Evening star., 1949-12-09
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no restrictions upon the sale OF
occupancy of the mortgaged prop
erty, on the ground of race, color
or creed, has been filed of record
any time subsequent to "a date
yet to be agreed upon) and prior
to the recording of the mortgage
offered for insurance"
"A mortgagor must establish
that no restriction upon the sale
or occupancy of the mortgagro
property, on the ground OF race
color, or creed, has been filed OF
record at any time subsequent tc
Ga date yet to be agreed upon ano
prior to the recording of the mort
gage offered for insurance, ano
must certify that, until the mort
gage has been paid in full or the
contract of insurance otherwise
terminated, he will not file fol
record any such restriction affect
ing the mortgaged property OF
execute any agreement. lease OF
conveyance affecting the mort
gagged property which imposes any
such restrictions upon its sale OF
occupancy"
Restriction on Investor.
"An investor must establish
that no restriction upon the SALE
or occupancy of the project, or
the ground of race. color or creed
has been filed of record at any
time subsequent to "a date YET
to be agreed upon) and must GER
tify that so long as the insurance
contract remains in force he will
not file for record any restriction
affecting the project or execute
any agreement, lease or convey
ance affecting the project which
imposes any such restriction upon
its sale or occupancy" =.
One of the commitment forms
now used will contain the follow
ing added paragraph:
"The undersigned further rep
resents that to it's best knowledge
and belief no restriction upon the
sale or occupancy of the mort
gagged property, on the ground OF
race, color or creed, has been
filed of record at any time subse-
quent to Ga date yet to be agreed
upon) and prior to the recording
of the mortgage offered for in
surance. This representation is
based upon the title evidence re-
ceived by it."
Some emphasis has been placed
upon the terms record" and
execute" by spokesmen for FHA
indicating that agreements for
racial restrictions that are not re-
corded with the deed or the mort
gage, would still permit an owner
to practice any sort of discrimina-
ton he chose in selling or renting
his property. This may be correct
and owners may still find ways to
control the. use or sale of their
property without disqualifying
themselves in obtaining FILA
guaranteed mortgages. An owner
may refuse to rent or sell to any
body, so long as his refusal is not
based on a recorded discrimina-
tory agreement.
New York Case Cited.
But this theory is disputed in
effect by the history of NAACP's
protest. In one case, not of rec
ord. a large real estate developer
in New York was said to have
forced renters to sign leases
that were not recorded-stipulat-
ing that the property would not be
occupied by colored. In some
cases, it was alleged. the devel-
oper would merely show a tenant
the lease. but not necessarily re-
quire it's signature, threatening
at the same time, that eviction
would follow if the property were
occupied by colored. There was
no recorded" document, however,
of any such threats.
Under the Supreme Court de-
cision on covenants, in which the
court held that such instruments
were not enforceable in Federal
Courts, it was made plain that the
court was not attempting to pro-
hibit citizens from making agree
ments among themselves. But
such agreements no longer had
any standing as legal documents.
In the case of the New York
developer. the FHA-in advance
of amending its rules-went be-
yond the Supreme Court decision
and its own proposed regulations
and told the developer that If he
persisted in his threats to tenants,
in respect to racial discrimination,
he could no longer expect any fu-
ture assistance from FILA.
AS real estate developers often
dispose OF one property developed
under FILA assistance in order to
recover capital and begin another
development, such a warning Of
no further FILA assistance would
ordinarily persuade the developer
to comply not only with the letter
but with the spirit of the FHA's
regulations against racial restric-
tions.
Value of Property Secondary.
No less important than the fact
that FHA evidently intends to
prevent all discriminatory prac-
tices by those receiving its as
sistance is the fact that Govern
ment appraisers, under the new
rules, will no longer consider
value of property in relation to
what might happen to it If Its
occupancy became racially mixed.
Here is the proposed text OF one
of the changes in the Under
writing Manual, issued for
guidance of FILA agents and ap-