Evening star., 1949-12-09

pledges as security for the loan.
The mortgage takes the risk Of
sacrificing all or a portion of the
interest which the amount of the
loan might be made to earn and
the possible loss Of all or a por-
ton Of the principal amount Of
the loan. In this respect
risk is never attributed solely to
the fact that there is a mixture of
user groups due to difference in
race, color, creed or nationality" :"
The significance. of these pro-
posed changes is evident when
studied against the background of
the same manual as presently
written, which requires the under
writer to make an estimate of
"the probability Of any change in
occupancy relating to income and
other characteristics of occu-
pancy."
In other words. underwriters
have been told in the past that
possibility of mixed occupancy
might depreciate values, and such
depreciation should be considered
in appraisals. The underwriters
were instructed, previously, to
evaluate the degree OF compatible
ity of the inhabitants of the
neighborhood as "the presence of
incompatible groups in neigh
borhood tends to lessen or destroy
owner occupancy appeal"
That theory will be eliminated
by FILA. Whether it will be elimi-
mated in fact in the appraisals
made by banks and other lend
ing institutions, whose loans
would be guaranteed by FILA. is a
question that only experience will
answer.
Story Is Unusual.
The story of how these changes
came to be made is an unusual
one, for it shows the executive
branch of the Government wait
ing until the adjournment of Con-
gress to write new law. in the
form of administrative rules,
which Congress probably would
not have approved. the new law
affecting social objectives not con-
templated when the Housing Act
was written.
The story began last year with
the gathering by Mr.. Marshall.
special counsel for NAACP, Of evil
dence relating to what he con-
sidered a practice by FILA in sup
porting racially restrictive poll
cies of private real estate owners
and developers.
AS an example, Mr.. Marshall
quoted a letter from w. j. Lock-
wood, assistant commissioner of
FILA, in connection with develop
ment of a proposed interracial
housing project in Illinois. in
which Mr.. Lockwood had written:
"If it is therefore apparent.
with respect to the particular
neighborhood or property under
analysis. that inflltration will be
unacceptable to the local real es-
tate market and desirability Of
properties will be reduced in the
markets mind. then this admin
istration has no alternative but
to so recognize the conditions in
its valuation of specific proper
ties within that sphere of infiu-
ence."
Complaint Filed With FHA.
When Mr.. Marshall wrote to FHA
Commissioner Franklin Richards,
complaining that FILA was guar
anteeing mortgage on q veterans
housing project in which tenants
were forced to sign leases con-
tanning a clause against use Of the
by any person other than
a member of the Caucasian race,
Mr.. Richards replied as follows:
Il find nothing in the (restric-
tive covenant) decisions to indi-
cate that in the absence Of statu-
tory authority the Government, or
any agency thereof, is authorized
to withdraw its normal protection
and benefit from persons who
have executed but do not seek
judicial enforcement of such
But Mr.. Marshall, as shown by
the proposed changes in FHA's
rules and regulations, was able
to convince others in the Govern
ment that, while there was no
authority, the executive
branch of the Government could
move into the field of denying |
help to those who made restric-
tive agreements, whether or not
such restrictive agreements had
any standing in the courts, and