Evening star., 1936-05-09
GUARANTEE GOOD
.|NLOW-COST UNITS
r. H. A. Projects Have Un.
usual Mortgage lnSur.
/ ance Protection.

ANALYSIS of the Federal Housing Ad-
ministration's large-scale housing op-
erstions, designed to provide housing
for persons of low income, reveals
guarantee in the mortgage insurance
not ordinarily accorded to private en-
terprise. The analysis was announced
by Miles L. Colean, director OF the
large-scale Housing Division.
The mortgage insurance. in effect,
constitutes a standing offer to purchase
the housing project for the amount OF
the outstanding mortgage Indebtedness
If the enterprise fails to prove self
liquidating, Colean stated. Important
in the principles that have been
adopted by the Housing Administra-
ton in reaching decision to approve
each project is the consideration OF
profit, the assurance that a fair re-
turn on the investment can be ex-
pected.
while the main purpose OF large
scale housing under the operation Of
the national housing act is to provide
housing of high standards for group
that cannot pay prevailing rates with
out sacrifice of other necessities, I"
Colean added. cit is important to pro-
vide projects that private enterprise
can build, finance and operate at a
profit"
The discussion of this phase of the
Housing Administrations program in
the annual report which recently was
sent to Congress show the main prin-
ciples involved to be:
Cd In given community or neigh
borhood persons of low income will be
taken to mean persons whose incomes
at the time a project is submitted are
insufficient to permit, without sacri-
flee of other essentials of living or
security, their occupancy of housing of
adequate standards of sanitation,
safety and amenity, which has been
created under conditions of financing,
construction and operation less favor
able than those made possible by the
national housing act.
CD If through the use of the mort
gage-insurance facilities of the ma
tional housing act, through the ef-
f1cient planning, construction and op-
Grafton of a group of dwelling units,
and through the control of rents,
charges, capital structure, rate of re-
turn, and methods of operation of the
mortgagor during the term of the
insured mortgage, the cost of housing
Of the required standards can be so
reduced as to fall within the means of
such persons of low income, the ad-
ninistrator will classify proposal to
erect such group of dwellings as a
low-cost housing project.
Luxury Glass" Ruled Out.
(3) No project will be deemed to fall
within this classification if it pro-
vides housing accommodations which
are obviously in the luxury class or
which are obliged to compete for ten
ancy by the offering of extraordinary
facilities and services; nor will any
project be approved for mortgage in
surance if the housing accommoda-
tions called for are SO incompatible
with the general character of the COM
munity or neighborhood as to impair
the economic soundness of the under
taking.
(4) When through the provision OF
new housing or otherwise, any low
income group can find in a given
community or neighborhood a rea-
sonable choice of accommodations Of
the required standard within a rental
range which it can afford to pay, nc
additional housing for such group viii
be considered low-cost housing.
go In cases where applications fol-
mortgage insurance on loW-cost hous-
ing projects are submitted by Federal
or State instrumentalities or munich
pal corporate instrumentalities which
receive public grants, subsidies, OF
other advantages not available to pri-
yate limited dividend corporations, the
accommodations provided by such
projects must be so designed and re-
stricted as to occupancy that such
projects may not be directly competi-
tive with private operations.