Madison County Democrat. (London, Ohio) 19??-1958, 1950-10-13
Restrictions On
Building Homes
Are Announced

authority OF the DcIeHSo rIOuuC-
ton Act of 1850 and the Presi-
dents Executive Order No. 10161
of September 9, 1850, were an
nounced today on non-govern-
ment aided private credit, gov
ernment-aided loans, and direct
government veteran and farm
loans on one and two-family
houses.
Credit restrictions on housing
loans not insured, guaranteed, or
extended by Government agencies
are covered under Regulation X
issued by the Board of Cover
nors of the Federal Reserve
System, with the concurrence OF
the Administrator of the Housing
and Home Finance Agency.
Companion restrictions on gov
ernment-aided housing finance, on
a basis conforming to those ap-
piled to other types of private
credit, were announced by the
HHFA Administrator.
Down Payments
The new regulations will call FOR
dswn payments ranging from 1O%
in the $1,000 and under price
range to 500 at $25, 900 and over,
with preference for veterans
amounting in most cases to 10
percentage points. The regulations
are geared to the marketing OF
housing production Of not more
than 100000 to $4,000 new hous-
ing units next year.
The regulations on both types
become effective Thursday, Oc-
tober II, 1850 They are designed
to help reduce the currently high
inflationary pressures by restrict
ing the flow of funds into the
mortgage market and through the
reduction. of new home construc-
ton activity next year. to assure
that materials and labor required
for the defense program will be
available when needed.
The regulations apply to vir-
tually all future loans on new
construction of one and two-fam-
lily houses. The restrictions agreed
upon are based on an estimate
that, to curb serious initiation in
the housing market and to meet
presently estimated defense re-
quirements, housing production in
1851 should be reduced about one
third below the current record
level of BODYBUILDING, or not more
than 100000 units.
The regulations specify max
imum amounts which can be bor-
rowed, maximum maturities, and
minimum amortization require
ments for extensions of credit on
residential construction, including
the financing of major additions
and Improvements where the loan
amount is more than $2,5OO.,
They do not apply to non-gov-
ernment-aided loans on construc-
ton begun before noon on August
3, 1850, nor to loan commitments
made prior to the effective date.
Credits secured by new construc-
ton as well as credits extended to
finance the purchase of homes are
subject to the regulations.
Amount 10 Lower
For those purchasing homes in
the lower price brackets, the
percentage down payments re-
suired are lower than for higher
priced structures, and for veterans
using CT loans the down payment
requirements are lower at each
price level than on other loans.
Also, a longer period for repay
ment is permitted for those buy
ing homes costing $1,000 or less.
Down payments and maximum
permissible loans for non-govern-
ment loans and FHA-insured fin
ancing are identical and are cal
culated on the transaction price
which is defined by the regulation
as the amount paid or to be paid
by the purchaser, exclusive of
prepaid items of expense, such
as taxes or insurance. Under the
regulation, maximum permissible
loan amounts, maximum maturit-
les and minimum amortization
provisions are specified.
Properties having a value of:
more than $500 but not more
than $1,000 may have outstand-
ing credit of 9O% of the value;
More than $1,000 but not more
than $9.0OO-$4,5OO plus $50 Of
excess of value over $1,000.
To carry out the requirement
that the relative credit prefer
ences for veterans be maintained,
down payment requirements on
loans guaranteed or made by the
Continued on Page Taoo)
IN HOSPITAL
Mrs. r. II. Meade, Chandler