The Washington times., 1937-11-29

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the property, as at present, to
90 per cent in the case Of loans
to owner-occupants where the
appraised value Of the property
does not exceed $1,000. This
proposal is of great Importance.
It recognizes the fact that most
persons who desire to own
homes Of their own cannot
make first payment as large
as 20 per cent of the purchase
price. This is particularly true
after the severe depression of
recent years, in which the saw
ings Of millions of prudent and
thrifty families were depleted.
The fact is not generally rec.
ognized that the majority of our
urban families are not home
owners. In the larger cities,
the proportion of rented dwell
ings runs from go to nearly 80
per cent of the total. Accord.
ingly, I am suggesting for your
consideration measures designed
especially to facilitate the con-
struction and financing, under
the economies of a blanket
mortgage. of groups of houses
for rent, or for rent with an op-
ton to purchase.
Such operations would afford
economies in construction as
we'll as in financing, and would,
therefore, I believe, lead to the
formation of substantial com.
panies to avail themselves of
the opportunities in this particu-
lar field. These same measures
are also designed to encourage
the construction of apartment
buildings to be operated on a
moderate scale Of rentals, with
the mortgage in any case not to
exceed $1,000 per room. This
is the type Of apartment prop.
erty particularly adapted to the
requirement Of our smaller
cities.
LARGE PROJECTS NEEDED
In the construction of large
scale rental properties, a small
but creditable beginning has al
ready been made under the ex-
listing provisions of the national
housing act applicable to linn
ited-dividend companies. Those
provisions, however, need to be
clarified and simplified in order
to encourage a more extensive
development of large rental prof.
ects In the larger communities
where they are needed.
Among the most important of
the measures to which would
invite your consideration are
those designed to facilitate the
financing of these large prof.
ects. Here there is a great gap
in our financial mechaniSms,
The large projects thus far con-
structed under the provisions Of
the national housing act have
been closely regulated as to
rents, charges, capital structure,
rate Of return, etc., and the ex-
eeSSeS and abuses which widely
characterized the financing Of
apartment properties in, the
1920's have thereby been
avoided. The very size Of the
loans in the case Of these large
projects, however, makes it diff
cult to finance them by means
of a single mortgage.
I would therefore urge the
Congress to liberalize the pro-
visions of the act under which
the chartering of National
Mortgage Associations is author
lied, and, among other things,
to give these associations eX-
plicit authority to make loans
on large-scale properties that are
subject to special regulation by
the Federal housing adminiStra-
tor. The effect of the change
here proposed would be to. en-
able these properties to be fl
nanced by National Mortgage
Associations through the sale of
housing bonds or debentureS
amply secured by the insured
mortgages on the properties.
so MILLION FROM RFC
In order that one or more
such ass ociations may be
promptly organized, I shall ask
the Reconstruction Finance
Corporation to make available,
out: of the funds already allo-
Gated to the RFC Mortgage
Company, $50,0o0,000 for capt.
tai purposes. Under the amend
ments proposed, this would pro-
vide the basis for $1,000,000,-
600 of private funds obtainable
through the sale of National
Mortgage Association deben'
lures.
Another Of the suggested
amendments that I regard as of
special Importance would make
the limitation of $4,000. 600, 900
on the amount of mortgages in
surable under the National
Housing Act apply to the
amount of insurance to be out
standing at any time and would
remove the limitation of July /.
1899, now applicable to the ulti-
mate guaranty Of the Federal
Government.
These changes would meaSur-
ably encourage private finan-
ing under the act without in
creasing the amount of the con-
tingent guaranty provided in
the existing legislation. In con.
nection with these changes, I
would suggest that the Congress