Evening star., 1938-02-19
BUILDING SLUMP
CHECK IS SEEN
New Federal Housing Act
Terms Hold Promise
of Upturn.

With the passage of important
amendments to the Federal Housing
Act. local construction circles are
hopeful that the recent slump in resi-
dental construction may begin to be
checked. The new legislation provides
for 80 per cent insured mortgages on
newly constructed small homes cost
ing $4,000 and less, and for between
30 and 80 per cent insured mortgages
on newly constructed homes costing
between $4,000 and $4,000. The
mortgage money must come, as here
tofore, from private lending institu-
tions. The Government insures mort
cages, but does not itself lend the
money.
Commenting on local programs for
stimulating residential building, John
w. OLeary, chairman Of the Execu-
tive Committee Of the Chamber of
Commerce of the United States,
stresses the Importance of local in
terest and local action. He says:
The construction of residences and
the improvement of housing condi-
tions, while of national interest, are
inherently localized activity and
problem and should be so recognized
Community Responsibility.
ANY action of central government
to obtain results must enlist the
initiative and place responsibility
squarely upon community agencies.
Without such local interest and action
little progress may be expected There
Is reason to believe that responsible
local organizations will give attention
IN their various communities to the
problem of removing handicaps to
building activity and of stimulating
residential building along constructive
lines"
Mr.. O'Leary believes that one prac-
tical thing local chambers of COM
merce can do is to cooperate with
industry programs which the build
ing material and equipment manu-
facturers have under way. He also
stresses the desirability of arousing
interest through local conferences on
residential construction Considerable
interest is developing on the part of
chambers of commerce in arranging
such conferences. Meetings of this
kind give local people in large num-
bers an opportunity to participate in
public discussion of practical ways
for overcoming the obstacles which
are retarding residential building.
AS evidence of the interest of local
chambers in residential construction,
Mr.. O'Leary calls attention to the
recommendations Of the Board of Di-
rectors of the National Association of
Commercial Organization Secretaries
in a recent report made to the United
States Chamber of Commerce and to
the secretaries of local chambers of
commerce.
Cooperation Recommended.
He quotes a. follows:
"A number of local chambers have
organized committees to examine To-
cal situations and have called con-
ferences of manufacturers, distribu-
tors of home building materials and
equipment. and representatives of la
Dor. Cooperation of all these groups
is needed.
'The National Small Homes Demon
stration, which was initiated last year
by the National Lumber Manufac-
turers Association and the National
Retail Lumber Dealers Association.
with the support of other building
material and equipment manufactur-
ers, will be continued in 1888 on
more vigorous scale. 1t is a we'll
conceived and organized building in
dustry effort to stimulate the build
ing of houses costing under $4,000.
I'VE recommend that chambers of
commerce take an active interest in
this campaign"
For a limited period, until July l,
1889, the new legislation reduces the
insurance premiums on small homes
from u per cent to 4 per cent. It
eliminates entirely the existing an
nual service charge allowed the lender
OF y per cent on the face value
OF the mortgage, and further re-
duces the costs of insured mortgages
by figuring insurance premiums on
the reduced balances. instead of as
at present on the face value of the
mortgage. 1t is contemplated that
these new premium arrangements will
reduce the cost Of insurance of mort
cages from about 6.4 per cent to SIS
per cent. with special provision for
reduction of 5.25 per cent in case of
houses costing $1,000 or less and in.
sured before July !, 1889.
Apartments Included.
Provision is made for 80 per cent
Insured mortgages on newly con-
structed apartment buildings, or a
group Of not less than 10 single fam
lily dwellings, provided mortgages are
IN excess of $4,000, but not in excess
of 100000, or s1,150 per room. This
Is an en- entirely new provision. It
should not be confused with the exist
ing section of the law which provides
Tor insurance of mortgages on large
scale rental housing projects owned
and managed by limited dividend cor
porations, which undertake to safe
guard the investment by careful at
tention to factors of location, con-
struction. maintenance and contin-
uins management. Various technical
changes are made by the new legis-
lation with the purpose of inducing
both equity and mortgage funds into
both types Of development.
There will be revived the moderniza-
tion plan which provides for a guar
antee against losses up to 10 per cent
on loans to property owners made to
finance alterations, repairs and i'm
provements on urban, suburban or
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