Evening star., 1950-01-08
CheopHon,es
Plan Pushed
Housing Co-operotives
Moy Solve Problem
For Middle Gloss
By Clarke Beach

Is good $55 or $50 a-month
home. And they intend to get 1t
at this session of Congress.
They have been making an in
tense search this winter for some
way to provide tens Of thousands
OF such apartments or houses for
middle-income families-those who
make between $4,000 and $4,000.
These families comprise about
40 per cent of all American fami-
lies and include the vast majority
Of labor union workers. Labor
leaders, veterans organizations
and other strong groups are de-
manding that they be helped.
Low-income families got assist
ance in 1949 in the public hous-
ing legislation. and there are
plenty of houses for weaIthier
persons.
Middle-income folk who live In
two-bedroom apartments financed
by mortgages insured by the Fed
eral Housing Administration pay
an average of 500 a month rent.
FILA is insuring one-third Of resi-
Dental construction In the United
States.
Such rent is SO Der cent Of a
$4,000 income. Economists say
that families shouldn't pay more
than 20 or rs per cent of their
income for housing.
Two Requisites
In his state-of the Union mes
sage President Truman recon-
mended that Congress enact new
legislation authorizing a vigorous
program to help co-operatives
and other non-profit groups build
: housing which middle income
families can afford.
j. Senator Sparknlan, Democrat, Of
Alabama, said on Friday that q
new housing program actually is
ready Tor Congress, and that hear
ings ON 1t will start within a few
days. The new plan contemplates
making between two and two and
. quarter billion dollars available
during the next two years as guar
antees for loans to cooperative
and non-profit groups providing
housing for the "moderate-in-
come" class.
Senator Sparkman said Con-
gress would probably limit the new
housing aid to persons with In
comes OF from $4,000 to 5000, or
perhaps more, a year."
He explained that loans or mort
cages would be guaranteed by al
proposed new government agency
known as the National Mortgages
Corr. TOR Housing Co-operatives.
To get cheaper housing two
things are needed: ID Lower
construction and maintenance
costs. 10 lower finance charges.
There Is only one quick way to
provide . large number Of new
dwelling units at lower eonstruc-
ton and maintenance costs In
the opinion of administration Of
f1cials and many congressional
leaders.
That is through housing CO.
operatives. l
5 That's the master-word among
the housing enthusiasts In WASH
tngton today-co-operatives. They
eliminate the profit feature, and
the experts say they provide eco
nomical construction and main
tenance II well run. Tenants
themselves can do q lot Of the
work, both In construction and
keeping up the property.
The planners have found It,
harder to agree on the other
problem, cheaper financing.
Some leaders of the Senate and
House travelled all around Europe
this winter and took q careful
look at the strong cooperative
movements there, particularly In
Scandinavia.
Many Of the travellers came
home with the conviction that
they had found the solution In
S9Teden.
Swedes Make Impression
There q typical two-bedroom
apartment in q cooperative de-
velopment rents for $23 q month.
Outside Of the cooperative, ten
ants would have to pay the same
rent for one room and kitchen.
The Swedes have many plans
for financing co-operatives, but
the one which most impressed
the visitors shapes up like this:
Private ,financiers lend 10 per
cent Of the money needed. On
60 per cent Of it they get q first
mortgage on the property, which
pays them only 8 per cent inter-
est. On the other 10 per cent
they get a second mortgage which
pays 4 per cent.
A third mortgage for as per
cent of the total loan is taken
by the government, which charges
the going rate of interest for gov
eminent bonds-about az per
cent in the United States.
The other 5 per cent Of the
cash needed is put up either by
the tenant or the cooperative or
ganization itself.
The third and second mortgages
are amortized over q period of 40
years. None Of the principal on
the first mortgage is paid of until
the principal on the other two has
been fully repaid. Then, after 40|
years. the borrower begins to pay
of the principal on the first mort
gage.
The low interest rates and the
very slow rate Of amortization are
both radically different from
American financing methods. In
terest charges on loans insured
by FHA total AZ per cent In the
case Of large projects. And al-
most no loans insured By FILA