9,195,918 and capital contributions from other FHA insurance funds of $700,000.
In accordance with Public Law 94, 83d Congress, approved June 30, 1953, the capital contributed by the United States Government to establish this fund in the amount of $5,000,000 was established as
337
HOUSING AND HOME FINANCE AGENCY
a liability of the fund as of June 30, 1935. This amount has been repaid during fiscal year 1954 together with interest thereon in the amount of $441,092 the final payment being made on November 30, 1953.
STATEMENT 28
Comparative statement of financial condition, Military Housing Insurance Fund, as of June 30, 1953, and June 30, 1954
June 30, 1953 June 30, 1954 Increase or decrease (—)
ASSETS Cash with U. S. Treasury ................. Investments: U. S. Government securities (amortized) Other securities (stock in rental housing corporations) Total investments Accounts and notes receivable: Accounts receivable—Insurance premiums Accrued assets: Interest on U. S. Government securities Total assets LIABILITIES Accounts payable: Interfund $711,762 $764, 461 $52,699
12, 750, 462 17,400 10, 549, 522 20, 200 -2, 200,940 2,800
12, 767,862 10, 569, 722 -2,198,140
55,990 73,042 17,052
19, 740 19, 739 -1
13, 555,354 11,426,964 -2,128,390
-2,103 1,939 4,042
Accrued liabilities: Interest on funds advanced by U. S. Treasury Deferred and undistributed credits: Unearned insurance premiums ..
413, 621 — -413, 621
1, 398,855 24,844 1,525, 508 3,599 126, 653 -21,245
Unearned insurance fees
Total deferred and undistributed credits. Other liabilities: Funds advanced by U. S. Treasury Total liabilities.. — CAPITAL
1, 423,699 1, 529,107 105,408
5,000, 000 — -5,000,000
6,835, 217 1, 531, 046 -5,304,171
Capital contributions from other FHA insurance funds Earned surplus: Insurance reserve fund (cumulative earnings) available for future losses and related expenses — 700,000 700,000
6, 720,137 9,195,918 2,475, 781
Total capital Total liabilities and capital 6,720,137 9,895,918 3,175,781
13,555,354 11,426,964 -2,128,390
338
FEDERAL HOUSING ADMINISTRATION
Total income of the Military Housing Insurance Fund during the fiscal year 1954 amounted to $3,460,712, while expenses and losses amounted to $989,487, leaving a net income of $2,471,225. The cumulative income of the fund from August 8, 1949 to June 30, 1954 amounted to $13,773,743, while cumulative expenses totaled $4,577,825, resulting in a cumulative net income of $9,195,918.
STATEMENT 29
Income and expenses, Military Housing Insurance Fund, through June 30, 1953, and June 30, 1954
Aug. 8, 1949, to June 30, 1953 July 1, 1953, to June 30,1954 Aug. 8, 1949, to June 30, 1954
Income: Interest and dividends: Interest on U. S. Government securities $653, 289 115 $266, 517 150 $919,806 265
Dividends on rental housing stock
Insurance premiums and fees: Premiums 653,404 266, 667 920,071
4,764,601 4,895,026 2,670, 442 523, 603 7,435,043 5, 418,629
Fees
Total income
9,659, 627 3,194,045 12,853,672
10,313,031 3,460, 712 13,773,743
^Expenses: Interest expenses: Interest on funds advanced by U. S. Treasury
413, 621 27,471 441,092
Administrative expenses: Operating costs
3,164, 297 957, 390 4,117,131
Other expenses: Depreciation on furniture and equipment. Losses and chargeoffs: Loss (or profit—) on equipment. Total expenses
15, 486 4,512 19, 998
-510 114 -396
3, 592,894 989, 487 4,577,825
Net income
6, 720,137 2,471, 225 9,195,918
ANALYSIS OF EARNED SURPLUS
Distribution of net income: Earned surplus: Balance at beginning of period $6, 720,137 4,556 2,471, 225
Adjustments during period
Net income for period $6, 720,137 $9,195,918
Balance at end of period.
6, 720,137 9,195,918 9,195,918
339
HOUSING AND HOME FINANCE AGENCY
Properties Acquired Under Terms of Insurance
During the calendar year 1954, one property insured under Title VIII was acquired by the Commissioner under the terms of insurance. This was the first property acquired by the Military Housing Insurance Fund, and the property remained on hand at December 31, 1954. The cost of the property at December 31, 1954, was:
Military Housing Insurance Fund, statement of properties on hand at Dec. 31, 1954
Sec. 803,1 project (55 units)
Expenses: Acquisition cost $393, 268 4,916 398,184
Interest on debentures
Net cost of properties on hand
Title IX: National Defense Housing Insurance Fund
The National Defense Housing Insurance Fund was created by Section 902 of the National Housing Act as amended September 1, 1951 (Defense Housing and Community Facilities and Services Act of 1951, Public Law 139, 82d Cong.), which provides that this fund shall be used by the Commissioner as a revolving fund for carrying out the provisions of Title IX of the Act. This title of the Act provides for the insurance of mortgages in areas which the President shall have determined to be critical defense housing areas. To accomplish this purpose, the Act authorized the Commissioner to transfer from the War Housing Insurance Fund the sum of $10,000,000, all of which had been transferred by December 31, 1953.
This is not a mutual insurance fund in the sense that any portion of the net income from operations will be shared by mortgagors in the form of participation payments.
National Defense Housing Insurance Fund Capital and Net Income
As of June 30, 1954, the assets of the National Defense Housing Insurance Fund totaled $10,722,199, against which there were outstanding liabilities of $3,882,954, leaving $6,839,245 capital. Included in the capital is $6,100,000 transferred from other insurance funds in accordance with Section 219 of the Act, and earned surplus of $739,245.
340
FEDERAL HOUSING ADMINISTRATION
STATEMENT 30
Comparative statement of financial condition, National Defense Housing Insurance Fund, as of June SO, 1953, and June 30, 1954
June 30, 1953 June 30, 1954 Increase or decrease (—)
ASSETS Cash with U. S. Treasury $471, 556 $1,014, 619 $543,063
Investments: U. S. Government securities (amortized) Other securities (stock in rental housing corporations) 11,438,491 4, 400 8,070,840 8, 500 -3,367,651 4,100
Total investments 11,442,891 8,079, 340 -3,363,551
Accounts and notes receivable: Accounts receivable—Insurance premiums 3,971 39,864 35,893
Accrued assets: Interest on U. S. Government securities 11,406 6,406 -5,000
Acquired security or collateral: Real estate (at cost plus expenses to date) Less reserve for losses 891,871 153,306 891,871 153, 306
Net real estate — 738, 565 738, 565
Mortgage notes acquired under terms of insurance (at cost plus expenses to date) Less reserve for losses 1,395,049 551,644 1,395,049 551,644
Net mortgage notes acquired under terms of insurance.. — 843,405 843,405
Net acquired security or collateral 1,581,970 1, 581,970
Total assets 11,929,824 10, 722,199 -1,207, 625
LIABILITIES Accounts payable: Bills payable to vendors and Government agencies Interfund 4,929 1,437 10,128 1,437 5,199
Total accounts payable 4,929 11, 565 6,636
Accrued liabilities: Interest on debentures 29,835 29,835
Trust and deposit liabilities: Fee deposits held for future disposition Deposits held for mortgagors, lessees and purchasers 968,873 374,341 5, 713 -594, 532 5, 713
Total trust and deposit liabilities 968,873 380,054 -588,819
Deferred and undistributed credits: Unearned insurance premiums Unearned insurance fees 665,944 6,316 1, 244, 209 578, 265 -6, 316
Total deferred and undistributed credits 672, 260 1, 244, 209 571,949
Bonds, debentures, and notes payable: Debentures payable... — 2,203, 500 2,203, 500
Other liabilities: Reserve for foreclosure costs—Mortgage notes. — 13, 791 13, 791
Total liabilities 1,646,062 3,882, 954 2, 236,892
CAPITAL Capital contributions from other FHA insurance funds ... 10,000,000 6,100,000 -3,900,000
Earned surplus: Insurance reserve fund (cumulative earnings) available for future losses and related expenses 283, 762 739, 245 455,483
Total capital 10, 283, 762 6,839, 245 -3,444, 517
Total liabilities and capital 11, 929,824 10, 722,199 -1, 207,625
350920—56----24
341
HOUSING AND HOME FINANCE AGENCY Income and Expe During fiscal year 1954, the income $2,634,324, while expenses and losses leaving $1,182,980 net income before pro After $704,950 had been provided fo remained $478,030 net income for the y The cumulative income of the Nationa Fund from September 1, 1951, to June 30, while cumulative expenses amounted to $2 net income of $1,444,195 before adjust Valuation reserves of $704,950 were est net income of $739,245. STATEMENT 3 Income and expenses, National Defense Housing 1953, and June 30, Income: Interest and dividends: Interest on IT. S. Government securities Interest—Other Dividends on rental housing stock Insurance premiums and fees: Premiums Fees. Other income: Profit on sale of investments Total income Expenses: Administrative expenses: Operating costs Other expenses: Depreciation on furniture and equipment Miscellaneous Losses and charge-offs: Loss (or profit—) on equipment Total expenses... Net income before adjustment of valuation reserves Increase (—) or decrease (+) in valuation reserves: Reserve for loss on real estate Reserve for loss on mortgage notes acquired under terms of insurance Net adjustment of valuation reserves Net income ANALYSIS OF EARNED Distribution of net income: Earned surplus: Balance at beginning of period Adjustments during period Net income for period Balance at end of period 342 nses to the fund amounted to amounted to $1,451,344, vision for valuation reserves, r valuation reserves, there ear. 1 Defense Housing Insurance 1954 amounted to $5,565,145 1,120,950, leaving cumulative ment of valuation reserves, ablished, leaving cumulative 1 Insurance Fund, through June 30, 1954
Sept. 1, 1951, to June 30, 1953 July 1, 1953, to June 30, 1954 Sept. 1, 1951, to June 30, 1954
$127,367 $219, 516 349 10 $346,883 349 10
127,367 219,875 347,242
713,001 2,090,453 1,865,806 494,021 2, 578,807 2, 584,474
2,803,454 2,359,827 5,163,281
54,622 54,622
2,930,821 2,634,324 5, 565,145
2,634,463 1,415,297 4,072,307
12, 626 6,671 29, 207 19,297 29,207
12,626 35,878 48,504
-30 169 139
2,647,059 1, 451,344 4,120, 950
283,762 1,182,980 -153,306 -551,644 1,444,195 -153,306 -551,644
-704,950 -704,950
283,762 478,030 739,245
SURPLUS
$283,762 -22, 547 478,030
$283, 762 $739,245
283, 762 739,245 739,245
FEDERAL HOUSING ADMINISTRATION
Investments
Section 905 (a) of Title IX contains a provision similar to that under Title II with respect to investment of moneys not needed for current operations by the purchase of United States Government securities or the retirement of debentures.
During fiscal year 1954, $36,400 of Series P 2% percent National Defense Housing Insurance Fund debentures were purchased from FNMA.
During the fiscal year 1954, net sales of $3,400,000, principal amount, of United States Government securities were made. These transactions left the United States Government securities held by the fund as of June 30, 1954 at $8,100,000, yielding 2.22 percent.
Investments of the National Defense Housing Insurance Fund, June 30, 1954
Series Interest rate (percent) Purchase price Par value Book value (amortized)
1658.. 2 2% 2J4 2)4 2)4 $4, 600,000 2, 790,813 288, 375 193, 562 193,063 $4,600,000 2,800,000 300,000 200,000 200,000 $4,600,000 2, 793,177 290,148 194,007 193, 508
1958
1956-59
1966-71
1967-72
Average annual yield 2.22 percent
8,065,813 8,100,000 8,070,840
Properties Acquired Under Terms of Insurance
During 1954, 4 mortgage notes (253 units) insured under Section 908 were assigned to the FHA Commissioner, and titles to 690 home properties (797 units) insured under Section 903 were acquired under the terms of insurance. Through December 31, 1954, a cumulative total of 4 mortgage notes (253 units) insured under Section 908 and 693 home properties (803 units) insured under Section 903 had been acquired under the terms of insurance. Two home properties (3 units) insured under Section 903 had been sold at December 31, 1954, resulting in a loss of $1,839 to the National Defense Housing Insurance Fund. Certificates of claim issued in connection with the two Section 903 home properties which had been acquired and sold through 1954 totaled $637, all of which will be canceled. At December 31, 1954, there remained on hand 691 properties (800 units) insured under Section 903 and 4 mortgage notes (253 units) insured under Section 908, as follows:
343
HOUSING AND HOME FINANCE AGENCY
National Defense Housing Insurance Fund, statement of properties on hand as of Dec. SI, 1954
Sec. 903, 691 properties (800 units) Sec. 908, 4 mortgage notes (253 units) Total, 691 properties, 4 mortgage notes, (1,053 units)
Expenses: Acquisition costs.. Interest on debentures Taxes and insurance Additions and improvements Maintenance and operating expense Miscellaneous expense Total expense Income: Rental and other income (net) Net cost of properties on hand $5,703,483 95,465 60,381 283 14,896 $1,877,502 47,373 450 $7,580,985 142,838 60,381 283: 14,896 450
5,874,508 1,925,325 7, 799,833
32,670 31,220 63,890
5,841,838 1,894,105 7, 735,943
A summary of the two Section 903 acquired properties sold at December 31, 1954, is shown in Statement 32.
STATEMENT 32
Statement of profit and loss on sale of acquired properties National Defense Housing Insurance Fund, through Dec. 31, 1954
Items Total National Defense Housing Insurance
erties (3 units)
Proceeds of sales: Sales price 1 $15,759 304
Less commission and other selling expense ...
Net proceeds of sales ...
15,446
Income: Rental and other income (net)
187 163
Mortgage note income. _
Total income . _.
350
Total proceeds of sold properties
15, 796
Expenses: Debentures and cash adjustment ...
18,129 500 105 740
Interest on debentures .. .. _ . .. _ .
Taxes and insurance. ._ ... .. . .
Maintenance and operating expense
Total expenses _ __
19,474
Net profit (or loss —) before distribution of liquidation profits .
—3,678
Less distribution of liquidation profits: Certificates of claim ...
Increment on certificates of claim .
Loss to National Defense Housing Insurance Fund .. .. _
3,678
Average loss to National Defense Housing Insurance Fund . .
1,839
1 Analysis of terms of sales—
Terms of sales Number of properties Number of notes Cash Mortgage notes Sales price
Properties sold for all cash
Properties sold for cash and notes (or contracts for deed) 2 2 $900 $14,850 $15,750
Properties sold for notes only
Total .
2 2 900 14,850 15, 750
344
FEDERAL HOUSING ADMINISTRATION
Statement 33 shows the turnover of properties acquired under Section 903.
STATEMENT 33
Turnover of properties acquired under Sec. 903 of Title IX, through Dec. 31, 1954
Properties acquired Properties sold, calendar years Properties on hand Dec. 31, 1954
Year Number 1953 1954
1953______________________
1954_______________________________________
Total___________________________________________
3 _____________________
690 _____________ 2
693 _____________ 2
3 688
691
Note —On the 2 properties sold, the average time between acquisition and sale by the Federal Housing Administration was 6.64 months.
Administrative Expense Account
A separate account, entitled Salaries and Expenses, Federal Housing Administration, is maintained for the purpose of handling all transactions with respect to the payment of salaries and other expenses involved in operating the FHA. Moneys for such expenses and for the purchase of furniture and equipment required in the operations of the Administration are allocated to this fund and all disbursements for these purposes are made from it. Until the income of the insurance funds was sufficient to cover salaries and expenses, allocations were made to this account from the United States Treasury through the RFC in accordance with provisions contained in the National Housing Act and subsequent appropriation acts. Since July 1, 1937, a portion of the allocations, and since July 1, 1940, all allocations to salaries and expenses have been made from the various FHA insurance funds.
345
HOUSING AND HOME FINANCE AGENCY
STATEMENT 34
Comparative statement of financial condition, Administrative Expense Account (salaries and expenses'), as of June 30, 1953, and June 30, 1954
June 30, 1953 June 30, 1954 Increase or decrease (—)
ASSETS Cash with U. S. Treasury $3,236,623 $3,151,244 —$85,379
Accounts and notes receivable: Accounts receivable—Other- Land, structures, and equipment: Furniture and equipment
70, 762 78,176 7,414
2,140,299 1,129,802 1 2,124,969 1,230,278 -15,330 100,476
Less reserve for depreciation Net furniture and equipment
1,010,497 894,691 -115,806
Total assets .
4,317, 882 4,124, 111 -193,771
LIABILITIES Accounts payable: Bills payable to vendors and Government agencies.. Interfund
2,356,018 1,010,497 3 2,397,662 894,691 41,644 -115,806
Total accounts payable Trust and deposit liabilities: Due general fund of the U. S. Treasury Employees’ pay roll deductions for taxes, etc Total trust and deposit liabilities
3,366, 515 3,292,353 -74,162
8,546 942,821 2,991 828, 767 -5, 555 -114,054
951,367 831,758 -119,609
Total liabilities
4,317, 882 4,124, 111 -193,771
1 Excludes unfilled orders in the amount of $3,658.
8 Excludes unfilled orders in the amount of $70,134.
346
PART IV
Eighth Annual Report
HOUSING AND HOME FINANCE AGENCY
Covering the Activities of the
PUBLIC HOUSING ADMINISTRATION
HOUSING AND HOME FINANCE AGENCY
348
CHART 47
1937 1938 1939 1940 1941 1942 1943 1944 1945 1946 1947 1948 1949 1950 1951 1952 1953 1954 * INCLUDES VETERANS REUSE HOUSING AND SUBSISTENCE HOMESTEADS-GREENBELT TOWNS PROGRAMS INCLUDES PUBLIC WAR, DEFENSE HOMES CORPORATION, HOMES CONVERSION, AND DEFENSE HOUSING PROGRAMS
LEGEND
8 OTHER* WAR HOUSING** LOW-RENT HOUSING
lOOOr 800-600-400-200-
THOUSANDS OF DWELLING UNITS
ACTIVE DWELLING UNITS UNDER JURISDICTION OF PHA BY PROGRAM, AT THE END OF EACH YEAR, 1937-1954
INTRODUCTORY STATEMENT
The Public Housing Administration (PHA) was established as a constituent agency of the Housing and Home Finance Agency by the President’s Reorganization Plan No. 3 of 1947, effective July 27, 1947. PHA is headed by a Public Housing Commissioner appointed by the President by and with the advice and consent of the Senate.
Historically, PHA is a successor agency to the United States Housing Authority (USHA), which was established by the United States Housing Act of 1937 to administer the low-rent public housing program authorized by that Act. In 1942, the responsibilities of USHA were taken over by a newly created Federal Public Housing Authority (FPHA), which was established as a constituent agency of the National Housing Agency and which continued in existence until 1947 when PHA was established.
The PHA administers two programs. The low-rent public housing program is a direct responsibility of the Public Housing Commissioner, and the liquidating emergency housing program, which consists mainly of war, defense, and veterans’ housing activities delegated to the Public Housing Commissioner by the Housing and Home Finance Administrator.
The low-rent public housing program is authorized by the United States Housing Act of 1937, as amended. Included in it are certain projects which were not built under the 1937 Act, but were subsequently transferred to the program. Such projects include those developed by the Public Works Administration prior to the passage of the Act, and farm labor camps and permanent war housing projects transferred under the terms of the United States Housing Act of 1950.
The liquidating emergency housing program consists principally of permanent and temporary housing built under the terms of the Lanham Act, as amended, to provide housing for war workers and military personnel during World War II, and the projects built under Title III of the Defense Housing and Community Facilities and Services Act of 1951, as amended. Housing built under this Title consists of temporary or mobile accommodations for inmigrant defense workers and military personnel in critical defense areas. PHA is responsible for the management of the housing in the liquidating emergency housing program, either by direct operation or through local agencies, and for the orderly disposition of such housing.
349
SECTION I
LOW-RENT PUBLIC HOUSING
The cardinal principle of the Housing Act of 1954 (Public Law 560, 83d Cong.) is “to aid in the provision and improvement of housing, the elimination and prevention of slums, and the conservation and development of urban communities.”
Public Law 560, signed by President Eisenhower on August 2, 1954, was an outgrowth of the report submitted to the President by his Advisory Committee on Government Housing Policies and Programs. President Eisenhower had previously assigned to this committee the job of assaying the proper role of the Federal Government in the housing field. The group was also directed to formulate a more economical and effective method of improving the Nation’s housing conditions.
The Housing Act of 1954 departed from the practice of cutting housing into individual segments but, instead, recognized the provision of housing as the overall responsibility of private enterprise.
Under the Act, the Federal Government is concerned with the general concept of housing and urban improvement. The tools it provides are those of private industry and the local community. Rather than have the Federal Government urge its programs upon the community, the community must take the initiative, develop its own plans, and then come to the Federal Government as help is required.
The Act recognized that the elimination of slums, prevention of blight and urban decay, and construction of low-rent public housing for low-income families was not a simple and easily gained objective. It would require a workable program approach by individual communities to the ultimate goal—a well-housed America.
Under the 1954 Act, the community must agree to undertake certain steps before it can qualify for Federal loans and grants for new slum clearance and urban renewal projects; for assistance to renew deteriorating neighborhoods and provide low-cost housing for displaced families, and for low-rent public housing. The Act provides that none of these aids can be extended to the community unless it first presents to the HHFA Administrator a workable program for urban renewal.
350
PUBLIC HOUSING ADMINISTRATION
The community’s workable program would include seven elements:
1. Codes and ordinances.—The community must have or commit itself to the adoption and enforcement of a comprehensive system of codes and ordinances governing adequate minimum standards of health, sanitation and safety under which dwellings may be lawfully 'Occupied.
2. Comprehensive plan for community development.—This includes a land-use plan, a thoroughfare plan and a zoning ordinance, and must have current provisions to meet changing conditions and future needs of the locality.
3. Neighborhood analyses.—To determine causes and conditions of blight throughout the community, and to study means of correction.
4. Administrative organization.—Its governing body must be able to enforce effectively its codes and ordinances and carry out the urban renewal program it adopts.
5. Financial capacity.—It must be able to meet financial requirements under its urban renewal program, with respect to both current operating expenses and capital outlays.
6. Housing displaced families.—Must facilitate the rehousing of displaced families in decent, safe, and sanitary accommodations.
7. Full-fledged citizen participation.—Should begin when program is initiated and include representatives of business, professional, labor, welfare, religious, educational and minority group interests in both the community as a whole and in slum and blighted areas.
After a workable program is approved by the HHFA Administrator, the community is eligible for the various types of Federal assistance provided in the 1954 Act.
How the Low-Rent Program Works
Under the 1954 Act, the Public Housing Administration is concerned primarily with assisting communities requesting Federal aid for the construction of low-rent public housing for families displaced by shim clearance or governmental action and eligible for such housing.
The Act includes several amendments to the United States Housing Act of 1937, as amended, the basic low-rent public housing statute. The 1954 legislation limits to 35,000 the number of low-rent units which may be brought under new annual contributions contract during fiscal year 1955, and contains additional requirements which must be fulfilled before PHA may enter into new contracts. The principal added requirements are:
1. At the time a new preliminary loan or annual contributions contract is signed, the locality must be carrying out a slum clearance and urban redevelopment project, or a slum clearance and urban renewal project assisted under Title I of the Housing Act of 1949, as
351
HOUSING AND HOME FINANCE AGENCY
POPULATION OF PLACES WITH HA ’49 PROJECTS UNDER ANNUAL CONTRIBUTIONS CONTRACT
AS OF DEC. 31, 1954
2OOi . ----------------------------------------------------
CO y □ iso—i ---------------------——— ------------------------------
o
O p™™
U. ICO- S --------------------------------------
O or •
uj ___
m 50— - - — - ■■ - -----------
z _ _
0LJ—LJ—LI—LI—LI—dJ—LI—I..—. .1
RURAL UNDER 5,000- 10,000- 25,000- 50,000- 100,000- 250,000- 500,000-
N0N-FARM 5,000 9,999 24,999 49,999 99,999 249,999 499,999 OR MORE
CHART 48
amended. The local governing body of the community must also have certified that low-rent public housing is needed to assist in meeting the relocation requirements of Title I.
2. The total number of units covered by a new preliminary loan or new annual contributions contract may not exceed the total number of such units required for relocating families displaced as a result of Federal, State, or local governmental action in the community.
3. Before signing an annual contributions contract with PHA, the locality must submit to the HHFA Administrator a workable program for the prevention and elimination of slums and blight. He must determine that this program meets statutory requirements, and certify to PHA that Federal assistance may be extended to the community.
4. Prior to executing a new annual contributions contract, the housing authority must notify the local governing body of the estimated annual amount of payments in lieu of taxes, and of the taxes which would be levied if the property were privately owned.
Other requirements are: (1) That a development program be completed by the local authority and approved by PHA in time to permit execution of an annual contributions contract before July 1, 1955. (2) The execution of a cooperation agreement with the local governing body. This agreement recites the tax exemption provided to the housing authority, and also sets forth the agreement of the
352
PUBLIC HOUSING ADMINISTRATION
HA ’49 PROJECTS UNDER ANNUAL CONTRIBUTIONS CONTRACT BY SIZE - AS OF DEC. 31, 1954
600---------------------------------------------------------------
500- ---------------------------------------------------------
co
o
4 00 - I I--------------------------------------------------------
o a: »
a.
u. 300 - ’ • ’ ——----------------------------------------------------
O n~~
cc
a 200 —i ---------------------------------------------
s
Z5
z ioo- - - .-TH------------------------------------------------------
J I,.. ................Ll I 11 । rn m —
V UNDER 50- 100- 200- 300- 400- 500- 600- 1,000- 2,000- 3,000-
50 99 199 299 399 499 599 999 1,999 2,999 OR MORE
NUMBER OF UNITS IN PROJECT
CHART 49
municipality not to impose any taxes (tax exemption has been provided under the various State enabling laws and upheld by the courts). (The agreement also covers the payments and manner of payments for municipal services to public housing projects.) Housing authorities are required to make annual payments in lieu of taxes not in excess of 10 percent of the shelter rents they charge.
PHA is authorized to make preliminary planning loans to the local housing authority. The loan application must be approved by the local governing body of the community in which the new housing is to be built. Presidential approval is still required prior to execution of a preliminary loan and an annual contributions contract. The President, however, has authorized the HHFA Administrator to approve preliminary loan and annual contributions contracts.
After PHA issues an allocation for a specific number of units, and authorizes action with respect to preliminary planning funds, the housing authority moves ahead to formulate a specific project or projects. Of primary importance is the selection of a proper site by the authority. After PHA tentatively approves the site, the authority prepares its development program.
This program must include (1) site boundaries, (2) data supporting the site selection, (3) the number and type of dwellings and other structures (if any) to be built on the site, and (4) estimated development cost of the project. The program must also present the author
353
HOUSING AND HOME FINANCE AGENCY
ity’s relocation plan for any families on the site, and an estimate of payments in lieu of taxes by the authority and full taxes which would be levied if the property were privately owned.
The authority is also required to show that a 20 percent gap has been left between the upper rental limits for admission to the new housing and the lowest rents at which private enterprise is providing a substantial supply of decent, safe, and sanitary housing.
Once a development program is reviewed, it is submitted for approval to the Commissioner. After his approval, he recommends to the HHFA Administrator that PHA enter into an annual contributions contract with the local housing authority. If approved, the contract is finally executed.
The annual contributions contract governs relations between PHA and the housing authority. The document provides for the liquidation of any outstanding preliminary loans, for temporary Federal loans for site acquisition and construction, and for annual contributions to the authority to assure the low-rent character of the housing.
Development
During 1954, the number of development programs submitted to PHA by housing authorities was considerably reduced due to limitations imposed by the Independent Offices Appropriation Act of 1954 and the Housing Act of 1954. Development programs on which action was taken, consequently, were limited to (1) reactivated projects and (2) revisions of existing programs. The technical review of the latter concentrated on economy in design, adjustment of site boundaries to eliminate expensive land, and coordination of site boundaries with urban redevelopment programs.
The development cost of projects placed under construction by the end of 1954 averaged $10,648 per unit, representing the best bids of private builders and contractors. It includes the price of relatively expensive slum sites, demolition of slum structures, planning costs, local housing overhead, and interest during the development period.
The average dwelling unit developed at this cost contained 4.85 rooms, planned primarily for families with children. This compares with only 3.3 rooms per unit for all renter-occupied units in nonfarm areas in the United States, according to the 1950 census.
During calendar 1954, local housing authorities placed 16,200 units under construction, as compared with 32,100 in 1953, 55,400 in 1952, and 69,300 in 1951. This was largely due to limitations placed on the program. A record more indicative of Agency effort was made during fiscal year 1954 (July 1, 1953-June 30, 1954). Under a Congressional limitation of 20,000 units, local authorities started 19,995.
Although the Housing Act of 1954 imposed no restrictions against the construction of projects previously placed under annual contri-
354
PUBLIC HOUSING ADMINISTRATION
AVERAGE SIZE OF UNITS IN HA ’49 PROJECTS UNDER ANNUAL CONTRIBUTIONS CONTRACT - AS OF DEC. 31, 1954 3001--------—---.... .;i!-------r..... ........
CO
o * I.
W • • ' -
o 200-..-__-_______ .___
o: o a: LlI m 100 —.... . —..................
s = •
Z -S
o’—.....f.n —L_j————___________n i..,—,
4.0 4.2 4 4 4.6 4.8 5.0 5.2 5.4 5.6
AVERAGE NUMBER OF ROOMS PER UNIT
CHART 50
butions contract, PHA policy required that certain conditions be met by local housing authorities; for example, the advertising for bids was not approved for any project until (1) there had been a redetermination of the 20 percent gap between the upper rental limits for admission to the proposed project and the lowest rents at which private enterprise was providing a substantial supply of decent, safe and sanitary housing, (2) current data showed that sufficient need still existed, and (3) there were no permanent Lanham projects suitable for low-rent use which could be transferred as a substitute for new construction.
Responsibility for supervision and inspection of construction rests with housing authorities. Because of the Federal financial interest in these projects, however, PHA project engineers are assigned in the field to assure strict adherence to plans and specifications.
During 1954, a staff of traveling engineers was organized to coordinate the activities of project engineers, giving them the benefit of experience of other project engineers, and providing uniformity in inspection and reporting.
Equivalent Elimination
The Housing Act of 1937 requires the elimination, repair, or closing of unsafe or insanitary dwellings in the locality substantially equal in number to the number of new low-rent public housing units built
355
HOUSING AND HOME FINANCE AGENCY
by the housing authority. The law also permits the deferment of equivalent elimination in areas with housing shortages. Substantially all of the elimination required under the original 1937 Act has been accomplished.
As of June 30, 1954, housing authorities had accomplished 34.2 percent of the equivalent elimination requirement of the Housing Act of 1949. The law allows 5 years after completion of the new housing in which to comply with this requirement. Further deferments are authorized in any locality where there is an acute shortage of housing for low-income families.
Physical Standards and Technical Studies
During 1954, “PHA Standards for Development of PHA-Aided Projects,” embodying optional and mandatory requirements were revised with a view toward simplification. The revision will be used by local housing authorities, architects, and engineers retained by the authorities for site selection, site planning, and design of new low-rent public housing. PHA revised some related “Guide Specifications” in accordance with current building practices, and issued them as aids for preparing contract documents.
Central Heating Plants
The large number of low-rent projects with central heating plants and the lack of comprehensive operating studies of such installations led PHA to initiate a study of plants in 188 projects. This study was published in August 1954 as “Fuel Consumption Data for Low-Rent Housing Projects Heated by Central or Group Heating Plants.” The study was effective in pointing the way toward correcting inefficient plant operation, in evaluating possible economies in heating low-rent public housing projects, and as a guide to housing authorities in designing new heating plants.
Hot Water Tanks
In line with its stepped-up campaign to reduce operating costs of low-rent projects, PHA conducted a series of exhaustive tests on hot water heaters. The findings have influenced some manufacturers of hot water tanks to convert quantity production from galvanized steel to glass-lined steel tanks, supplied with magnesium anodes. Such tanks with a longer life expectancy reduce maintenance costs at low-rent public housing projects.
Management-Maintenance Clinics
Complying further with the Commissioner’s intent to reduce project operating expenses, PHA, in cooperation with the National Associa
356
PUBLIC HOUSING ADMINISTRATION
tion of Housing and Redevelopment Officials, launched a training program in 1954 for housing authority maintenance personnel. The 2-day program at Toledo, Ohio, covered grounds, utilities, janitorial services, and painting. The demonstration method was used at the Gadsden, Ala., clinic, and a display of appliances and equipment common to housing projects supplemented the discussions. The experience gained at these clinics has been incorporated in a guide for future maintenance and management training.
Prefabricated Housing
In September 1954, 2 pilot projects using single-family, factory-built houses—the first in the 17-year history of federally aided low-rent public housing were opened for occupancy in Calhoun County, Ill.
After rejecting two bids for conventional housing in Hardin and Kampsville because they were substantially higher than the costs of low-rent public housing in some principal mid-western cities, the Housing Authority of Calhoun County decided to use prefabricated houses. The dwellings—22 for Hardin and 12 for Kampsville— bought by the housing authority, were placed on individual but adjacent lots.
Although the housing authority was obliged to lay out streets and utilities as in the usual project, PHA expects to determine whether housing authorities in small communities can advantageously place prefabricated units on sites where paved streets, sewer and water mains, and utility systems already exist. PHA is carefully examining costs, adequacy and speed of construction of these pilot projects to properly evaluate the merits of prefabricated homes in the low-rent public housing program, particularly in small towns.
Managing Low-Rent Housing
As of December 31, 1954, approximately 390,000 dwellings in 2038 low-rent public housing projects were under active management— 46,000 more than on December 31, 1953.
The federally aided low-rent public housing program includes (1) projects built under the provisions of the Housing Act of 1937, as amended (Public Law 412, 75th Cong.), and (2) projects not so constructed, but subsequently transferred to this program.
In the first group are approximately 117,000 dwellings in 383 projects (including 63 dwellings built on individual farms), constructed under the original 1937 Act. Except for 17 projects in Ohio, and 7 rural farm projects in 4 Southern states, all are locally owned. In December 1954, 13 of the 30 federally owned projects in Ohio were conveyed to local ownership. PHA is in the process of selling the remaining 17—(6,233 units) to the local housing authorities which have been operating them under lease.
350920—56---25
357
HOUSING AND HOME FINANCE AGENCY
358
CHART 51
HOUSING ACT OF 1949
DWELLING UNITS UNDER CONSTRUCTION AND COMPLETED* ___________________JUNE 1950-DECEMBER 1954 UNDER CONSTRUCTION_3 JUNE 1950 COMPLETED
DEC. 1950
JUNE 1951
DEC. 1951
JUNE 1952
DEC. 1952
JUNE 1953
DEC. 1953
JUNE 1954
DEC. 1954
* EXCLUDES 2,222 UNITS UNDER PL 301 EACH. SYMBOL* 10,000 UNITS___
PUBLIC HOUSING ADMINISTRATION
HA ’49 PROJECTS STARTED AND COMPLETED, 1949-1954
60Qi-----------------------------------------
LEGEND ____
500 - r—1 started ilillI——————
__ _____________
o ~1 COMPLETED H r~H '
w 400- ..La -*:W--- --------------------
o ----------------- ! I
ct
300-------------- : . —I -----------------
s aoc ............- ■ • —pa-
i 100-------- - —
0 1949 1950 1951 1952 1953 1954
CHART 52
HA ’49 PROGRAM UNITS - STARTED AND COMPLETED, 1949-1954
801------------------------------------------------------------
LEGEND
yj r~] STARTED
H 60 — - -----------------------------------
z h iSC0MPLETED ra
; -------------------------- r r
5“-----------------~ A n
1 : I I
o 20------------------------
I h[TfH Mta , ,L
H n ■ ■
■•7,i llllll |H • itii dhf
0 E=3__________— EEEED----L—1 . — J__________________ ___
1949 1950 1951 1952 1953 1954
CHART 53
359
HOUSING AND HOME FINANCE AGENCY
In accordance with the legislative history of the Housing Act of 1949, PHA is liquidating the rural farm housing program. During 1954, over 300 rural farm units, built under the provisions of Public Law 412, were sold by local housing authorities to private owners. Of the remaining 63 rural units, all except one have been transferred to PHA ownership, and are being operated and offered for rale by the Central Office.
In this group, there are also 49,472 units in 194 projects, built under World War II legislation (Public Law 671, 76th Cong.), which authorized the use of low-rent housing funds for projects to be used initially for defense workers. These were to be converted to low-rent use when the war housing emergency ended. At the end of 1954, all but 5 were in low-rent use. All but 4 of the Public Law 671 projects are locally owned.
There are 1,309 projects with 173,000 low-rent dwellings (including 277 rural nonfarm projects with 10,368 units) already completed under the Housing Act of 1949 (Public Law 171, 81st Cong.). All of these are locally owned.
The second group consists of the housing brought into the low-rent program by Congressional action. This includes 49 projects with 22,000 dwellings initiated in the mid-1930’s by the Public Works Administration, and completed under the provisions of the Housing Act of 1937. By the end of 1954, PHA had conveyed 29 of these projects to local housing authorities, leaving 20 still federally owned.
There are 38 farm labor camps with 9,000 units, built in the late 1930’s by the Department of Agriculture, for migrant farm workers. These camps, conveyed to PHA under the terms of the Housing Act of 1950 (Public Law 475, 81st Cong.), now house low-income farm workers. Originally, there were 39 camps, but during 1954, PHA disposed of one. All but two have been conditionally sold to local housing authorities.
Lanham Act permanent war housing projects have been transferred for low-rent use to local housing authorities, as permitted by Public Law 475. By the end of 1954, a total of 65 projects with about 20,000 dwellings were in low-rent use. Ten of these projects with about 3,000 units were transferred during 1954.
Occupancy Requirements
Local housing authorities select the tenants for low-rent housing. An applicant must provide enough information to enable the authority to determine the family’s eligibility, its preference rights, if any, and rent to be paid. To be eligible, an applicant must meet these general criteria: (1) his family consists of at least 2 related persons, (2) the family’s total net income, less an exemption of $100 a year for each minor member, does not exceed the income limits established by the
360
PUBLIC HOUSING ADMINISTRATION
HOUSING ACT OF 1049 - NEW PROGRAM ONLY
AUGUST 1949 — DECEMBER 31,1954 4001------------------------------r----------------
cn — -------------------------------------- .______
Z> s'
g 300-------------------------------------------------
H s' RESERVED NOT
5. ' UNDER A.C.C. _____,
° 2 0 0-/-------------------
o / /^cUeXECUTED.NOJ^B^^^^^ B I
u, / ^yUNDER CONSTRUCTION
Z / Zh:::s - ^O^UNDER CONSTRUCTION'S
o / / F" C( 1 ED?
? / Xkv \ KFC ■
qL— ..I... i ..J.s , I t
DEC JUN DEC JUN DEC JUN DEC JUN DEC JUN DEC
H9494---1950--1--1951--1--1952-1-1953----1-1954--1
SEMI-ANNUALLY
CHART 54
local authority, (3) he is either without housing or his housing is substandard, or he is about to be without housing through no fault of his own (local housing authorities may waive this requirement for veterans, servicemen, and families displaced by slum clearance), (4) the family member signing the lease must be a citizen (may be waived under certain circumstances), and (5) neither he nor any member of his family may belong to an organization designated as subversive by the Attorney General of the United States. This requirement follows a provision in the Independent Offices Appropriation Act, 1953. The provision is commonly known as the Gwinn Amendment.
In selecting tenants, the housing authority must give first preference to eligible families displaced from their homes by any low-rent project, or public slum clearance or redevelopment project. Among these, as well as nondisplaced eligible families, first preference is given to families of disabled veterans, second, to families of deceased vererans and servicemen, and third, to families of other veterans and servicemen. A housing authority may establish other requirements, such as length of residence in the community and net family assets. As among all applicants, preference is given to those who need housing most. No family may be discriminated against because any member is receiving public assistance.
Periodically, but at least annually, the housing authority reexamines the status of each family to determine its eligibility for continued
361
HOUSING AND HOME FINANCE AGENCY
occupancy. This review is a statutory requirement. The eligibility requirements for continued occupancy are similar to those for initial occupancy. A family found to be ineligible must move. The lessee must also execute at the time of each reexamination a new certificate of nonmembership in any subversive organization on the Attorney General’s list.
Income and Rents
Local housing authorities set income limits for admission and continued occupancy in low-rent public housing, subject to PHA approval. Since these are based on local economic conditions, considerable variation is found among localities.
As of December 31, 1954, about 37 percent of the localities had income limits of $2,400 or less for the admission of average size families. Only 6 percent of the localities had limits above $3,000. The median income limit for admission was $2,600.
The majority of families admitted to low-rent housing had incomes far lower than the maximum allowable. The median annual income for eligibility (net income after statutory exemptions) of all families admitted during the first half of 1954 was only $1,810, an amount substantially below the maximum limit, and lower than the median reported for the first half of 1953. Statutory exemptions are: death or disability benefits to the family of a deceased or disabled veteran and $100 for each minor in the family.
The limits for continued occupancy, about 25 percent higher than those for admission, establish the highest income a family may have and be eligible for continued occupancy. During the first half of 1954, the incomes of 142,814 families in projects in the continental United States were reexamined to determine eligibility for continued occupancy. The median income of families reexamined was $1,852 and only 5 percent were found to be ineligible.
As shown in the following table, at the end of 1954, about 1 percent of all families in occupancy in United States Housing Act projects were ineligible and under a requirement to move. This figure does not include the families who were living in permanent war housing transferred to low-rent use. Where such families are found ineligible to remain, the law allows them as long as 2 years to find other accommodations.
Year Number of families becoming ineligible Number of ineligibles removed 1 Percent of all families ineligible on Dec. 31 Year Number of families becoming ineligible Number of ineligibles removed 1 Percent of all families ineligible on Dec. 31
1947 29 337 28, 718 25 1951 18, 620 21, 239 7
24,414 27,829 24 1952 15,028 16, 668 5
1Q4Q 19 435 32,104 14 1953 13,938 17,867 3
1950 17, 666 26, 928 9 1954 8,708 12,106 1
i Includes families moving out and those becoming eligible because of reduced income or change in income limits.
362
PUBLIC HOUSING ADMINISTRATION
During a family’s residence in low-rent housing, its gross rent is scaled to its size and income. Gross rent is the rent including heat and utilities, both of which are generally furnished by the projects and included in the rents paid. For families admitted during the first 6 months of 1954, the median gross rent was $34 per month. The median rent for the families whose incomes were reexamined during the first 6 months of 1954 was $35.
Annual Contributions Contracts
These contracts assist local housing authorities in maintaining the low-rent character of projects developed under the Housing Act of 1937, as amended.
Such contracts are executed by PHA and the local housing authorities after approval of their development programs. These contracts establish the maximum annual contributions authorized by law. Such amounts represent a fixed percentage of project development cost. At the time the project is permanently financed through sale of bonds to private investors, PHA reduces the statutory maximum to a fixed annual contribution sufficient to cover the level debt service of the indebtedness. This fixed amount is further reduced annually by the aggregate amount of residual receipts which are the excess of •operating receipts over operating expenditures, exclusive of debt service.
The following table shows the payments becoming due and made on all low-rent projects during fiscal 1954:
Law under which projects were developed Maximum annual contribution payable Annual contribution actually paid Percentage of maximum annual contribution paid
Pub. Law 412 $16,007,260 6,892, 666 44, 944,402 $7,445, 739 2,850,007 34,177,864 47 41 76
Pub. Law 671 _
Pub. Law 171
Total
67,844,328 44,473, 610 66
363
SECTION 2
CURRENT PROGRESS IN THE FINANCING OF LOW-RENT PUBLIC HOUSING
Objectives and Methods of Financing
PH A has two principal objectives in the capital financing of the low-rent housing program. The first is that local authorities borrow the largest possible share of their capital funds from private investors, rather than from the Federal Government. The second is to secure the lowest possible interest rates on the borrowings from private investors in order to keep annual contributions at a minimum. Substantial progress was made in achieving both objectives during the calendar year 1954.
The capital financing of low-rent housing projects involves the successive use of various types of loans. PHA makes direct loans to local authorities for use in the early stages of project development. As soon as the amounts needed for a project are sufficiently large to warrant such action, the local authority sells temporary notes to private investors and repays the advances previously made by PHA. The amount of temporary notes sold to private investors is increased as construction proceeds. At the time a project nears completion, the local authority sells its long-term bonds to private investors and applies the proceeds of such bond sale to the payment of outstanding temporary notes and any outstanding indebtedness to PHA.
Temporary Notes
Short-term temporary notes sold by local authorites to private investors are secured by an unconditional obligation of PHA to loan, if necessary, funds to pay both principal and interest of the temporary notes at their maturity.
The primary use of temporary notes is for construction loans on projects prior to their completion, and maturities of these notes generally run from 3 to 9 months. Temporary notes are also being used at present in connection with two different groups of projects which have been permanently financed. The first group are those on which bonds were sold in 1953 and in connection with which (as ex
364
PUBLIC HOUSING ADMINISTRATION
plained below) 30 percent of capital cost has been financed by temporary notes. The second group are old projects (see below) on which old Series B Bonds were redeemed during 1954 and which are now financed with temporary notes, pending a sale of new bonds.
Interest on temporary notes is, by statute, exempt from Federal income tax. This, together with their short-term character and their exceptional security, entitles them to very low interest rates. During the year PHA, in cooperation with the local authorities, made every effort to secure the best possible interest nates. Competition among bidders was encouraged, and local authorities assisted by securing bids for their own temporary notes from local banks and investors.
The total principal amount of temporary notes outstanding at the beginning of 1954 was $813,626,000. Because of the continued efforts of PHA to curtail local authority borrowings from the Federal Government and to rely instead on loans from private investors, the total outstanding temporary notes had increased to $1,065,866,000 by December 31, 1954. Most of this increase was in connection with the refinancing of old Series B Bonds.
Because of the short maturities of the temporary notes used during the construction stage, the volume of sales during a year far exceeds the amount outstanding at any one time. During the calendar year 1954 there were 12 separate sales of temporary notes comprising 835 issues, for a grand total of $1,896,613,000.
The average interest cost in the first sale in January 1954 was 1.115 percent. Thereafter, the interest rate moved steadily downward until July 1954, when the average cost was 0.585 percent. During the second half of the year interest costs moved slowly upward, with the last sale in December at a cost of 0.693 percent. The average interest on all sales made during the year was 0.763 percent.
Sales of New Housing Authority Bonds in 1954
The interest cost for long-term money with maturities of from 30 to 40 years was so high during 1953 that bonds sold during that year were limited to maturities running up to only 30 years. These bonds served to finance approximately 70 percent of the total project cost, while the remaining 30 percent was covered by the sale of temporary notes.
The improvement in the money market in the last months of 1953 and the beginning of 1954 permitted abandonment of this temporary expedient. In the 3 sales of bonds during 1954, substantially the entire cost of the respective projects was financed by serial bonds running out for 40 years.
365
HOUSING AND HOME FINANCE AGENCY
During 1954, 3 sales of New Housing Authority Bonds were held with the following results:
Sale date Number of Issues Total amount of bonds Average bond interest rate (percent)
Mar. 2, 1954 17 27 14 $119, 000, 000 119. 210, 000 135.935 000 2.3380 2. 2727 2.3327
June 22. 1954..
Sept. 14, 1954
Total 1954 bonds sold
374,145, 000
The interest rates achieved were relatively satisfactory. They reflect the increased recognition in financing circles of the great security of these tax-exempt obligations and their greater acceptance by well-informed investors.
Maintenance of Competition in Sale of Bonds
New Housing Authority Bonds are sold at public sale pursuant to advertisement as required by the laws of most of the States. PHA is of the opinion that satisfactory interest rates can be secured only as long as there is bona fide and effective competition in the bidding for these bonds. It has accordingly spent much time in the study of market conditions and the timing of its bond sales, and has endeavored to fix the size of the various offerings and select the bonds to be sold so as to promote the maximum competition.
Two large competing syndicates—one composed entirely of bond dealers, the other in which banking groups predominate—were organized for the specific purpose of bidding on New Housing Authority Bonds. Competitive bids were received from these groups or their predecessors at all sales of these bonds. At the more recent sales, bids on certain specific issues were also received from other groups.
In the 1954 bond sales the dealer group was successful in purchasing bonds with a face value of $220,550,000, while the bank group purchased bonds for $123,250,000. Other independent groups purchased the $30,345,000 balance of bonds sold during the year.
The dealer and banker groups reported that in the last few sales there was a very noticeable increase in the diversity and distribution of investors purchasing New Housing Authority Bonds. Whereas some years ago interest was largely confined to institutional investors in the large financial centers of the Atlantic seaboard and Chicago, sales were made in all parts of the country and to investors of a wide diversity of types.
This increased interest in the original sale of housing bonds was paralleled by the development of an active and healthy secondary market maintained by a number of interested dealers and banks.
366
PUBLIC HOUSING ADMINISTRATION
This was most helpful, since the assurance of a ready market for his holdings is of great importance to almost every investor.
All in all, the market acceptability of New Housing Authority Bonds has been greatly increased during the last year, and these bonds are now beginning to command the interest rates to which their taxexemption status and then* exceptional security features entitle them. The opinion of the Attorney General of the United States in May 1953 “that the faith of the United States has been solemnly pledged to the payment of (annual) contributions in the same terms its faith has been pledged to the payment of its interest-bearing obligations” has continued to be of great value in this respect.
Use of Premiums Received at Sale of Bonds
In the sale of these bonds at competitive bidding, the bidders offer premiums which serve to adjust the coupon rate of the bonds to the exact interest rate which is being bid.
Under PHA’s original practice, local authorities held these premiums for eventual use in the amortization of bonds. In order to provide for a more effective and immediate use of the premiums, PHA now stipulates that the local authorities shall use the premiums received to repurchase their own bonds of longest maturity which are customarily reoffered at less than par by the purchasers.
The advantages of this practice may be illustrated by the results of the bond sale of June 22, 1954. In this sale, bonds were sold for a total of $119,210,000 and premiums were received aggregating $1,376,440. These premiums were sufficient to purchase bonds of the last maturity with a face value of $1,423,000. As a result of this immediate retirement of the longest bonds there will be a saving, over the life of the issues (in this case averaging 38.9 years), of the interest which would otherwise have been payable on these bonds. The amount thus available each year from normal annual contributions will be applied to the repurchase of further long-term bonds. As a result of the original and subsequent repurchases thus made possible, there will be a cumulative saving of over $3,500,000 in the debt service of this group of bonds—an amount sufficient to wipe out one entire annual contribution for these projects.
The results of this plan for the use of bond premiums have been so satisfactory that PHA plans to continue it as a permanent feature of all further bond sales.
Refunding of Old Bonds Held By PHA
Congress, in the Independent Offices Appropriation Act, 1954, recommended that PHA refund local housing authority bonds held by it on projects financed under the original Housing Act of 1937.
367
HOUSING AND HOME FINANCE AGENCY
The object was to permit the repayment to the Treasury of the funds borrowed by PHA in connection with such projects.
Specifically, this directive referred to some $270 million of longterm Series B Bonds which PHA was holding in connection with these projects. In order to repay any of these Series B Bonds, it was necessary for the respective local authorities to repay, at the same time, the Series A Bonds which had been sold to private investors on these projects.
During 1954, refunding of 122 of these issues was completed. The local housing authorities retired outstanding Series A Bonds aggregating $16 million, and at the same time repaid to PHA the outstanding balance on Series B Bonds aggregating $199 million. To secure the funds for the retirement of these bonds, the local authorities sold temporary notes to private investors.
These projects will be again permanently financed through the sale of New Housing Authority Bonds which will this time cover the entire outstanding indebtedness of the projects and thus involve no Federal loans. The sale of these new bonds will be postponed for a year or so until they can be fitted into the regular schedule of permanent financing. During the interim period, interest on the temporary notes is running at less than half the amount which would have to be paid on bonds, thus making available substantial amounts for the advance amortization of capital costs.
Approximately $70 million of old Series B Bonds are still held by PHA, but these are on projects where approximately $100 million of Series A Bonds are outstanding at such low interest rates that it would not be in the interest of the Government to have these bonds called for payment.
PHA therefore considers the program of refinancing to have been carried as far as practicable. This program has been successful in making possible a repayment to the Treasury of $199 million formerly loaned to local authorities.
Status of Financing and Reduction of PHA Borrowing from
Treasury
The following table shows the outstanding financing at the beginning and ending of the calendar year 1954 for all public housing developed under the Housing Act of 1937, as amended. It includes all the outstanding borrowings of local authorities, both for completed projects and for projects still under development; it also includes amounts invested in certain projects developed under the Act but still owned by PHA. It does not, however, include the cost of housing developed under other programs with approoriated funds and transferred to the low-rent program.
368
PUBLIC HOUSING ADMINISTRATION
Dee. 31, 1953 Dec. 31. 1954
Local authority loans from private investors: Temporary notes $813, 626,000 1,119,326,741 $1,065, 866,000 1,575, 739,465
Bonds
Subtotal
1, 932, 952, 741 2,641,605, 465
PHA loans and investments: Loans to local authorities.. ..
510, 290, 717 71,124, 205 111,484,720 34,169, 706
Invested in federally owned projects .
Subtotal ... .
581,414,922 145, 654, 426
Grand total
2, 514,367,663 2, 787, 259, 891
The increase in temporary notes from $813 million to $1,065 million is due principally to the sale of temporary notes to permit repayment to PHA of the old Series B Bonds. The increase in outstanding bonds from $1,119 million to $1,575 million results from the three bond sales of 1954, as well as the closing of the bonds sold December 15, 1953.
Although the total investment in public housing projects from all sources increased only $273 million (from $2,514 million to $2,787 million), the local authority loans from private investors showed an increase of $709 million. This increased participation by private investors testifies to the widening recognition of the prime security features of local authority notes and bonds, and their increasing-acceptance by the investing public.
As a result of this increased participation by private investors, the loans and investments of PHA decreased by $436 million during the year. At the end of the year, the PHA investment in the low-rent program amounted to only $145 million, or 5 percent of the total. The remaining 95 percent of the capital funds had been provided by private investors.
The capital funds which PHA uses in the low-rent program are obtained primarily by borrowing from the Federal Treasury. At the beginning of the calendar year, these borrowings amounted to $537 million. Repayments to PHA by local authorities out of their increased borrowings from private investors made it possible for PHA to reduce its borrowings from the Treasury to $90 million by December 30, 1954. The net repayment to the Treasury of $447 million became available to the Treasury for a like curtailment of the national debt..
SECTION 3
WAR AND EMERGENCY HOUSING
The bulk of PHA’s war and emergency housing was built under the terms of the Lanham Act (Public Law 849, 76th Cong., approved October 1940) and related statutes, to provide permanent and temporary accommodations for World War II essential war workers and their families. Some 626,000 units were programed for this purpose.
PHA had intended to dispose of Lanham and other emergency housing as soon as possible after World War II ended. It became necessary, however, in the intervening years to utilize these accommodations to meet emergency housing needs of veterans and servicemen following the demobilization of the armed forces at the end of the war, and the later mobilization for defense upon the outbreak of the Korean hostilities in mid-1950.
Statutory responsibility for administration and disposition of Lanham and related housing is vested in the HHFA Administrator, who has delegated all necessary functions in this field to the PHA Commissioner.
EMERGENCY PROGRAM UNITS
SUBJECT TO DISPOSITION AND DISPOSED OF 1946-1954
IOOO-----------____ I ■— I — - =====■—
A ON HAND |
H 750— /............................ ; ■
Z / . h I _______—
Z) /
o .
(/) 500 /zz -.v/./v/y Zxva > ■. j ■
g / REMOVED FROM
< / WORKLOAD
o 250-----------—— ------------------------------ < ' - ■
0 1946 1948 1950 1952 1954
CHART 55
370
PUBLIC HOUSING ADMINISTRATION
Disposition Activities
In 1954, PHA broke all previous records by disposing of some 79,700 units of war, veterans reuse and defense housing. This exceeded the 70,000 units disposed of in 1953, and was more than double the number disposed of in 1952.
PHA disposed of 61,400 temporary units in 1954. Approximately 15,400 permanent units were sold to private owners and 2,800 more conveyed to local housing authorities for low-rent use.
Sale of Permanent Housing
In selling permanent housing, PHA encourages individual home ownership, especially by veterans. Wherever feasible, projects are subdivided to afford the maximum number of individual sales, with veteran occupants receiving first preference as purchasers. If a project cannot be subdivided, it must be offered to groups of veterans organized on a mutual or cooperative basis, with nonveteran tenants eligible for membership. If no such group acquires the project, it is offered for sale to private investors on a competitive bid basis.
Permanent Housing for Low-Rent Use
The Lanham Act permits the conveyance of permanent projects to local housing authorities for low-rent use for low-income families. Before PHA may make such conveyance, however, there must be a demonstrated need for low-rent housing in the locality, the housing authority must secure the formal approval and cooperation of the local governing body, and the housing authority must have entered into a contract with PHA.
Permanent housing transferred for low-rent use is subject to regulations similar to those applicable to housing developed under the Housing Act of 1937, as amended. The principal differences are that these Lanham projects do not receive annual contributions from the Federal Government, and net income is paid to the Federal Government for a period of 40 years. Transfers for low-rent use during. 1954 included a 600-unit project at White Center, Wash., transferred to the Housing Authority of King County; a 600-unit project in Mobile, Ala., and a 400-unit development in Corpus Christi, Tex.
Temporary Housing
Legislation governing the disposition of temporary war and veterans reuse housing provides that under certain conditions, it may be relinquished to local housing authorities or other local bodies. If the locality determines that the housing is satisfactory for long-term use, it can be sold for continued use on the site.
371
HOUSING AND HOME FINANCE AGENCY
Unless disposed of by either of these methods, it must be removed within specified time limits. Such removal must be preceded by the orderly vacating of the units without imposing undue hardship upon tenants, especially in areas where a housing shortage exists for low-income groups. The 19,300 temporary units relinquished in 1954 to local bodies included a 2,474-unit project at Willow Run, Mich.; 720 units at South San Francisco, Calif.; and 619 units in Philadelphia," Pa. In addition, 33,600 temporary units were sold for removal or reused, and 8,600 more otherwise disposed of.
Among the sales of temporary housing in 1954 were 1,597 units at Los Angeles, Calif., and 1,365 units in 2 projects at Dallas, Tex.
Veterans’ Reuse Housing
At the end of 1954, only about 8,000 units remained for disposition out of a total of 267,000 units provided under Title V of the Lanham Act.
PUBLIC WAR HOUSING (LANHAM CONSTRUCTED)
CURRENT WORKLOAD AND REMOVALS BY TYPE OF DISPOSITION
AS OF DECEMBER 31, 1954
OF / TRANS- \ \ nr / \ HAND // \ \
e\ //transferX "VZ \\
\ \ 4 \ /Z \ \
\ AM \ \ I >
xA 0N I I W/ !
—A\ HAND RELINQUISHMENTS
\\ I I 1ST / \ REUSE
\\ / \ \ \ 35% / /
vk / \ \ SALE \ / /
/ \ x 2I% \ Z/
PERMANENT TEMPORARY
CHART 56
Public Defense Housing
Public Law 139, as amended (82d Cong.), provided that this housing be disposed of, as follows: (1) conveyed to the Department of Defense (2) declared excess under certain conditions to the General Services Administration, or (3) sold to a public body for public purpose. If
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PUBLIC HOUSING ADMINISTRATION
the housing was not disposed of as outlined above, it was offered for sale under competitive bidding, with veterans having a priority to purchase a unit for their own occupancy. Over 3,600 units have been terminated, and of these, 2,100 have been disposed of by PHA.
For defense areas with temporary housing needs, Public Law 139 authorized mobile or portable dwellings, suitable for reuse elsewhere. No permanent housing was provided under this program. As of December 31, 1954, 13,709 defense housing units had been assigned to PHA for construction, and of this number, 13,459 had been completed.
Subsistence Homesteads and Greentowns
This program was initiated in the mid-1930’s by the Federal Government. In 1942, it was transferred by Executive Order to PHA’s predecessor, the Federal Public Housing Authority. PHA completely liquidated the program, and is now servicing mortgage and sales documents. The greentowns are Greenbelt, Maryland; Greendale, Wisconsin; and Greenhills, Ohio.
By the close of 1954, PHA had remaining for disposition only 15 percent of its original inventory of 991,814 units of war and emergency housing.
Program Originally programed units On hand Dec. 31,1954, units
Lanham Act 626,288 266, 926 98, 600 128,117 8, 396 13, 467
Veterans’reuse ...
Other emergency housing 1
Total _ __
991,814 149,980
1 Includes subsistence homesteads and greentowns; Defense Homes Corporation, Surplus Property Act Homes conversion and defense housing (Public Law 139).
Mortgage Servicing Activities
The agency’s mortgage inventory increased substantially during the year as a result of its disposition activities. The number of lien instruments on hand December 31, 1954, was 5,475 compared to 1,424 a year ago. The total dollar volume (unpaid principal balance) was $64.21 million compared to $34.38 million a year ago. Payments on principal (periodic payments, advance payments, full and partial releases) totaled $4.80 million. During 1954, PHA received a $644,732 cash payment in full for a land mortgage at Greendale, Wis., and $555,054 for complete liquidation of PHA’s interest in the Dallas Park (Tex.) Mutual Housing Corporation. The latter was the first mortgage with a mutual association paid in full.
At the end of 1954, receipts by PHA from payments on principal and interest were running at a rate in excess of $9 million per annum. No mortgages have been written off as uncollectible.
350920—56----26
373
HOUSING AND HOME FINANCE AGENCY
The cost of operating mortgage service functions continued at a very low rate—17/100 of 1 percent of the unpaid principal.
Management
Distressed families of veterans and servicemen now have perference for admission to the small amount of Lanham Act housing awaiting disposition, except that in permanent projects when the needs of this group have been met, other distressed families may be admitted. In designated defense areas, admission policies have been relaxed in favor of distressed inmigrant workers or servicemen.
Only families of distressed inmigrant workers or servicemen at plants or installations in specified defense housing areas are eligible for Public Law 139 temporary housing. This housing was provided with appropriated funds to meet housing needs in defense areas. The HHFA Administrator delegated to PHA the administration (except for programing and deprograming) of this small program. By the end of 1954, 11,938 units in 65 projects were under active management. Another 250 units were in planning. The balance of 3,600 units had either been terminated or disposed of.
To avoid competition with private housing, PHA restricts occupancy in Lanham and defense housing to families who are unable to secure private housing within their means. The agency has established income limits in certain areas to prevent such competition.
PHA issued procedures late in 1954 to assure that rents in Lanham housing were equivalent to those prevailing in the locality for comparable private accommodations. Annual comparability studies are also made to assure comparable rents.
In compliance with legislative directives, PHA makes annual payments in lieu of taxes on its emergency housing. These payments approximate full real property taxes that would be paid if the property were not tax exempt. If the projects do not get the same public services furnished other property owners, PHA makes appropriate deductions from its tax payments. Authorized tax payments for the last fiscal year totaled $11,500,289.
Military Clearances
Following the outbreak of the Korean conflict in 1950, the Administrator placed all Lanham Act projects under a disposition suspension order, and release for disposition required prior clearance with the military. Although a substantial number of units was released on a piecemeal basis from the order, PHA was anxious to obtain a greater number of military clearances to accelerate disposition. Accordingly, in March 1954, the Department of Defense was requested to identify the projects in which they had a continuing interest, and which PHA
374
PUBLIC HOUSING ADMINISTRATION
should not schedule for disposition. Late in July, the Department submitted to PHA a list of 81 projects, with 31,417 units, required for continued military use. By virtue of this action, many projects were released from the suspension order.
PHA and Defense representatives met in September 1954 to review problems which arose out of the operation and ultimate disposition of the housing then under the suspension order. It was agreed that the Department would again review its need for Lanham housing remaining under Federal control. The Department was also asked to request transfer of housing determined to be permanently useful to it. This action is necessary in the case of temporary housing to be removed, because (1) leases on land underlying temporary projects expire in June 1956, and the dwellings must be vacated before the land is returned, and (2) temporary housing on federally owned land must be removed expeditiously in accordance with statutory require-ments. Unless these projects are transferred to the military, tenant intake will be stopped on June 30, 1955, preparatory to removal of the buildings from the land, in all cases where such action is necessary.
In the case of permanent and temporary housing remaining on site, the Department was informed that PHA had no long-range plan for its continued operation. Sale, either to tenants or to investors, would not remove such dwellings from the housing inventory, but would have the net effect of removing the Federal Government’s control over occupancy. Therefore, on June 30, 1955, PHA plans to release from the suspension order permanent and temporary housing remaining on site, not previously transferred to military establishments, and proceed with other methods of disposal.
375
SECTION 4
ADMINISTRATION
Organization
On January 18, 1954, 6 months after Commissioner Charles E. Slusser assumed office, a major reorganization of PHA became effective, in accordance with his determination to eliminate overlapping functions, improve the administration of the agency’s housing programs, and reduce operating expenses.
Principal changes in the administrative staff included the creation of a Deputy Commissioner with supervision over all PHA’s activities. The position of First Assistant Commissioner was redesignated Assistant Commissioner. On November 22, 1954, the office of Assistant to the Commissioner (Compliance) was established. The Compliance Officer assists the Commissioner in formulating and carrying out policies and procedures designed to assure the efficient and impartial administration of PHA’s programs, and strengthen the existing safeguards against the possibility of improper activities. In accordance with the intent of Congress, similar posts were created in the entire Federal establishment.
At the end of 1954 there were 7 field offices—New York, Chicago, Atlanta, Fort Worth, San Francisco, Santurce (Puerto Rico), and Washington, D. C., the last added during the year.
Budget and Employment
The total number of employees in PHA dropped from about 4,100 in December 1953 to some 3,300 a year later.
PHA’s budget for administrative expenses in the fiscal year which ended on June 30, 1954, amounted to $10,975,000. The budget for the ensuing fiscal year which started July 1, 1954, amounted to $10,950,000 consisting of a $7,350,000 appropriation for the administration of the United States Housing Act program, and $3,600,000 advanced from the Office of the HHFA Administrator, for the administration and disposition of the emergency housing programs.
Central-Field Office Relationships
During 1954, the Commissioner met with field office directors and attorneys in Washington, D. C. The directors met in March, June,
376
PUBLIC HOUSING ADMINISTRATION
PHA FULL-TIME EMPLOYMENT - DEC. 1943 - DEC. 1954
12.------------------------------------------------------------------------------------
|Q__ ________________ ______________________ LEGEND
Wl PR0JECT MANAGEMENT and disposition
UJ Mil PROJECT DEVELOPMENT
LjJ III ADMINISTRATIVE - FIELD
q 8 --------- ----- ------ -------x-------------- |U ADMINISTRATIVE - WASHINGTON ---
i
Ld
fe 6 - - - --r~i---------------------------------------------------------
CO ----- ----- ------
Q ---- ------
| 4-__ — - - _ _ --------------
o ---- .-----
2 — — -■ —-----— _—-------“a?L.z=:__ ZZZ — • — ' —
M ____ ■ ” _ xn ST
MH M BM Of SR iMW ngn BMa
ol__NUR_____BM_____BM Bl fam HMM HH MH MS BBS MM BHI
'43 '44 ’45 '46 '47 '48 '49 '50 '51 '52 '53 '54
CHART 57
377
HOUSING AND HOME FINANCE AGENCY
and October; the attorneys in November. The directors reviewed changes in operating procedures in the low-rent public housing program necessitated by the “workable program” and urban renewal provisions in the Housing Act of 1954. They also discussed the accelerated disposition program, budget assumptions, legislation, and relationships with other HHFA constituents—-principally the newly created Urban Renewal Administration.
The field office attorneys discussed the revised annual contributions contract and a uniform schedule of legal costs and expenses in the low-rent public housing program.
Real Property Inventory
A special inventory of real property held by PHA as of December 31, 1953, was made at the request of the General Services Administration. The inventory covered about 1,100 projects, originally worth about $950 million. It included low-rent, farm labor, greentowns, Lanham, defense, and veterans reuse projects. It was broken down to show areas and value of land, dwelling structures, nondwelling structures and facilities, sewer, water, gas, and electrical distribution systems, and paved areas. GSA had requested from every Federal agency an accounting of its real property holdings. The individual agency reports are to be published by GSA as a Consolidated Inventory.
Prior to this special inventory, PHA had been regularly maintaining an inventory of its real property holdings.
Combined Charity Fund Drive
During 1954, the numerous fund solicitations in PHA were found to be time- and manpower-consuming, and frequently did not meet the quotas set by the fund-raising agencies. For example, during January and February, six fund-raising drives were held in the Central Office.
In order to assure equitable contributions to the groups and reduce the number of drives, the Commissioner declared a 3-month moratorium on campaigns beginning June 1. During that period, the Office of the Special Assistant to the Commissioner (Liaison) planned and conducted a combined charity fund drive.
The plan, which was put into effect only after it had been approved by Central and Washington field office employees, called for pledges by each participating employee, with payment to be spread over six pay periods.
Almost 80 percent of the Central Office staff signed pledge cards, while other employees made their contributions as they saw fit. No funds are to be solicited in PHA again until August 26, 1955. Em
378
PUBLIC HOUSING1 ADMINISTRATION
ployees participating in the plan were permitted to earmark 90 percent of their contributions for specific charities. The distribution of the remaining 10 percent and other allocations were made by a Board of Governors, elected by the participating employees.
TABLE 115
Dwelling units 1 owned or supervised by the Public Housing Administration, by program as of Dec. 31, 1954
Program Total Federally owned Locally owned
Number Net change since Dec. 31, 1953
Total Active Veterans’ reuse housing Defense housing Public war housing (Lanham constructed) Low-rent housing Under management. Under construction Not under construction Pub. Law 171 Pub. Law 412 .- Pub. Law 671 PWA Farm labor camps Public Law 475 Subsistence homesteads and greentowns Inactive Public war housing (Lanham constructed) Defense housing 605,918 -77, 437 172,090 433, 828
592, 264 -66, 211 158, 436 433, 828
8,396 12,188 115, 984 455,688 -5, 722 -968 -59, 931 -451 1,291 12,188 115, 984 28,965 2 7,105 426, 723
390,065 33, 412 32, 211 +46,307 -28,049 -17, 807 28, 965 361,100 33,412 32, 211
238,872 117,150 49, 472 21,571 9,038 19, 585 8 -1,815 -194 -44 -322 +2,826 -41 6,295 3,331 10,569 8, 770 8 238, 872 110,855 46,141 11,002 268 19,585
13,654 -11, 226 13,654 —
12,133 1,521 -12,177 +951 12,133 1,521 —
1 Excludes units which have been sold to mutual housing associations, limited dividend corporations (PWA) and homesteads associations on which PHA has mortgages for collection.
2 This veterans’ housing is so classified even though title or income rights may not be formally transferred.
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HOUSING AND HOME FINANCE AGENCY
TABLE 116
Active projects and dwelling units owned or supervised by the Public Housing Administration, by State and other areas, as of Dec. SI, 1954
Total program 1 Low-rent housing2 War housing Defense housing Veterans reuse housing
Projects Units Projects Units Projects Units Projects Units Projects Units
Total. 2,676 592, 264 2,194 455,688 367 115, 984 66 12,188 46 8,396
Alabama.. . .
144 26 26 264 17 73 5 21 98 289 6 125 42 4 8 50 64 11 48 63 38 10 51 12 8 6 5 6 103 2 81 69 19,166 3, 312 2, 469 72, 424 3,962 19,412 1,002 6,480 16,884 24, 726 895 29, 834 7, 545 871 5,328 9, 286 13, 687 1,971 16, 768 19, 282 15,168 2,514 3,120 9, 997 697 1, 778 394 1,511 23, 613 148 52, 626 12,024 135 18 26 158 16 32 4 19 84 277 4 117 26 16, 730 2, 752 2, 469 29, 900 3,762 9,990 760 6,055 15, 204 22, 548 420 28, 933 4,900 5 4 1,970 260 4 4 466 300
Arizona
Arkansas . __
California .
84 38, 248 12 1 1 2,128 200 200 10 2,148
Colorado..
Connecticut .
39 1 2 9 11 9,161 242 425 1,120 1,920 1 61
Delaware . ..
District of Columbia.. ..
Florida ..
4 1 2 510 258 475 1 50
Georgia.. .... .
Idaho . . ...
Illinois.. . . _
7 12 4 5 550 2,134 871 4, 903 1 4 351 511
Indiana..
Iowa.. ..
Kansas
3 425
Kentucky .. ... _
49 61 3 30 51 29 10 50 10 8 6 1 4 93 2 64 64 9,262 13,185 286 10, 444 16,957 13,955 2,514 3,119 8,889 697 1,778 100 626 22, 643 148 48,308 9,877 1 24
Louisiana .. ......
2 6 17 10 8 255 1,360 6, 214 2,213 1,093 1 2 1 247 325 110
Maine ...
Maryland ... . . .. . _.
Massachusetts ..
2 112
Michigan . .
1 120
Minnesota
Mississippi. . . ... . ...
Missouri _ . . _.
1 49 1 1,059
Montana ... . .
Nebraska- ....
Nevada .. ..
2 2 3 195 885 690 2 99
New Hampshire ... _
NewJersey.. . ..
6 275
New Mexico . .
New York . . ...
9 1 2,411 472 8 1,907
North Carolina. . 4 1,675
North Dakota
Ohio _ _ 79 3 15 156 17 88 27, 431 634 1,266 41, 447 4,942 6,996 46 2 13 121 13 85 19, 106 434 1,081 31, 865 4,008 5,946 25 6,119 5 1,300 3 1 906 200
Oklahoma
Oregon . .... 2 35 1 3 185 9,582 538 1,050
Pennsylvania. .. ._
Rhode Island
2 327 1 69
South Carolina .. ... _
South Dakota ..
Tennessee 88 227 7 2 60 43 15 9 1 13 11 64 3 15, 719 30,613 2,083 300 24, 611 10, 725 2,151 2,360 287 566 3, 111 17, 652 476 86 213 15,667 28, 729 1 8 7 2 17 12 50 1,018 2,083 300 14, 264 2,626
Texas . . .
6 866
Utah..
Vermont.
Virginia . 36 28 14 9 9, 569 7,737 2,113 2,360 7 2 778 320
Washington .... _ . _
1 1 42 38
West Virginia... .. ... ... .
Wisconsin .
Wyoming . 1 9 287 241
Alaska .. 4 6 64 3 325 1,409 17, 652 476
Hawaii _ ....
5 1, 702
Puerto Rico
Virgin Islands...
1 Includes 3 projects and 8 units in the subsistence homesteads program not shown separately, by program.
2 Includes Public Laws 412, 671, 171, and 475, PWA and farm labor camp programs.
380
PUBLIC HOUSING ADMINISTRATION
TABLE 117
Disposition responsibility of the Public Housing Administration: Total number of dwelling units and number disposed of, by program, type of structure and accommodation, and method of disposition, as of Dec. 31, 1954
Disposition responsibility Number of dwelling units disposed of by method of disposition
Program Total Conveyance for low-rent use Relinquishments Sale Veterans’ reuse Transfer to other agencies Reuse war housing Lease termination Other
Total 998,546 848, 242 19, 587 283, 316 182, 938 105,452 61,547 59,157 56, 734 79,511
Public war housing (Lanham constructed) 626, 288 498,171 19,587 67, 297 150,429 99, 655 60, 246 58, 757 6, 800 *35,400
Family dwelling 525, 669 398, 249 19, 587 66, 641 131, 761 57, 901 43, 361 48, 060 273 30, 665
Permanent Demountable Temporary and stopgap— 147, 815 24, 876 352. 978 70, 355 24, 876 303, 018 19, 587 66, 641 36, 556 17,490 77,715 8 598 57, 295 12, 799 2,357 28, 205 843 4, 051 43,166 273 289 380 29, 996
Dormitory 100, 619 99, 922 — 656 18, 668 41,754 16, 885 10, 697 6, 527 4, 735
Permanent Temporary and stopgap— 9, 404 91,215 9.186 90, 736 656 1,871 16, 797 41, 754 764 16,121 10, 697 6, 527 24 4, 711
Veterans’ reuse housing Subsistence homesteads and greentowns Low-rent housing Other 266, 926 5, 419 6, 732 93,181 258, 530 5,411 6,408 79, 722 216, 019 12 5,398 5, 765 21. 334 5, 797 7 209 1,085 400 49, 934 242,499 6 34 1.572
' Includes the following methods of disposition: Demolition, 13,079 units; reuse defense housing 1 676 units, accident, fire, etc,, 8,582 units; deprogrammed trailer park accommodations, 8,126 units; termination of consti uction contracts for incomplete units, 2,051 units; conversion to nondwelling use, remodeling, deterioration, etc., 1,393 units; and use in experimental projects, 493 units.
2 Includes 41,679 units disposed of by termination due to lack of need, by conversion and by deterioration' also includes 820 units disposed of for reuse as defense housing.
381
HOUSING AND HOME FINANCE AGENCY
TABLE 118
Housing Act of 1949:1 Number of presently active dwelling units processed through stages, by State, as of Dec. 31, 1954
State 2 Reserved 3 Preliminary loan approved 3 Tentative site approved 3 Annual contributions contract executed Placed under ’ construction Completed
Total. 349,181 345,073 254,081 236,652 204,441 171,029
Alabama 13,420 13,364 9,864 8,388 8,388 8,388
Arizona 1,867 1,867 1,261 1,001 1,001 1,001
Arkansas 1,696 1,696 1,602 1,844 1,792 1,792
California 15,302 15,181 13,086 14,528 11,760 9,229
Colorado 3,125 3,125 2,724 2,724 2,504 2,504
Connecticut 4,396 4,064 3,883 3,733 3,393 3,025
Delaware 1,280 1,280 380 380 380 '380
Florida 8,223 8,223 6,126 5,216 4,728 4, 478
Georgia Idaho 17, 261 17, 261 14, 648 12,390 75 12, 260 75 10. 594
Illinois 28,450 28,380 15,964 15,440 9,263 6,972
Indiana 2.143 2,143 2,085 1,837 1,317 1,209
Kentucky 5,732 5, 732 4, 816 4,911 4,837 4,837
Louisiana 9, 549 9,003 6,835 7,341 7,341 4,801
Maine 86 86 86 86 86 86
Maryland 5,810 5,810 4,966 4,146 2,841 1,538
Massachusetts 10,821 10,621 9,367 9,044 8,247 8,120
Michigan 7,263 7, 063 6,232 8,532 4,350 1,986
Minnesota 4,104 4,104 2,690 2,050 1,632 1,632
Mississippi 2,349 2 349 2,151 1,569 1,530 1,449
Missouri 9,200 9,200 6,513 7,574 5, 380 2,308
Montana . . _ 164 164 164 164 164 164
Nebraska 700 700 700 700 700 700
Nevada 290 290 100 100 100 100
New Hamsphire 725 525 623 626 626 626
New Jersey ...... 16,211 16,167 14,422 12,867 12, 660 10,896
New Mexico 70 70 70 148 148 148
New York 54,880 54,880 31,569 28, 696 22,422 16, 747
North Carolina North Dakota __ 7,843 100 7,407 100 6,304 76 6,692 6,532 6,288
Ohio 15,145 14, 570 4,267 3,382 1,526 610
Oregon 240 240 186 186 186 172
Pennsylvania 24, 290 23,830 14, 716 14, 230 12,162 9,090
Rhode Island .. 2,124 2,124 1,682 2,080 2,080 2,080
South Carolina South Dakota.. 4,031 4,031 3,266 3,255 3,255 3,255
Tennessee 9,955 9, 955 9,131 8,256 8,232 7,899
Texas Vermont 19, 036 18,976 17,269 16, 899 16,625 16,371
Virginia 8, 354 8,354 6,979 7,054 6, 542 5,401
Washington 1,145 1,145 826 608 608 608
West Virginia _ 1.208 500 500 558 500
Wisconsin 3,020 3,020 2,819 1,457 1,450 1,046
District of Columbia 4,000 4,000 4,146 2,428 1,361 L 175
Alaska 325 325 325 325 325 325
Hawaii 900 800 712 1,048 1,048 1,048
Puerto Rico 21, 778 21, 778 17, 380 11,734 11,734 9, 526
Virgin Islands 570 570 570 350 350 350
1 Excludes 2,222 units reactivated under Public Law 301.
2 Excludes 5 States with no enabling legislation (Iowa, Kansas, Oklahoma, Utah, and Wyoming).
3 Reactivated units not included in these stages.
382
PUBLIC HOUSING ADMINISTRATION
TABLE 119
Housing Act of 1949A Reservations issued, places with approved preliminary plans, and projects processed through selected progress stages, by State, as of Dec. 31, 1954
State 2 Places with reservations 3 Places with preliminary loan approved 3 Projects
Tentative site approved3 Annual contributions contract executed Placed under construction Completed
Total . 1,111 1,080 1,751 1,462 1,397 1,306
Alabama .
95 13 6 73 2 19 1 37 167 93 14 6 69 2 16 1 37 166 145 14 16 95 10 18 2 56 326 109 9 18 99 10 16 2 41 237 1 80 11 33 47 2 14 33 19 9 31 8 4 3 1 4 57 2 40 48 109 9 17 85 8 13 2 39 236 1 72 9 33 48 2 11 29 17 8 31 8 4 3 1 4 55 2 39 47 109 9 17 76 9 12 2 38 233 1 66 8 32 45 2 9 27 12 8 29 4 4 3 1 4 51 2 28 46
Arizona
Arkansas.
California ..
Colorado
Connecticut
Delaware
Florida
Georgia
Idaho _
Illinois 71 6 18 32 2 5 27 15 9 27 2 4 1 2 3 34 1 20 23 2 13 9 48 4 41 69 6 18 28 2 5 26 15 9 27 2 4 1 2 2 34 1 20 22 2 10 9 45 4 41 100 12 33 46 2 16 40 18 13 53 7 4 3 1 4 65 1 48 13 8 65 6 72
Indiana
Kentucky
Louisiana ..
Maine
Maryland .
Massachusetts
Michigan
Minnesota _.
Mississippi
Missouri.-.
Montana .
Nebraska
Nevada.... _ _
New Hampshire
New Jersey
New Mexico
New York. ..
North Carolina
North Dakota
Ohio
8 8 62 8 68 5 8 57 8 68 1 7 44 8 68
Oregon..
Pennsylvania
Rhode Island
South Carolina _
South Dakota
Tennessee 31 125 31 122 74 173 61 162 61 156 57 154
Texas
Vermont
Virginia 9 15 4 4 1 4 2 82 2 9 15 1 4 1 4 1 82 2 22 15 1 9 11 4 4 76 4 22 13 3 6 6 4 4 37 2 21 13 1 6 4 4 4 37 2 17 13
Washington
West Virginia
Wisconsin .
5 3 4 4 32 2
District of Columbia
Alaska...
Hawaii
Puerto Rico
Virgin Islands
1 Excludes 2,222 units reactivated under Public Law 301. 2 Excludes 5 States with no enabling legislation (Iowa, Kansas, Oklahoma, Utah and Wyoming). 3 R eactivated units not included in these stages. 87
383
HOUSING AND HOME FINANCE AGENCY
TABLE 120
Public housing units* completed for occupancy 1935 to 1954
Year All public housing Low-rent War and defense housing Veterans2 reuse housing
Total U. S. Housing Act All other 1
Total 2 1,377, 961 2 372, 714 3 342,351 2 30,363 4 739, 595 265, 652
1935
3,932 1,213 7,849 17,319 3,858 31, 940 119, 634' 158,266 374, 729 153,158 45,026 134, 726 107,097 30,054 1,242 1,582 10, 246 63, 533 64,773 47,734 3,932 1,213 7,849 17,319 3,858 31, 940 50,848 37,537 27,325 2,831 2,949 1,804 466 1,336 547 1,201 10,246 57,956 58, 214 44,293 3,932 1,213 7,849 17, 319
1936 .
1937
1938
1939 3,858 31,940 59,848 37, 537 27,325 2,831 2,949 1,804 466 1,336 547 1,201 10,246 57, 956 58,214 44,293
1940
1941
59, 786 120, 729 347,404 150,327 40,171 4,051
1942
1943
1944
1945 1,906 128,871 106,631 27,168 695 381
1946
1947
1948 31, 550
1949
1950
1951
1952
3 5,577 6 6, 559 8 3,441
1953
1954
1 Includes PWA, subsistence homestead and greentown projects.
2 Includes 50 PWA units completed in 1934.
3 Includes 60,489 units completed as war housing of which all but 2,185 units have been returned to low-rent use.
4 19,985 permanent family war housing dwelling units have since been conveyed to local authorities for low-rent use under Public Law 475.
5 Units completed for emergency flood projects in Portland-Vancouver area.
6 Defense housing.
*Covers programs administered by Housing and Home Finance Agency or Public Housing Administration.
384
PUBLIC HOUSING ADMINISTRATION
TABLE 121
Combined balance sheet, as of June 30, 1954 1 2 3
Total United States Housing Act program Public war housing program4 5 Veterans reuse housing program Subsistence homestead and greentowns program
ASSETS Cash $70,862,357 $22,093,147 $48,126,140 $136,087 $506,983
Accounts receivable: Government agencies _
328,390 s 108, 663 5,116,188 1,574, 756 3 441,768 328,390 31,574 2, 780, 913 1,398,260 8 306,824
Other programs (PHA) 74, 514 1, 675, 417 98,118 814,040 2,275 7 659,858 7, 966 8 120, 690 300
Local authorities and other public bodies... ...
Other
70,412 8 214
Less allowance for losses...
Total accounts receivable ...
6, 686,229 1,834,009 4, 232,313 549,409 70,498
Advances: Government agencies
266,103 1,107, 776 84,676 8 84,379 266,103 861,410 297
Local authorities. 246,366
Other . ...
84,379 « 84,379
Less allowance for losses
Total advances
1,374,176 246,366 1,127,810
Accrued interest receivable: Accrued interest
3,993, 538 8 58,635 3,823,861 8 50,000 119,035 8 8, 635 1,371 49,271
Less allowance for losses .
Total accrued interest receivable. Loans, mortgages, and investments: Local authorities loan notes
3, 934,903 3, 773,861 110,400 1,371 49, 271
125,248, 792 70,942,000 55,972,842 8 1,303,091 125,248, 792 70,942,000 1, 418,393 8 1,116,000
Local authorities “B” bonds
Mortgages and investments.
44, 516, 228 8 187,091 95,938 9, 942,283
Less allowance for losses...
Total loans, mortgages, and investments
250,860, 543 196, 493,185 44,329,137 95,938 9, 942,283
Conditional conveyance contracts.. 108,129,104 s 1,787, 294 108,129,104 8 1, 787,294
Less allowance for amortization Total
106,341,810 9 106,341,810
Land, structures and equipment: Development costs 858,417,439 8 H 35,257,522 159,918,409 8 32,611, 663 688,497, 761 8 19 2, 603,323 9,147, 200 854,069 8 10 42, 536
Less allowance for depreciation and disposition losses
Total..
823,159, 917 512,845 127,306, 746 3,078 9 685, 894,438 479,417 9,147, 200 27, 569 811, 533 2,781
Prepaid expenses. _ ..
Total... 1, 263, 732,780 458,092, 202 784,299,655 9,957,574 11, 383,349
LIABILITIES, RESERVES, APPROPRIATIONS, AND EQUITY Liabilities: Accounts payable: Government agencies
128,926 21, 592 16,090,115 1, 203,628 3,392,259 4,456 123,159 21, 592 201, 533 1,203, 628 3,180, 659 1,090 221
Other programs (PHA). ..
Local authorities and other public bodies. _ . 12 15,888, 582
Contractors and vendors—-Defense housing development costs...
Other accounts payable 51, 693 159,815 92
Total
is 20,836, 520 15, 944, 731 4, 730, 571 160,905 313
Accrued liabilities
1, 553, 482 916,146 561, 956 4, 668,145 183, 707 728 234, 680 4,668,145 1,351,871 788, 719 325,794 12,649 537 1,350 5,255 126,162 132
Trust and deposit liabilities Deferred and undistributed credits. Reserves.
See footnotes at end of table.
385
HOUSING AND HOME FINANCE AGENCY
TABLE 121—Continued
Combined balance sheet, as of June 30, 1954—Continued
Total United States Housing Act program Public war housing program 4 5 Veterans reuse housing program Subsistence homestead and greentowns program
LIABILITIES, RESERVES, APPROPRIATIONS, and equity—continued Appropriations for annual contributions to local authorities: Net appropriations available Less payments and obligations Total $159, 541,519 160, 715,129 $159, 541, 519 160, 715,129
31,173,610 9 14 1,173,610
Equity of United States Government (table 122) Total
1,236, 370,141 438,233,821 $777,102,700 $9, 782,133 $11,251,487
1, 263,732,780 458,092, 202 784, 299,655 9,957, 574 11,383,349
! Represents the combined balance sheet of all programs administered bv PHA, with the exception of the administrative program. Defense housing pursuant to Public Law 139, Title HI, 82d Cong, has been combmed with the public war housing program for reporting purposes.
This combined balance sheet was prepared on the same basis as the PHA published Financial Report for June 30, 1954, and does not include adjustments which were made subsequent to publication thereof. TiTT, June 30, 1954, there were $10,710,000 of contingent liabilities representing suits and claims against PHA applicable to the following programs:
United States Housing Act program____________
Public war housing program___________________
Veterans’ reuse housing program_______________
Subsistence homestead and greentowns program.
Total____________________________________
Over 700 suits amounting to $6,500,000 arose out of the Columbia River flood damage at the Vanport, Oregon and Vancouver, Washington areas, of which 659 cases have been tried and decided in favor of the United States Government. If the rulings of the courts are upheld upon anpeal, the liabilitv of PHA will be negligible. With respect to the remaining suits and claims, it is the opinion of operating officials of PHA that they will be settled for.less than 15% of the stated amounts. There may also be additional claims of indeterminate amounts arising from contractual agreements to rehabilitate property upon termination of projects and leases.
3 The contingent liability for accrued annual leave applicable to programs at June 30, 1954, was as follows: United States Housing Act program________________ ________________________________________________
Public war housing program___________________
Veterans reuse housing program_______________
Subsistence homestead and greentowns program.
Total___________________________________
$300,000
8, 000, 000
2,400,000
10,000
10, 710,000
$1. 080, 600
1, 562, 200
41,200
6,300<
2, 690,300
4 Uncompleted portions of development contracts for defense housing projects in the amount of $1,984,534 are not reflected on the balance sheet.
5 The balance sheet and related statements do not include net loss on property dispositions in the amount of $626,668 for which documentation was received too late for recording in the books of account at June 30 1954.
6 Includes $87,071 due from the administrative program.
1 Does not include $568,691 of accumulated net income of projects operated by public bodies under contracts which provide for settlement, at the termination of the contract, of any cumulative net income.
3 Indicates negative item.
9 I he amount of $106,341,810 represents the unamortized interest of PHA in PWA projects, permanent war housing projects and farm labor camps transferred to public bodies under contracts bv which they are to return all net income derived from operations for a period of forty years from date of transfer for the PWA and permanent war housing projects and twenty years for the farm labor camps. The operation of these projects will continue under the budgetary control of PHA throughout the contract period.
PHA has entered into agreements for future conveyance to local authorities (for low-rent use) of 22 permanent war housing projects having a book value of $23,790,692.
19 Represents provision for losses on assets subject to disposition under executed offer and acceptance contracts for which formal disposition documentation has not been completed.
» No provision has been made for depreciation on structures and equipment in the public war housing, veterans reuse housing and subsistence homesteads and greentowns programs.
12 Under Public Law 171 annual contributions are permitted to be paid to local authorities in two installments. The amount includes $15,810,511 of second installments, to be paid to local authorities during fiscal, year 1955 for Public Law 171 projects, the first installments having been paid in fiscal year 1954.
13 The liabilities and their related expense and cost accounts include $1,787,061 of unliquidated obligations for services and materials which had not been received at June 30, 1954, as follows:
Public war housing program_____________________________________________________________ 785, 779
Veterans’reuse housing program_______________________________________________’ L282:
Total---------------------------------------------------------------------------- 1,787,0611
14 This amount represents 1954 obligations payable from 1955 appropriations.
386
PUBLIC HOUSING ADMINISTRATION
TABLE 122
Combined statement of equity of the U. S. Government, as of June 30, 1954 1
Total United States Housing Act program Public war housing program Veterans’ reuse housing program Subsistence homestead and greentowns program
Interest-bearing investment—N otes payable to U. S. Treasury. $215, 000, 000 2 $215,000 000
Non-interest-bearing investment: Capital stock issued to Secretary of the Treasury
1, 000, 000 2, 097, 603, 100 36, 797,800 321, 000 359, 577, 743 469, 472 3 95,174, 841 25, 000, 000 1, 000, 000
Appropriations for: Development of housing $1,654,977,825 $442, 625, 275
Administrative expenses: Expended 36, 797,800 321,000 160, 716,155
Unexpended
Assets transferred from other Government agencies 120,128, 709 469,472 3,596, 877 25, 000,000 16, 278,383 $62,454, 496
Assets acquired through claims settlements paid by other Government agencies for PHA
Assets transferred from other programs (PHA) 61,319, 035 30, 238,984 19, 945
Reserve for expenses of disposition of properties
Total non-interest-bearing investment
2,615, 943, 956 260,153, 990 1,804,172 883 489,142, 642 62, 474, 441
Total investment
2, 830, 943,956 475,153, 990 1, 804,172,883 489,142,642 62,474, 441
Reduction of investment: Assets transferred to other Government agencies
209,707, 647 3 90, 075, 608 25,000, 000 465,333, 971 804,456, 589 1,655 23,888 201, 501,121 86, 638,163 25, 000, 000 408,362,843 305, 568,056 6, 264, 093 3,353,194 1,940,778 60,363
Assets transferred to other programs (PHA)
Amount withheld for reserve for expenses of disposition of properties
Cash deposited into the general fund of the U. S. Treasury . 174 36, 894,452 36,471, 579 433, 271, 643 20,499,375 28, 722,438
Deficit
Total reduction of investment-. Equity of U. S. Government
1, 594, 573, 815 36 920,169 1,027, 070, 183 479, 360, 509 51, 222, 954
1, 236, 370,141 438, 233,821 777,102,700 9, 782,133 11,251,487
1 Excludes the equity of the participating programs in the net assets of the administrative program and the activity for all programs previously administered by PHA, which are now liquidated.
1 HA may issue and have outstanding at any one time notes and other obligations for purchase by the Secretary of the Treasury in an amount not to exceed $1,500,000,000.
3 The difference of $5,099,233 between assets transferred from other programs (PHA) ($95,174 841) and assets transferred to other programs (PHA) ($90,075,608) consists of transfers to and from programs which are not included m this statement, as follows:
Surplus Property Act program______
Homes conversion program (net). Administrative program (net)______
$5, 062,457
10, 024
26,560
Surplus assets reassigned to the subsistence homestead and greentowns program, but not ’ credited to the transferring program_______________________________________________________ 192
Total,
5,099,233
387
HOUSING AND HOME FINANCE AGENCY
TABLE 123
Combined statement of deficit, as of June 30, 1954
Total United States Housing Act program Public war housing program Veterans’ reuse housing program Subsistence homestead and greentowns program
Deficit, .Tune 30, 1953 Adjustments to beginning balance: Management Disposition Administrative Special adjustments Net adjustments Deficit, June 30, 1953, as adjusted Net income or loss (—) for the fiscal year ended June 30, 1954 (table 124) ' Deficit, June 30, 1954 (table 122) $700, 061,882 $28, 927, 903 $208, 514,887 $433, 334, 954 $29, 284,138
' 606, 594 1, 226, 473 1 54, 799 7, 687, 541 61 2 1 37, 800 2 839,155 1 438, 483 1, 064, 054 1 15, 099 3 6, 848, 386 1 10, 635 1 52, 210 1 1, 300 1 157, 537 214,627 > 600
8, 252, 621 801,418 7,458, 858 > 64,145 56, 490
708,314, 503 -96,142, 086 29, 729, 321 -7,165,131 215, 973, 745 -89, 594,311 433, 270, 809 -834 29, 340, 628 618,190
804, 456, 589 36, 894, 452 305, 568, 056 433, 271, 643 28, 722, 438 A*
1 Indicates negative item. 2 Includes special adjustments for projects conveyea to public bodies, as follows: Increase in depreciation $1, 599, 221 Less reduction of operating reserves ’ 760, 066 Toial 839,155 3 Includes special adjustments for revaluation of property, as follows: Projects conveyed for low-rent use 9, 279,384 Less nondwelling buildings and structures 2,430,998 Total....' 6,848,386
388
PUBLIC HOUSING ADMINISTRATION
TABLE 124
Combined statement of income and expenses for the fiscal year ended June 30,1954
Total United States Housing Act program Public war housing program Veterans’ reuse housing program Subsistence homestead and greentowns program
MANAGEMENT Income: Interest on loans $12,977,181 15,353,866 8,502,001 27,501 38,90f $11, 628, 62. 80,77C 1 2,824, 251 $961,326 15,173,952 11,326,253 27, 501 30,196 $2,78£ 80,016 $384,442 19,128
Project operations (net): Directly operated projects . ..
Leased projects ..
Other . ...
Other 7,634 1,078
Total . . 36,899,458 8,892, 777 _ 27,519,228 83,883 403, 570
Expenses: Interest on borrowings from United States Treasury
8, 209, 557 1,395,456 1 1,188, 362 1 207,094 2 8, 209, 557 1,395,456 1 1,188,362 1 207,094 674,191 1 566,000 1 1,512 6,629,000 2,445
Cost of technical services
Less technical service fees
Reduction of reserve for furnishing technical services at project site
Accounts receivable written off 682,816 8,625 8,700 69, 793 2,123,815 65, 790
Provision for losses on loans and accrued interest 1 557,300 68,281 8,909,115 68,235
Provision for doubtful accounts receivable ... .
Administrative expenses .. . .. 118,400 37,900
Other
Total... ._ 17,380, 704 14, 947, 681 2. 276, 723 118, 400 37, 900
Net management income or loss (—)
19,518, 754 —6,054, 904 25, 242, 505 -34,517 365, 670
PROPERTY DISPOSITIONS 3 Costs: Property sold .. .. ... 103, 221, 773 40,787,526 16, 964, 644 1 2, 788, 404 13,216,153 86,131,923 4 40,466,667 16,920,124 1, 241,324 320,859 43,189 2, 602,373
Transfers to public bodies. .
Other dispositions 1,331 1 2,010,814
Less allowance for depreciation and disposition losses 1 777, 590
Total 158,185, 539 11, 236, 670 143, 518, 714 1,605,372 1,824, 783
Amortization of conditional conveyance contracts ...
1,057,172 2, 603, 323 3,521 43, 755 848,473 1,401,300 343, 534 1,057,172
Provision for losses on disposition 2,603, 323 i 517
Disposition expenses: Accounts receivable written off. _ _ _ 4,038 43, 755 32,815
Provision for losses on accounts receivable
Direct expenses 2,736 805, 561 1,395,300 323, 534 7,361 6,000
Administrative expenses .
Nonadministrative expenses 20,000
Total 6,301,078 1,059,908 5,127, 201 100, 608 13, 361
Proceeds: Sale of property ..
47, 754,850 1,070,927 11,186,351 33,809,099 668,736 1, 070, 927 2,090, 664
Net income from properties transferred to public bodies under contracts
Total 48, 825, 777 11,186,351 33.809,099 1,739, 663 2,090,664
Net income or loss (—) from property dispositions ... -115, 660,840 -1,110, 227 -114,836,816 33,683 252,520
Total net income or loss (—) for the fiscal year ended June 30, 1954 -96,142,086j -7,165,131 -89,594,311 -834 618,190
1 Indicates negative item.
tt2 J?uLins ,ile fiscal year en) (>) 12.9 33.7
Sec 603, NHA 367.3 27.6 339.6 42.6 215.2 .2 15.4 66.2
Sec. 608, NHA 323.9 251.4 66.3 1.0 37.7 (*) 10.6 6.2 17.0
Sec 803, NHA 288.3 53.9 115.7 .7 72.1 .9 118.7 42.0
Sec. 903^ NHA 520.7 21.0 448.4 12.2 22.3 .1 8.9 51.3 404.9
Sec 908i NHA 65.4 17.7 28.4 .2 10.6 .1 .9 19.3 16.6
Total, VA-guaranteed mortgages__________ 3,192.0 337.7 2,846. 9 305.9 874.0 15.6 20.0 7.4 1, 631.6
Sec 501, SRA (home) Sec. 501, SRA (multiple 3,148.9 11. 0 327.8 1.9 2, 813. 7 9.0 301.8 1.0 852.0 6.9 15.5 . 1 19.7 7.4 1, 624.6 1.1
Sec 502 SRA 2.0 .1 1.9 .4 (>) (*) 1.4
Sec. 505(a), SRA 30.1 7.9 22.3 2.5 15.1 (*) .3 — 4.5
Defense Homes Corpora- 41.5 2.2 — 41.5 .7 40.8
RFC Mortgage Company 2.2 .6 1.6
•
1 Less than $0.05 million.
424
FEDERAL NATIONAL MORTGAGE ASSOCIATION
TABLE 137
FNMA participation in defense, military and disaster housing program during 1954 and at end of 1954
[In millions of dollars]
National Housing Act (FHA) and Servicemen’s Readjustment Act (VA) by section of law Advance-commitments and purchase authorizations Commitments canceled Purchases Sales (Gross) Repayments and other credits At end of 1954
Undis-bursed commit ments Mortgage portfolio
During Calendar Year 1954
$117.8 $42.5 $287.4 $109. 8 $21.0
80.0 22.1 233.1 47.1 20.3
Sec. 8, NHA
Sec 203 NHA (.2) .3 7.0 1.8 .6
Sec 207, NHA 4.8 3.0 .1
Sec 803, NHA .2 4.1 8.4 .1
Sec 903 NHA 63.5 2.2 9.1 180.2 21.8 16.7
Sec 908, NHA 7.5 15.7 10.7 1.2
Sec 501 SRA 14.3 1.1 17.0 9.8 1.6
.7 .2 .4 .1 .4
Sec 8 NHA .5 .2 .4 .3
Sec 203, NHA . 1 (i)
Sec 501, SRA . 1 . 1 .1
37.1 20.2 53.9 62.6 .3
Sec. 207, NHA - -
Sec. 803, NHA 37.1 20.2 53.9 62.6 .3
Cumulative (July 16,1951-Dee. 31, 1954)
Total $1,008.0 $101.2 $709.2 $124. 6 $28.8 $197.6 $555. 8
Total, defense.. _ 719.1 50.6 585.9 51.1 27.4 82.6 507.4
Sec. 8, NHA (i) (1) (1)
Sec. 203, NHA 18.3 1.4 16.7 4.3 1.0 .3 11.4
See. 207, NHA 11.9 .5 11.4 3.0 .7 7.7
Sec. 803', NHA 16.8 4.1 8.4 .1 4.4 8. 3
Sec. 903i NHA 520.7 21.0 448.4 22.4 21.0 51.4 405.0
See. 908; NHA 65.4 17.5 28.4 10.7 1.2 19.3 16.6
Sec. 50L SRA 86.0 6.1 72.6 10.7 3.4 7.2 58.4
Total, disaster. 17.2 .6 15.9 .5 .8 .7 14.6
Sec. 8, NHA 12. 4 .6 11.3 . 1 .5 .6 10.7
See. 203, NHA .7 (’) .6 (’) .1 .5
Sec. 50L SRA 4.1 (’) 4.0 .4 .3 3.4
Total, military 271.7 50.0 107.4 73.0 .6 114.3 33.8
See. 207, NHA .1 . 1 (i) .1
Sec. 803; NHA 271.6 50.0 107.3 73.0 .6 114.3 33.7
1 Less than $0.05 million.
425
HOUSING AND HOME FINANCE AGENCY
TABLE 138
FNMA home financing activity by month: 1954 [In millions of dollars]
Purchases Repayments Other credits
Month Advance commitments and purchase authorizations Commitments canceled Undisbursed commitments at end of month Sales (net) Discounts Mortgage portfolio at end of month
Total 468.6 51.1 658.1 100.3 515.4 9.8 18.1
January 20.2 0.6 451. 0 37.3 6.8 55.0 1.9 0.9 2,434.4
February 27.2 .3 430.5 47.4 7.6 48.9 1.5 .2 2,423.6
March 25.2 1.4 405.6 48.7 7.4 96.4 1.9 .6 2,366.0
April 28.9 .6 383.8 50.1 7.5 106.7 1.7 1.0 2, 299.2
May 23.9 2.4 366.8 38.5 7.2 29.7 .4 .9 2,299.5
June 65.6 11.8 370.2 50.4 8.5 36.9 .4 3.0 2,301.1
July 141.3 2.5 347.5 161.5 8.2 36.1 .3 3.5 2,414.5
August 17.3 4.4 327.4 33.0 8.8 38.4 .7 1.8 2,397. 8
September 19.1 6.9 301.8 37.8 8.9 18.6 .3 1.4 2,406.3
October 22.6 9.7 275.7 39.0 9.1 23.1 .3 2.6 2,410. 2
November 32.1 3.8 254.0 50.0 9.5 11.1 .2 1.3 2,438.1
December 45.2 6.7 228.1 64.4 10.8 14.5 .2 .9 2,476.1
426
FEDERAL NATIONAL MORTGAGE ASSOCIATION
TABLE 139
FNMA refinancing operations by calendar years 1938-54 [In millions of dollars]
Year Advance commitments and purchase authorizations Commitments canceled Undis- Purchases Sales (gross) Repayments and other credits Mortgage portfolio (end of period)
bursed commitments (end of period)
1938 102.2 2.5 17.5 82.2 1.9 80.3
1939 69.9 5.5 7.8 74.1 .4 7.2 146.8
1940 51.1 2.5 8.4 48.0 (») 13.7 181.1
1941 42.3 2.1 6.3 42.3 (‘) 16.6 206.8
1942 18.4 1.1 .4 23.2 19.1 210.9
1943 1.2 .1 (*) 1.5 126.6 21.3 64.5
1944 .2 (>) .2 (■) 12.3 52.4
1945 . 1 (') .1 38.6 6.5 7.4
1946 .1 (*) (*) (*) 1.8 5.6
1947 • 8 (') .7 .1 1.3 4.4
1948 431.9 8.0 226.7 197.9 3.0 199.3
1949 1,356. 1 86. 5 824.1 672.2 19.8 23.3 828.4
1950 1,069. 7 364.4 485.1 1,044.3 469.4 56.6 1, 346.7
1951 684.1 252.8 239.1 677.3 111.1 63.4 1,849.5
1952 642.3 20.6 322.9 537.9 55.9 89.8 2,241. 7
1953 733.3 45.0 468.7 542.5 221.1 101.4 2,461. 6
1954 468.6 51.1 228.1 658.1 525.2 118.4 2,476.1
1 Less than $0.05 million.
427
HOUSING AND HOME FINANCE AGENCY
428
TABLE 140
FNMA sales and purchases by month: 1953-54
[Thousands of dollars]
RFC Federal Housing Administration Veterans’ Administration
vNTiVf a Defense Mtg __________________________________________________
Year and month * Homes Co.
Corp- Total Sec. 8 Sec. 203 Sec. 207 Sec. 213 Sec. 603 Sec. 608 Sec. 803 Sec. 903 Sec. 908 Total Sec. 501 Sec. 502 Se(c^505
Purchases
1953 —
January__________ 61,032 ---------- 26,131 960 8,430 591 1,074 ___ 31 _______ 14,697 348 34,901 34,901 ______
February--------- 53,073 ---------- 22,339 1,258 7,835 41 538 -------------- 12,667 __ 30,734 30,734 _______
March------------ 80,914 ---------- 43,099 1,048 10,486 4,529 5,481 _ 553 4,820 15,400 782 37,815 37,815 _____
April------------ 67,950 ---------- 38,234 826 8,956 12 1,360 _____ 4,026 22,965 89 29,716 29,716 ______
May-------------- 40,283 ---------- 30,357 492 3,531 4,828 407 ------ 408 18,195 2,496 9,926 9,926 _______
June------------- 30,802 ---------- 22,530 186 2,532 34 359 ___ 102 4,781 14,436 _ 8,272 8,272 ________
July------------- 38,519 ---------- 33,266 97 1,386 330 114 --------- 14,470 16,869 _ 5,253 5,253 ________
August----------- 33,154 ---------- 29,514 42 2,662 37 625 ___ 4,979 8,614 12,555 _ 3,640 3,640 _______
September-------- 26,317 ---------- 23,331 18 2,479 154 3,983 ---------- 15,548 1,149 2,986 2,986 _______
October---------- 38,587 ---------- 32,916 19 4,429 3,288 10 ---------- 7,928 14,751 2,491 5,671 5,671 _____
November_________ 30,004 __________ 21,764 5 5,052 176 _______________ 2,991 13,540 __ 8,240 8,240 ________
December--------- 41,822 ---------- 31,612 96 2,739 3,078 --------- 3,564 18,144 3,991 10,210 10,210 ___
1954
January---------- 37,336 ---------- 26,128 109 2,055 30 ------------ 4,050 19,629 255 11,208 11,208 _____
February_________ 47,369 ---------- 36,852 124 2,203 419 345 ______ 5,014 26,313 2,434 10,517 10,517 ___
March------------ 48,685 ---------- 36,705 339 8,899 291 190 _____ 2,044 24,346 596 11,980 11,980 ______
April...--------- 50,118 ---------- 37,096 315 3,427 1,311 2,058 ___ 11,285 17,601 1,099 13,022 13,022 ___
May-------------- 38,444 ---------- 25,229 383 4,739 416 1,923 _____ 573 16,538 657 13,215 13,215 ______
June_____________ 50,427 ---------- 34,179 725 2,633 98 2,257 ____ 9,534 18,850 82 16,248 16,248 _____
July------------- 117,923 41,519 2,154 40,958 1,617 5,209 61 3,323 62 _ 15,354 15,332 _ 76,965 76,962 _ 3
August___________ 32,985 ---------- 16,796 1,270 2,718 5,991 672 __________ 5,254 891 16,189 16,189 ______
September-------- 37,767 ---------- 19,984 1,710 1,521 97 1,307 --------- 5,722 6,008 3,619 17,783 17,783 ____
October__________ 38,968 ---------- 20,497 1,434 1,691 2,780 1,944 ___________ 11,820 828 18,471 18,471 ____
November--------- 50,038 ---------- 26,018 6,177 2,192 10 2,648 _____ 4,355 8,455 2,181 24,020 24,020 _____
December--------- 64,363 ---------- 33,135 5,285 7,662 23 2,651 _________ 4,317 10,024 3,173 31,228 31,228 ____
FEDERAL NATIONAL MORTGAGE ASSOCIATION
429
Sales (gross)
1953 —....- - —-—*-------------------
January----------- 9,870 ---------- 7,267 4 1,556 --------------- 5,707 .._____________ 2,603 2,594 _____ 9
February---------- 2,786 ---------- 804 42 581 ---------- 78 95 ----- 8 ________ 1,982 1 971 ______ 11
March------------- 7,296 ---------- 4,572 5 4,381 -------------------------- 186 ------ 2,724 2 667 ______ 57
April------------- 3,498 ---------- 873 18 855 -------------------------------------- 2,625 2,579 ___ 46
May--------------- 3,130 ---------- 1,212 ---- 1,204 ---------- 8 ------------------------- 1,918 1 902 ___ 16
June-------------- 810 ------------ 228 ------ 229 ------------------ (1) ---------------- 582 559 6 17
July-------------- 266 ------------ 231 ______ 231 ________________________ _____ 35 35
August ----------- 11,036 --------- 579 ------ 301 ------------ 63 ------------- 215 ------ 10,457 10,457 _
September-------- 18,778 960 944 16 17,818 17,817 1
October---------- 43,512 1,300 1,093 207 42,212 42,191 21
November---------- 58,689 --------- 12,148 --- 1,791 ---------- 1,687 ---- 8,581 89 _____ 46,541 46,507 _ 34
December--------- 61,455 2,539 2,499 40 58,916 58^907 9
1954
January----•_----- 56,868 --------- 19,559 --- 2,412 ---------- 199 ______ 14,777 1,031 1,140 37,309 37,304 _ 5
February--------- 50,339 ---------- 20,043 --- 2,555 3,000 --- 620 325 12,252 1 (5) 1,296 30,296 30,296 ____
March------------ 98,283 ---------- 22,262 --- M*4 ------ 96 151 ---- 11,866 3,216 1,489 76,021 76,003 _ 18
April------------ 108,362 --------- 20,546 77 8,461 --------- 931 ------ 4,729 5,194 1,154 87,816 87,750 ___ 66
May-------------- 30,158 ---------- 9,655 532 4,433 -------------------- 2,042 2,648 -- 20,503 20,481 9 13
June-------------- 37,321 --------- 9,706 990 1,595 --------- 6 -------- > (1) 5,209 1,907 27,615 27,592 __ 23
July-------------- 36,508 --------- 12,303 1 1,319 ---- 1,036 1,378 --- 7,657 824 88 24,205 24,184 _ 21
August ----------- 39,061 --------- 4,937 39 471 ---------- 727 ------ 442 3,258 ____ 34,124 34,114 _ 10
September-------- 18,909 ---------- 4,815 4 345 __________ 106 ______ 4,352 8 _____ 14 094 14 093 . 1
October---------- 23,412 ---------- 9,312 ---- 473 ------------ 786 ______ 4,460 449 3,144 14,100 14,084 ___ 16
November---------- 11,323 --------- 1,714 13 533 --------- 700 _________________ 468 9,609 9,602 7 _____
December--------- 14,688 ---------- 717 4 713 _____________________________________ 13,971 13,969 _ 2
1 Represents adjustment from previous year.
PART VI
Eighth Annual Report
HOUSING AND HOME FINANCE AGENCY
Covering the Activities of the
COMMUNITY FACILITIES ADMINISTRATION
SECTION 1
INTRODUCTION
The Community Facilities Administration was established as a constituent unit of the Housing and Home Finance Agency on December 23, 1954, by Reorganization Order No. 1, issued by the HHFA Administrator pursuant to the authority contained in Title I of the Independent Offices Appropriation Act, 1955. This Order transferred to the Community Facilities Administration the programs and staff of the Division of Community Facilities and Special Operations, Office of the Administrator.
The Community Facilities Administration has been assigned the responsibility for administering the following programs:
Loans to institutions of higher learning to finance student and faculty housing.
Advances to State and local governments for reserve of planned public works.
Public facility loans to State and local governments to finance construction of public works.
Loans and grants to local governments for construction of commu-nity facilities in critical defense housing areas, authorized under Public Law 139, 82d Congress.
Supervision and disposition of securities held by HHFA in connection with the foregoing programs.
Supervision of construction of school facilities for which Federal aid is provided by the Office of Education, under agreement with the Commissioner of Education.
The management and liquidation of certain programs for which legislative authority has terminated, including prefabricated housing loans, two previous advance planning programs, war public works under the Lanham Act, and Alaska Housing.
433
SECTION 2
ACTIVE OPERATING PROGRAMS
College Housing Program
The year 1954 was the fourth full year of operation of the college housing program authorized under Title IV of the Housing Act of 1950. Title IV authorized direct Federal loans at reasonable rates of interest to aid institutions of higher learning in meeting their needs for additional housing for students and faculty. This need has been acute since the end of World War II. At the time the law was enacted, college and university enrollments were setting record levels and included nearly a million veterans. Since then, enrollments have risen even higher. The problem of housing these record numbers of students and faculty has been accentuated by the deterioration of temporary housing which had been pressed into service after the war.
The authority which the law gives to the Administrator to borrow from the Treasury limits the total of such borrowings to not more than $300 million outstanding at any one time. Releases of borrowing authority by the President were in the amount of $40 million for fiscal 1952, $60 million for fiscal 1953, $50 million for fiscal 1954, and $50 million for fiscal 1955, or a total of $200 million. According to the Act, loans are to be repaid by the colleges within a period of not more than 40 years, and, as provided by the Housing Amendments of 1953, the interest rate is established by the Administrator, with a lower limit related to the yields on long-term Government bonds. During the first 6 months of calendar 1954 the rate was 3% percent; during the last 6 months of the year it was 3% percent.
It has been the policy of the Agency to encourage the participation of private investment in the program at all stages. During the 4 years of the program’s operations, when the Administrator approved a cumulative total of $124.5 million in loans, 73 applications totaling about $71 million were withdrawn or rescinded at some stage in the processing because the institutions had been able to secure private financing at comparable terms.
The law provides that, before an institution can obtain a loan under the program, it must demonstrate that private financing is not available on comparable terms and conditions. The bonds offered by the college as evidence of the obligation must be offered for public sale, and comparable terms of private financing were considered to be a
434
COMMUNITY FACILITIES ADMINISTRATION
bid at an interest rate not more than one-tenth of 1 percent above the college housing interest rate. This differential was increased to one-quarter of 1 percent on July 1, 1954.
During the calendar year 1954, 102 applications totaling $60,024,745 were filed by colleges and universities. During the same period, 54 applications, totaling $31,160,000 were approved by the Administrator. The following table shows the applications received and approved in 1954, with the same information for each of the first 3 years of the program’s operation. It also shows the number of accommodations to be provided for men, women, student families, and faculty members.
TABLE 141
Applications received and approved under the college housing program
Calendar year Number Amount Accommodations to be provided
Men Women Student families Faculty
Total, applications received 382 $266,130, 658 52,367 27, 726 1,264 1,151
1951 53 40,482,171 9,888 2,106 153
1952 92 82' 022j 124 17^ 912 6,017 411 389
1953 135 83j 601i 618 17', 051 10,370 443 341
1954. 102 60,024, 745 <516 <233 410 268
Total, applications approved 158 124,445,000 25,242 12,095 1 260 489
1951 _ 17 16, 895,000 4,073 855 87
1952 26 24,213,000 6,005 1,499 68 56
1953 61 52j 17< 000 12,829 3^004 234 148
1954 54 31j 160,000 2,335 <737 198
1 Reduced by rescissions or revisions.
Source: Community Facilities Administration, HHFA.
In addition to the approvals shown in the above table, as of December 31, 1954, another 49 applications totaling $31,306,000 had been given preliminary approval and funds had been reserved, thus bringing the total of commitments through approvals and preliminary reservations to $155,751,000 against the $200 million available.
Within HHFA, the college housing program is administered through the College Housing Branch in the Community Facilities Administration. Title IV of the Housing Act of 1950 authorizes the Administrator to consult with and secure the advice of the Office of Education in the Department of Health, Education, and Welfare. The procedures established by the College Housing Branch to secure such advice on all applications have worked smoothly and the Office of Education has been of great assistance to the Agency through its advice on the educational aspects of the program.
435
HOUSING AND HOME FINANCE AGENCY
Public Facility Loans
The Housing Act of 1954 placed in the Housing Administrator authority to make public facility loans. This program was originally provided for in the RFC Liquidation Act, which authorized loans to State and local public agencies to assist in financing the construction of public projects undertaken pursuant to Federal, State, or local law. This assistance may be extended only if financing is not otherwise available on reasonable terms.
The Supplemental Appropriation Act, 1955, approved August 26, 1954, contained an appropriation of $2,000,000 as the first payment into the $50 million revolving fund authorized in the enabling legislation.
The designation of the Administrator and the appropriation of funds for this program occurred too late in the current year to permit the implementation of the program in time to develop any great amount of activity. However, as of the end of 1954, 206 inquiries regarding financing of public facilities had been received, 141 of which concerned proposed sewer or water systems.
The Administrator has delegated to the Community Facilities Commissioner operating responsibility for this program which will be administered through the regional offices of the Housing and Home Finance Agency. As of the close of 1954, the regional offices had released application forms to 42 potential applicants.
Defense Community Facilities Program
The defense community facilities program was set up by Public Law 139 to aid in meeting urgent need that had developed in many defense housing areas for the provision or expansion of vital community facilities. These community facilities included waterworks, sewerage systems, street improvements, and fire and police protection facilities.
The Act authorized up to $100 million in Federal loans and grants for this type of assistance to local governmental agencies in critical defense housing areas. Actual appropriations under the Act amounted to $20.6 million to HHFA and $8 million to the Department of Health, Education, and Welfare. Responsibility for water and sewage treatment was delegated to DHEW.
The authority for the making of new loans and grants was extended by Congress to June 30, 1954. Subsequent to that date, the program has been on a standby basis.
The 100 projects which had been approved as of December 31, 1953, were reduced to 97 projects during the current year by cancellations. Of these projects, 75 were the sole responsibility of this Agency, while the responsibility for 22 was shared jointly with United States Public Health Service of the DHEW.
436
COMMUNITY FACILITIES ADMINISTRATION
The total estimated cost of the 97 projects amounted to $45.0 million. The USPHS portion of this total was $11.2 million, including the applicants’ contributions, and HHFA was responsible for the remaining $33.8 million. Under its responsibility, this Agency had approved a total of $15.7 million in grants and $3.6 million in loans, with the provision that $14.5 million should be provided by the sponsors of the projects.
Of the 97 projects approved, 19 were under construction, 77 were completed, and 1 had not yet reached the construction stage. This project was involved in legal difficulties.
Of the 96 projects completed or under construction, 35 were for water facilities, 39 for sewers, 11 for water and sewer, and 11 for other types of facilities. Forty-eight final project reports have been received, 3 of which covered terminated projects, with a small amount of Federal funds involved. Approximately 82 amendments involving increases and decreases in allotted funds were processed during 1954.
Reserve of Planned Public Works
The Housing Act of 1954, authorized the Administrator to advance funds to public bodies with which to plan needed public works. Public works are considered to mean those public facilities other than housing, which the public body has legal authority to plan, finance, construct, maintain, and operate. The Act authorized $10 million and the sum of $1.5 million was appropriated.
The program is regarded as an important component of antirecessionary planning. Many smaller communities do not have funds immediately available to produce preliminary surveys and designs. Assistance to such communities will help them to develop plans for public works ready for initiation, which would otherwise take months to prepare. The reservoir of well-planned public works which this program will produce, will provide for a constant high level of public works construction thus maintaining the high economic level of the Nation.
The law limits the total amount available for advances in any one State to not more than 5 percent of the total appropriated funds. It is the policy of the Agency to give priority to those projects which will develop maximum construction at minimum planning costs and which will serve the most demanding needs in the community. No elaborate, long-range, planning proj ect is considered and each application is confined to a single specific public works project.
Approval will be given for the preparation of preliminary plans only. No advances are to be made for reimbursement purposes on plans already developed or under preparation nor for planning a project which is included in an urban renewal project area or contemplated
350920—56----30
437
HOUSING AND HOME FINANCE AGENCY
to be included therein. Advances become due and repayable whenever any of the work contemplated by the approved preliminary plans is placed under construction.
Since the program was just getting underway at the end of 1954, no advances had been made. However, more than 300 inquiries had been received and 250 public bodies were preparing Qualification Statements, the first step in the process of securing an advance.
School Construction Program
On September 23, 1950, the school construction program came into being under Public Law 815. The purpose of this law was to provide schools in areas where Federal activities had caused an increase in school population. Under the law it is possible to (a) make Federal grants to assist local school districts in the expansion of their school facilities to meet the increased needs arising out of Federal activities in the area; (6) construct a limited amount of temporary or permanent school facilities primarily in those areas where local school districts are unable to provide facilities for children living on Federal property because State laws preclude the extension of the State’s educational activities to such children; and (c) assist those local school districts which can undertake to provide for the education of children living on Federal property, most of whom are Indian children living on tax-exempt land.
The original law creating the program, Public Law 815, 81st Congress, was amended by Public Law 246, 83d Congress, which extended the original law and created Titles III and IV. Public Law 357, 83d Congress, provided funds for districts which qualified for assistance under the original law but failed to receive such assistance because of lack of funds. Public Law 731, 83d Congress, extended Title III.
Responsibility for administration of the school construction program rests with the Office of Education, Department of Health, Education, and Welfare. However, pursuant to a working agreement between the Office of Education and the Housing and Home Finance Agency, the Community Facilities Administration performs the necessary engineering, legal and financial services for the Office of Education. These services are financed by advances of funds from those appropriated to the Department of Health, Education, and Welfare.
There are two types of projects under this program, the Federal project and the non-Federal project. In the Federal projects, the Community Facilities Administration through the Field Service of the Office of the Administrator has full responsibility for all planning and construction operations. It prepares cost estimates and prelim i-nary design data, and upon approval of the project by the Office of
438
COMMUNITY FACILITIES ADMINISTRATION
Education, it secures architectural services, approves plans and specifications, awards construction and equipment contracts, inspects construction and equipment, makes payments to architects, contractors, and suppliers, and transfers completed schools to the Office of Education.
In the non-Federal projects, the local school districts are the builders and Community Facilities Administration gives advice, approves plans and specifications, supervises construction, recommends payment of Federal funds, and otherwise acts in a helping and supervisory capacity. The completed facility becomes the property of the local school district.
At the end of 1954, fund reservations had been made for a total of 2,441 projects under the program as may be seen in table 142. Of this number, 1,054 had been completed, 456 were under construction, 419 were in the planning stage prior to going under construction, and 167 were expected to be approved during the next few months. In addition, there were 345 reimbursement projects in which the school district constructs the project itself to be later reimbursed from Federal funds. The Department of Health, Education, and Welfare has approved a total of 1,891 projects, as shown in table 143.
TABLE 142
School construction program
3 Does not include 27 applications combined with Public Law 246 projects.
2 Does not include 2 projects canceled prior to construction.
439
Number of projects
Calendar year 1954 Cumulative total as of Dec. 31, 1954
Public Law 815 Public Law 246 Unpaid entitlements Total
Reimbursement Construction
All types of projects: Fund reservations Reports by HHFA Construction starts Completions.. 10 11 114 630 5 6 97 574 5 5 17 56 559 525 174 5 529 496 159 5 30 29 15 345 232 1 138 62 1 1,052 830 289 635 1,017 796 257 579 35 34 32 56 2,441 2,161 1,510 1,054 2,286 2,013 1,377 984 2 155 2 148 133 70
Non-Federal construction: Fund reservations Reports by HHFA Construction starts Completions 345 232 1 138 62 1
Federal construction: Fund reservations .
Reports by HHFA . ...
Construction starts
Completions..
HOUSING AND HOME FINANCE AGENCY
TABLE 143
Number of projects under Titles II, III, and IV of the school construction program
Approved by Department of Health, Education, and Welfare Placed under construction
Total Non-Federal construction Sec. 202, 305, 401 Public Law 357 Federal construction Sec. 204/310 Sec. 203/309 Total Not yet completed Completed
Cumulative data from September 1950 through-
1951, December 302 238 64 153 150 3
1952, December . - 958 865 93 475 396 79
1953, December 1,328 1,214 114 1,221 802 419
1954, December 1/891 1,745 146 1/510 456 1,054
1954':
January 1,342 1,226 116 1,248 792 456
February 1,366 1,249 117 1,264 726 538
March 1,419 1/292 127 1/293 686 607
April __ 1,447 1,318 129 1,310 616 694
May— 1,483 1,346 137 1,325 584 741
June- - 1,499 1/362 137 1,354 538 816
July 1, 517 1/379 138 1,373 507 866
August 1,593 1,448 145 1,399 487 912
September 1,653 1,508 145 1,436 474 962
October 1,764 1, 618 146 1,445 445 1,000
November _ __ _ _ _ _ 1,821 1,675 146 1,475 452 1,023
December 1,891 1,745 146 1, 510 456 1,054
During 1954, work was begun on 247 non-Federal projects and 32 Federal projects. Nonfederally constructed projects completed during the year totaled 579, while 56 Federal projects were completed in the same period.
440
SECTION 3
PROGRAMS IN LIQUIDATION
Prefabricated Housing Loans
Reorganization Plan No. 23, 1950, transferred to the HHFA Admin-istrator from the Reconstruction Finance Corporation authority for pioviding financial assistance to the manufacturers of prefabricated houses and housing components. Authority for such loans was provided by Sections 4(a)l and 5(d) 2 of the Reconstruction Finance Corporation Act, the Veterans’ Emergency Housing Act of 1946, and Section 102 of the Housing Act of 1948. In September 1951, Section 102a was added to the Housing Act of 1948 by Public Law 139, in order to permit loans to assist production of defense housing.
As of June 30, 1953, the Administrator’s authority to make loans had either expired or had been withdrawn except for loans made in furtherance of, or for refinancing existing loans, where such action was determined to be in the best interest of the Government.
The authority to make additional loans in furtherance of existing loans was withdrawn as of June 30, 1954.
During 1954, all activities under this program were directed toward an early and orderly liquidation of the outstanding loans. Repayments on principal amounted to $3.5 million. These repayments included 200 first mortgages aggregating $1,290,000 on individual homes. These mortgages, which were accepted from one borrower in partial payment of its loan balance, are for the most part insured by FHA or guaranteed by VA.
Except for 2 loans with 10-year terms, which were originally written by the RFC on such favorable interest rates that there seems little likelihood of their being refinanced or repaid at an early date, the remaining outstanding items should be liquidated during the forthcoming year.
It is anticipated that the loan commitment of $110,000, undisbursed as of December 31, 1954, will be disbursed during the early part of 1955.
441
HOUSING AND HOME FINANCE AGENCY
The following table summarizes the status of the program both at the end of 1953 and 1954:
TABLE 144
Status of prefabricated housing program
Item As of Dec. 31,1953 As of Dec. 31,1954
No. of borrowers Amount (000) No. of borrowers Amount (000)
Outstanding principal balance 27 $8,139 21 $5,835
Sec. 102.
6 3 2 16 4,497 3, 528 109 5 4 1 1 15 1,692 4,121 18 4
See. 102a
Sec. 4(a)l
See. 5(d)2 _
Undisbursed loan commitments -
6 6,872 1 110
Sec. 102 Sec. 102a
2 4 4,826 2,046 0 1 0 110
Liquidation of Disaster Relief Program
Public Law 875, 81st Congress, as amended by Public Law 107, 82d Congress, authorized the President to declare “major disaster” areas in any area which had suffered sufficient hardship as a result of disasters from natural causes, such as floods, fires, hurricanes, drought, etc., and thereby provide Federal assistance as a supplement to State and local efforts in alleviating hardship resulting from such catastrophe.
Fifty-two such major disasters involving Federal grants of almost $40 million, had been administered by the CFA prior to the transfer of the function to the Federal Civil Defense Administration by Executive Order dated January 16, 1953. The Executive Order provided that the HHFA was to carry out and complete all activities, including reports thereon, in connection with any disaster which occurred prior to January 16, 1953.
442
COMMUNITY FACILITIES ADMINISTRATION
As of December 31, 1954, there remained 7 disaster projects. For 6 of these, there was a total unobligated balance of $1,208,000, while 2 projects had outstanding obligations of Federal funds to the States of $169,000.
Liquidation of Advance Planning of Non-Federal Public Works
Title II of the War Mobilization and Reconversion Act of 1944 established a program of interest-free repayable advances to help States and local governments plan non-Federal public works. Under Public Law 352, 81st Congress, a second and generally similar program was established. The authority to make advances has expired and both programs are now in liquidation.
Through December 31, 1954, a total of $62.9 million of planning advances had been approved under these programs for 7,707 projects, with an estimated construction cost of $3.6 billion. About half of all approved projects are for sewer, water, and sanitary facilities; slightly less than one-third are for schools, other educational facilities, hospitals, and health facilities; and the remainder include other public buildings, highways, roads, bridges, etc. As of December 31, 1954, construction had started on 3,768 projects with an estimated cost of more than $1.7 billion, and repayments amounted to $27.4 million, or about 44 percent of the total of $62.9 million of advances actually disbursed.
As a result of the 2 advance planning programs, State and local authorities had available on December 31, 1954, a reserve or shelf of non-Federal public works consisting of 2,725 projects, with an estimated cost of more than $1.5 billion. Planning had been completed on all but 13 projects in the reserve.
443
HOUSING AND HOME FINANCE AGENCY
The following table summarizes the status of the 2 advance planning programs as of December 31, 1954:
TABLE 145
First and second advance planning programs
Status of activity' No. of projects Estimated construction cost (000,000) Amount of advances (000,000)
Total approved First and second advance planning programs
7,707 $3, 627. 5 $62.9
Plans incomplete. _
92 97.9 1.3
In process _ __
13 79 97.9 .9 .4
Uncollected GAO claims Plans completed _
7,615 3, 529. 5 61.6
Construction started
3, 768 2, 712 1,035 100 1, 751.8 1, 473.5 277.5 26.7 27.4 27.4 6.2 .5
Active, awaiting contract.. -
Abandoned . .
Uncollected GAO claims _
Potential reserve (construction not started) _
2,725 1, 571. 4 28.3
Total approved.
First advance planning program
6,526 2, 586. 5 46.0
Plans incomplete - - - - - - - - - - - -
72 .4
Tn process
Uncollected GAO claims.- 72 .4
Plans completed -
6,454 2, 586.5 45.7
Construction started.- . _ . _
3, 089 2, 252 1, 016 97 1,223.1 1,066. 7 272.0 24.7 20.2 18.9 6.0 .5
Active, awaiting contract .
Abandoned _ _ . __
Uncollected GAO claims _
Potential reserve (construction not started)
2, 252 1, 066. 7 18.9
Total approved
Second advance planning program
1,181 1, 041. 0 16.9
Plans incomplete - -
20 97.9 .9
In process
13 7 97.9 .9 (>)
Uncollected GAO claims . ........
Plans completed _
1,161 943.0 15.9
Construction started Active awaiting contract _ _ . -
679 460 19 3 528.7 406.8 5.5 2.0 7.2 8.5 .2 (*)
Abandoned _ _ _______
Uncollected GAO claims _
Potential reserve (construction not started)
473 504.7 9.4
i Less than $50,000.
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COMMUNITY FACILITIES ADMINISTRATION
Maintenance and Disposition of War Public Works
During World War II, the Federal Government constructed some 1,500 urgently needed public works in war-congested areas where the local governments were either unable or unwilling to meet the need. These projects consisted principally of schools, hospitals, recreational centers, waterworks and sewers. In the years since the end of the war, every effort has been made to dispose of these projects and as of December 31, 1954, nearly 98 percent of these projects have been sold, leased with option to purchase, or transferred by authority of the Congress. The Community Facilities Administration has been charged with the responsibility of this disposal program.
At the outset of the calendar year 1954, 80 projects having a total cost of $15 million were available for disposal. At the end of the calendar year, 53 projects representing a cost of $12.6 million remained for disposal. Of these, 7 projects, which originally cost $2.0 million, were being held for transfer to other Federal agencies, or transfer to local educational agencies under Public Law 815, 81st Congress, and 36 projects, original cost $6.8 million, were under lease with option to purchase. Accordingly, 10 projects, which cost $3.8 million, are the only remaining projects for which disposal arrangements have not been consummated. Negotiations are being continued to dispose of these remaining projects to the original sponsors.
Under the War Public Works Program, bonds of a par value of approximately $8.0 million were purchased from public agencies to aid in financing the construction of public works. As of December 31, 1954, only $939,000 remained undisposed and efforts are being continued to dispose of the remaining bonds.
TABLE 146
Status of World War If Public Works projects on hand Dec. 31, 1954
Number of projects Cost (000)
Federally constructed properties on hand, total .. . 53 $12, 614
Reserved for other Federal agencies _
3 36 14 174 6,862 5, 577
Leased with option to purchase (title still held by U. S. Government)
Available for disposal
Sewer _ _
8 4 1 1 2,217 1, 614 58 1, 688
Schools
Hospital _
Water
Original loans outstanding
12 939
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HOUSING AND HOME FINANCE AGENCY
Alaska Housing Loans
The Alaska Housing Act, enacted in 1949, and amended by the Housing Act of 1952, authorized a revolving fund to which $19 million was appropriated for loans to assist in developing housing in Alaska. The fund was reduced to $14 million as of July 31, 1953, by Public Law 176, 83d Congress, which also prohibited the making of new loans under the basic authority.
Under this program, for which the Community Facilities Commissioner has operating responsibility, the revolving fund was utilized to finance, through the Alaska Housing Authority, the construction of 1,297 units secured by first mortgages and to assure the completion of 268 units, the advances for the latter being secured by second mortgages.
Approximately $328 thousand was also made available to the Alaska Housing Authority for the purpose of making loans to approximately 700 natives in remote areas to assist them in the improvement or construction of homes. The loans to natives were limited to $500 each.
During the current year, all activities have been directed toward the completion of the various projects and the orderly liquidation of the loans.
TABLE 147
Status of Alaska Housing Program
Dec. 31, 1953 ($000 Omitted) Dec. 31,1954 ($000 Omitted)
Outstanding principal balance $11,864 $9,125
First mortgage loans 11,300 8,666
Second mortgage loans.. . . 346 301
Remote dwelling loans 218 158
446
PART VII
Eighth Annual Report
HOUSING AND HOME FINANCE AGENCY
Covering the Activities of the
URBAN RENEWAL ADMINISTRATION
SECTION 1
OBJECTIVES AND METHODS
Introduction
The slum clearance and urban redevelopment program authorized by Title I of the Housing Act of 1949 underwent a major transformation with passage on August 2 of the Housing Act of 1954, which, in essence, enables communities to attack both slums and potential slums.
The transformation entailed broad expansion of Title I in which the slum clearance and urban redevelopment program became part of the present “urban renewal” program—an approach geared to the premise that, without forceful measures to prevent slums and remove the causes of blight, clearance alone is not enough to solve the problem of bad housing and urban decay in American communities.
This premise is based on findings and recommendations of the President’s Advisory Committee on Housing Policies and Programs which, after exhaustive study, made its report in December 1953. The report said, in part:
A piecemeal attack on slums simply will not work—occasional thrusts at slum pockets in one section of a city will only push slums to other sections unless an effective program exists for attacking the entire problem of urban decay. Programs for slum prevention, for rehabilitation of existing houses and neighborhoods, and for demolition of wornout structures and areas must advance along a broad unified front to accomplish the renewal of our towns and cities. This approach must be vigorously carried out in the localities themselves, and will require local solutions which vary widely from city to city.
The findings of the Committee, as reflected in President Eisenhower’s message to the Congress, were followed closely in the framing and passage of the 1954 Act. The President’s message advocated three main elements for local urban renewal programs. The three included:
First. Prevention of the spread of blight into good areas of the community through strict enforcement of housing and neighborhood standards and strict occupancy controls.
Second. Rehabilitation of salvable areas, turning them into sound, healthy neighborhoods by replanning, removing congestion, providing parks and playgrounds, reorganizing streets and traffic, and by facilitating physical rehabilitation of deteriorated structures.
Third. Clearance and redevelopment of nonsalvable slums.
Federal Urban Renewal Aids Under the Housing Act of 1954
To implement this expanded approach to urban renewal, the 1954 Act continued the financial aids made available to communities by
449
HOUSING AND HOME FINANCE AGENCY
Title I—planning advances, loans, and grants—and added the following types of assistance:
The Urban Renewal Service.
Special Demonstration Grants.
Special Grants for Urban Planning Assistance.
Special Provisions for Mortgage Insurance under FHA Section 220 for new building or rehabilitation in urban renewal areas.
Special Provisions for Mortgage Insurance under FHA Section 221 to provide low-cost housing for families displaced from urban renewal areas.
Provisions for Public Housing for displaced low-income families. (Note.—The liberalized mortgage insurance authorized by Secs. 220 and 221 of the National Housing Act is covered in detail in Part III of this report. Public housing is discussed at length in Part IV.)
With the exception of FHA and PHA aids, urban renewal assistance is administered by the Urban Renewal Administration, a constituent unit of HHFA. This Administration was created on December 23 by the Administrator’s Reorganization Order No. 1 as a successor to the Division of Slum Clearance and Urban Redevelopment, which had administered the old Title I program. The same Order designated James W. Follin, previously Director of the Division of Slum Clearance and Urban Redevelopment, as Commissioner of the new Administration.
A summary of urban renewal aids administered by the UR A follows:
Planning Advances.—These are intended to finance all necessary surveys and plans in preparation of a project prior to the execution of a loan and/or grant contract. They are repaid from any funds made available for the undertaking of the project to the local public agency carrying out the project.
Loans.—Expenditures involved in the undertaking of projects are financed by repayable loans, which bear the going Federal rate of interest. They are divided into two categories—temporary and definitive, or long-term. A contract for a temporary loan generally will be made for such period of time as may reasonably be required by the local public agency to complete the project. A definitive loan will be made available only to finance that portion of a project area which is leased for redevelopment, rather than sold. The time may not exceed 40 years from the date of the bonds evidencing the loan.
Capital Grants.—These may be used to defray up to two-thirds, of the net cost (i. e., deficit) of projects. The locality must supply the remaining one-third of the deficit.
Urban Renewal Service.—In accordance with the intent ofjthe 1954 Act, communities may obtain through this Service technical and other professional aid for the preparation of local programs. The
450
URBAN RENEWAL ADMINISTRATION
Service includes the publication and dissemination of technical bulletins and materials by the Urban Renewal Administration.
Special Demonstration Grants.—The 1954 Act authorizes special fund of $5 million for the developing, testing, and reporting of slum prevention and slum elimination techniques. Local public bodies may obtain grants, up to two-thirds of cost, where the studies they undertake will be of value to other communities in solving urban renewal problems. The law envisions studies of varying scope and covering a wide range of subject matter pertinent to the program.
Special Grants for Urban Planning Assistance.—State planning agencies may obtain cash grants foi the provision of planning assistance to localities with populations less than 25,000, which frequently lack funds to carry out effective urban planning. A grant of this kind may total up to half the estimated cost of the work for which it is made. Grants under this authorization are also available, for planning work covering metropolitan and regional areas, to official State, metropolitan, or regional planning agencies. The 1954 Act authorized a $5 million appropriation for these grants.
Federal aid for urban renewal projects may be given only to local public agencies duly authorized by State and local law to carry out the various activities involved. Generally, a local public agency may be—according to individual local circumstances—a specially created redevelopment agency, a local housing authority, or a city or county itself. In some localities, two local agencies, such as the city and the redevelopment agency, may have to participate jointly in certain types of projects until such time as total authority is vested by State enabling acts and city ordinances in one local agency.
Urban Renewal Projects
An urban renewal project, according to the new law, may embrace diversified local efforts directed at the elimination or prevention of slums and blight. These efforts may be directed toward complete clearance of a slum or blighted area—whether residential or non-residential and its subsequent rebuilding, or toward rehabilitation of residential structures by the property owners accompanied by improvement of community facilities by the local government, or any combination of these complementary approaches.
Specific activities of an urban renewal project may include:
1. Acquisition of a slum area or deteriorated or deteriorating areas;23 Acquisition of predominantly open land—such as arrested sub
23 Predominantly residential slums and predominantly open land—residential in character—may be redeveloped for any purpose or combination of purposes. Blighted commercial or industrial areas are eligible only when they are to be redeveloped for predominantly residential purposes, unless they contain a substantial amount of bad housing and are not suitable for residential reuse. In such case they may be redeveloped for any purpose, but Federal capital grants for this type of project may not exceed 10 percent, of the total amount authorized by law.
451.
HOUSING AND HOME FINANCE AGENCY
divisions—which, because of deterioration or other basic faults, impede sound community growth;
Acquisition—in areas where the prime need is conservation or rehabilitation—of individual parcels of land and structures thereon which must be razed to aid public welfare, prevent the spread of blight, or provide land for needed public facilities;
2. Installation, construction, or reconstruction—in the urban renewal area—of streets, utilities, parks, playgrounds, and other improvements necessary to carry out sound urban renewal;
3. Demolition and removal of buildings and improvements on land which is to be cleared;
4. Selling or leasing any acquired land—for development or redevelopment by private enterprise or public agencies—at its fair value for the reuse specified in the urban renewal plan; and
5. Carrying out a program of voluntary repair and rehabilitation by property owners, accompanied by enforcement of local codes and ordinances which control use of residential properties.
An additional type of project authorized by the Act is the acquisition, preparation, and disposal of open land—outside an urban renewal area—for predominantly residential purposes. No capital grants, however, may be made in such cases. In connection with open land projects, the local public agency must present evidence to show that development of the land is necessitated by the displacement of families which has taken place or will take place under the over-all local urban renewal program. While displaced families need not be relocated in dwellings built on open land, it must be demonstrated that the open land project will result—directly or indirectly—in housing accommodations for such families.
Urban renewal funds may not be expended for the construction or improvement of any building in an urban renewal project. FHA mortgage insurance under Section 220 of the National Housing Act, of course, is available for rehabilitation of dwellings or the construction of housing in an urban renewal area.
The 1954 Act requires a plan, locally devised, for each urban renewal project. This plan must conform not only to a general plan for the improvement of the locality as a whole, but also to the community’s workable program (discussed in following pages). The urban renewal plan, in addition to indicating proposed land acquisition, demolition and removal of structures, redevelopment, improvements, and contemplated rehabilitation, must also show any zoning and planning changes, land uses, maximum densities, building requirements, and its relationship to local objectives. These objectives include such items as appropriate land uses, improved traffic, public
452
URBAN RENEWAL ADMINISTRATION
transportation, public utilities, recreational and community facilities, and other public improvements.
Communities which initiated projects with Federal contracts or approval under the 1949 Act will continue such projects under the old law until such time as further Federal assistance—if any—is required. If an additional contract for Federal assistance is required, the local public agency must elect then to continue under the old law or the project goes under the 1954 Act. If a community had initiated projects under the old law, but had not obtained a Federal contract or approval before August 2, 1954, it must undertake those projects— or any new projects—under the 1954 Act.
The Workable Program
The workable program is basic to the expanded approach to urban renewal embodied in the 1954 Act. Before Federal loans and grants can be obtained for urban renewal projects qualifying under the 1954 Act, each community must satisfy the Administrator that it has a workable program that will prevent as well as eliminate slums and urban blight. (See page 3.) Lack of a certified workable program, however, will not prevent a community from obtaining Federal advances for surveys and plans and other preliminary work on an urban renewal project.
At year’s end two communities—Clarksville, Tenn., and Somerville, Mass.—had received approval of their workable programs. Dozens of other cities were engaged in preparing workable program submissions.
350920—56----31
453
F
3 1<
SECTION 2
1 ACTIVITY
“ Operations
1. Project Progress
A total of 188 communities, at the end of 1954, were at work on 279 urban renewal projects, old and new. Of these, 5 projects involving clearance and redevelopment only, that were initiated under the 1949 Act, were proceeding under the broader provisions of the 1954 Act.
A breakdown of the 279 total shows the following:
94 projects in preliminary planning.
98 projects in final planning.
87 projects in execution (56 of the 87 projects had started or completed demolition, while 31 had received approval for assembly and clearance of land).
There were, accordingly, 185 projects (in final planning and execution) well-advanced toward completion. These 185 are located in 129 communities. Completion of the 185 projects, according to local plans, will result in the clearance and redevelopment of more than 7,000 acres of slums and blight and the rehousing of almost 90,000 slum-dwelling families.
The status of Federal assistance approved for all 279 projects was as follows at the end of 1954:
_____ a. Reservations for capital grants for the 279 projects totaled almost $380 million, or, considering the desirable reserve, more than three-quarters of the $500 million authorized by the 1949 Act.
b. Capital grant contracts totaling $146.6 million had been authorized for 79 of the projects. Of this amount, $21.3 million had been disbursed for 13 projects in 6 localities.
c. Temporary loans of $132.1 million had been approved for 59 projects. (Twenty of the 79 projects with capital grant contracts did not ask for loans, since State and local financing was adequate.)
d. Planning advances had been approved amounting to A4.4 million for 295 projects.
2. Project Characteristics of the 185 Well-Advanced Projects
Local public agencies, at the end of 1954, were directing almost all of their efforts toward eliminating slums in or near central city areas.
454
URBAN RENEWAL ADMINISTRATION
A total of 165 of the 185 projects that were well advanced were originally residential slums. Eight were blighted areas of other types. Eleven were predominantly open land, and one was completely open.
The project areas ranged in size from the 1.1 acre at Tarrytown, N. Y., to a 471.1-acre project in Washington, D. C. One hundred and three projects are less than 25 acres in size. Sixty-six range from 25 to 100 acres. Only 16 are more than 100 acres.
Almost 90,000 families are estimated among the occupants of the units. There are about 97,000 dwelling units in the 185 project areas. Four out of every five of the units have been designated substandard. Under Title I provisions, all of these families will be offered safe, decent, and sanitary dwellings at prices and rents within their means. An estimated 44,000 of the 84,000 families for whom eligibility reports were received were eligible on an income basis for relocation in low-rent public housing.
Housing will be the principal reuse in 108 of the projects. Some residential reuse is also planned in 21 additional project areas in which other uses will predominate. Public housing will be the predominant, use in only two projects, but some public housing is planned in a subordinate role in seven others.
Commercial, industrial, or public uses ■will be predominant or exclusive in 77 project areas. Industrial development will be the predominant or exclusive reuse in 33 areas, commercial in 29 areas, and nonresidential public reuse in 15 areas.
In most of the project areas in which housing will predominate, there will also be some nonresidential uses, typically neighborhood shopping centers and public facilities such as playgrounds, clinics, parks, and schools. Some of the larger residential projects are also expected to provide land for redevelopment for warehousing and light industrial areas.
Areawise, redevelopment plans call roughly for some 3,000 acres devoted to new housing and related uses, 1,700 acres for streets and highways, 800 for commercial activity, and 900 for industrial development. The balance of some 600 acres is slated for nonresidential public use.
Local grants-in-aid in the form of cash, donations of land, site improvement and clearance work, and supporting facilities will be provided by the localities at a cost of about $150 million. Overall net project costs aggregate some $420 million.
This deficit amounts to about two-thirds of the gross costs of the projects, estimated at about $625 million. It reflects the high cost of assembling slum property, clearing the land, and providing the streets, utilities, and other improvements which are necessary in order to dispose of the land for redevelopment in accordance with locally determined land use patterns.
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HOUSING AND HOME FINANCE AGENCY
3. Data on Projects in Execution
Data given in the following categories refers to the group of 87 projects which have reached the stage of execution.
Acquisition.—Land acquisition has begun in 69 projects and been completed in 24. Gross project costs of $317.3 million are estimated for the 79 projects for which Federal loan and grant contracts have been authorized. Acquisition and disposition costs will account for an estimated $211.3 million—or almost exactly two-thirds of the total gross project costs of these 79 projects.
Site Clearance—Demolition of structures has begun in 56 project areas and been completed in eight. Cost of site clearance in the 79 projects approved for loan and grant is estimated at $6.8 million- —or slightly more than 2 percent of the gross project costs.
Relocation.—Relocation of families to be displaced is already underway in 65 projects and completed in 15. A total of more than 51,000 families will be displaced in these projects. As of the end of 1954, relocation responsibility had been discharged for 26,000 of these families. Relocation costs in the 79 projects are expected to run $2.8 million, or less than 1 percent of the total gross project costs.
Site Improvements.—A total of 76 project areas have plans calling for site improvements as part of the preparation of land for resale. Of these, 14 have started improvement activity, with 1 completed. Total site improvement costs for projects with loan and grant contracts authorized are estimated at $23.6 million—or 7.5 percent of total gross project costs.
Supporting Facilities.—Fifty-eight of the 87 projects plan supporting facilities, with construction commenced in 12 of the projects. Supporting facilities for projects with loan and grant contracts authorized will amount to $30.6 million, or slightly less than 10 percent of total gross project costs.
Land Disposition.—Twenty-one of the 87 projects have already started disposition of the cleared land, and 13 have completed disposition. Disposition proceeds for the 79 projects with loan and grant contracts authorized are expected to total $89.9 million. Subtracting this figure from the gross project costs estimate of $317.3 million leaves a balance of $227.4 million as the total estimated deficit resulting from slum clearance operations in the 79 projects. Although Federal grants are authorized up to two-thirds of this deficit, some communities are requesting less than the maximum amount. The current estimate of the total amount of grants in the 79 loan and grant contracts authorized through 1954 is $146,598,829, or 64.6 percent. Of this amount, $21,279,256 has actually been disbursed.
Construction.—New construction by redevelopers was under way
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URBAN RENEWAL ADMINISTRATION
or completed in 11 project areas in the following 7 cities: Baltimore, Chicago, Detroit, Little Rock, New York, Norfolk, and Philadelphia.
Procedures and Publications
The Urban Renewal Administration, at year’s end, was engaged in the preparation of application forms, requirements, contracts, and other material geared to the new program, and was readying itself for the decentralization to regional offices scheduled to take place in January 1955.
Two publications concerning the new program were released by the HHFA late in the year. These included “How Localities Can Develop A Workable Program for Urban Renewal,” published in October, and “An Introduction to Urban Renewal,” which made its appearance in December. Other informational and technical publications were in preparation.
State Legislation and Litigation
At the end of 1954 a total of 31 States, along with the District of Columbia, Alaska, Hawaii, Puerto Rico, and the Virgin Islands, had enabling legislation authorizing local public agencies to undertake slum clearance and urban redevelopment programs under Title I of the Housing Act of 1949.24
During 1954, statutes of several jurisdictions were changed by amendments designed in most instances to assure full local participation in the Title I program, exclusive of the innovations of the Housing Act of 1954. In Kansas a new statute was enacted and subsequently declared unconstitutional because it constituted special legislation in that its authorization was confined to only one city. In Louisiana the repeal of certain sections of the redevelopment law rendered questionable the effectiveness of the remaining provisions of that law.
Decisions upholding the constitutionality of State enabling legislation by the courts of last resort in seven States were rendered during the year. The States were California, Illinois, Maine, Missouri, New Hampshire, New York, and Wisconsin. In addition there was a favorable decision in the First Circuit Court, Territory of Hawaii, on which no appeal was taken. Favorable decisions have also been rendered in Federal courts under the statutes of California and Connecticut. The District of Columbia case was affirmed by the Supreme Court of the United States in a unanimous opinion considered to be of outstanding importance in affirming the constitutionality of urban renewal legislation. The Supreme Court also denied a writ of certiorari in the California case. At the end of 1954, cases were pending
34 The States are Alabama, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, Illinois, Indiana, Kentucky, Maine, Maryland, Massachusetts, Michigan, Minnesota, Missouri, Nebraska, New Hampshire, New Jersey, New York, North Carolina, Ohio, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Virginia, West Virginia and Wisconsin.
457
HOUSING AND HOME FINANCE AGENCY
in several other jurisdictions. Subsequent to the adverse decision by the Supreme Court of Georgia, a constitutional amendment was approved by the voters in the fall of 1954 and a new proposed enabling act was prepared for submission to the State legislature in 1955. Drafting of State legislation enabling the various States to take advantage of the new provisions of the Housing Act of 1954 was initiated through cooperation with the Council of State Governments and direct assistance to various State bodies when requested.
TABLE 148
Project approvals under Title I, Housing Act of 1949, as amended
Total approvals for project activities Net change in outstanding project approvals Net change in outstanding project reservations
Preliminary planning Final planning Project execution Preliminary planning Final planning Project execution
Cumulative data from July 15, 1949 through—
1954, December 311 180 89 94 98 87 $377,170,988
1950 i 103 13 8 103 13 8 198, 774,275
1951 72 32 1 44 32 1 83,950,252
1952 60 58 18 —2 42 18 46, 504,074
1953 39 47 36 -40 7 34 19,311,807
1954 37 30 26 -11 4 26 28,630,580
Semiannual data
1950:
First half ... - 35 10 6 35 10 6 $88,177, 500
Second half 68 3 2 68 3 2 110, 596,775
1951:
First half 46 11 0 37 11 0 36,156,208
Second half 26 21 1 7 21 1 47,794,044
1952:
First half 29 32 9 -5 24 9 27,059, 732
Second half 31 26 9 3 18 9 19,444,342
1953:
First half 19 22 18 -20 -2 16 14,966, 214
Second half.. 20 25 18 -20 9 18 4,345, 593
1954:
First half 26 20 12 -3 9 12 24,825,983
Second half 11 10 14 -8 -5 14 3,804,597
i First project approval under this program took place in March 1950.
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URBAN RENEWAL ADMINISTRATION
TABLE 149
Financial Assistance Under Title I, Housing Act of 1949, ^Ls Amended
Advances and loans (000) _ x Activity Capital grants
Contracts (000)
authorized ~~ ------------------------
Advances Loans—Federal Loans—Non-Federal
Ad" Loans Dis' Re’ Writ- Dis- Re- Re- 9ut.‘ Guar- Re- Re- Out‘ Contracts ni
vances bursed paid ten off st^ngd‘ bursed paid funded st^d' anteed paid funded sta^d* a^hor-
—:—-----———————---------------------------1_____________________________________________|___________
Cumulative data from July 15, 1949 through—
1954, December------- $14,435 $132,075 $10,027 $3,339 $364 $6,324 $55,590 $4,245 $13,510 $37,835 $22,750 _ $6,920 $15,830 $146,599 $21,270
Annual data
1950 ’--------------- $3,066 ------- $889 ___________ $889 ____
1951----------------- 2,758 $282 2,581 ---------- 2,581 _________Z ZZ ---------
1952----------------- 3,584 33,608 3,041 $604 _____ 2,437 $9,714 $140 —Z.ZZZ $9'574’ZZZZZZZZ ZZ Z----- K3 6QR -----
toS------------------ o’nl? 2!’173 1,954 1,488 --- 465 21,043 2,205 $6,512 12*327 $10 933 _Z_ZZZZZZ $10 933* 51’109 $8 673
2,951 28,007 1,562 1,247 $364 —49 24,832 1,900 6,999 15,934 11,817 _ $6,920 4^897 41^392 12,’597
Semiannual data
1950: ~------------------------------------------------------------------------------------
First half--------- $1,098 ______ $16 . . $16
Second half________ 1,968 _______ 873 ____ 873 "
1951:
First half -------- 1,148 ------- 1,222 ---------- 1,222 ___________ .
Seeondhalf--------- 1,610 $282 1,359 ___ . 1 359 -----
1952: " •--- ------------
First half -------- 1,845 18,541 1,346 $339 ---- 1,007 $4,063 __________ $4,063 43 008
I953?econd half----— 11739 15-067 1>695 265 ----- 1,430 5,652 $140 ____ 5; 512 ...ZZZZZ ZZZZZZZZ ZZZZZZZZ ZZZZZZZZ ijm ZZZZZZZZ
First half--------- 901 55,487 1,288 1,038 ___ 250 7,901 1 598 6 304 aa O1O
19S4®eCOnd haIf------ 1,175 14,691 666 451 ------ 215 13>142 607 $6,512 6^023 $16’933* ZZZZZZZZ ZZZZZZZZ $16,*933’ *6,’935 $7'855
First half ....... 1,290 13,542 842 489 $364 -10 9,740 553 5,349 3,839 5 881 5 881 12 201 in 798
Second half...----- 1,661 14,465 719 758 ---- -39 15,092 1,347 1,650 12,095 5,936 ZZZZZZZZ *$6,*920*-1^ 984 29,101 1,869
0.
1 First approvals under this program took place in March 195(
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HOUSING AND HOME FINANCE AGENCY
TABLE 150
Urban renewal project directory
The letters in the final column of the following table represent the approval outstanding:
PP—Preliminary planning
FP—Final planning
E—Execution
The symbol “s” after an entry under “approval outstanding” signifies that the project was suspended on December 31,1954.
State City Project name Approval outstanding Dec. 31, 1954
Alabama Auburn - Hare Project - FP
Birmingham Medical Center E
Avondale Site 0 FP
Cullman Logan Road PP
Decatur Church St.-8th Avenue PP
Eufaula Flake Hill PP
Florence Handy Heights _ _ E
Gadsden Birmingham Street, FP
North Fifth Street FP
Huntsville West Clinton Street- FP
Mobile Broad Street-Beauregard E
Montgomerv Houston Hill.— FP
North Montgomery E
Phenix City Municipal Center - FP
A rkansas Little Rock Central Area (Dunbar) E
Granite Mountain E
California Calexico Project No. 1 PP
Los Angeles Bunker Hill _ PP S
Richmond Canal Industrial Area FP
East Shore Park _ _ ______________ PP
Sacramento Capital Mall Proj. No. 2 PP
San Bernardino Project No. 1 PP
Project No. 2 - PP
San Francisco Diamond Heights E
South of Market PP
Western Addition Proj E
Colorado Denver _ West Colfax— PPs
Conn fictiont East Haven - Bradford Cove PP
Hartford Front Street FP
Middletown Center Street- PP
New Haven Oak Street FP
Norwalk Harbor Avenue-Isaac Street PP
Norwich West Main Street PP
Shelton Central Project FP
Stamford East Meadow E
Waterbury Project B-2 FP
Willimantic Project A PP
Delaware Wilmington Project A (Poplar Street) - FP
District of Columbia Washington Southwest Proj. Area B E
Southwest Proj. Area C. FP
Illinois Cairo - _ Area No. 1 E
Chicago Area 6A— E
79th and Western FP
Hyde Park Proj A FP
Hyde Park Proj. B FP
Michael Reese Hospital E
Lake Meadows E
Westside Industrial., E
Chicago Heights East Side FP
Danville Project No. 2 FPs
Galesburg Area A. — _ FP
Area B _ ______________ FP
Granite City PPs
Kankakee Redevelopment Area No. 1 FPs
Peoria Northside-- _ PP
Robbins Project No. 1 E
Rock Falls Sand Hill - FP
Rockford PPs
Villa Grove PPs
Waukegan Project No. 1 FPs
460
URBAN RENEWAL ADMINISTRATION
TABLE 150—Continued
Urban renewal project directory—Continued
State City Project name Approval outstanding Dec. 31, 1954
Indiana Evansville High Street PP
Kentucky. Louisville Redevelopment Proj. No. 1 PP
Middlesborough _ . Bell Lumber 1.. FP s
Newport .. Project No. 1 . ... _ FP
Owensboro Riverfront FPs
Paducah. B-l PP
Louisiana New Orleans Poydras (Tulane) FPs FP s
Shreveport Project No. 1 ...
Maine Portland Bayside Park FP
Viiie-Deer-Chatham FP
Maryland Baltimore Redevelopment Area No. 12 FP
Broadway ... E
Waverly .. E
Massachusetts Boston Mattapan.. ._ PP
New York Street FP
West End FP
Brookline PP
Cambridge Riverview FP
Rogers Block. FP
Chelsea Area No. 1 PP
Area No. 4. PP
Fall River Development Area No. 3 PP
Eastern Avenue, South PPs
Lawrence Common, Valley and Concord Street Area. South End PP
Lowell. PP
Medford Survey Area No. 1 PP
Revere Ocean Avenue FP
Somerville Linwood Joy E
Woburn Park Center FP
Worcester New Salem Street E
Michigan Albion . Gadsden Court PP
Battle Creek ... Jewell Street PP
Detroit Corktown PP
Gratiot E
Lafayette PP
Port Huron Fort Street FP
Ypsilanti Southwest Ypsilanti PPs
Minnesota Duluth .... _ Garfield Avenue FP
South First Avenue, E FP
Minneapolis Glenwood... ... FP
St. Paul Eastern . E
Western E
Missouri Kansas City Attucks . FP E
Northside
South Humboldt FP
St. Louis Memorial Plaza . ... . E
New Hampshire Dover Project No. II FP
Manchester Concord-Lowell Streets FP
Pearl Street PP
Spruce Street FPs
Nashua High Street FP
Portsmouth Marcy-Washington Street PP
New Jersey Asbury Park Springwood Avenue . . PPs
Atlantic City Northside PP
Bayonne Bergen Point. FP
Camden Broadway-Kaighns PP
! Elizabeth Washington Avenue FP
Hoboken PP
Jersey City Gregory E
St. John’s E
Long Branch Shrewsbury-Riverfront FP
Morristown Hollow PP
Newark Branch Brook Park E
Broad Street E
New Brunswick Bishop Street PP
Burnet Street FP
Passaic Pulaski Park... ._ FP
Paterson. Paterson Redev. Proj . PP
Perth Amboy Forbesdale 1 E
Willocks.. ... E
Plainfield South 2d Street _ FP
Trenton Sec. 1 Area B (Coalport Area) FP
John Fitch Way Area PP
461
HOUSING AND HOME FINANCE AGENCY
TABLE 150—Continued
Urban renewal project directory—Continued
State City
New York Albany
Ohio Binghamton
Buffalo-..
New Rochelle
New York
North Tarrytown _
Port Chester
Rochester
Schenectady
Syracuse,--"
Tarrytown -
Troy
Utica __
Yonkers
Cincinnati
Pennsylvania Cleveland
Columbus.
Dayton
Hamilton
Steubenville-
Toledo
Youngstown
Beaver Falls
Rhode Island Bethlehem
Braddock
Chester
Clairton
Darby
Duquesne
Easton
Harrisburg
Johnstown
McKeesport
McKees Rocks
Philadelphia
Pittsburgh
Rankin
Reading
Sharon
Tarentum
Turtle Creek
York
Newport
Providence-
Project name Approval outstanding Dec. 31, 1954
Project A FP
Stowe-Chenango FP
Ellicott District •_ PP
Redevelopment Area PP
Columbus Circle E
Corlears Hook E
Harlem E
Morningside E
North Harlem E
Fort Greene E
N. Y. Univ.-Bellevue E
Pratt Institute. E
Rockaway PP
Washington Square... E
West Park E
PP
Project No. 1 E
Baden-Ormond PP
Project No. 1 FP
Project A PP
.. Depot Plaza E
Burden Avenue FP
PP
Jefferson-Riverdale FP
Laurel-3, Richmond 1 E
Charity Hospital PP
Dike..'—... FP
Longwood Project E
Goodale FP
M arket-M ohawk PP
Eastside Urban Renewal Area PPs
Second Ward and Peck’s Addition PP
Seminary Survey Area PPs
Canton Street. FP
Hazelton PP
Poland PP
River Bend PP
West Federal .. PP
Southend Project FP
Areas No. 1, 2, and 3 PP
General Braddock Plaza FP
Bethel Court E
Blair Redevelopment FP
Hook Road FP
Project No. 1 PP
Project Area No. 1 PP
Project 1-A. FP
Area B FP
First Ward FP
McKees Rocks Plaza FP
East wick PP
East Poplar No. 2 E
East Poplar No. 3 E
East Poplar Nos. 1, 4, 5, and 6 E
North Allen (W. Poplar) FP
Southwest Temple E
University FP
Lower Hill FP
Palisades Plaza FP
Walnut Site PPs
North Flats PP
Riverview Plaza PP
Valley Center FP
Proj. Area No. 1 (Wellington) FP
Project No. 1 FP
Constitution Hill PP
Lippitt Hill PP
Point Street E
Willard Center No. 1 E
Willard Center No. 2 E
West River FP
462
URBAN RENEWAL ADMINISTRATION
TABLE 150—Continued
Urban renewal project directory—Continued
State City Project name Approval outstanding Dec. 31, 1954
South Carolina. Tennessee Texas. Virginia. West Virginia- Wisconsin Alaska Hawaii Puerto Rico.. Columbia Clarksville Gallatin Johnson City Knoxville Lewisburg Memphis... Murfreesboro Nashville Pulaski.. Tullahoma Union City San Antonio Alexandria Bristol Danville Newport News Norfolk.. Portsmouth... Richmond Roanoke South Norfolk Charleston Madison Milwaukee Fairbanks Honolulu Aibonito Anasco Arecibo Arroyo Bayamon Cabo Rojo Caguas Carolina Guaynabo Loiza Mayaguez Naguabo Ponce Rio Piedras Sabana Grande. - San Juan Toa Baja.. Utuado Vega Alta Vega Baja.. — Yabucoa Assembly-Main Street Riverview w Town Creek Fall Street Riverfront-Willow St Foundry Hill Kinney Town Railroad Avenue Thomas Street Broad Street Development— Capitol Hill Bellview Grundy Street... Black Bottom Edgewood (No. 20) Prince Street-Shopping Center Sullins Street Industrial Avenue Ridge Street Project A Project B Redevelopment Proj. No. 1.... Redevelopment Proj. No. 2 Redevelopment Proj. No. 1 Carver Commonwealth Redevelopment Proj. No. 1 Project Area No. l._ Brittingham Proj. Area Brady-Humboldt Convent Hill Lower 3rd Ward Hillside.-. Central Downtown Area Joseph Farrington Samuel Wilder King John H. Wilson Coqui Pueblo Nuevo La Playa I La Playa II Open Land Project Brooklyn La Machina Condadito Tortuguero Vista Alegre Open Land Project El Cibao La Placita Catanito Sabana ... Sunoco Columbia Malecon North Concordia Cristy (Open Land) El Duque Cantera Survey Area. El Bosque Machuelito Palo de Pan El Monte San Jose (Open Land) Varsovia Buenos Aires The Hoare Los Ranchos MiniUas Jalisco Catano Alto de Cuba . La Pica Open Land Project ElSapo PP FP PP FP E PP FP FPs FPs E E PP FP E PP s FP E PP FP FP FP E PP FP FP FP PP PP s PP PP PP FP FP PP PP FP E E E E PP PP E E PP E E PP E E E E E FP E E FP E PP E E E E PP E PP E FPs E E E E E PP E
463
APPENDIXES
APPENDIX A
STATISTICAL AND FISCAL TABLES
TABLE A-1
Permanent nonfarm dwelling units started: 1920-5j
Year Total permanent nonfarm dwelling units started Type of ownership Type of structure
Private Public
Total Urban Rural nonfarm Total Urban Rural nonfarm 1-family 2-family Multifamily
1920..._ 247,000 247, 000 196, 000 51, 000 0 0 0 202,000 24,000 21, 000
1921.... 449,000 449, 000 359,000 90, 000 0 0 0 316,000 70,000 63,000
1922 716,000 716,000 574, 000 142, 000 0 0 0 437,000 146,000 133,000
1923... 871, 000 871,000 698, 000 173,000 0 0 0 513, 000 175, 000 183, 000
1924.... 893,000 893, 000 716,000 177,000 0 0 0 534,000 173,000 186,000
1925.... 937, 000 937, 000 752, 000 185, 000 XX XX XX 572,000 1157, 000 208,000
1926.... 849,000 849, 000 681,000 168, 000 XX XX XX 491,000 117,000 241,000
1927 810,000 810,000 643,000 167,000 XX XX XX 454, 000 99, 000 257, 000
1928.... 753,000 753,000 594,000 159, 000 XX XX XX 436,000 78,000 •329,000
1929.... 509,000 509,000 400,000 109,000 XX XX XX 316,000 51,000 142,000
1930— 330,000 330, 000 236, 000 94,000 XX XX XX 227,000 29, 000 74, 000
1931---. 254, 000 254, 000 174,000 80, 000 XX XX XX 187, 000 22, 000 45,000
1932..__ 134, 000 134,000 64, 000 70,000 XX XX XX 118,000 7,000 9,000
1933.... 93, 000 93.000 45, 000 48, 000 XX XX XX 76, 000 5,000 12,000
1934-... 126, 000 126,000 49,000 77,000 XX XX XX 109, 000 5,000 12,000
1935.... 221, 000 215, 700 112, 600 103,100 5,300 4,400 900 183,000 8,000 30,000
1936.... 319,000 304,200 197, 600 106, 600 14,800 13,400 1,400 244,000 14,000 61,000
1937-... 336,000 332,400 214, 400 118, 000 3,600 3,600 0 267,000 16,000 53, 000
1938..__ 406,000 399,300 255, 300 144,000 6, 700 6,700 0 317,000 18, 000 71, 000
1939.... 515,000 458,400 303, 500 154, 900 56, 600 55, 500 1,100 399, 000 29,000 87,000
1940..._ 602, 600 529, 600 333,200 196. 400 73,000 63, 400 9,600 485, 700 37,300 79, 600
1941.... 706,100 619, 500 369, 500 250,000 >86, 600 164,800 121,800 603, 500 34,300 68,300
1942.— 356,000 301,200 184, 900 116,300 54,800 42,500 12, 300 292, 800 20,100 43,100
1943.... 191, 000 183, 700 119, 700 64.000 7,300 4,700 2,600 143,600 17,800 29, 600
1944.— 141,800 138, 700 93, 200 45, 500 3,100 3,000 100 117,700 10, 600 13, 500
1945.... 209,300 208,100 132, 700 75, 400 1,200 1,200 0 184, 600 8, 800 15, 900
1946.— 670,500 662, 500 395, 700 266,800 8,000 8,000 0 590,000 24, 300 56, 200
1947.... 849,000 845,600 476, 400 369,200 3, 400 3,400 0 740,200 33, 900 74, 900
1948.... 931, 600 913,500 510, 000 403, 500 18,100 14, 900 3,200 766, 600 49, 900 118,100
1949.... 1,025,100 988,800 556, 600 432,200 36,300 32,200 4,100 794,300 36, 500 194,300
195O..__ 11,396,000 11,352, 200 1785,600 >566,600 43,800 42, 200 1,600 11,154,100 44,800 197,100
1951.... 1, 091,300 1,020,100 531,300 488,800 71, 200 64, 000 7,200 900,100 40,400 150, 800
1952— 1,127,000 1,068, 500 554, 600 513, 900 58, 500 55.000 3, 500 942,500 45, 900 138,600
1953.... 1.103. 800 1. 068, 300 533. 200 535,100 35, 500 31,800 3, 700 937,800 41, 500 124, 500
1954— 1,220,400 1,201,700 (2) (2) 18, 700 (2) (2) 1,077,900 34,200 108, 300
1 All-time high.
2 Not available.
Source: U. S. Department of Labor.
467
HOUSING AND HOME FINANCE AGENCY
TABLE A-2
Permanent privately-owned nonfarm dwelling units started: 1920-54
Year Total private nonfarm starts Number of starts in— Percentage of total starts in—
1-family structures 2-family structures Multifamily structures Sales-type structures (1-family) Rental-type structures
Total 2-family Multifamily
1920 247,000 202,000 24,000 21,000 82 18 10 8
1921 449,000 316,000 70,000 63; 000 70 30 16 14
1922 716,000 437,000 146,000 133,000 61 39 1 20 19-
1923 87L 000 513, 000 175; 000 183,000 59 41 1 20 21
1924 893,000 534,000 173; 000 186; 000 60 40 19 21
937 000 579. 000
1926 849’ 000 49L 000 117, 000 241,000 58 42 14 28
1927 810,000 454,000 99,000 257; 000 56 1 44 12 1 32
1928 753,000 436,000 78,000 1239; 000 58 42 10 1 32
1929 509” 000 316,000 51; 000 142,000 62 38 10 28
1930 330,000 227, 000 29,000 74,000 69 31 9 22
1931 254,000 187,000 22; 000 45; 000 73 27 9 18
1932 134,000 118,000 7; 000 9; 000 88 12 5 7
1933 93; 000 76^ 000 5,000 12,000 82 18 5 13-
1934 126,000 109,000 5; 000 12; 000 86 14 4 10'
1935 215, 700 182,200 7,700 25,800 84 16 4 12
1936 304, 200 238,500 13; 300 52; 400 78 22 4 17
1937 332^ 400 265, 800 15; 300 5i; 300 80 20 5 15
1938 399,300 316,400 18; 000 64, 900 79 21 5 16
1939 458, 400 373; 000 19; 700 65; 700 81 19 4 14
1940 529, 600 447, 600 25, 600 56, 400 85 15 5 11
1941 619, 500 533; 200 28; 400 57; 900 86 14 5 9
1942 301, 200 252; 300 17; 500 31, 400 84 16 6 10
1943 18.3, 700 136; 300 17,800 29, 600 74 26 10 16
1944 138, 700 114; 600 10; 600 13; 500 83 17 8 10
1945 208,100 184, 600 8, 800 14, 700 89 11 4 7
1946 662^ 500 590', 000 24; 300 48; 200 89 11 4 7
1947 845, 600 740,200 33, 900 71, 500 88 12 4 8
1948 913; 500 763; 200 46, 300 104,000 84 16 5 11
1949 988,800 792,400 34, 700 161, 700 80 20 4 16
1950 1 1, 352,200 1 1,150,700 42,300 159,200 85 15 3 12
1951 L020,100 ' 892,200 40,400 87; 500 87 13 4 9
1952 1,068, 500 939; 100 45,900 83,500 88 12 4 8
1953 L 068,300 932; 800 41, 500 94; 000 87 13 4 9
1954 Il 20i; 700 1,077; 300 34', 200 90; 200 190 10 3 7
* All-timeJiigh.
Source: U. S. Department of Labor.
468
APPENDIXES
TABLE A-3
FHA and VA starts compared with total permanent privately-owned nonfarm starts: 1935-54
Year Units in FHA starts 1 Units in VA starts (family homes)3 4 * 6 Units in BLS private starts As a percent in BLS total private starts
Total 1- to 4-family homes Project housing 2 Total 1-family 2-family Multifamily FHA starts VA starts
Cumulative data
1935-54--.. 3,761, 225 3,099,125 662,100 W 12,812,000 10,922,400 526, 200 1,363,400 29 XX
Annual data
1935 13,964 13, 226 738 XX 215, 700 182,200 7, 700 25,800 6 XX
1936 49,376 48,752 624 XX 304, 200 238, 500 13,300 52,400 16 XX
1937 60, 003 56,980 3,023 XX 332,400 265,800 15,300 51,300 18 XX
1938 118, 741 106,811 11,930 XX 399,300 316,400 18,000 64,900 30 XX
1939 158,119 144, 657 13,462 XX 458,400 373,000 19, 700 65, 700 34 XX
1940 180,091 176, 645 3,446 XX 529, 600 447, 600 25, 600 56,400 34 XX
1941 220,387 217,091 3, 296 XX 619, 500 533, 200 28,400 57,900 36 XX
1942 165, 662 160, 204 5,458 XX 301, 200 252,300 17, 500 31,400 55 XX
1943 146,154 126; 119 20,035 XX 183, 700 136,300 17,800 29,600 3 80 XX
1944 93; 259 83,604 9, 655 XX 138, 700 114, 600 10, 600 13, 500 67 XX
1945 41,159 38,897 2,262 (0 208,100 184, 600 8,800 14, 700 20 0)
1946 69,033 67,122 1,911 W 662, 500 590,000 24, 300 48, 200 10 (<)
1947 229. 035 178, 269 50, 766 (<) 845, 600 740, 200 33,900 71, 500 27 (0
1948 294, 059 216,449 77,610 W 913, 500 763, 200 3 46,300 104,000 32 (0
1949 363,802 252,626 111,176 W 988,800 792,400 34, 700 3 161, 700 37 (<)
1950 5 486,681 5 328, 245 « 158,436 3 200, 000 51,352, 200 5 1,150,700 42,300 159, 200 36 15
1951 263, 523 186,924 76, 599 148, 634 1,020,100 892, 200 40,400 87, 500 26 15
1952 279', 901 229,085 50,816 141, 274 1,068, 500 939,100 45, 900 83, 500 26 13
1953 251, 969 216, 509 35,460 156,616 1,068,300 932,800 41, 500 94,000 24 15
1954 276; 307 250,910 25, 397 5 307,018 1, 201, 700 1,077, 300 34, 200 90, 200 23 3 26
1 Based on FHA 1st compliance inspection.
2 Includes single-family and multifamily structures under Secs. 207, 213, 608, 611, 803, and 908.
8 Based on VA 1st compliance inspection since June 1950, prior data in 1950 were estimated.
4 Not available.
6 All-time high.
6 Estimated.
Sources: Federal Housing Administration, HHFA; Veterans’ Administration and U. S. Department of Labor.
350920—56----32
469
HOUSING AND HOME FINANCE AGENCY
TABLE A-4
Nonfarm permanent housing starts compared with net gain in nonfarm population in continental United States: 1910-54
Year Population Housing starts Five-year moving averages Starts 1 as a percent of population net gain
As of April 1st (000) Net gain during year (000) During the year (000) As a percent of population net gain Population net gain (000) Housing starts (000)
1910 59,800 61,300 62,600 64, 500 66,300 67, 600 69, 000 70, 400 70, 800 72, 800 74, 000 75, 900 77, 500 80, 000 82, 500 84, 200 85. 900 88, 000 89, 500 90, 700 92,100 92, 700 93, 000 92, 700 93, 600 94, 600 95, 800 97,100 98, 400 99, 600 100, 900 102, 400 104, 200 107,100 106, 9G0 106, 700 113,100 115, 800 119, 700 122, 200 125, 600 128, 700 130, 900 135, 000 138, 600 XX 1,500 1,300 1, 900 1,800 1, 300 1, 400 1, 400 400 2,000 1,200 1,900 1,600 2, 500 2, 500 1,700 1, 700 2,100 1, 500 1,200 1, 400 600 300 (-300) 900 1,000 1, 200 1, 300 1,300 1, 200 1,300 1,500 1,800 2, 900 (-200) (-200) 6, 400 2, 700 3, 900 2,500 3, 400 3,100 2, 200 4,100 3, 600 475 480 490 455 445 475 480 230 126 330 247 449 716 871 893 937 849 810 753 509 330 254 134 93 126 221 319 336 406 515 603 706 356 191 142 209 670 849 932 1,025 1,396 1,091 1, 127 1,104 1, 220 XX 32 38 24 25 37 34 16 32 16 21 24 45 35 36 55 50 39 50 42 24 42 45 XX 14 22 27 26 31 43 46 47 20 7 XX XX 10 31 24 41 41 35 51 27 34 XX XX XX XX XX 1, 560 1, 540 1, 560 1, 260 1,300 1,280 1,380 1, 450 1, 840 1, 940 2, 040 2, 000 2,100 1,900 1,640 1, 580 1,360 1,000 640 580 500 620 820 1,140 1,200 1, 260 1,320 1,420 1,740 1, 460 1,160 2,140 2,320 2,520 3,060 3,780 3,120 3, 020 3, 060 3, 280 XX XX XX XX 469 469 469 417 351 328 283 276 374 523 635 773 853 872 848 772 650 531 396 264 187 166 179 219 282 359 436 513 517 474 400 321 314 412 560 737 974 1, 059 1,114 1,149 1,188 XX XX XX XX XX 30 30 27 28 25 22 20 26 28 33 38 43 42 45 47 41 39 40 41 32 33 29 27 25 30 35 39 36 27 27 28 15 18 22 24 26 34 37 38 36
1911
1912
1913
1914
1915
1916
1917
1918
1919
1920
1921
1922
1923
1924
1925
1926
1927
1928
1929
1930
1931
1932
1933
1934
1935
1936
1937
1938
1939
1940
1941
1942
1943
1944
1945
1946
1947
1948
1949
1950
1951 ...
1952
1953
1954
1 Percents computed on 5-year moving averages.
Note.—Data in this table, developed by the Housing and Home Finance Agency, are from statistics of the U. S. Department of Labor (housing starts) and the U. S. Department of Commerce (population).
470
APPENDIXES
TABLE A-5
Dollar volume of new construction put in place: 1915-54
[In millions of dollars]
Year Total new construction activity Nonfarm building All other construction 1 Ownership
Residential Nonresidential Total private Total public
Private Public Private Public Private Public
Industrial Other Industrial Other
1915 3,262 3, 849 4, 569 5,118 6,296 6,749 6,004 7, 647 9,332 10,407 11, 439 12,082 12,034 11,641 10,793 8,741 6,427 3, 538 2,879 3, 720 4,232 6,497 6,999 6,980 8,198 8,682 11, 957 14,075 8,301 5,259 5,633 12,000 16, 689 21, 678 22,789 28,454 31,182 33,008 35,271 3 37, 577 1,220 1,375 1,190 915 1,850 2,015 2,105 3, 360 4,400 5,060 5, 515 5,600 5,160 4,770 3,625 2,075 1,565 630 470 625 1,010 1, 565 1,875 1,990 2,680 2,985 3, 510 1,715 885 815 1,100 4,015 6,310 8, 580 8,267 12, 600 10, 973 11,100 11,930 313, 496 0 0 0 28 14 0 0 0 0 0 XX XX XX XX XX XX XX XX XX 1 9 61 93 35 65 200 430 545 3 739 211 80 374 200 156 359 345 595 654 556 336 197 262 364 449 6?1 1,099 574 467 549 460 513 727 696 802 949 532 221 74 176 191 158 266 492 232 254 442 801 346 156 208 642 1,689 1,702 1,397 972 1,062 2,117 3 2,320 2,229 2, 030 281 454 436 282 461 865 860 990 1,148 1,215 1,547 1,786 1,838 1,771 1,745 1,471 878 428 230 265 314 447 593 532 532 583 681 289 77 143 378 1,652 1,440 2,224 2,256 2, 715 3,035 2,694 3, 451 3 4,220 (2 3) (2) (2) (2) (2) (2) (2) (2) (2) (2) (2) (2) (2) (2) (2) (2) (2) (2) 2 11 2 4 2 12 23 164 1,280 *3, 437 1,870 1,230 755 113 96 196 177 224 974 1,684 1,771 1,506 217 207 192 199 246 283 387 481 481 494 573 603 596 638 659 660 612 415 228 352 326 697 548 660 947 451 366 248 140 131 182 241 503 1,105 1,891 2,160 2,523 2,452 2, 575 3 3,135 845 1,050 1,300 1,234 1,388 1,418 901 1,146 1,613 1,771 1,726 1,825 1,931 1,813 1, 988 1,805 1,104 544 355 428 517 703 943 806 923 1,044 1,214 1,065 861 1,020 1,115 2,282 3,804 4, 652 4,889 5,077 5,639 5, 993 3 6,267 6,022 502 501 1,087 2, 011 1,716 1,069 1,177 1,203 1,141 1,407 1, 565 1,541 1,813 1,847 1,827 2,198 2,047 1,447 1,418 1,847 1,896 2, 754 2,453 2, 713 2,774 2,813 3,675 6,430 3, 573 1,501 1,381 1,634 2,634 3,368 3,978 4,271 5,326 6,111 6,492 3 6,832 2, 543 3,141 3,290 2,880 4,320 5,397 4,440 5,963 7,710 8,506 9,301 9,938 9,625 9,156 8,307 5, 883 3,768 1,676 1,231 1, 509 1,999 2,981 3, 903 3,560 4,389 5,054 6,206 3, 415 1,979 2,186 3,235 9,638 13,256 16, 853 16, 384 21,454 21,764 22,107 23,877 3 25,768 719 708 1, 279 2,238 1,976 1,352 1,564 1,684 1,622 1,901 2,138 2,144 2,409 2,485 2,486 2,858 2, 659 1,862 1,648 2,211 2,233 3,516 3,096 3,420 3,809 3,628 5, 751 10, 660 6, 322 3,073 2,398 2,362 3,433 4,825 6,405 7,000 9,418 10, 901 11,394 3 11,809
1916
1917
1918
1919
1920
1921-
1922
1923
1924
1925
1926
1927
1928
1929
1930
1931
1932
1933
1934
1935
1936
1937
1938
1939
1940-
1941
1942
1943
1944
1945
1946
1947
1948
1949
1950
1951
1952
1953-
1954
1 Includes public utilities, highways, sewer and water systems, conservation, farm structures, etc.
3 Amount negligible included in private industrial building.
3 All-time high.
Sources: U. S. Departments of Commerce and Labor.
471
HOUSING AND HOME FINANCE AGENCY
TABLE A-6
Total new construction put-in-place compared with the gross national product: 1929-54
Year Y Gross national product New construction put in place New construction put in place as a percent of the Gross national product
Total Residential nonfarm Other Total Residential nonfarm Other
Millions of dollars Percent
1929 104,436 10, 793 3,625 7,168 10.3 3.4 6.9
1930 91,105 8,741 2,075 6, 666 9.5 2.3 7.2’
1931 76. 271 6, 427 1,565 4,862 8.4 2.1 6.3
1932 58, 466 3, 538 630 2,908 6.0 1.0 5.0
1933 55, 964 2,879 470 2,409 5.2 0.9 4.3
1934 64,975 3,720 626 3,094 5.7 0.9 4.8
1935 72, 502 4,232 1,019 3, 213 5.8 1.4 4.4
1936 82, 743 6,497 1,626 4,871 7.9 1.9 6.0
1937 90, 780 6, 999 1,968 5,031 7.7 2.2 5.5.
1938 85, 227 6, 980 2,025 4, 955 8.2 2.3 4.9
1939 91,095 8,198 2,745 5,453 9.0 3.0 6.0
1940 100, 618 8,682 3,185 5,497 8.6 3.2 5.4
1941 125,822 11. 957 3, 940 8,017 9.5 3.1 6.4
1942 159,133 14,075 2,260 11,815 8.9 1.4 7.5
1943 192, 513 8,301 1,624 6, 677 4.3 0.8 3.5
1944 211, 393 5, 259 1,026 4,233 2.5 0.5 2.0
1945 213, 558 5, 633 1,180 4,453 2.6 0.6 2.0
1946 209, 246 12,000 4,389 7, 611 5.7 2.1 3.6’
1947 232, 228 16, 689 6,510 10,179 7.2 2.8 4.4
1948 207, 325 21. 678 8, 736 12, 942 8.4 3.4 5.0
1949 257, 301 22, 789 8, 626 14,163 8.9 3.3 5.6
1950 285,067 28, 454 12, 945 15, 509 10.0 4.5 5.5
1951 328, 232 31,182 33,008 11. 568 19, 614 9.5 3.5 6.0
1952 345, 229 11, 754 21, 254 9.6 3.4 6.2
1953 1 364, 520 35, 271 12, 486 22, 785 9.7 3.4 6.3
1954 360,474 37, 577 1 13,832 1 23, 745 10.3 3.8 6.5
> All-time high.
Sources: U. S. Departments of Commerce and Labor
472
APPENDIXES
TABLE A-7
New private construction compared with the gross private domestic investment: 1929-54
Year Gross private domestic investment in millions of dollars New construction as a percent of the gross private domestic investment
Total New construction Other 1 invest ment Total Residential nonfarm Other
Total2 Residential nonfarm Other
1929 16,231 8,707 3, 625 5,082 7,524
54 22 32
1930 10, 265 6,183 2,075 4,108 4,082
1931 60 72 20 40
5, 523 3, 968 1, 565 2,403 1, 555
1932 28 44
913 1,876 630 1,246 -963
1933
1,391 1,431 470 961 —40
1934 2,888 1, 709 625 1,084 1,179
22 37
1935 6, 277 2,299 1,010 1,289 3, 978 37
16
1936 8,404 3,281 1,565 1, 716 5,123
1937 39 37 19 20
11, 747 4, 403 1,875 2, 528 7,344
1938 16 21
6,661 3. 960 1,990 1.970 2,701 59
1939 30 29
9,309 4, 757 2,680 2,077 4, 552 51
29 22
1940 13,155 5,452 2,985 2,467 7,703 41
1941 23 18
18, 072 6.629 3, 510 3,119 11,443 37
1942 20 17 21
9,875 3, 721 1, 715 2,006 6,154 38
1943 17
5,600 2, 326 885 1,441 3,274 42
1944 16 26
7,130 2,712 815 1,897 4,418 38
11 27
1945 10,430 27,125 3,833 10, 291 1,100 4,015 2,733 6,276 6,597 16,834 37 38
1946 11 15 26
1947 . 23
29, 705 14,029 6, 310 7, 719 15, 676 47
1948 21 26
41,176 17, 904 8,580 9,324 23, 272
1949 54 21 22
32, 549 17, 453 8, 267 9,186 15,096
25 29
1950 51, 219 22, 733 12, 600 10,133 28,486
1951 41 25 19 22
56,864 23, 332 10, 973 12,359 2 33, 532
1952 19 22
49, 592 23, 723 11,100 12, 623 25,869
1953 48 26
2 51,383 25, 778 11, 930 13,848 25, 605
1954 59 23 27 30
47, 248 2 27, 778 2 13,496 2 14,282 19, 470
29
1 Includes producers’ durable equipment and change in business inventories 2 Includes m addition to construction put in place oil and gas well drilling 2 All-time high.
Sources: IT. S. Departments of Commerce and Labor.
473
HOUSING AND HOME FINANCE AGENCY
TABLE A-8
Estimated construction cost of permanent nonfarm dwelling units started: 1925—54
Year Total permanent nonfarm starts Privately owned starts Publicly owned starts
Number of dwelling units Estimated construction cost1 Number of dwelling units Estimated construction cost1 Number of dwelling units Estimated construction cost 1
Total (000) Average per unit3 Total (000) Average per unit2 Total (000) Average per unit3
1925 937, 000 $4, 475, 000 $4,775 937,000 $4, 475, 000 $4,775 0 0 XX
1926 849,000 4,112,000 4, 850 849, 000 4,112, 000 4, 850 0 0 XX
1927 810,000 3i 910, 000 <825 810, 000 3, 910, 000 4, 825 0 0 XX
1928 753,000 3, 613, 000 4, 800 753, 000 3, 613, 000 4, 800 0 0 XX
1929 509, 000 2,453; COO 4,825 509, 000 2, 453, 000 4,825 0 0 XX
1930 330, 000 1, 494, 488 4, 525 330, 000 1, 494, 488 4,525 0 0 XX
1931 254,000 1,104', 600 4,350 254, 000 1,104, 600 4; 350 0 0 XX
1932 134, 000 407, 040 3, 050 134, 000 407,040 3,050 0 0 XX
1933 93,000 285, 446 3,075 93,000 285, 446 3,075 0 0 XX
1934 126, 000 368,483 2, 925 126, 000 368, 483 2,925 0 0 XX
1935 221, 000 757,397 3, 425 215, 700 732, 522 3, 400 5, 300 $24, 875 $4, 700
1936 319, 000 1,27L 039 3,975 304, 200 1,193, 733 3,925 14, 800 77,306 5,225
1937 336, 000 1,382,360 4,125 332, 400 1,365, 791 4,100 3, 600 16, 569 4,600'
1938 406, 000 1, 583,936 3, 900 399,300 1,561, 610 3,900 6,700 22,326 3,325
1939 515, 000 1,948,340 3,725 458, 400 1, 763,932 3,850 56, 600 184, 408 3,250’
1940 602, 600 2, 299, 447 3,825 529, 600 2,072,155 3,925 73,000 227, 292 3,125
1941 706,100 2,826,192 4,000 619, 500 2, 530, 765 4,075 3 86, 600 295, 427 3,400
1942 356' 000 i; 343, 458 3; 775 301, 200 1,133; 846 3, 775 54, 800 209, 612 3,825
1943 191, 000 689,146 3, 600 183, 700 ' 660, 459 3,600 7,300 28, 687 3,925
1944 141, 800 496, 054 3, 500 138, 700 483,231 3, 475 3,100 12, 823 4,125
1945 209, 300 965, 670 4,625 208,100 959,251 4,600 1,200 6,419 5,350'
1946 670, 500 3, 769, 767 5, 625 662, 500 3, 713, 776 5, 600 8, 000 55,991 7,000
1947 849, 000 5; 643', 436 <650 845, 600 < 61< 425 6,650 3, 400 26, 011 7,650'
1948 931, 600 7, 203,119 7, 725 913, 500 7,028,980 7,700 18,100 174,139 3 9, 625
1949 1,025j 100 7, 702; 971 7, 525 98< 800 7,374, 269 7i 450 36,300 328, 702 9, 050
1950 31, 396, 000 11, 788, 595 8, 450 31, 352, 200 11, 418,371 8,450 43, 800 370,224 8, 450'
1951 1, 091,300 9, 80a 892 8,975 1,020; 100 9i 186,123 9, 000 71, 200 3 614, 769 8,625
1952. 1,127, 000 10, 208, 983 9,050 1, 068, 500 9, 706,276 9,075 58, 500 502, 707 8,600
1953 1,103, 800 10, 488, 003 9, 500 1, 068, 300 10,181,185 9,525 35, 500 306, 818 8, 650'
1954 1J 220i 400 312, 478, 237 310, 225 1, 201, 700 312,309,200 310,250 18, 700 169, 037 9,050'
* Data exclude sales profit, selling cost, cost of land and site improvements, architectural and engineering: fees, and all other nonconstruction expense.
1 Dollar amount rounded to nearest 25.
3 All-time high.
Source: U. S. Department of Labor.
474
APPENDIXES
TABLE A-9
Boeckh indexes of dwelling unit construction cost: 1914-54
[1947-49 = 1001
Year
1914_______________________
1915_______________________
1916_______________________
1917_______________________
1918_______________________
1919_______________________
1920_______________________
1921_______________________
1922_______________________
1923_______________________
1924_______________________
1925_______________________
1926_______________________
1927_______________________
1928_______________________
1929_______________________
1930_______________________
1931_______________________
1932_______________________
1933_______________________
1934_______________________
1935_______________________
1936_______________________
1937_______________________
1938_______________________
1939_______________________
1940_______________________
1941_______________________
1942_______________________
1943_______________________
1944_______________________
1945_______________________
1946_______________________
1947_______________________
1948_______________________
1949_______________________
1950_______________________
1951________________________
1952_______________________
1953_______________________
1954_______________________
Residences Apartments, hotels, and office buildings
26.1 26.9
26.7 27.6
28.4 30.9
33.2 37.1
39.6 42.2
46.0 47.9
59.3 61.3
47.6 49.2
43.8 46.2
49.1 51.1
48.4 50.2
47.9 50.6
48.4 51.0
47.7 50.3
47.9 50.5
50.0 51.7
48.7 50.9
44.9 46.9
38.0 40.0
38.0 41.1
41.3 45.2
40.3 44.5
41.7 45.8
46.6 51.1
48.0 53.2
48.9 53.9
50.5 54.8
54.6 57.3
57.6 60.4
60.2 62.8
65.4 67.0
70.1 71.3
77.0 78.0
93.2 91.7
104.8 103.5
102.1 104.8
107.7 109.6
116.0 118 0
119.1 122.0
1 121. 2 125.8
120.3 * 126.8
Month
1952
January_______________
February______________
March_________________
April_________________
May___________________
June__________________
July__________________
August________________
September_____________
October_______________
November______________
December.............
1953
January_______________
February______________
March_________________
April_________________
May___________________
June__________________
July------------------
August________________
September_____________
October_______________
November______________
December______________
1954
January_______________
February______________
March_________________
April_________________
May___________________
June__________________
July__________________
August________________
September_____________
October_______________
November______________
December______________
Residences Apartments, hotels, and office buildings
117.7 120.0
117.6 119.8
117.6 119.9
118.0 120.4
118.3 120.8
119.4 122.0
119.8 122.7
120.2 123.4
120.4 123.7
120.2 123.8
119.9 123.6
119.8 123.6
120.1 123.8
120.1 123.7
120.3 124.0
120.4 124.2
120.8 124.8
121.5 125.8
»122.4 127.0
122.1 127.2
121.9 127.4
121.4 127.1
121.5 127.3
121.3 127.3
120.4 126.4
119.5 125.9
119.6 125.8
119.1 125.6
119.5 126.3
120.0 126.5
120.7 127.1
120.7 127.4
120.8 127.5
121.0 127.6
121.0 127.5
121.1 * 127.7
1 All-time high.
Source: U. S. Department of Commerce.
475
HOUSING AND HOME FINANCE AGENCY
TABLE A-10
Average hourly earnings and average weekly hours in building construction by type of employing contractor: 1940-54
Special trade contractors
Year All building General
contractors contractors A1]spe. Plumbing Electri- Other
cial trades and heating ating°r cal worl£ trades
1 ' Average hourly earnings
1940 $0.958 $0.918 $1.012 $0.949 $1.016 $1.196 (1)
1941 1.010 0.965 1.052 1.005 1.083 1.214 (1)
1942 1.148 1.098 1.189 1.133 1.185 1.409 (>)
1943 1.252 1.206 1.284 1.238 1.299 1.517 O)
1944 1.319 1.262 1.358 1.313 1.367 1.522 (1)
1 1945 1.379 1.315 1.423 1.382 1.451 1.559 (1)
( 1946 1.478 1.419 1.544 1.537 1.564 1.683 $1.485
1947 1.681 1.603 1.772 1.779 1.724 1.930 1.705
1948 1.848 1.766 1.946 1.960 1.925 2.084 1.888
1949 1.935 1.815 2.034 2.037 1.982 2.211 1.979
1950 2.031 1.915 2.119 2.128 2.013 2.322 2.087
1 1951 2.190 2.050 2.310 2.330 2.200 2.550 2.260
1952 2.310 2.150 2.440 2.440 2.350 2.710 2.390
1 1953 2.480 2.340 2.590 2.580 2.510 2.840 2.550
1 1954 2.600 2.470 2.700 2.710 2.620 2.920 2.640
t Average weekly hours
e 1940 33.1 33.3 32 7 34 6 32 5 34 5 (1)
1941 _ 34 8 34.4 35 2 37 2 34 2 38 1 (ij
1942 36.4 35.8 37.0 36 9 35.6 4L1 (>)
1943 38.4 37.9 38 9 40 1 37 7 41 5 (1)
1944 39.6 39.1 39.9 4L 0 3<£ i 46 2 (1)
1945 - 39.0 38 3 39 5 40 8 39 2 41 9 (1)
1946 38.1 37.6 38 6 39 6 37 5 40 7 ' '37 4
1947 37.6 37.0 38.4 39.2 36 7 46 3 37.' 4
1948 37.3 36.6 38 0 39 2 36 3 39 8 36 9
g 1949 . 36.7 36.2 37.2 38 6 35 7 39 2 36 1
( 1950 36.3 35.8 36 7 38 4 35 4 38 4 35 8
1951 37.2 36.6 37.8 39 2 35 8 40 1 37 0
I 1952. 38.1 38.5 37 7 38 9 35 2 40 7 37 0
1953 37.0 37.5 36.7 38 1 34 7 39 3 35 7
E 1954 36.2 36.2 36.3 37.9 3L 4 36 6 35.’ 2
f 1 Not available.
i Source: U. S. Department of Labor.
c
V il
E i
a
n
Q
t
1
s
A
476
APPENDIXES
TABLE A-11
Indexes of wholesale prices of selected building materials and other commodities: 1949-54
[1947-49 = 100]
Commodity—group, subgroup, or class Annual data
1949 1950 1951 1952 1953 1954
All commodities except farm and food. .. 101.3 105.0 1 115. 9 113. 2 114. 0 114. 5
All building materials Lumber and wood products: 102.0 109.5 119.6 118.2 119.9 1 120.2
Lumber 98.2 114. 5 1 123.6 120.5 119.3 117.3
Douglas fir 95.3 117.6 1 128. 6 127.3 117.2 119.4
Southern pine 96.3 108.0 115.7 1 116.9 115.8 110.7
Other softwoods 105.1 118.9 130.0 128.2 1 132. 6 130.4
Hardwood 97.4 114.8 1 122. 4 112.5 114.8 112.4
Millwork 107.6 114.6 130.1 127.0 1 131. 5 130.6
Plywood 95.2 106.5 1115.1 105.0 109.3 103.1
Softwood plywood 98.4 113.8 1 121. 1 110.3 110.7 107. 2
Hardwood plywood Chemical and allied products: 92.9 101.4 1110.8 101.3 108.4 100.3
Prepared paint 101.2 99.3 109.0 110.4 111. 1 1 112. 8
Paint materials Metal and metal products: 96.7 90.9 1 108.8 100.3 96.2 96.3
Structural steel shapes 112.7 121.1 128.4 131.1 138.2 1 143.8
Hardware (finish) 106.0 114.2 125.8 125.4 130.8 1 139.3
Plumbing equipment 102.7 108.2 1 122. 5 117.4 116.0 118.4
Enameled iron fixtures 107.7 115.5 1 130.0 122.4 126.1 129.2
Vitreous china fixtures 107.1 114.1 1 128. 3 122.0 107.1 111.7
Brass fittings 96.8 100.5 114.8 112.2 114. 7 1 116.4
Heating equipment 103.6 105.1 114.6 113.8 1 114. 8 114.3
Metal doors, sash and trim Nonmetallic mineral items: 102.8 110.0 121.0 117.7 122.6 1 129.4
Concrete ingredients 105.2 106.8 113.0 113.0 117.4 * 121.0
Portland cement 105.8 108.0 116.4 116.4 122.2 1 126. 6
Concrete products 103.1 105.5 112.3 112. 5 115.4 1 117. 5
Structural clay products 105.3 112.6 121.4 122.0 128.1 1 133.1
Gypsum products 102.3 104.6 117.4 117.7 121.0 1 122.1
Insulation materials 100.0 101.1 104.1 105.4 107.9 1 109. &
Other items: Building paper and board 104.2 107.6 113.4 115.5 121.4 1 127. 7
1 All-time high.
Source: U. S. Department of Labor.
TABLE A-12
Indexes of output of selected construction materials: 1947-54
[Base: 1947-49 monthly average= 100]
Item 1947 1948 1949 1950 1951 1952 1953 1954
Lumber and wood products 98.1 105 0 96 9 116 2 114 2 115 0 1 120 1 110 2
Mill work.. 92.8 109 4 97 8 1 126 5 100 7 103 8 5 lid. O hr e
Paint, varnish, and lacquer 102.8 102.1 95 1 1 113^3 101 5 103 1 103 6 110. 0 101 6
Portland cement 93.0 102.4 104 6 112 7 122 7 124 2 131 6 1 1^5 2
Asphalt products • 114. 4 98 2 87 3 107 5 101 5 QQ § 100 3 1OO. A 1HQ 1
Heating and plumbing equipment 124.0 90.8 84.9 > 130:5 105.8 103.8 115. 6 lUo. 1 117. 6
Iron and steel products. 96. 9 102 5 100 8 119 9 122 8 113 0 1 127 8 1 on 5
Clay construction products 96.8 103. 1 99 9 113 7 1 122 7 110 5 112 2 11 5 Q
Gypsum products 85. 8 112 9 101 1 127 5 135 5 129 2 138 5 no. v 1 1 si a
Plumbing fixtures 94.5 112.3 93.4 1 125^ 2 119.8 94.7 101.0 * 101. 0 107.2
1 All-time high.
Source: U. S. Department of Commerce.
477
HOUSING AND HOME FINANCE AGENCY
TABLE A-13
Estimated mortgage debt on 1- to 4-family nonfarm homes, showing type of mortgagee: 1925-54
[Dollars in millions]
1 First year data available.
2 All-time high.
8 Preliminary.
At end of December Total all mortgagees Savings and loan associations Life insurance companies Mutual savings banks Commercial banks Home Owners’ Loan Corporation Federal National Mortgage Association Veterans’ Ad-min-istra-tion Individuals and others
Amount 1 Percent
1925 i $12,984 $3,994 30.8 $837 $1, 547 $1,376 XX XX $5,230
1926
14,809 16,433 4, 570 5,214 30.9 31.7 1,062 1,254 1,713 1,922 1,796 1,927 XX XX XX 5,668 6,116
1927 XX
1928
17, 904 18,912 5,757 6,182 32.2 32.7 1, 445 1,626 2,139 2,286 2,145 2,207 XX XX XX XX 6,418 6,611
1929
1930 18,891 6,082 32.2 1,732 2,341 2,199 XX XX 6,537
1931
18,104 5, 596 4,891 30.9 1,775 1, 724 2,436 2,085 XX XX 6,212
1932
16,655 29.4 2,446 1,887 XX XX 5,707
1933
15,352 4,215 27.5 1 599 2,354 1,707 $132 XX XX 5,345
1934 L379
15,630 3, 525 22.3 2,190 1,450 2,379 XX XX 4,707
1935 15,437 3,127 20.3 1,281 2,089 1,541 2 2,897 4, 502
1936
15,385 3,122 20.3 1,245 2,082 1,634 2,763 4, 539
1937
15, 518 3, 291 1,246 2,111 2,119 1,786 2,398 4,686
1938 22.1 $80
15,765 3,433 1,320 1,910 2,169 4,734
1939
16,337 3,616 22.1 1,490 2,128 2,096 2,038 144 4,825
1940 17,346 3, 919 22.6 1,758 2,162 2,363 1,956 178 5,010
1941 _
18,358 4,349 23.7 1,976 2,189 2, 672 1,777 203 5,192
1942
18,226 4,349 23.9 2,255 2,128 2, 752 1, 567 206 4, 969
1943
17,835 4,355 24.4 2,410 2,033 2, 706 1,338 60 4,933
1944 XX
17,947 4, 617 25.7 2,458 1,937 2,703 1,091 50 5,091
XX
1945 18, 543 5,156 27.8 2,258 1, 894 2,875 852 7 5,501
1946 XX
23,059 6,840 29.7 2, 570 2,033 4,576 636 6 6,398
1947 XX
28,161 8,475 30.1 3,459 2,283 6,303 486 4 7,151
1948 XX $1
33,261 9,841 29.6 4, 925 2,835 7,396 369 198 7,696
1949
37,496 11,117 29.6 5, 970 3,364 7,956 231 806 4 8,048
1950 45,072 13,104 29.1 8,392 4,312 9,481 10 1,328 17 8,428
1951
51,872 14,801 28.5 10,814 5,331 10,275 1,818 136 8,697
1952
58,684 17,590 30.0 11,996 6,194 11,250 2,210 199 9,245
1953
66,296 20, 923 31.6 13,473 7,373 12,025 2 2,358 303 9,841
1954
275, 943 2 24, 993 2 32. 9 215,430 2 9,002 213,300 2,328 2 384 210, 506
Sources: Home Loan Bank Board (HHFA) and for 1954 The Board of Governors of the Federal Reserve System.
478
APPENDIXES
TABLE A-14
Estimated mortgage debt on 1- to 4~family nonfarm homes, showing FHA and VA components: 1925-54
[In millions of dollars]
Year Outstanding, at end of December— Net change, during the year—
Total Government-underwritten Con-ven-tional Total Government-underwritten Con-ven-tional
Total FHA-insured VA-guaranteed Total FHA-insured VA- guar-ranteed
1925 > $12,984 XX XX XX $12,984 XX XX XX XX XX
1926.. 14,809 XX XX XX 14,809 +$1,825 XX XX XX +$1,825
1927 16,433 XX XX XX 16,433 +1, 624 XX XX XX +1,624
1928 17, 904 XX XX XX 17, 904 +L 471 XX XX XX 4-1,471
1929 18,912 XX XX XX 18, 912 +1,008 XX XX XX 4-1,008
1930 18,891 XX XX XX 18,891 -21 XX XX XX -21
-787
XX
1932 16,655 XX XX XX 16,655 -1,449 XX XX XX -1, 449
1933 15, 352 XX XX XX 15,352 -1,303 XX XX XX -L 303
1934 15, 630 XX XX XX 15,630 +278 XX XX XX 4-278
1935 15,437 $100 2 $100 XX 15,337 -193 +$100 +$100 XX -293
1936 15,385 300 2 300 XX 15,085 -52 +200 +200 XX -252
1937 15, 518 700 2 700 XX 14,818 +133 +400 +400 XX -267
1938... 15, 765 1,100 21,100 XX 14, 665 -4-247 +400 +400 XX -153
1939 16,337 1,755 1,755 XX 14, 582 +572 +655 +655 XX -83
1940 17,346 2,349 2,349 XX 14,997 +1,009 +594 +594 XX +415
1941 18,358 3,030 3,030 XX 15,328 +1,012 -4-681 4-681 XX +331
1942 18, 226 3, 742 3,742 XX 14,484 -132 +712 +712 XX -844
1943 17,835 4,060 4,060 XX 13, 775 -391 +318 +318 XX -709
1944. 17,947 4,190 4,190 XX 13, 757 +112 +130 +130 XX -18
1945 18,543 4, 278 4,078 $200 14, 265 +596 +88 -112 +$200 +508
1946 23,059 6, 092 3,692 2,400 16, 967 +4,516 +1,814 -386 +2,200 +2, 702
1947 28,161 9,281 3,781 5,500 18,880 +5,102 +3,189 +89 +3,100 +1, 913
1948 33, 261 12 469 5 269 7 200
1949.... 37', 496 15,006 6,906 <100 22,490 +< 235 +< 537 r *ioo +1,637 +900 +1,698
1950. 45,072 18,863 8, 563 10,300 26,209 +7,576 +3,857 3+l, 657 +2, 200 +3,719
1951 51,872 22,877 9, 677 13,200 28, 995 4-6,800 3+4,014 4-1,114 +2,900 4-2, 786
1952___________ 58,684 25,370 10, 770 14,600 33,314 +6,812 4-2,493 4-1,093 +1,400 +4,319
1953 66,296 28,090 11, 990 16,100 38,206 +7, 612 +2, 720 4-1,220 4-1,500 +4,892
1954 4 1 3 75, 943 3 32,079 312, 779 319,300 3 43,864 4-9, 647 4-3,989 +789 3+3,200 3 4-5,658
1 First year data are available.
2 Estimated.
3 All-time high.
4 Preliminary.
Sources: Home Loan Bank Board (HHFA) Federal Housing Administration (HHFA), Veterans Administration, and Board of Governors of the Federal Reserve System.
479
HOUSING AND HOME FINANCE AGENCY
TABLE A-15
FHA and VA home loans compared with total recordings: 1939-54.
Year Estimated amount nonfarm mortgage recordings of $20,000 or less (000) Federal Housing Administration and Veterans’ Administration Other recordings of' $20,000 or less
Total home loans insured and guaranteed FHA home loans insured VA home loans partially guaranteed
Amount (000) Percent of total recordings Face amount (000) Percent of total recordings Principal amount (000) Percent of total recordings Amount (000) Percent of total recordings
Cumulated 1945 through—
1954 $145,001,280 $42, 507,911 29 $16, 710, 754 12 $25,797,157 18 $102,493)369 71'
Annual data
1939 1 $3, 506, 563 $694,764 20 $694, 764 20 XX XX $2, 811, 799 80
1940 4,031,368 762,084 19 762,084 19 XX XX 3, 269, 284 81'
1941 4, 731, 960 910, 770 19 910, 770 19 XX XX 3,821; 190 81
1942 3,942, 613 973,271 25 973,271 2 25 XX XX 2, 969; 342 75
1943 3,861,401 763,097 20 763,097 20 XX XX 3,098; 304 80'
1944 4, 605,931 707,363 15 707,363 15 XX XX 3i 898; 568 85
1945 5,649,819 659,037 12 474, 245 8 3 $184, 792 3 4,990)782 2 88
1946 10, 589,168 2,724,256 26 421, 949 4 2,302,307 22 7,864, 912 74
1947 11, 728,677 4,177,196 2 36 894,675 8 3,282,521 2 28 7, 551,481 64
1948 11,882,114 3,992,951 34 2,116,043 18 1,876,908 16 7,889,163 66.
1949 11, 828,001 3, 633, 431 31 2,209,842 19 1,423, 589 12 8; 194; 570 69'
1950 16,179,196 5, 565, 795 34 2 2,492,367 15 3,073, 428 19 10, 613,401 66
1951 16,405,367 5, 542,913 34 1,928, 433 12 3,614,480 22 10, 862, 454 66
1952 18,017, 677 4, 660,225 26 1, 942,307 11 2,717,918 15 13,35L 452 74
1953 19, 747,408 5,353, 544 27 2,288,627 12 3,060, 917 16 14,393', 864 73
1954 2 22,973,853 2 6,198, 563 27 1, 942,266 8 2 4,256,297 19 2 16, 775,290 73
1 First year data available.
2 All-time high.
» Activity in 1944 is included in the 1945 annual total; estimated by HHFA.
Sources: Home Loan Bank Board (HHFA), Federal Housing Administration (HHFA), and Veterans’ Administration.
TABLE A-16
Number of nonfarm real estate foreclosures: 1926-54
Year Number of foreclosures Year Number of foreclosures Month Number of foreclosures Month Number-of foreclosures
1926 1 1927 1928 1929 1930 1931 1932 1933 1934 1935. 1936 1937 1938 1939 1940 68,100 91,000 116,000 134, 900 150,000 193,800 248, 700 3 252, 400 230,350 228,713 185,439 151,366 118,357 100,410 75, 556 1941 1942 1943 1944 1945 1946 1947 1948 1949 1950 1951 1952 1953 1954 58,559 41,997 25,281 17,153 12, 706 210,453 10, 559 13, 052 17, 635 21, 537 18,141 18,135 21,473 26, 211 1953 January February March April May June July August September October November December 1,640 1, 577 1, 771 1, 846 1,769 1,793 1,907 1,777 1,820 1,823 1,779 1,971 1954 January February March April May June July ; August September October November December 1,858 1,976 2,387 2,275. 2,189 2,339 2,230 2,108 2,365 2,079 2,181 2,224.
1 First year data available.
2 All-time low.
3 All-time high.
Source: Home Loan Bank Board (HHFA).
480
APPENDIXES
TABLE A-17
Number of dwelling units by nonfarm and rural farm location, by region, and by occupancy: 1940-50
[Dwelling units are in thousands]1
Region and occupancy Nonfarm and rural farm Nonfarm Rural farm
Dwelling units Percent change 1950/1940 Dwelling units Percent change 1950/1940 Dwelling units Percent change 1950/1940
1940 1950 1940 1950 1940 1950
United States 37,325 45,983 +23 29, 683 39,625 +34 7,642 6,358 -17
Region: Northeastern 10,313 12, 051 +17 9,702 11,527 +19 611 524 -14
North Central 11,597 13, 746 +19 9,140 11,594 +27 2, 457 2,152 -12
South 10, 876 13, 653 +26 6,990 10, 581 +51 3,886 3,072 -21
West 4,539 6,533 +44 3,852 5,923 +54 687 610 -11
Occupancy: Occupied 34, 855 42,826 +23 27, 748 37,105 +34 7,107 5,721 -20
White 31, 561 39, 043 +24 25, 459 33,982 +34 6,102 5,061 -17
Nonwhite 3,293 3,783 +14 2,289 3,123 +36 1,005 660 -34
Vacant 2,470 3,157 +28 1,935 2,520 +30 535 637 +19
1 Due to rounding the components may not add precisely to the totals. Source: U. S. Bureau of the Census, Census of Housing.
TABLE A-18
Occupied dwelling units, by location and tenure: 1890-1950
[Units in thousands]
Occupied dwelling units or families
Year and area Total Reporting tenure
Total Owner occupied Renter occupied
Number Percent Number Percent
All areas: 1890 12, 690 12, 690 6,066 47.8 6,624 52.2
1900 15, 964 15, 429 7, 205 46.7 8.224 53.3
1910 20,256 19, 782 9,084 45.9 10, 698 54.1
1920 24, 352 23, 811 10, 867 45.6 12, 944 54.4
1930 29, 905 29,322 14,002 47.8 15,320 52.2
1940 34,855 34, 855 15,196 43.6 19, 659 56.4
1950 42,826 42, 826 23,560 55.0 19,266 45.0
Nonfarm:1
1890 7,923 7,923 2,924 36.9 4,999 63.1
1900 10, 274 9,780 3, 567 36.5 6,213 63.5
1910 14,132 13, 672 5, 245 38.4 8, 427 61.6
1920 17, 600 17, 229 7, 041 40.9 10,188 59.1
1930 23, 300 22, 917 10, 550 46.0 12,367 54.0
1940 27, 748 27, 748 11,413 41.1 16,335 58.9
1950 37,105 37,105 19,802 53.4 17,304 46.6
Farm: 1
1890 . 4, 767 4,767 3,143 65.9 1,624 34.1
1900 5,690 5,649 3, 638 64.4 2,011 35.6
1910 6,124 6,110 3, 838 62.8 2,271 37.2
1920 6, 751 6,581 3, 826 58.1 2,756 41.9
1930 6,605 6, 405 3,452 53.9 2,953 46.1
1940 7,107 7,107 3,783 53.2 3,324 46.8
1950 5,721 5,721 3, 758 65.7 1,863 34.3
1 Prior to 1930, urban farm units are included in the “farm” category.
Source: U. S. Bureau of the Census: data for 1890-1930 are from Population Census; 1940-50, from the Census of Housing.
481
HOUSING AND HOME FINANCE AGENCY
TABLE A-19
Personal consumption expenditures
[Dollar amounts in billions]
Percent of total personal
Total Housing expenditures consumption expend!-
personal tures for
tion ex-
penditures Space- Household Total Space-
rental1 operation housing rental1
1929 $79.0 $22.1 $11.4 $10.7 28.0 14.4
1930 71.0 20.6 11.0 9.6 29.0 15. 5.
1931 61.3 18.7 10.3 8.4 30.5 16.8.
1932 49.3 15.8 9.0 6.8 32.0 18. 3.
1933 46.4 14.4 7.9 6.5 31.0 17.0
1934 51.9 14.8 7.6 7.2 28.5 14.6.
1935 56. 3 15 3 7 6
1936 62.6 16.7 7/9 8.8 26.7 12. 6
1937 67.3 17.9 8.4 9.5 26.6 12.5
1938 64.6 17.7 8.8 8.9 27.4 13.6.
1939 67.6 18.6 9.0 9.6 27.5 13.3
1940 71. 9 19 8 9 3 10 5
1941 81. 9 22 0 10 0 12 0
1942 89 7 23 5
1943 __ 100. 5 24 4 11 3 13 1
1944 109.8 25.9 11.9 14/0 23.6 10.8
1945 121 7 27 9 12 4
1946 146. 6 33 6 13 6 20 0
1947 165.0 39.3 15.4 23.9 23.8 9.3
1948 177.6 43.1 17.5 25.6 24.3 9.9
1949 180.6 44.0 19.4 24.6 24.4 10.7
1950 194.0 48 8 21 4 27 4 25 2 Ji 0
1951 1952 208.0 218. 3 52.0 54 5 23.4 25 6 28.6 28 9 25.0 25 0 11.3, 11 7
1953 230. 6 58 1 27 9 30 2 25 2 19 1
1954 236.5 60.5 29.8 30.8 25/6 12.6
1 Includes imputed rental value of owner-occupied homes. Source: U. S. Department of Commerce.
482
APPENDIXES
TABLE A-20
Production worker employment
[Number of workers in millions]
Year Number of production workers Contract construction, as a percent of
All industries Nonfarm industries Contract construction All industries Nonfarm industries
1929 __ 46.2 37. 0 2. 3 5. 0 6 2
1930 . 44.1 35.1 2.2 5.0 6 3
1931 . . 41.0 32.0 2.0 4 9 6 3
1932 _ 37.6 28. 7 1.6 4. 3 5 6
1933 38. 1 29.1 1.4 3 7 4 8
1934 41.4 32.3 1.5 3. 6 4. 6
1935 42.9 33.8 1. 5 3. 5 4 4
1936 46.0 36. 9 1.8 3. 9 4. 9
1937 _ ... 47.2 38. 3 1.7 3. 6 4. 4
1938 45. 3 36. 7 1.7 3.8 4 6
1939 _ . 46. 6 38.3 1.9 4.1 5.0
1940 48. 5 40.4 1.9 3. 9 4. 7
1941 53.1 45. 2 2.4 4. 5 5. 3
1942 58.0 50. 2 2.9 5.0 5. 8
1943 63.7 56.1 2. 2 3. 5 6. 2
1944 64.7 57.4 1. 6 2.5 2.8
1945 63.1 55.9 1. 7 2. 7 3.0
1946 57.4 50.3 2. 6 4.5 5. 2
1947 57. 7 50. 6 3.0 5. 2 5. 9
1948 58.6 51.6 3.3 5.6 6.4
1949 57.2 50.4 3.1 5.4 6. 2
1950 58. 7 52. 2 3. 4 5.8 6. 5
1951 62. 3 56. 2 3. 7 5.9 6.6
1952 63.5 57. 5 3.7 5.8 6.4
1953 64. 4 58.6 3.6 5. 6 6.2
1954 62.7 56.9 3.6 5.8 6.4
Source: U. S. Department of Commerce.
483
HOUSING AND HOME FINANCE AGENCY
TABLE A-21
Labor requirements for new construction [Number of fulltime persons, in thousands]
Type of construction Monthly average
1954 1953 Percent change 1954/1953
Total new construction 3,175 2,980 +6.5
Offsite
390 2,785 365 2,615 +6.8 +6.5
Onsite
Private
2,030 1,900 +6.8
Homebuilding
1,050 465 150 355 10 755 922 424 167 377 10 715 +13.9 +9.7 -10.2 -5.8 0.0 +5.6
Nonresidential building
Farm— . _
Public utilities
All other private
Public
Residential.
23 303 58 246 65 60 39 282 78 194 59 63 -41.0 +7.4 -25.6 +26.8 +10.2 -4.8
Nonresidential building- _
Military and naval
Highways—
Sewer and water
All other public
Source: U. S. Department of Labor.
TABLE A-22
Household formation trend: 1890-1954
Number of households
Year As of April 1st Net change annual data
Total (000) Nonfarm (000) Farm (000) Total (000) Nonfarm (000) Farm (000)
1890 i 12, 690 7, 923 4, 767 XX XX XX
1900 i 15,964 10, 274 5,690 2 327 235 92
1910 20 256 14 132
1920 3 24’ 352 11 600 43
1930 29; 905 23^ 300 6,605 2 555 570 63 -15
1940 34 855 27 748
1947 3^ 107 32; 673 6,434 4 607 704 50 —96
1948 40 532 34 116
1949 42,182 35’ 687 1 6^0 18
1950 5 43; 554 37; 279 6,275 1, 372 1,592 79 -220
1951 44,656 38, 587 6,069 1,102 1,308 -206
1952 45, 504 39, 554 5,950 848 967 -119
46 334 40 503
1954 46, 893 41’ 400 5,493 559 897 119 -338
1 June data.
2 Annual average for preceding 10-year period.
3 January data.
4 Annual average for preceding 7-year period.
8 March data.
Source: U. S. Bureau of the Census: data for 1890-1930 are from the Population Census; 1940, the Census of Housing; 1947-54, current Population Survey.
484
APPENDIXES
TABLE A-23
Number of persons per room: Occupied nonfarm and farm dwelling units; nonfarm dwelling units by color of occupants, 194-0 and 1950
[Units in thousands]
All occupied dwelling units reporting
Area, race, and number of persons per room 1950 1940
Number Percent Number Percent
United States—Total 42,154 100.0 34,447 100.0
0.75 or less 25,357 10,170 4,020 2,608 36, 549 60.2 J 27,482 79.8
0.76 to 1.00 24.1
1.01 to 1.50 „ 9. 5 3,879 3,086 27,430 11.3 9.0 100.0
1.51 or more 6. 2
United States—Nonfarm 100.0
0.75 or less 22,140 9,031 3,342 2,036 (1) 60.6 J 22,598 82.4
0.76 to 1.00 24. 7
1.01 to 1.50.. 9.1 2,875 1, 957 10.5 7.1
1.51 or more __ 5.6
Nonfarm—White (1) 25; 171 100.0
0.75 or less _ _ (') (i) } 21,103 83.8
0.76 to 1.00 . __ (i) (1)
1.01 to 1.50 (1) (') 2, 526 1, 542 10.0 6.1
1.51 or more. _ . _ (*) (i)
Nonfarm—Nonwhite.. ... _ __ (!) (9 2; 259 100.0
0.75 or less _ . (*) (9 66.2
0.76 to 1.00 (’) (9 J 1,495
1.01 to 1.50 (1) (9 348 15.4
1.51 or more..- . .. _ . .... (1) (9 416 18. 4
United States—Farm ... 5,606 100.0 7,017 100.0
0.75 or less __ _ .. 3,216 57. 4 j 4,885 69.6
0.76 to 1.00 1,140 20.3
1.01 to 1.50 678 12.1 1,004 1,128 14. 3
1.51 or more 572 10.2 16.1
1 Not available.
Source: U. S. Bureau of the Census.
TABLE A-24
Estimated number of married couples with and without own household: 1910-54
Date All married couples With own household Without own household Percent without own household
April 1954 37,346,000 35,875, 000 1,471,000 3.9
April 1953 37,106,000 35, 560,000 1, 546,000 4.2
April 1952 36, 696,000 35,138, 000 1. 558,000 4.2
April 1951 _ _ _ 36,136,000 34,378, 000 1 758,000 4 9
March 1950 - 36,091, 000 34; 075’, 000 2, 016, 000 5 6
April 1949 _ 35,425,000 33,257,000 2,168 000 6 1
April 1948 34; 364; 000 31,900,000 2,464,000 7.2
April 1947 . . 33, 543,000 30, 612,000 2, 931,000 8.7
June 1946- _ - . 31, 550,000 28,850,000 2,700 000 8 6
September 1945 _ _ 28,200, 000 26,835,000 1,365,000 4. 8
April 1940 _ 28,517; 000 26; 57i; 000 1 946 000 6 8
April 1930 __ 25‘, 174-, 000 23,649,000 1,525 000 6.1
April 1910 17; 175; 000 16,250,000 925,000 5.4
Source: U. S. Bureau of the Census.
350920—56----33
485
HOUSING AND HOME FINANCE AGENCY
HC
19!
19:
19: 19:
19
19
19
19
19
19
19
19
19
19
19 1!
1!
1'
1
1
1
1
1
1
1 J
TABLE A-25
Expenditures for property repairs, improvements, and additions, by purpose and class: January to May 1954
Year structure built Percent distribution
Subject —————————_ —-------------------------------------
Total 1950 to ^40 10 1930 10 1929 or Not re- Total 1950 10 1945 to 1940 to 1930 to 1929 or
1953 1949 1944 1939 earlier ported 0131 1953 1949 1944 1939 earlier
Number of properties (thousands)
Total properties---------- 25,300 3,200 3,500 2,200 3,000 12,800 500 100.0 100.0 100.0 100.0 100.0 100.0
With expenditures---------------- 17,800 2,400 2,500 1,500 2,000 9,100 400 70.5 75.6 72.0 65 2 64 8 71 3
No expenditures------------------ 7,500 800 1,000 800 1,100 3, 700 200 29.5 24.4 28.0 M 8 st 2 28.7
Amount of expenditure (thousands)
Total----------------------- $3,007,000 $362,000 $387,000 $238,000 $231,000 $1,680,000 $109,000 100.0 100.0 100.0 100.0 100.0 100.0
Purpose of expenditure: ——————————————— —
Repairs and replacements------ 1,264,000 77,000 171,000 133,000 144,000 717,000 21,000 42 0 21 2 44 1 55 8 62 5 42 7
Alterations and improvements-- 1,410,000 245,000 165,000 87,000 72,000 754,000 87 000 46 9 67'7 42’5 36’6 31 2 44 9
Additions--------------------- 333,000 40,000 52,000 18,000 14,000 208,000 __..... 11.1 11.1 13^4 7. 6 6.’3 12.4
Class of expenditure:
Materials purchased----------- 1,596,000 272,000 192,000 126,000 139,000 834,000 33,000 53.1 75.2 49 6 53 0 60 4 49 6
Contracts completed----------- 1,410,000 90,000 195,000 112,000 91,000 846,000 7^ 000 46.9 24.8 50.4 47. 0 39^6 50.4
Average (mean) expenditure
Total properties--------- $119 $113 $112 $106 $76 $131 -
With expenditures---------------- 169 149 155 163 117 184 _________Z____”Z f.'.'.f'.'. ZZ—Z—Z
Source: U. S. Bureau of the Census.
486
APPENDIXES
TABLE A-26
Mobility of civilian population 1948-54
[Thousand persons]
Year ended April Total civilian population Did not move during year Did move during year Percent moved during year
Total Same county Different county
1954 1953 155,679 153,038 150,494 148,400 146,864 144,101 141,698 125,654 121,512 120,016 116,936 118,849 116,498 113,026 29,027 30, 786 29,840 31,158 27,526 27,127 28,210 19,046 20,638 19,874 20,694 19,276 18, 792 19,202 9,981 10,148 9,966 10,464 8,250 8,335 9,008 18.6 20.1 19.8 21.0 18.7 18.8 19.9
1952
1951
1950
1949 1948
Source: U. S. Bureau of the Census.
TABLE A-27
Housing and Home Finance Agency—Programs in the Federal Budget
[This table presents a brief analysis of the portion of the overall Federal budget expenditures attributable to HHFA programs. Budgetary expenditures of the Government for the fiscal year 1954 were $67.8 billion, a total reduced by the $615 million of net receipts attributable to HHFA programs]
Receipts and expenditures
Use of Funds by HHFA f°r fiscal Uear 195i (jthou-
Acquisition of assets: sands of dollars)
Loans for production and sale of housing 1_______________________________________$45,698
Less repayments__________________________________________________________________ 15,291
------— $30, 407
Collateral on insurance claims 2_________________________________________________ 53,078
Less recoveries on sale of collateral_______________________________________ .13,904
—-----— 39,174
Construction of public defense housing___________________________________________________ 22,689
Total acquisition of assets__________________________________________________________ 92,270
Grants-in-aid to local governments 3_______________________________________________________ 64,636
Expenses:
Administrative__________________________________________________________________ 24,634
N onadministrative______________________________________________________________ 30,045
Payments direct to Treasury 4___________________________________________________ 4,196
FNMA fees to servicing agents___________________________________________________ 11, 772
FNMA sales discounts____________________________________________________________ 15,337
FHA participation dividends to mortgagors_______________________________________ 6,850
Other___________________________________________________________________________ 1,815
Total expenses________________________________________________________________________ 94, 649
Total applied to operations___________________________________________________________ 251, 555
Sources of Funds
Realization of assets:
Sales and repayment of mortgages_____________________________________________$677,407
Less purchase of mortgages 5_________________________________________________ 480, 783
--------$196,624
Repayment of loans and advances to local governments_________________________ 956,473
Less loans and advances to local governments6________________________________ 552,716
-------- 403,757
Receipts from disposition of property 7______________________________________________ 17,648
Total realization of assets_________________________________________________________ 618,029
Operation of Public War Housing projects___________________________________________ 51,814
Less operating expenses____________________________________________________________ 24,868
—------ 26,946
Interest on mortgages, loans and other investments_________________________________ 130,836
Less interest on borrowings 8______________________________________________________ 63,071
------- 67,765
Fees and premiums 9_______________________________________________..._____________________ 144,360
Miscellaneous_____________________________________________________________________________ 9, 049
Total provided by operations.
866,149
See footnotes at end of table.
487
HOUSING AND HOME FINANCE AGENCY
TABLE Aril—Continued
Housing and Home Finance Agency—Programs in the Federal Budget—Continued
Receipts and expenditures for fiscal year 1951 (thou-
Recapitulation sands of dollars)
Total funds applied to operations______________________________________________________ $251,555
Less total funds provided by operations__________________________________________________ 866,149
Net budgetary expenditure_________________________________________________________ —614,594
Funds provided by Treasury:
Net appropriation (after rescissions)__________________________________________$46,472
Net decrease in Treasury cash__________________________________________________ 53,155
_______ gg g27
Funds provided to Treasury:
Net repayment of borrowings from (or guaranteed by) Treasury___________________ 587,956
Dividends and repayment of appropriations______________________________________ 115,565
Investment of insurance reserves in United States bonds________________________ 10,700
Total funds provided to Treasury_________________________________________________ 714,221
-614,594
1 These loans are made under the Alaska, prefabricated, and college housing loan programs. Substantial net repayments under the first 2 programs were outweighed by the heavy disbursements under the growing college housing program.
2 Accounted for by FHA insurance claims, chiefly from Title I Modernization and Improvement Loan Insurance and from Sec. 608 (multifamily) War Housing Insurance.
3 Consists of the following 3 items: Annual contributions for low-rent housing ($44.4 million), capital grants for slum clearance and urban redevelopment ($11.6 million), and capital grants for defense community facilities ($8.6 million).
4 Consists of recoveries from loans and properties under the advance planning programs and World War II public works (Lanham) program, which under existing law are covered directly into miscellaneous receipts of the Treasury.
5 FNMA operations account for most of this item.
6 The 2 most important components of this item, in order of importance, are financing of low-rent housing under the U. S. Housing Act and loans for slum clearance and urban redevelopment.
7 Principally from sale of public war housing constructed under the Lanham Act.
8 Practically all of this item represents payments to U. S. Treasury.
9 About 92 percent of the fees and premiums were in connection with FHA and Federal Savings and Loan Insurance Corporation operations. About $7 million of this item was received to reimburse the agency for inspection and audit expenses and on account of FNMA commitments to purchase mortgages.
488
APPENDIX B
EXECUTIVE MESSAGES AND FEDERAL LEGISLATION AFFECTING HOUSING IN 1954
A. Executive Messages
In his address on the “State of the Union” of January 7, 1954, President Eisenhower stated to the Congress the broad objectives of the housing program he intended to submit on January 25th. He said the program to be submitted would enlarge and improve the opportunity for our people to acquire good homes and that if the individual, the communities, the State, and Federal Government would alike apply themselves, every American family could have a decent home.
In a special message to the Congress on housing dated January 25th, 1954, the President said the development of conditions under which every American family can obtain good housing is a major objective of national policy, and was important for two reasons. First, good housing in good neighborhoods is necessary for good citizenship and good health among our people. Second, a high level of housing construction and vigorous community development are essential to the economic and social well-being of our country. The message also pointed out that the building of new homes would provide only a partial solution to the housing problem and that the Nation had tremendous assets in its 37 million existing nonfarm homes, 19 million of which were more than 30 years old. Encouraging the conservation and improvement of our existing supply of homes would be an important contribution to the raising of national housing standards.
The President also stated in his special housing message that millions of our people still live in slums and millions more live in run-down, declining neighborhoods; and that the national interest demanded the elimination of slum conditions and the rehabilitation of declining neighborhoods. In this respect the President said, to clear slums and blighted areas and to improve our communities, we must eliminate the causes of slums and blight, and that while it is essentially a problem for our cities, Federal assistance would be justified for communities which face up to the problem of neighborhood decay and undertake long-range programs directed to its preventions. It was suggested that the main elements of such programs should include—
489
HOUSING AND HOME FINANCE AGENCY
First. Prevention of the spread of blight into good areas of the community through strict enforcement of housing and neighborhood standards and strict occupancy controls;
Second. Rehabilitation of salvable areas, turning them into sound, healthy neighborhoods by replanning, removing congestion, providing parks and playgrounds, reorganizing streets and traffic, and by facilitating physical rehabilitation of deteriorated structures;
Third. Clearance and redevelopment of slums.
In the President’s Economic Report transmitted to the Congress on January 28, 1954, certain features of the then existing housing credit law and regulations were stated to have been made obsolete by the inflation of recent years. In connection with mortgages insured by the Federal Housing Administration it was shown that the maximum loan for owner-occupied 1- and 2-family houses of $16,000 had remained unchanged since 1934 despite the great rise in construction costs and in prices of housing that had occurred in the meantime. The report suggested increasing the maximum loan to $20,000, with appropriate differentials for 3- and 4-family dwellings.
The report stated that another step forward would be to remove the discrimination against existing housing in insurance programs by making loans on existing housing more nearly comparable with those available on new houses. The report stated that not only would this expand activity directed to the rehabilitation of existing structures, but it would give greater flexibility to our economic system by facilitating transfers of houses, including those affected on the so-called “trade-in” basis.
Upon the occasion of the approval of the Housing Act of 1954 on August 2, 1954, the President issued a statement in which he said the country would be benefited by the Housing Act of 1954; that it had been one of the administration’s major legislative goals; and that it would raise the housing standards of our people by helping our communities get rid of slums, improve older neighborhoods, and also strengthen our mortgage credit system. The statement also stated that the new law would permit the Government to insure larger home mortgage loans, with smaller downpayments and longer terms, making it possible for millions of families with modest incomes, for the first time, to buy new or used homes. By this new law, the statement concludes, “We have made a major advance toward meeting America’s housing needs.”
Reorganization Plan No. 2 of 1954 which was sent to the Congress April 29, 1954, and became effective July 1, 1954, assigned to different agencies the liquidation of certain affairs of the Reconstruction Finance Corporation. There was assigned to the Federal National Mortgage Association, under this plan, the functions relating to 490
APPENDIXES
mortgages held by the Reconstruction Finance Corporation which were made or acquired under the authority of the RFC Mortgage Company or the Defense Homes Corporation. This transfer of functions to the Federal National Mortgage Association was recommended by the President in his message transmitting the reorganization plan, because that Association was responsible for servicing, liquidation and sale of the bulk of residential real estate mortgages held by the Federal Government, and was best situated to liquidate assets of a similar type transferred to it by the reorganization plan.
Executive Order 10530, dated May 10, 1954, authorized the Housing and Home Finance Administrator to issue notes and obligations for purchase by the Secretary of the Treasury under Section 102 (e) of the Housing Act of 1949 and to contract to make capital grants under Section 103(b) of that Act, without the approval, ratification, or other action of the President. There was also delegated to the Administrator by this order the authority of the President under certain sections of the United States Housing Act of 1937. The authority vested in the President under Sections 6(d) and 10(3) of that Act to approve undertakings by the Public Housing Administration of any annual contribution, grant, loan, or contract for any contribution loan or grant, was delegated to the Administrator. There was also delegated to the Administrator the President’s authority under Section 14 of that Act to approve the amending or superseding of a contract for annual contributions or loans so that the going Federal rate on the basis of which such annual contributions or the interest rate on the loans are fixed shall mean the going Federal rate on the date of the approval of the amending or superseding contracts.
Two other delegations were provided for: first, delegating to the Administrator the authority vested in the President to approve the dedication by the Public Housing Commissioner of streets, alleys, and parks for public use and the granting by the Commissioner of easements in connection with any low-cost housing or slum-clearance project described in that Act; second, the delegation to the Administrator of the President’s authority to determine that housing administered or assisted by the Public Housing Administration for persons engaged in national-defense activities is no longer needed for that purpose.
The Congress and Federal Legislation
The Housing Act of 1954
The Housing Act of 1954, Public Law 560, 83d Congress, approved August 2, 1954, amended existing housing laws and enacted new provisions of law designed to carry out most of the President’s housing program based on the recommendations of the President’s Advisory
491
HOUSING AND HOME FINANCE AGENCY
Committee on Housing after its intensive study of the Federal housing programs and after “shirt sleeves” conferences by the Housing and Home Finance Administrator with all groups interested in housing. The Act also includes provisions added to prevent abuses in certain FHA programs.
Major emphasis was placed on the prevention of slums and urban blight. To further this new emphasis local communities were required as a condition to receiving Federal assistance to slum clearance and urban renewal, low-rent public housing and certain new FHA insurance programs, to develop and put into operation a workable program utilizing all means available to eliminate and prevent slums and urban blight.
New assistance was provided to the conservation and rehabilitation of housing and neighborhoods and to local, regional, and State planning to assure efficient and proper development and redevelopment of communities. Grants were provided to encourage cities in developing methods and techniques for the prevention and elimination of slums and urban blight. The administration of related programs was coordinated to assure that the Federal assistance provided would be used with a minimum of waste and duplication, and with maximum utilization of local initiative and private financing and enterprise.
Existing laws were amended to liberalize and make more effective assistance to the provision of new housing and to make it easier for families to purchase or build new homes or to repair or buy existing homes. The government’s facilities to assist in the distribution and provision of home mortgage credit were revised first, to assure the provision of adequate home-mortgage credit, and second, to provide for a gradual substitution of private investment funds for Federal funds in the provision of such credit.
Provisions were also added to existing laws to protect the consumer and the Federal government against abuses in the FHA home repair and improvement program and to prevent excessive profits through “mortgaging out” in connection with mortgage insurance on rental housing.
FHA Insurance Programs
Regular Sales Housing Program
Section 203 of the National Housing Act covering the insurance of mortgages on 1- to 4-family homes was amended to liberalize and simplify the statutory limits on the terms of the mortgages insured under this section. The limits on the amounts of mortgages which may be insured were increased from $16,000 to $20,000 where the mortgages cover 1- to 2-family homes, from $20,500 to $27,500 where the mortgages cover 3-family homes, and from $25,000 to $35,000
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for 4-family homes. The mortgage amounts were also limited to 95 percent of the first $9,000 of the value of the home plus 75 percent of the value in excess of $9,000. The President was authorized to increase this latter limit to 95 percent of $10,000 and 75 percent of the amount over $10,000 if he considers such action to be in the public interest. Where the mortgagor is not the occupant of the housing (as in the case of a builder-mortgagor) the mortgage is limited to a maximum of 85 percent of the mortgage amount otherwise available. In addition, the mortgagor must have paid as a downpayment at least 5 percent of the cost of acquisition of the house or such larger downpayment as the Federal Housing Commissioner may prescribe. These same terms were all made applicable to existing (not new) homes, except that the 95 percent in the ratio to value limit is 90 percent.
Section 203 was also amended to provide that mortgages insured under that section may have a maturity satisfactory to the Federal Housing Commissioner up to 30 years or three-quarters of the Commissioner’s estimate of the remaining economic life of the housing, whichever is the lesser. The maximum statutory interest rate is set at 5 percent with authority in the Federal Housing Commissioner to increase the rate to not to exceed 6 percent as he finds it necessary to meet the mortgage market. The Commissioner is also permitted to allow a service charge.
The foregoing statutory limits on the terms of mortgages insured under Section 203 take the place of more complicated formulas previously in the National Housing Act making statutory distinctions within specific housing programs related to proposed and existing construction, maximum mortgage amounts and maximum ratio of loan to value as related to the number of bedrooms, and other factors.
A new subsection was added to Section 203 to continue the authority previously carried in Section 8 (made inactive by this law) to insure disaster housing loans up to 100 percent of the appraised value of the property where the mortgage is not in excess of $7,000.
Another new subsection of Section 203 authorizes the insurance of mortgages covering single-family dwellings in suburban and outlying areas and small communities where the Federal Housing Commissioner finds—(1) it is not practicable to obtain conformity with many of the requirements essential to the insurance of mortgages on housing in built-up urban areas and (2) that the project is an acceptable risk giving consideration to the need for low- and moderate-income housing. The amount of the mortgage is limited to $6,650 and 95 percent of value if the mortgagor is the owner and occupant of the property, or $5,950 and 85 percent of value if the mortgagor is the builder. A
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downpayment of at least 5 percent of the cost of the housing is to be required from an owner-occupant mortgagor. Where the mortgagor is the owner-occupant another person or corporation with a credit standing satisfactory to the Commissioner may advance all or part of the downpayment for the house and guarantee payment of the mortgage. Mortgages covering the construction of farm homes can be insured under these same provisions. The farm home is required to be on a plot of land five or more acres in size adjacent to a public highway. The total amount of insurance outstanding of farm-home mortgages may not exceed $100,000,000.
Regular Rental Housing Program
Section 207 of the National Housing Act, dealing with eligibility for rental housing mortgage insurance was amended to make clear that such section applies to the insurance of mortgages on existing multifamily structures located in slum or blighted areas.
Rental housing mortgage limits under Section 207 were changed by removing the $10,000 limit per family unit and making increases in other limitations to compensate for the higher costs incident to the construction of elevator type structures. In the discretion of the Federal Housing Commissioner, the limit of $2,000 per room may be increased up to $2,400, and the limit of $7,200 per family unit (which applies where the number of rooms in a project is less than four per family unit) may be increased up to $7,500 where the housing consists of elevator type structures.
Rental Housing in Guam
Special liberal provisions in Section 207 applicable to rental housing in Alaska (90 percent of replacement cost rather than 80 percent of value) were made applicable to mortgages covering property located in Guam.
Cooperative Housing
Section 213 of the National Housing Act was amended to permit FHA-insured cooperative housing mortgages to be as high as $25 million in amount (the previous limit was $5 million) if the mortgagor cooperative is regulated by Federal or State law as to rents, charges, and methods of operation. The per family or per room mortgage amount limitations with respect to nonveteran projects was changed from $8,100 per family unit or $1,800 per room, to $2,250 per room and with a per family unit limitation of $8,100 applicable only if the number of rooms per unit is less than 4. The limits for veterans’ cooperatives are $2,375 per room or $8,550 per family unit. A provision was also added to Section 213 which permits the Federal
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Housing Commissioner to increase the per room limit and per family unit limit on mortgage amounts for elevator type structures in both veteran and nonveteran projects. The former cost basis for cooperative housing mortgages was changed to a valuation basis. The statutory provision for an Assistant Commissioner for Cooperative Housing was stricken from the National Housing Act.
New FHA Assistance to the Prevention and Rehabilitation of Slums
Sections 220 and 221 were added to the National Housing Act which authorize new FHA mortgage insurance programs to assist in financing the rehabilitation of existing dwellings as well as the construction of new dwellings in connection with slum clearance and urban renewal undertakings. In addition, some of the changes in the regular FHA programs were designed to assist in rehabilitation of housing and the prevention of slums and blight. The more liberal mortgage insurance terms provided for existing homes under the Section 203 program will encourage the enlargement and modernization of homes and the purchase in some cases of larger old homes more suitable for large families in preference to smaller new homes. Also the Section 207 rental housing program may now be used for the rehabilitation of multifamily housing in blighted areas on the same terms as in other areas.
The new Section 220 provides a mortgage-insurance program to assist in the rehabilitation of existing dwellings and the construction of new dwellings in slum clearance or urban renewal areas. This includes urban redevelopment areas where Federal aid contracts were approved or executed under Title I of the Housing Act of 1949 before the effective date of the Housing Act of 1954, and urban renewal areas within the meaning of that term in the new urban renewal provisions as added by this Act to Title I of the Housing Act of 1949. A redevelopment plan or urban renewal plan, as the case may be, must have been approved for the area by the local governing body and by the Housing Administrator. The Administrator must certify to the Federal Housing Commissioner that the plan conforms to a general plan for the locality as a whole and that there is necessary authority and financial capacity to assure the completion of the redevelopment or urban renewal plan. Further, the property must meet such standards and conditions as are prescribed by the Federal Housing Commissioner. In addition, before Section 220 may be made available in an urban renewal area the locality must have a workable program for the elimination and prevention of the spread of slums and urban blight which has been approved by the Housing Administrator. A workable program is not required as a condition to housing in an existing redevelopment area, however.
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The mortgage limits covering 1- to 4-family dwellings are the same as those in the regular Section 203 sales housing program. However, this new Section 220 also permits mortgage insurance covering more than 4-family dwellings (the number in excess of 4 to be specified by the Commissioner) to take care of those structures which may contain more than 4 units but less than the number which could be covered under multifamily mortgage insurance. The mortgage limits in such cases would be $35,000 plus not to exceed $7,000 for each additional family unit in excess of four.
Provision was also made in Section 220 for multifamily housing mortgage insurance with maximum mortgage limits of $2,250 per room (or $8,100 per family unit if the number of rooms in the project is less than four per family unit). Where a project consists of elevatortype structures the Commissioner may increase these dollar maximum mortgage amounts to $2,700 per room and $8,400 per family unit, respectively. These mortgage amounts (per room and per family unit) on elevator-type structures may be increased by the Federal Housing Commissioner by an additional $1,000 per room in high cost areas. The maximum ratio of loan to value limit for multifamily housing is 90 percent of value.
Maturities of Section 220 mortgages may be as prescribed by the Commissioner except that the maturities of mortgages covering 1- to 4-plus family sales housing are not permitted to exceed the maximum maturity prescribed for Section 203 sales housing—up to 30 years or three-quarters of the Commissioner’s estimate of the remaining economic life of the housing, whichever is the lesser. The maximum interest is 5 percent per annum except that it can be up to 6 percent if the Federal Housing Commissioner finds it necessary to meet the mortgage market.
The new Section 221 program provides FHA mortgage insurance for low-cost housing for families displaced as the result of governmental action in a community which has a workable program (which has been approved by the Housing Administrator) for the elimination and prevention of the spread of slums and urban blight, or in a community where there is being carried out a slum clearance and urban redevelopment project covered by a Federal aid contract executed or approved prior to the effective date of the Housing Act of 1954. Eligible displaced families include families which are required to move because of any form of governmental action, such as land acquisition by a public body, closing or vacating of dwellings by public officials, or the eviction of families from public housing because of high incomes. Section 221 mortgage insurance is available only in communities which have requested that it be provided. The Federal Housing Commissioner will prescribe procedures securing to displaced families pref
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erences and priorities of opportunity to purchase or rent the dwellings furnished with Section 221 assistance. The total number of Section 221 housing units cannot exceed the aggregate number of such dwellings which the Housing Administrator certifies to the Federal Housing Commissioner to be needed for the relocation of displaced families. The Housing Administrator cannot certify any dwelling units for Section 221 mortgage insurance during any period when, in his opinion, the community has failed to carry out its workable program for eliminating and preventing slums and urban blight. Further, where Section 221 is made available in a community undertaking only an existing slum clearance and redevelopment project the Housing Administrator may not certify a larger number of dwelling units for Section 221 than he estimates to be needed for the relocation of families during the period the slum clearance and redevelopment project is being carried out.
The maximum mortgage amount is $7,600 or up to $8,600 in high-cost areas, and 95 percent of value. Owner occupants are required to make at least a 5-percent downpayment. Section 221 financing is also available for mortgages not exceeding 85 percent of value covering single-family homes built, or acquired and repaired or rehabilitated for sale, if the financing is required pending subsequent sale to a qualified owner occupant.
Section 221 mortgage insurance is also provided for the repair or rehabilitation, as well as construction, of dwellings (not necessarily contiguous) for use by 10 or more families as rental accommodations for qualified displaced families where the mortgagor is a private nonprofit corporation, association, or organization which is regulated under Federal or State laws as to rents, charges, and methods of operation. Such mortgages may not exceed $5 million, $7,600 ($8,600 in high-cost areas) per family unit, and 95 percent of value.
Maturities of Section 221 mortgages would be as prescribed by the Federal Housing Commissioner but not more than thirty years or three-fourths of the estimated remaining economic life of the property, whichever is lesser. Maximum interest rate is 5 percent per annum or 6 percent if the Commissioner finds it necessary to meet the mortgage market.
Mortgage lenders under Section 221 mortgages have the option after 20 years if the loan is not in default, of assigning the mortgage to the Federal Housing Commissioner and receiving in exchange 10-year debentures equal to the original principal unpaid at assignment plus accrued interest. These debentures will bear interest at a rate fixed at date of issuance based on the estimated average yield to maturity over a six months period on outstanding marketable Government obligations having a maturity of 8 to 12 years.
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Mortgage Insurance for Servicemen
Section 222 was added to the National Housing Act to authorize a new FHA mortgage insurance program for housing for servicemen in the Armed Forces of the United States and their families. This program will assist in the provision of housing for members of the active military establishment who are not usually eligible for the home loan benefits of the Servicemen’s Readjustment Act of 1944, because they have not become veterans.
Before a serviceman is entitled to the benefits of this program the Secretary of Defense must issue to him a certificate indicating that he requires housing, that he is serving on active duty in the Armed Forces of the United States, and that he has served on active duty for more than 2 years. A certificate may not be issued to any person ordered to active duty for training purposes only. A serviceman may be issued more than one certificate only if in the judgment of the Secretary of Defense the additional certificate is justified due to circumstances resulting from military assignment.
Mortgages insured under the new Section 222 are subject to the same limits on amounts as mortgages insured under the regular Section 203 sales housing program except that the maximum ratio of loan to value under Section 222, may, in the discretion of the Federal Housing Commissioner, exceed the maximum prescribed in Section 203, up to 95 percent of the appraised value of the property, but not more than $17,100. The serviceman will be required to either occupy the property or certify that his failure to do so is the result of his military assignment.
Premiums on the insurance will not be payable by the mortgagee while the serviceman owns the home but will be paid yearly by the Secretary of Defense from the appropriations for pay and allowances of persons eligible for mortgage insurance under this section. The Secretary of Defense will certify to the Federal Housing Commissioner the termination of ownership of such home by a serviceman, and future premiums will be payable in the same manner as in the case of other mortgage insurance.
The benefits of this section also apply to servicemen in the United States Coast Guard and their families, except that the Secretary of the Treasury will perform the functions otherwise performed by the Secretary of Defense.
FHA Insurance of Open-End Mortgages
FHA is authorized to insure advances to a mortgagor made pursuant to provisions in an open-end mortgage by the provisions of a new Section 225 added to the National Housing Act. Open-end mortgages are mortgages which provide that the outstanding balance
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can be increased in order to advance additional loan funds to a mortgagor for improvements, alteration, or repair of the home covered by the mortgage without the necessity of executing a new mortgage. Only advances for such improvements or repairs as substantially protect or improve the basic livability or utility of the property will be eligible for insurance. In addition, no advance will be insured if the amount of the advance plus the amount of the unpaid balance of the original mortgage will exceed the amount of the original mortgage unless the mortgagor certifies that the advance will be used to finance the construction of additional rooms or other enclosed space as a part of the dwelling.
FHA Appraisals Available to Home Buyers
A new provision (Section 226) of the National Housing Act requires that the amount of the FHA appraised value of a property be made known to the purchaser of a home for his own occupancy prior to the sale. Under this provision the Federal Housing Commissioner will require the seller or builder to agree to give the purchaser this information. The requirement applies to single and two-family residences.
Extension of Titles VIII and IX—Military Housing and Defense Housing
The Military housing insurance authority (Title VIII) was extended for 1 year—to June 30, 1955. The President is given standby authority up until July 1, 1955, to authorize the use of Title IX for Federal aid in the provision of defense housing during certain periods or for a specific project or projects. In addition, dwellings covered by a mortgage hereafter insured under Section 903 are required to be held for rental for at least 3 years.
Protection of Labor Standards
The provisions of the National Housing Act with respect to the protection of labor standards were made to apply to multifamily housing financed by mortgages insured under the new Section 220 rehabilitation and neighborhood conservation program.
FHA Debentures
Under new provisions added to the National Housing Act all FHA debentures issued under the Act (other than the new special debentures issued under Section 221) shall have 20-year maturities except where the mortgage involved was insured or commitment for insurance was issued prior to the effective date of the Housing Act of 1954.
The interest rate on FHA debentures with respect to mortgages insured after the effective date of the Housing Act of 1954 will be at the rate in effect at the time of insurance as established by the Federal
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Housing Commissioner with the approval of the Secretary of the Treasury. The rate will not exceed the rate determined by the Secretary of the Treasury by estimating average yield to maturity on comparable marketable obligations of the United States.
FHA Authorization
Section 217 of the National Housing Act was amended to consolidate and merge all existing mortgage-insurance authorizations with respect to all sections or titles (except Section 2) into one general insurance authorization. The total authorization equals the estimated amount of insurance in force and commitments outstanding as of July 1, 1954, plus $1% billion, except that with the approval of the President, the total authorization may be increased by amounts up to not to exceed $500 million. This provides an additional $2 billion authorization.
Miscellaneous
The Act contains miscellaneous other amendments to the National Housing Act with respect to the administration of the new programs authorized by the Act.
Other amendments improve and simplify provisions of the Act with respect to the payment of insurance in cases of defaults on mortgages and loans, administration of the insurance funds, reinsurance of mortgages on foreclosed properties, and the insurance of mortgages covering housing properties sold by Federal and State governments.
Provisions To Prevent Abuses of FHA Programs
Title I Home Improvement and Repair Loans
Title I of the National Housing Act, which provides for FHA insurance of lending institutions against losses on loans for alterations, repairs and improvements of homes and other structures, was amended by the addition of provisions designed to prevent abuses and misuse of the program.
Lenders which are insured against losses will be required to provide ten percent co-insurance. In other words, Title I was amended to provide FHA insurance for only 90 percent of the loss on each insured loan. Previously an institution was insured against losses up to 10 percent of the losses on the aggregate amount of its Title I loans, which in practice amounted to 100 percent insurance.
Only such items as substantially protect or improve the basic livability or utility of properties will be eligible for financing with Title I loans. The Federal Housing Commissioner is directed to declare ineligible for FHA insurance loans financing any items which he deter
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mines do not meet this requirement, or which are especially subject to selling abuses.
Further, the Commissioner is directed to prevent by regulations or procedures the use of Title I assistance (1) with respect to new residential structures that have not been completed and occupied for at least 6 months, or (2) which would, through multiple loans, exceed the dollar limit for the particular type of loan involved under Title I.
The FHA is prohibited from making Title I insurance contracts with lending institutions which are not subject to government supervision or approved by the Federal Housing Commissioner on the basis of the institution’s credit and experience or facilities to make and service Title I loans.
These Title I corrective amendments went into effect the first day after the first full calendar month following the date of approval of the Housing Act of 1954.
Cost Certifications—Prevention of “Mortgaging Out”
Provisions were added to the National Housing Act designed to prevent “mortgaging out” on mortgages insured by FHA for new or rehabilitated multifamily and rental housing (including Section 903 or 221 1- or 2-family housing which are temporarily held for rental). These provisions are designed to prevent any proceeds of an insured mortgage loan on such housing from being used to provide excessive profits to the builder. They require that the amount of the mortgage shall be reduced, after actual costs of the project are known, to an amount conforming to the percentage of estimated value or replacement cost which was used in establishing the FHA commitment for the mortgage. For example, where FHA makes a commitment before construction to insure a mortgage on a rental housing project for 80 percent of its estimated value of $1 million, and the subsequent construction and other costs of the project actually are $900,000, the amount of the mortgage would be reduced to 80 percent of $900,000. This will assure that the builder cannot obtain an FHA insured loan greater than the percentage of the actual project costs specified by the Congress. Upon completion of the project and prior to final endorsement of the mortgage for insurance, the mortgagor is required to certify that the approved percentage of the actual cost (i.e., 80 percent under Section 207, 90 percent or 95 percent under Section 213, 90 percent under Section 220, etc.) equaled or exceeded the proceeds of the mortgage loan or the amount by which the proceeds exceeded such approved percentage and to apply the amount of such excess to the reduction of the mortgage loan. In the computation of actual cost, the land value considered may not exceed the Commissioner’s estimate of the fair market value of the land in the project prior to
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the construction of the improvements. There will be excluded from the computation of actual costs amounts representing any kickbacks, rebates, or trade discounts received in connection with the construction of the improvements. Reasonable allowance may be included for builders’ profit if the mortgagor is also the builder. There are special provisions with respect to costs which the mortgagor may include in the certification when the mortgage finances rehabilitation of housing.
The new provisions for cost certification take the place in Titles VIII and IX of the former provisions for cost certifications with respect to military housing and defense housing in those titles, respectively.
Denial of FHA Insurance Assistance in Cases of Abuses
Under a new Section 512 added to the National Housing Act the Federal Housing Commissioner is authorized to refuse the benefits (either direct or indirect) of participation in FHA insurance programs to persons or firms who knowingly and wilfully violate the letter and spirit of the National Housing Act, or the loan guaranty title of the Servicemen’s Readjustment Act of 1944, or the regulations promulgated under either of these acts. Such benefits can also be refused if there has been violation of Federal or State penal statutes in connection with programs under either of the two acts or where there has been material failure to carry out contractual obligations with respect to the completion of construction or repairs financed with assistance under either of the two laws. These provisions are applicable to insured lenders and borrowers, builders, contractors, dealers, salesmen, or agents for a builder, contractor or dealer.
Prohibition Against Use of FHA-insured Housing for Hotel Purposes
Provisions were added to the National Housing Act (Section 513) which prohibit multifamily housing financed with FHA mortgage insurance from being used for transient or hotel purposes unless (a) by May 28, 1954, the Federal Housing Commissioner had agreed in writing to rental of a specified number of units for such purposes, or (b) the Commissioner finds that the project is in a resort area and that prior to May 28, 1954, a specified number of the accommodations were used for transient or hotel purposes. Mortgagors under FHA insured multifamily housing mortgages will be required in the future, as a condition to insurance by FHA, to certify under oath that the property will not be used while insurance remains outstanding for transient purposes. The Federal Housing Commissioner will define “transient or hotel purposes,” but rental for less than 30 days will constitute rental for such purposes. Provisions were also made for enforcing this prohibition.
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Misuse of Initials “FHA”, etc.
Title 18, Section 709 of the United States Criminal Code was amended to prevent the use of the initials “FHA” (in addition to the name “Federal Housing Administration”) in advertising or names in such a way as to suggest that a dealer or product is in any way connected with or approved by FHA. That section was also amended to prohibit a similar misuse of the words “Housing and Home Finance Agency” and “Federal National Mortgage Association.”
Provision of Mortgage Funds
Federal National Mortgage Association Rechartered—Establishment ot Voluntary Home Mortgage Credit Program
Title II of the Housing Act of 1954 rewrites Title HI of the National Housing Act to recharter the Federal National Mortgage Association, the existing Federal secondary market facility for home mortgages, and provides for the capitalization and operation of the Association under its new charter. Provision is made for the gradual substitution of private investment for Federal investment in the capitalization of the Association and provision of funds for the purchase of mortgages. As a supplement to the secondary market assistance provided by the Federal National Mortgage Association for home mortgage credit, Title VI of the Housing Act of 1954 establishes a voluntary home mortgage credit program under which private financing institutions will assist in making funds available for VA and FHA home mortgages.
The FNMA is authorized, subject to limitations in the new law, to make commitments to purchase, and to purchase, service, or sell home mortgages (or participations therein) that are insured by the Federal Housing Administration or guaranteed or insured by the Veterans’ Administration. No mortgage may be purchased at a price exceeding 100 percent of the unpaid principal amount of the mortgage. In addition, the mortgages purchased may not exceed $15,000 in amount for each family dwelling unit covered by the mortgage and the Association is not authorized to purchase mortgages offered by or covering property held by Federal, State, territorial, or municipal agencies.
FNMA is authorized to—
(1) provide a secondary market for FHA and VA home loans, except those insured or guaranteed prior to the effective date of the Housing Act of 1954,
(2) provide special assistance with respect to special housing programs or retarding or stopping a decline in mortgage lending and home building when authorized to do so by the President, by making commitments to purchase and purchasing home mortgages (this will in
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elude the purchase of Section 221 mortgages for homes for displaced families if the President finds it necessary) and
(3) manage and liquidate the mortgage portfolio of the FNMA in existence as of the close of a cutoff date determined by the rechartered Association within 90 days after the enactment of the Housing Act of 1954.
To bring in private capital lenders and institutions who sell mortgages to FNMA will be required to make capital contributions to FNMA equal to not less than 3 percent of the unpaid principal amount of the mortgages involved, or such greater percentage as may be determined by FNMA. Common stock will be issued to the mortgage sellers as evidence of their capital contributions. This requirement will not apply where mortgages are sold under FNMA’s special assistance operations or its operations in connection with the liquidation of the existing portfolio of mortgages acquired by FNMA prior to being rechartered. The Association is also authorized to impose charges or fees for its services with the objective that all costs and expenses of its operations will be within its income and revenues.
The initial issuance of stock will be subscribed for by the Secretary of the Treasury in an amount equal to the sum of the original capital stock of the former FNMA and its paid in surplus, surplus, surplus reserves, and undistributed earnings as of the close of the cutoff date. It is estimated that this will amount to approximately $70 million and preferred stock will be delivered to the Treasury. As promptly as practicable after all of the preferred stock of the Association held by the Treasury has been retired, the Housing Administrator is required to transmit to the President for submission to the Congress recommendations for legislation to make appropriate provisions to transfer to the owners of the outstanding common stock of the Association the assets and liabilities of the Association in connection with its secondary market operations in order that such operations may thereafter be carried out by a privately owned and privately financed corporation.
Funds of the capital surplus and the general surplus accounts of the Association will be available to retire the preferred stock held by the Treasury as rapidly as the Association deems feasible. Concurrently with the retirement of the last of the outstanding preferred stock, the Association will pay to the Treasury for covering into miscellaneous receipts an amount equal to that part of the general surplus and reserves of the Association (other than reserves established to provide for any depreciation in value of its assets, including mortgages) which shall be deemed to have been earned through the use of the capital represented by the shares held by him from time to time. The amount of this payment will be determined by applying to the surplus and reserves that percentage which is equivalent to the proportion borne
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by the employed capital represented by the Treasury’s stock to the total employed capital of the Association, computed monthly for the period from the cutoff date to the retirement of the last of the outstanding shares of preferred stock of the Association.
All earnings from the operations of the Association will annually be transferred to its general surplus account. Funds of the general surplus account may, in the discretion of the board of directors of the Association, be transferred to reserves. All dividends shall be charged against the general surplus account. There will be no recourse to the capitalization of the Association with respect to the special assistance operations of the Association and its liquidation of the existing portfolio of mortgages. All benefits and burdens of these two operations, after allowance for related obligations of the Association, its prorated expenses, and the like, including amounts required for the establishment of such reserves as the Association deems appropriate, will inure solely to the Secretary of the Treasury.
To enable the Association to carry out its secondary market operations, it is authorized to issue obligations for sale to the investing public. The aggregate amount outstanding at any one time will not exceed 10 times the sum of its capital, capital surplus, general surplus, reserves, and undistributed earnings.
The Secretary of the Treasury is also authorized in his discretion to purchase the secondary market obligations of the Association, but his holdings cannot at any time exceed $1 billion. The authority of the Treasury to purchase the Association’s secondary market obligations terminates when all of the captial stock held by the Treasury has been retired.
The Association may not purchase participations or make any advance commitments to purchase mortgages under its secondary market operations. However, it may, in the discretion of its board of directors, issue a purchase contract in an amount not exceeding the amount of the sale of mortgages purchased from it, entitling the holder of the contract to sell to the Association mortgages in the amount of the contract.
The total amount of purchases and commitments to purchase mortgages under the Association’s special assistance functions is limited to $200 million outstanding at any one time. However, under these operations the President may also authorize the Association to enter into commitments to purchase immediate participations and to make related deferred participation agreements up to $100 million outstanding at any one time. Deferred participation agreements will be only on the basis of a commitment by the Association to purchase an immediate participation of a 20-percent undivided interest in each mortgage and a related deferred participation agreement by the
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Association to purchase the remaining outstanding interest in such mortgage conditional upon the occurrence of such a default as gives rise to the right to foreclose.
The Association is also authorized to issue obligations for sale to the investing public to finance its liquidation operations. The total of such obligations cannot exceed the amount of the cash, mortgages, and Government bonds, free from any liens or encumbrances, held by the Association for management and liquidation. The Secretary of the Treasury is also authorized to purchase obligations from the Association issued to finance its liquidation activities.
No mortgage may be purchased by the Association under its liquidation activities except pursuant to and in accordance with the terms of a contract or a commitment to purchase the mortgage made prior to the cutoff date for the old FNMA operations. The total amount of mortgages and commitments held by the Association under its liquidation activities is limited to $3,350,000,000. However, this limit is required to be progressively reduced by the amount of cash realizations on account of the principal of mortgages held under the Association’s liquidation activities, and by cancellation of any commitments to purchase mortgages. The Association will be permitted to grant the usual and customary increases in the amounts of outstanding commitments.
Voluntary Home Mortgage Credit Program
Title VI of the Housing Act of 1954 established a voluntary home mortgage credit program under which private financing institutions would undertake to make mortgage credit available where it is needed, particularly in remote areas and small communities.
A National Voluntary Mortgage Credit Extension Committee was established consisting of the Housing and Home Finance Administrator as Chairman, and fourteen other persons appointed by the Administrator representing lending institutions, home builders, and real estate boards. The Administrator, after consultation with the members of the National Committee, appointed regional subcommittees for regions conforming generally to the Federal Reserve districts.
The National Committee and the regional subcommittees will facilitate the flow of funds for residential mortgage loans into areas or communities where there may be a shortage of local capital for, or inadequate facilities for access to, such loans. This will be done by soliciting and obtaining the cooperation of private financing institutions in extending credit for insured or guaranteed mortgage loans wherever consistent with sound underwriting principles. The committee and subcommittees will study and review the demand and supply of funds for residential mortgage loans and maintain liaison
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with the Federal Housing Administration and the Veterans’ Administration. Regional subcommittees will render assistance to any applicant for a home loan where the applicant certifies that he has applied to at least two private lending institutions for such loan and has been informed by them that funds are not available, and that he is eligible for insurance or guaranty of the loan. Regional subcommittees will also encourage small or local private lending institutions to originate home loans by assisting them in locating other private lending institutions willing to repurchase the mortgage loans.
The Housing Administrator will issue general rules and procedures for carrying out this program and provide the National Committee with office space and staff assistance. The authority for this program terminates June 30, 1957.
Slum Clearance and Urban Renewal
The slum clearance and urban redevelopment program authorized by Title I of the Housing Act of 1949 is broadened by Title HI of the Housing Act of 1954 to authorize Federal assistance to local communities not only in the clearance and redevelopment of slum areas as originally provided by Title I but to help them in preventing the spread of slums and urban blight through the rehabilitation and conservation of blighted and deteriorating areas. Accordingly, the name of this program was changed by Title III from “Slum Clearance and Community Development and Redevelopment” to “Slum Clearance and Urban Renewal” to indicate more clearly the broader nature and extent of the program.
Under the Title I program as changed by this 1954 Act, Federal assistance to local slum clearance and urban renewal activities includes assistance to either (a) slum clearance and urban redevelopment projects of the type authorized under the original 1949 law, or (6) projects involving the rehabilitation and conservation of blighted and deteriorating areas, or (c) a combination of both. Communities which were carrying out slum clearance and urban redevelopment projects prior to enactment of the Housing Act of 1954 will be permitted, if they desire, to complete such projects under the provisions of Title I of the 1949 Act in effect when they commenced their projects. However, they may broaden their programs to include rehabilitation and conservation projects if they meet the requirements for such additional assistance under the new provisions of law.
New contracts for Federal assistance to slum clearance and urban renewal can not be entered into unless the local community making application for such assistance has presented to the Housing Administrator and he has approved a workable program for eliminating and preventing slums and urban blight. The workable program must
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HC
provide for utilizing appropriate private and public resources, and must include an official plan of action for dealing effectively with the problem of urban slums and blight within the community and for the establishment and preservation of a well-planned community with well-organized residential neighborhoods.
A rehabilitation or conservation project is defined by the Housing Act of 1954 to include the restoration and renewal of a blighted, deteriorated, or deteriorating area by—
(1) carrying out plans for a program of voluntary repair and rehabilitation of buildings and improvements in accordance with the urban renewal plan;
(2) acquisition of real property and demolition or removal of buildings and improvements where necessary to eliminate unhealthful, insanitary or unsafe conditions, lessen density, elim-inate obsolete or other detrimental uses, or to otherwise remove or prevent the spread of blight or deterioration, or to provide land for needed public facilities;
(3) installation, construction, or reconstruction of streets, utilities, parks, playgrounds, and other improvements necessary for carrying out in the area the urban renewal objectives in accordance with the urban renewal plan; and
(4) the disposition of any property acquired in the urban renewal area (including sale, initial leasing, or retention by the local public agency itself) at its fair value for uses in accordance with the urban renewal plan.
Buildings or improvements on property which is acquired in a blighted area are not required to be torn down but can be rehabilitated and repaired if that is the most practicable and economical way to prevent or eliminate slums and blight. However, the costs of rehabilitation will not be included in the project cost and will not be financed by Federal loans. Such costs will be financed by the purchasers (in most cases) or by local agencies. FHA mortgage insurance assistance is provided by the Housing Act of 1954 to assist financing by purchasers (see especially the new Section 220 program under “FHA Insurance Programs”).
Federal grants will be available for assistance of rehabilitation and conservation projects in accordance with the same “two-thirds one-third” formula as for Federal-local grants for slum clearance and urban redevelopment projects.
In addition, new special grants are authorized to be made to localities to assist them in developing, testing, and reporting on improved techniques for preventing and eliminating slums and urban blight. Grants under this authority are limited to $5 million in aggregate amount.
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Other changes were made in existing law to adapt it to the broadened program of slum clearance and urban renewal and to clarify and improve the program. A provision is added to Section 110(d) of the 1949 Act (defining local grants-in-aid) which will exclude from local grants-in-aid public facilities financed by special assessments against land in a project area, and revenue-producing pubic utilities the capital cost of which is wholly financed with local bonds or obligations payable solely out of revenues derived from service charges.
Provisions were also included in this Act to enable the District of Columbia to participate in urban renewal projects.
Low-Rent Public Housing
Authorization for Additional Low-Rent Public Housing
The United States Housing Act of 1937, was amended to authorize the Public Housing Administration to enter into new contracts during the fiscal year 1955 for loans and annual contributions with respect to not more than 35,000 additional public housing units. The new contracts can be entered into only with respect to low-rent housing projects which are to be undertaken in communities where a slum clearance and urban redevelopment or urban renewal project is being carried out with assistance under Title I of the Housing Act of 1949, as amended, and only if the local governing body of the community undertaking the project certifies that the low-rent public housing project is needed to assist in meeting the relocation requirements of Section 105(c) of the Housing Act of 1949 by providing housing for persons displaced by the slum clearance operations. Further, under a provision in Section 101 of the Housing Act of 1949 added by the Housing Act of 1954, a local community must have a workable program for eliminating and preventing slums and urban blight which has been approved by the Housing Administrator, before new contracts can be entered into for annual contributions for public housing.
The total number of dwelling units which may be contained in any low-rent housing project provided for under these new contracts is further limited by the provision that it may not exceed the number of such units needed for the relocation of families displaced as a result of Federal, State, or local governmental action in the community.
Preferences for Admission to Public Housing
The preference provisions with respect to admission to low-rent public housing were amended. Prior to this new law, a first preference was given only to families displaced by a low-rent proj ect or by a slum clearance or redevelopment project, or which were so displaced within 3 years prior to making application for admission. This
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preference provision was amended to make it applicable to families who are displaced because a building, health, sanitary, or other code relating to housing standards prohibits the family from living in that particular dwelling for reasons such as overcrowding or failure of the dwelling to meet minimum standards of light, air, sanitation, etc.; or through closing of the dwelling through local government action because it is unfit; or through demolition of the dwelling by government action for the construction or widening of a highway or bridge even though not connected with redevelopment or urban renewal. In order to permit proper programming of relocation activities, local housing authorities are authorized to grant prior preference as among projects or actions entitled to preference. Veterans continue to be preferred within each preference group.
A provision in the United States Housing Act of 1937 was continued in effect until March 1, 1959, which waives, in the case of veterans, the requirement that tenants being admitted to a low-rent public housing project must have lived in substandard housing.
Payments in Lieu of Taxes
Section 10(h) of the United States Housing Act is amended to make mandatory on a local housing authority any payments in lieu of taxes stipulated in its cooperation agreement with the local governing body. The agreement is required to provide for payments in lieu of taxes of 10 percent of shelter rents unless State law prescribes a lesser amount or unless the local governing body agrees to a lesser amount. Agreements will also provide for offsetting against such payments any claims by the public agency against local bodies due to their failure to meet their obligations under the agreement. However, in any case where it appears at the time the cooperation agreement is entered into that tax exemption, less a 10 percent payment in lieu of taxes, will not result in a local contribution to the project equal to at least 20 percent of the Federal contributions, the payments in lieu of taxes to be provided in the agreement, will be limited to an amount, if any, determined year by year which will not reduce the local contributions below such 20 percent.
Under the new provisions, localities may elect, if they so desire and if permitted by State law, to make the project subject to full taxes on condition that the locality pays to the project in cash the difference between full taxes and 10 percent of shelter rents but not less than 20 percent of the Federal contribution to the project. In either case the local housing authority must inform the local governing body, before the Federal annual contributions contract is executed, its estimate (in the case of a tax-exempt project) of the annual amounts to be paid in lieu of taxes and of the amount of taxes which would be
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APPENDIXES
levied if the property were privately owned, or (where the project is taxed) the estimated amount of the local cash contribution.
Existing annual contributions contracts were authorized to be amended in accordance with the new provisions.
Self-liquidation of Public Housing
Provisions were added to Section 10(h) of the United States Housing Act designed to make the public housing program self-liquidating so far as possible. They provide that after the obligations for which annual contributions are pledged are paid in full, receipts in excess of necessary expenses of administration of the project, and of reasonable reserves therefor, must be paid to the Federal Government, and to local public bodies which have contributed to the project in the form of tax exemption or otherwise, in proportion to the aggregate contributions which the Government and such local bodies have each made to the project, but not to exceed their respective contributions. Meanwhile, only debts for necessary expenditures of the project can be incurred by the local housing authority.
In the event the project is sold at any time (either before or after its cost has been liquidated), it must be sold to the highest bidder after advertising, or at fair market value; and the proceeds of such sale together with any reserves held in connection with the project, after all outstanding debts in respect to the project have been paid, must be paid to the Government and to the local public bodies in a proportion based on the aggregate contribution which the Government and the local bodies have made to the project, but not to exceed their respective contributions.
Repeal of Labor Reporting Requirements
A provision requiring certain reports to the Department of Labor which that Department no longer desires was repealed.
GAO Audit
A provision was added to the United States Housing Act which requires expenditures for the payment of annual contributions to low-rent public housing to be subject to audit and final settlement by the General Accounting Office.
Procedure in Cases of Local Decision to Sell Low-rent Public Housing
A new provision was added to the United States Housing Act of 1937 prescribing procedures to be followed where a local community by resolution or ordinance, or by referendum, has determined that a low-rent public housing project should be sold to private ownership. In such case, the Public Housing Administration will negotiate with the
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community and agree that the project can be sold upon payment and retirement of all outstanding obligations (with interest, etc.) in connection with the project. Proceeds from the sale of the project in excess of the amounts required to cover such outstanding obligations will be paid to the Public Housing Administration and the local housing authorities in proportion to their aggregate contributions to the project. The sale will be made to the highest bidder after public advertising.
Urban Planning
Section 701 of the Housing Act of 1954 authorizes the Housing and Home Finance Administrator to make planning grants to State planning agencies for the provision of planning assistance to cities and other municipalities with populations of less than 25,000. The Administrator is also authorized to make grants to official State, metropolitan, or regional planning agencies empowered under State or local laws to perform planning work in metropolitan and regional areas. Included in the planning to be assisted are surveys, land-use studies, urban renewal plans, and technical services.
Grants for planning may not exceed 50 percent of the estimated cost of the work for which the grant is made. Five million dollars is authorized to be appropriated for the grants.
Reserve of Planned Public Works
Section 702 of the Housing Act of 1954 provides for the resumption of Federal aid to assist in the advance planning of State and local non-Federal public works. The Housing Administrator is empowered to make advances to the States, their agencies and political subdivisions for the planning of public works (other than housing) which conform to an overall State, local, or regional plan approved by a competent State, local, or regional authority. Advances are repayable, without interest, if and when the construction of the public works contemplated by the advance is undertaken. If payment is not made promptly when due the unpaid amount of the advance will bear interest at the rate of 4 percent per annum from the date the Federal Government makes demand for repayment.
The authority to make advances expires July 1, 1957, and appropriations up to $10 million are authorized for this program.
Public Facility Loans
Section 108 of the Reconstruction Finance Corporation Liquidation Act was amended (Section 804) to provide that the Housing and Home Finance Administrator is authorized to make the loans which
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are authorized by that section to State and local public agencies for public facilities.
An appropriation of $50 million was authorized which will be used to establish a revolving fund in the Treasury from which the Housing Administrator will obtain funds for the public facility loans.
The termination of the program was extended from June 30, 1955, to June 30, 1956.
Home Loan Bank Board
Service of Process on Federal Savings and Loan Insurance Corporation
Section 501 of the Housing Act of 1954 provides a method whereby service of process may be obtained on the Federal Savings and Loan Insurance Corporation anywhere by service upon an agent and the mailing of a copy of the process by registered mail to the Corporation at Washington, D. C.
Statute of Limitations in Enforcement of Claim for Payment of Insurance
Section 501 also amended Section 405 of the National Housing Act by adding a provision which bars the enforcement of a claim against the Federal Savings and Loan Insurance Corporation for the payment of insurance after the expiration of three years from the date of default. If, however, within this 3-year period the receiver or conservator recognizes the claim but the FS&LIC denies its validity, the action may be brought within 2 years from the date of such denial.
Termination of Insurance by FS&LIC
Section 407 of the National Housing Act was amended to provide that whenever the Home Loan Bank Board determines that an institution insured by the FS&LIC has violated its duty or has continued unsafe or unsound practices in conducting its business, or has knowingly or negligently permitted any of its officers or agents to violate any provision of law or regulation to which the institution is subject, the insured status of the institution may be terminated, after notice and an opportunity for hearing has been given by the Board. Local authorities which have supervisory authority over the institution are given an opportunity to attempt to secure a correction of the unsafe or unsound practice before action is taken by the Home Loan Bank Board to terminate the insured status of the institution. The action of the Board is subject to court review.
Increase in Amount of Home Mortgage as Collateral for Advances
The Federal Home Loan Bank Act was amended to increase from $20,000 to $35,000 the maximum home mortgage acceptable as collateral security for an advance by a Federal home loan bank.
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HOUSING AND HOME FINANCE AGENCY
Increase in Maximum Amount of Loan by Federal Savings and Loan Associations
Section 5 of the Home Owners’ Loan Act of 1933 was amended to increase the maximum dollar amount of a home loan which may be made by a Federal Savings and Loan Association from the previous maximum of $20,000 to a maximum of $35,000.
Enforcement of Rules and Regulations Governing Operations of Federal Savings and Loan Associations and Appointment of Conservators and Receivers
Section 5 of the Home Owners’ Loan Act of 1933 was further amended to provide a means by administrative and court proceedings whereby the Home Loan Bank Board can enforce compliance with law and regulations by Federal savings and loan associations in cases where the Board feels that the appointment of a conservator or receiver is not necessary or desirable. Procedure is also provided for the appointment of conservators, receivers, and supervisory representatives, and the specific grounds authorizing appointment of conservators or receivers are set out.
Increase in Authorized Investment in Unsecured Loans for Home Repair and Improvement
Section 503(3) of the Housing Act of 1954 increased from $1,500 to $2,500 the maximum amount of an unsecured home repair and improvement loan in which a Federal savings and loan association can invest. The same authority is provided to savings and loan associations in the District of Columbia by Section 315 of the Housing Act of 1954.
Builders* Warranty
Section 801 of the Housing Act of 1954 directs the Federal Housing Commissioner and the Veterans’ Administrator to require that the builder or seller of a new home built with the assistance of an FHA-insured or VA-guaranteed mortgage, deliver to the purchaser or owner a warranty that the dwelling is constructed in substantial conformity with the plans and specifications (including any amendments of the plans and specifications which have been approved in writing) on which the FHA or VA valuation of the dwelling was based. The requirement applies to dwellings designed for not more than four family residence. The certification applies only when the purchaser notifies the person making the certification that there has been nonconformity to the plans and specifications within one year from the date of conveyance of title or initial occupancy, whichever occurs first.
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College Housing Loons—Interest Rote
The interest rate on college housing loans will be determined on the basis of the going Federal rate in effect at the time the loan is approved by the Housing Administrator, instead of the time the loan is executed, as previously required.
Veterans* Open-End Mortgages
The maximum veterans’ home loan guaranty entitlement of $7,500 was made applicable to loans for repairs, alterations, and improvements (if they will substantially protect or improve the basic livability or utility of the property involved) as well as to loans for the purchase and construction of residential property. Under previous law (the so-called “veterans’ open-end mortgage” provision) a veteran who had used his guaranty entitlement in acquiring a home could have additional entitlement for repair loans only if he had used less than $4,000 of his entitlement in acquiring the home.
Defense Housing and Community Facilities
The Defense Housing and Community Facilities and Services Act of 1951 was amended to provide that the President has standby authority up until July 1, 1955, to designate periods when Title III of that Act authorizing Federal aid in the provision of defense housing and community facilities and services in critical defense areas can be used. The President may also designate a specific project or projects to be assisted by either of the two programs.
In addition, the Housing and Home Finance Administrator is authorized to enter into amendatory agreements after June 30, 1954, to provide additional Federal assistance with respect to defense community facilities undertaken on or before such date where he finds it necessary to do so to assure the completion of such facilities. The amendatory agreement may not involve the expenditure of Federal funds in excess of those available on or before June 30, 1954.
Disposition of Government-Owned Housing
Title VIII of the Housing Act of 1954 makes special provision for the acquisition of the fee in land now held by the Administrator under a leasehold for Lanham Act housing in Richmond, California. Special provision was also made for the disposition of Lanham Act housing in the San Diego area to Indian tribes; in Riverside County, California, to the University of California; in Wethersfield, Connecticut, to the Wethersfield Housing Authority; in St. Louis County, Missouri, to the Housing Authority; and Columbia, South Carolina, to the University of South Carolina.
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Provision was also made for the disposition of defense housing constructed or acquired under the Defense Housing and Community Facilities and Services Act of 1951.
A small amount of war housing will be permitted to be disposed of without regard to the applicable veterans’ preference in certain unusual cases where (for any one of several specified reasons) the allowance of the preference would not accomplish the real intent and purpose of the veterans’ preference provisions.
Control of Lenders* Charges and Fees
Section 504 of the Housing Act of 1950, which directed the Federal Housing Commissioner and the Veterans’ Administrator to limit and control the fees and charges imposed by lenders upon the builders and purchasers in connection with mortgages and home loans, is repealed. This provision is no longer needed, and adequate authority for the control of these fees and charges is otherwise available.
Farm Housing
Section 812 of the Housing Act of 1954 amended Title V of the Housing Act of 1949 to provide the following additional authorizations for loans and contributions to farm housing: (1) $100 million in the amount of loan funds which can be obtained from the Treasury; (2) $2 million per annum in the amount of annual contribution commitments for housing on potentially adequate farms, and (3) $10 million in the amount of appropriations authorized for loans and grants for improvements and repairs of farm housing.
Advisory Committees
Section 601 of the Housing Act of 1949 was amended to authorize the head of each constituent agency of the Housing Agency (in addition to the Housing Administrator) to establish such advisory committees as may be deemed necessary by them.
Miscellaneous
1. Reports and Audits
The Housing Act of 1954 contains miscellaneous provisions with respect to record keeping, audits, submission of specifications, reports to Congress, personnel, and administration of the housing programs.
2. Federal Aid to Schools
Public Law 731, 83d Congress, approved August 31, 1954, extended for 2 more years the Federal assistance for school construction
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APPENDIXES
authorized under Public Law 815, 81st Congress, in school districts which since the school years 1951-52, had substantial increases in school membership as a result of new or increased Federal activities.
3. Lanham Act Projects
Public Law 305, 83d Congress, approved March 10, 1954, amends Section 707 (b) of the Lanham Act dealing with preferences in the purchase of Lanham Act housing, by providing that notwithstanding the order of preferences set out in that section, the Administrator may grant first preferences to persons occupying the dwellings at the time of acquisition by the Federal government.
4. Veteran’s Home Loans
Public Law 611, 83d Congress, approved August 21, 1954, extended for 1 year—until June 30, 1955—the direct home loan program for veterans and provided an additional $150,000,000 authorization for such loans to be made available at the maximum rate of $37,500,000 per calendar quarter.
5. Investigations
In addition to the investigation conducted by this Agency of irregularities or abuses in connection with the administration of programs of mortgage and loan insurance by the Federal Housing Administration, an investigation was conducted by the Senate Banking and Currency Committee pursuant to Senate Resolution 229 which authorized the holding of hearings, the reporting of hearings and the making of investigations, the employment of investigators and technical and clerical assistants, and authorized the committee to incur expenses not to exceed $150,000 for such investigation. Public hearings were held by the Committee beginning June 28, 1954, in Washington. Later hearings were also held in New York, Los Angeles, New Orleans, Chicago, Indianapolis, and Detroit. Public hearings were concluded on November 9, 1954. A report of the FHA investigation was filed by the Senate Committee on Banking and Currency and was ordered to be printed January 6, 1955.
6. Appropriations
Public Law 357, 83d Congress, approved May 11, 1954, provided temporary appropriations for the Housing and Home Finance Agency pending enactment of the Independent Offices Appropriation Act of 1955. The latter law, Public Law 428, approved June 24, 1954, contained the fiscal year 1955 appropriations for this Agency. The Supplemental Appropriation Act, 1955, Public Law 663, approved August 26, 1954, provided for an additional amount for salaries and expenses of $1,100,060 and increased the amount available for expenses
350920—56----35
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HOUSING AND HOME FINANCE AGENCY
of travel from $169,325 authorized under the Independent Offices Appropriation Act, 1955, to $260,825. Appropriations for Federal aid to school construction were provided in the Departments of Labor, and Health, Education, and Welfare Appropriation Act, 1955 (Public Law 472, 83d Cong.), approved July 2, 1954.
7. Rescissions of Appropriations
The Independent Offices Appropriation Act, 1955, reduced by $4,500,000 funds previously appropriated for defense housing and directed that such amount be covered into the Treasury promptly upon enactment of the Appropriation Act.
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APPENDIX C
PUBLICATIONS OF THE HHFA
1954
Office of the Administrator
Unless otherwise indicated, the following publications are available t without charge from the Housing and Home Finance Agency, Wash-
ington 25, D. C.
Annual Report—Seventh Annual Report of the HHFA covering calendar year 1953. Superintendent of Documents, Government T Printing Office, Washington 25, D. C. $1.25
Housing and Home Finance Agency: Its Organization and Functions.
Housing Market Analysis—analysis of techniques for preparing local market studies. Superintendent of Documents, Government Printing Office, Washington 25, D. C. 50^
Application of Climatic Data to House Design—use of weather data in planning for comfort, convenience, and economy in house design. Superintendent of Documents, Government Printing Office, Washington 25, D. C. 75d
Population Growth in Standard Metropolitan Areas 1900-50. Superintendent of Documents, Government Printing Office, Washington 25, D. C. 55c
Building Better from Modular Drawings—an explanation of modular coordination for construction officials. Superintendent of Documents, Government Printing Office, Washington 25, D. C. 20^
Financing the Construction of Prefabricated Houses—how dealers in prefabricated housing have been able to finance operations. Superintendent of Documents, Government Printing Office, Washington 25, D. C. 40^
Performance of Plumbing Fixtures and Drainage Stacks—summaries of studies of plumbing systems. Superintendent of Documents, Government Printing Office, Washington 25, D. C. 25^
Construction Financing for the Home Builder—financing guide for professional builder of homes. Superintendent of Documents, Government Printing Office, Washington 25, D. C. 75^
Moisture Migration from the Ground—causes of and cures for dampness in homes. Superintendent of Documents, Government Printing Office, Washington 25, D. C. 200
Septic Tank Soil Absorption Systems for Dwellings—builder guide for selecting most suitable septic tank systems. Superintendent of Documents, Government Printing Office, Washington 25, D. C. 25^
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HOUSING AND HOME FINANCE AGENCY
Deflection Characteristics of Residential Wood-Joist Floor Systems—• how floor stiffness affects plaster cracking and vibration. Superintendent of Documents, Government Printing Office, Washington 25, D. C. 400
A Report on Administrative Procedures for Enforcement of Building Regulations—methods used by various cities and counties to enforce building regulations. Superintendent of Documents, Government Printing Office, Washington 25, D. C. 400
Housing Research No. 7—includes articles on house conversions, trailer living, housing market data. Superintendent of Documents, Government Printing Office, Washington 25, D. C. 450
The Thermal Insulating Value of Airspaces—thermal resistance of airspaces when faced with various materials. Superintendent of Documents, Government Printing Office, Washington 25, D. C. 250
Shrinkage Characteristics of Concrete Masonry Walls—a guide for producers, builders, architects, engineers. Superintendent of Documents, Government Printing Office, Washington 25, D. C. 400
Demonstration of New Techniques for Low-Cost Home Construction— information on large-scale methods for small volume home builders. Superintendent of Documents, Government Printing Office, Washington 25, D. C. 600
An Introduction to Urban Renewal—a brief review of the principal urban renewal provisions and operations under the Housing Act of 1954.
How Communities Can Develop a Workable Program for Urban Renewal—a description of requirements for certain Federal aids for urban renewal. Superintendent of Documents, Government Printing Office, Washington 25, D. C. 100
Home Loan Bank Board
The following publications are available without charge from the Home Loan Bank Board, Washington 25, D. C.
Answers to Questions about Insurance of Savings—Federal Savings and Loan Insurance Corporation.
Outline of Functions of the Home Loan Bank Board.
Federal Savings and Loan Associations; What They Are and How Their Charters Are Granted.
Combined Financial Statement of Members of the Federal Home Loan Bank System, 1953.
Financial Report {Annual} Federal Savings and Loan Insurance Corporation.
Savings and Home Financing Source Book (Annual)
Summary of Operations (Annual)—includes Federal Home Loan
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APPENDIXES
Bank System, Federal Savings and Loan Insurance Corporation, and Federal Savings and Loan System.
Trends in the Savings and Loan Field (Annual)
20th Anniversary, 1934-5J. Story of the Federal Savings and Loan Insurance Corporation.
Federal Housing Administration
The following are the principal new or revised FHA publications issued in 1954. Unless otherwise indicated, they can be obtained without charge from the Federal Housing Administration, Washington 25, D. C.
Administrative Rules and Regulations for Military Housing Insurance under Title VIII of the National Housing Act; FHA Form No. 3300, revised September 23, 1954.
Administrative Rules and Regulations under Section 908 of Title IX of the National Housing Act; FHA Form No. 3375, revised September 23, 1954.
Amortization and Mortgage Insurance Premium Tables—For mortgages to be insured under Section 203 of the National Housing Act; FHA Form 2042B, revised December 1954. Superintendent of Documents, Government Printing Office, Washington 25, D. C. 30 cents.
Annual Report—Twentieth annual report of the Federal Housing Administration; year ending December 31, 1953. Superintendent of Documents, Government Printing Office, Washington 25, D. C. 60 cents.
FHA Plan of Home Ownership—FHA Form No. 2098, revised January 1954. (Obsolete)
Insured Mortgage Portfolio—-(Issued quarterly—discontinued at the end of 1954). Vol. 18, Nos. 3 and 4; Vol. 19, Nos. 1 and 2. Superintendent of Documents, Government Printing Office, Washington 25, D. C. Copies 15 cents.
Minimum Requirements for Low Cost Housing under Sections 203 (A) and 203 (i) of the National Housing Act; FHA Form No. 3400, August 2, 1954.
Multifamily Rental Housing Insurance—-Administrative rules and regulations under Section 207 of Title II of the National Housing Act; FHA Form No. 2012, revised August 13, 1954.
Mutual Mortgage Insurance—Administrative rules and regulations under Section 203 of the National Housing Act; FHA Form No. 2010, revised August 9, 1954.
National Defense Housing Insurance—Administrative rules and regulations under Section 903 of the National Housing Act; FHA Form No. 3350, revised August 11, 1954.
Property Improvement Loans—Regulations under Title I under
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HOUSING AND HOME FINANCE AGENCY
Section 2 of the National Housing Act; effective October 1, 1954; FHA Form No. 20.
Property Improvement Loans—General administrative policy applicable to property improvement loans reported for insurance under Title I of the National Housing Act; for use in connection with regulations effective October 1, 1954; FHA Form No. 20A.
Rehabilitation and Neighborhood Conservation Housing Insurance— Administrative rules and regulations under Sections 220 and 221 of the National Housing Act; FHA Form No. 3500, effective October 15, 1954.
Section 213 Cooperative Housing Insurance—Administrative rules and regulations under Section 213 of Title II of the National Housing Act; FHA Form No. 2076, revised September 10, 1954.
Servicemen’s Mortgage Insurance—Administrative rules and regulations under Section 222 of the National Housing Act; effective November 5, 1954; FHA Form No. 3600.
What Is the FHA?.—Revised September 1954.
Public Housing Administration
The following publication is available without charge from the Public Housing Administration, Wassington 25, D. C.
Annual Report. Seventh Annual Report of the PHA covering calendar year 1953.
Federal National Mortgage Association
The following publications are available without charge from the Federal National Mortgage Association, Washington 25, D. C.
Semi-Annual Report of the Federal National Mortgage Association—-summary of activities of the FNMA issued semiannually.
Government Guaranteed Real Estate Mortgage Loans Covering Individually Owned Homes and Rental Housing Developments—Mortgages insured by the FHA or guaranteed by the VA and owned by the Federal National Mortgage Association, available for sale, on a State basis by sections of acts.
Background and History of the Federal National Mortgage Association.
Information Circular Regarding the Activities of the Federal National Mortgage Association—Summary of procedures and requirements that apply to the purchasing, servicing, and sale of mortgages by FNMA.
Urban Renewal Administration
Approaches to Urban Renewal in Several Cities—Urban Renewal Bulletin No. 1. Urban renewal programs in ten cities. Superintendent of Documents, Government Printing Office, Washington 25, D. C. 25 cents.
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APPENDIX D
ORGANIZATION OF OFFICE OF THE ADMINISTRATOR
At the end of 1954, the Office of the Administrator consisted of the following principal organization units:
1. The Deputy Administrator assists the Administrator in the general supervision and coordination of the functions of the constituents of the Agency and in the direction and supervision of the operations and programs of the Office of the Administrator. He acts for the Administrator in such matters as, from time to time, the Administrator may indicate.
2. The Division of Law, under the supervision of the General Counsel, provides legal counsel and assistance required in the formulation and development of the Agency’s policies and programs, conducts studies of basic legal problems, and represents the Administrator on all legal matters. The division is responsible for the preparation and review of proposed Federal legislation, reports, statements, and other materials concerning proposed or pending legislation, preparation of public regulations of the Agency and related documents, and preparation of legal opinions, briefs, and contract documents. It provides counsel and assistance on all legal matters in connection with the operations and programs of the Office of the Administrator, the Community Facilities Administration, the Urban Renewal Administration, and the Voluntary Home Mortgage Credit Program.
3. The Division of Plans and Programs, under the supervision of the Assistant Administrator (Plans and Programs), assists the Administrator in the formulation of Agency policies and programs, in evaluating the effectiveness of existing policies and programs and in preventing or resolving policy inconsistencies. The division assists in the coordination of Agency urban renewal activities and in the performance of the Administrator’s nondelegable and reserved functions under the Housing Act of 1954. The division prepares recommendations on determinations of critical defense housing areas and designations of project eligibility, and develops plans for the civil defense and defense mobilization responsibilities of the Administrator. It also assists in the supervision of Lanham Act housing management and disposition. The division is responsible for making broad studies of the housing economy, preparation of estimates of nonfarm housing needs and reports on the progress being made toward meeting those needs, development and interpretation of statistical data for Agency programs, and preparation of reports on Agency operations. It assists
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HOUSING AND HOME FINANCE AGENCY
in maintaining effective relationships with public interest organizations and citizens’ groups for the purpose of providing them with interpretations of Agency programs and policies and keeping Agency officials informed of their viewpoints.
4. The Division of Administration, under the supervision of the Assistant Administrator (Administration), develops administrative management policies, programs and procedures for Agency-wide application; provides general supervision and coordination of budgetary, accounting, personnel, organization and general services policies and activities in the Agency; and provides general administrative services and facilities for the Office of the Administrator, the Voluntary Home Mortgage Credit Program, and the two constituent units— Community Facilities Administration and Urban Renewal Administration.
5. The Division of Information, under the supervision of the Assistant Administrator (Congressional Liaison and Public Affairs) with operations carried on under the supervision of the Director of Information, provides a central point of information and referral for the public on housing activities of the government generally, on Agency-wide policies and activities, and on policies and activities of the Office of the Administrator, the Community Facilities Administration, and the Urban Renewal Administration. The division also coordinates the issuance by the constituent units of the Agency of informational material of general Agency concern and provides information services to the Administrator and the staff of the Office of the Administrator, the Community Facilities Administration, the Urban Renewal Administration, and the Voluntary Home Mortgage Credit Program.
6. The Congressional Liaison Staff, under the supervision of the Assistant Administrator (Congressional Liaison and Public Affairs) with operations carried on under the supervision of the Head of Congressional Liaison Staff, maintains liaison with members of Congress and prepares or expedites the preparation of responses to Congressional requests for information and service.
7. The Compliance Division, under the supervision of the Director, is responsible for the conduct of inspections and special investigations, including examination into alleged irregularities in connection with bids, contract provisions, financial transactions, land acquisition and other operations relating to Agency programs. These functions are carried on through the Office of the Director, which includes a legal review staff; the Inspection Branch, responsible for maintaining surveillance over inspection and quasi-investigative activities and systems throughout HHFA; and the Investigation Branch, responsible for conducting all HHFA investigations into alleged statutory and
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APPENDIXES
regulatory violations. Five regional compliance offices are also maintained under the supervision of the Director.
8. The Division of Field Coordination, headed by a Director, is responsible for coordinating the activities of the HHFA regional offices, reviewing field operations for general effectiveness and adherence to established policies and procedures, initiating and coordinating Central Office action to resolve major field problems requiring Central Office attention, recommending necessary improvements and changes in existing policies and procedures, including deviations required by local conditions, and advising Central Office operating officials with respect to field operations aspects of existing or proposed policies, procedures, and instructions.
9. The field operations of the Office of the Administrator, Community Facilities Administration and Urban Renewal Administration programs are carried on by six HHFA regional offices, each of which is headed by a regional administrator directly responsible to the HHFA Administrator.
10. The International Housing Activities Staff, headed by an Assistant to the Administrator, is responsible for liaison with the Department of State, other agencies of the Government, and established international organizations, with respect to international matters affecting housing, for coordinating functions assigned to the Agency in connection with participation in the Technical Assistance (Point IV) Program, and for facilitating interchange of information with other governments and assisting foreign missions.
11. The Racial Relations Service, headed by an Assistant to the Administrator, is responsible for advising on racial considerations in the development and execution of the Agency’s policies and programs, and for maintaining liaison with minority groups and groups or organizations primarily interested in the minority aspects of the Agency’s programs.
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525
COMPLETE CONTENTS Low Rent Public Housing g
List of Charts Current Progress q < In Financing
■ List of Tables War & Emergency § — Housing Sg
Significant Housing Events in 1954 o Administration 1
Organizations ■ And Functions of HHFA FEDERAL NATIONAL MORTGAGE ASSOC.
1954 in Review k : a Housing Supply P And Needs u g jg :o < -ft: Ji Origin & Purpose
Activity
Staff Functions And Activities £ National Voluntary £ Mortgage Credit c Extension Committee Administration
COMMUNITY FACILITIES ADM.
The Board y Q — Fed. Home Loan § < Bank System j O —. m Fed. Savings & Loan S insurance Corp. g z Fed. Savings & 1 co Loan System Introduction
Active Programs
Programs In Liquidation
URBAN RENEWAL ADMINISTRATION
F. H. A. Program General Review Statistics of Insuring Operations z o p Objectives And Methods
Activity
E E E i a c E n 9 0 E s X d 3 d 4. APPENDIXES
Section 203 Homes z Section ° 2 8 Homes p ° ° g £ ! Projects s j W ; Property x § Improve- °2 ment Loans 3 t Actuarial Analysis of 1 Insuring Operations j Accounts And Finance Statistical & Fiscal Tables
Executive Messages And Federal Legislation Affecting Housing
H. H. F. A. Publications
LICENSE NO. 147 UNDER U. S. PATENT NO. 2680630 OTHER U. 8. AND FOREIGN PATENTS PENDING 1
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