(4) The provisions of section 221 relating to housing for families displaced by slum clearance or other governmental action in communities obtaining assistance under title I of the Housing Act of

1949.

(5) Section 803 relating to rental housing at permanent military installations.

(6) Sections 903 and 908 relating to rental housing needed in connection with defense activities in critical defense housing

areas.

Your committee wishes to express its opinion that no existing FHA mortgage insurance commitments which would expire unless extended by the Commissioner should be extended for mortgages insured under the above sections and titles unless the mortgagor agrees that the cost certification will be provided.

Compensation of certain positions in FHA-New section 228

This section would authorize the Federal Housing Commissioner to establish in the FHA not to exceed 18 positions at grade GS-16 of the general schedule established by the Classification Act of 1949 ($12,000 to $12,800). These positions would be in place of the positions previously allocated in the FHA under section 505 of the Classification Act, and would be made without regard to that act and to civil-service laws.

ADDITIONAL AMENDMENTS RELATING TO FEDERAL HOUSING
ADMINISTRATION

Section 127. Termination of authority to insure mortgages under title VI This section would terminate authority to insure mortgages under title VI of the National Housing Act after the effective date of the enactment of this bill, except pursuant to a commitment to insure issued on or before such date. The following insurance programs would be affected:

(1) Section 603: Authority to issue commitments on new business expired April 30, 1948, and the only authority now existing is with respect to loans to refinance existing insured mortgages. This proposal would terminate such authority but such refinancing loans are eligible under section 203 and no reason exists for continuation of the insurance authority under section 603.

(2) Section 608: Authority to issue commitments now limited to applications filed on or before March 1, 1950, and as to mortgages to refinance existing insured mortgages. This proposal would terminate such authority but it is proposed by the provision of the new section 223 to transfer authority to insure refinancing mortgages to section 207. (3) Section 609: Authority to insure prefabricated housing manufacturers' loans would be terminated. Only a few loans have been insured and experience indicates that the continuance of such a program under the National Housing Act is not warranted.

(4) Section 610: Authority to insure mortgages in connection with sale by Government of certain publicly owned housing would be terminated under section 610 of title VI, but such authority would be transferred to title II and continued pursuant to the provisions of the proposed new section 223, added by section 125 of this bill.

(5) Section 611: Authority to insure blanket mortgage covering 25 or more single-family houses would be terminated. Experience has indicated continuation of this program is not warranted. It has not been used to any substantial extent by builders.

(6) Section 608 (g): Authority to insure mortgages taken by the Commissioner in connection with sale of Commissioner-acquired property would be terminated, but the same authority would be continued under the proposed section 223.

Section 128. One-year extension of military housing insurance authority Section 903 housing to be held for rental

Subsection (a) of this section would extend for 1 year (from July 1, 1954, to June 30, 1955) the authority under title VIII of the National Housing Act. This is the title which provides mortgage insurance for rental housing at permanent military installations, or permanent installations of the Atomic Energy Commission.

Subsection (b) of this section would add a provision to section 903 (a) of the National Housing Act which would require that 1- to 4-family defense housing covered by a mortgage insured under that section be held for rental for not less than 4 years after the dwelling is made available for initial occupancy. This requirement would be applied to dwellings where the commitment to insure the mortgage financing the dwelling was issued after the effective date of the Housing Act of 1954.

Section 129. Continuation on standby basis of defense housing and community facilities programs

This section would give the President standby authority to use title IX FHA mortgage insurance authority and the provisions in title III of the Defense Housing and Community Facilities and Services Act of 1951 for Federal aid in the provision of defense housing and community facilities and services in critical defense housing areas. Under the present law the authority for new projects under these two programs expires on June 30, 1954. Your committee believes that a need for this assistance may develop in a few areas and the authority to provide such assistance should be available.

Under this section the President could designate periods after June 30, 1954, when either of these two programs could be used, or he could designate a specific project or projects to be assisted by either of the two programs.

In addition, the Housing and Home Finance Administrator would be 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 adequate completion of such facilities. Such amendatory agreements could not involve the expenditure of Federal funds in excess of those available on or before June 30, 1954.

Section 130. Builders' cost certifications FHA titles VIII and IX

This section would require the builders' cost certification with respect to military and defense rental housing financed with the assistance of FHA titles VIII and IX mortgage insurance to be made in accordance with the new and more restrictive provisions for such certifications prescribed in this bill. Such certifications would be

prescribed in section 227 of the National Housing Act to be added by section 126 of this bill. This would make all cost certifications with respect to multifamily housing under the various FHA programs consistent. The old provisions for certification of costs would be removed from title VIII and section 908.

Section 131. Misuse of the initials "FHA"

As one of the provisions designed to assist in preventing abuses in connection with FHA programs, this section would amend title 18, section 709, of the United States Criminal Code 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.

This provision would not prohibit an appropriate statement in any advertising relating to the availability of title I financing for the purchase of the products or services advertised.

Section 132. Denial of FHA insurance assistance in cases of abuses— prohibition against using FHA-insured housing for transients in all cases

(a) This section would add a new section 512 to the National Housing Act to authorize the Federal Housing Commissioner 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 loanguaranty title of the Servicemen's Readjustment Act of 1944 or the regulations promulgated under either of these acts. Such benefits could 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 acts. Persons or firms proposed to be denied such benefits would be given the right of a hearing and to be represented by counsel. These provisions would be applied not only to insured lenders and borrowers, but to builders, contractors, dealers, salesmen, or agents for a builder, contractor or dealer.

The reference to the Servicemen's Readjustment Act of 1944 is included only for the purpose of permitting the FHA to deny the benefits of the National Housing Act to persons who have previously been barred by the Veterans' Administration from certain benefits under the Servicemen's Readjustment Act. Otherwise, builders barred by the VA would be free to take advantage of FHA programs. However, a builder who had been barred by the VA could, if he desires, obtain a hearing on the merits from the FHA as to whether he should also be barred from FHA programs. An FHA determination could not affect the builder's status in the VA program.

(b) This section would also add a new section 513 to the National Housing Act to prohibit the use of new, existing, or rehabilitated multifamily housing for transient or hotel purposes so long as the property is covered by an FHA-insured mortgage. This applies to all such housing, whether or not the project was built with mortgage insurance in past years and regardless of the current need for normal dwelling use of such property in the area or vacancies in the project.

HOUSING ACT OF 1954

Further, after the effective date of the Housing Act of 1954, no mortgage on such housing would be insured unless the mortgagor certifies under oath that while the FHA-insured mortgage remains outstanding no rental of any portion of any of the project will be permitted for a period of less than 30 days and no hotel services will be offered to or provided for any tenant in the project. The Federal Housing Commissioner would also be directed to enforce this prohibition by all appropriate means at his disposal as to all existing multifamily housing financed with mortgages insured prior to the effective date of the Housing Act of 1954.

Under section 514 of the National Housing Act which would also be added to that act by this section, the Federal Housing Commissioner would be required to investigate within 15 days after receipt of written notice that any portion of a project is being rented or operated as a hotel and if he finds that the project is being used as a hotel or for transient accommodations he shall order that the operation be discontinued. If the operation is not discontinued the Commissioner shall forward the case to the Attorney General of the United States for prosecution. In addition, the Commissioner would be required to petition the court for an order enjoining such operations. If the Commissioner should fail to petition for an injunction any person could file such a petition in the name of the United States and conduct such litigation to its conclusion on behalf of the United States.

Section 133. Study of merger of GI home loan program with FHA insurance program

This section would require the Director of the Bureau of the Budget to report to the Committees on Banking and Currency of the Senate and the House of Representatives not later than February 1, 1955, on the feasibility of merging or consolidating the home loan guaranty functions of the Veterans' Administrator and the mortgage insurance functions of the FHA. The Director would also be required to submit any proposed legislation which would be necessary to carry out his recommendations.

TITLE II-FEDERAL NATIONAL MORTGAGE ASSOCIATION

Section 201. Continuation of certain FNMA authority

As explained in the introductory statement of this report, the provisions of the bill for rechartering FNMA have been deleted, which would thus permit the FNMA to continue in its present form. However, some technical changes in the law are required in this connection. Thus, this section would provide that all authority of the Reconstruction Finance Corporation with respect to the Federal National Mortgage Association which was transferred to the Housing and Home Finance Administrator and the Housing Agency by Reorganization Plan No. 22 of 1950 would remain in full force and effect notwithstanding the termination of the succession of the Reconstruction Finance Corporation. Under Public Law 163, 83d Congress (the Reconstruction Finance Corporation Liquidation Act), the succession of the Reconstruction Finance Corporation expires June 30, 1954. This section would prevent any question concerning the validity of continuing FNMA secondary market operations after June 30, 1954.

Section 202. FNMA advance commitments for military housing mortgages and Guam housing mortgages

This section would extend from July 1, 1954, to July 1, 1955, the authority of the FNMA to make advance commitments to purchase FHA title VIII military housing mortgages. FNMA would also be authorized to make advance commitments to purchase FHA insured or VA-guaranteed mortgages covering property in Guam. The original principal amount of the mortgages on property in Guam could not exceed in the aggregate $15 million. The advance commitment authority of FNMA with respect to disaster housing mortgages and FHA title IX defense housing mortgages will expire July 1, 1954. In addition to the advance commitment authority provided by this section of the bill, FNMA would continue to have authority to make advance commitments to purchase Alaska housing mortgages and any cooperative housing mortgages which may be eligible under the pro visions of Public Law 243, 82d Congress.

Section 203. Transfer of functions from the Housing Administrator to FNMA

This section would transfer to FNMA certain technical operating functions of the Housing Administrator regarding FNMA under section 2 of Reorganization Plan No. 22 of 1950, together with the notes and capital stock of FNMA held by the Administrator under that section of the plan.

(NOTE. See also title VI-Voluntary Home Mortgage Credit Program.)

General

TITLE III-SLUM CLEARANCE AND URBAN RENEWAL

Sections 301 through 311 of the bill would amend title I of the Housing Act of 1949, as amended, which provides for the present slum clearance and community development and redevelopment program. The amendments are designed primarily to assist more effectively local communities in taking action to meet their overall problems of eliminating, and preventing the spread of, slums and urban blight, including action to rehabilitate or improve blighted, deteriorated, or deteriorating areas by broadening the existing law so as to permit the extension of Federal assistance to communities for rehabilitation and conservation type projects, in addition to the present clearance and redevelopment type projects.

Section 301. Change in title

This section changes the present title from Slum Clearance and Community Development and Redevelopment to Slum Clearance and Urban Renewal so as to reflect in the title the new type of activity contemplated by the rehabilitation and conservation feature. In so doing, your committee does not intend to imply in any way that any change is required in the title of any of the enabling laws, many of which are entitled "Slum Clearance and Urban Redevelopment Act," enacted by the various States. Nor is the title of the State enabling legislation pertinent to the determination as to whether a local public agency is eligible for assistance under title I of the Housing Act of 1949. The latter question relates to the substance of the State

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