Evening star. [volume] (Washington, D.C.) 1854-1972, 1954-04-14
Housing Inquiry
Expected 10 Focus
On District Area
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that the postwar apartment
building program had liberal
financing provisions. Big profits
were made on many such
projects. Efficient builders often
were able to complete apartment
projects at no cost to themselves,
and without in any way violat-
ing the law. Many are reported
to have had a surplus in loan
funds after individual projects
were completed.
Only recently, in this con-
nection, Congress defeated a
proposal to prevent builders
from pocketing any surplus in
loan funds they might have left
over on certain FILA apartment
loans now available. The pro-
poSal was made by Representa-
tive Multer, Democrat of New
York. The type of loans for
rental housing now being investi-
gated are no longer available.
Thus, since high profits in
the apartment program were not
Illegal and were known to be
possible under the program as
it was enacted, it appears that
the Governments interest and
that of Senator Byrd's Commit
tee on Non-eSsential Federal
Expenditures will focus on any
cases in which FILA officials
can be found to have connived
with builders:
l. To arrive at excessive ap-
praiSals of the construction cost
of a project, and thus provide a
fictitious base for a too-large
mortgage loan.
2. To appraiSe land for mort
gage-loan purposes at a higher
value than was justifiable and
thus excessively increase the
amount of the loan.
In the case of home moderni-
zation and repair loans, charges
have been made that some FHA-
approved lenders, dealers and
contractors conspired to fleece"
home owners.
Housing Administrator Albert
M, Cole said FILA had failed to
hold such cases to the few which
would be inevitable under a pro-
gram of this magnitude.
One local FILA official said he
had never heard of any large
scale "racketeering" in home re-
pair and modernization in the |
Washington area, but he said !
there were some cases of viola
tons. Such violations included,
he said, failure of a contractor
to finish a job satisfactorily, poor
workmanship and use of poor
Complaints of this kind have
been investigated here by FILA,
he said, and some dealers were
disapproved for further work.
Certification of the IS FILA
approved lenders in the WASH
Ington area was made by the
national FILA Office, on recon-
nendation of the local Office, he
said.
Responsibility in most cases
Tor lending funds is in the hands
of the lender" he said. Under
sHA's rules. lenders are pre-
'umed to exercise the same care
and Judgment in making an FILA
oan as if they were acting on
heir credit paper" he said.
Home-repair loans are limited
to $500 in the case of a single
family dwelling. They must be
repaid within three years. In
case a borrower wants to repair
or recondition house having
two or more apartments, loans
up to $4,000 are available that
must be repaid within seven
years. These loans are so-called
discount loans that have an
effective interest rate of about
8 per cent.
AS to profits on rental-hous-
Ing projects, few local FILA Off
Gals would deny that some
builders were able to make large
profits and were able to mort
gage out" advantageously.
In builders lingo, to mort
gage out" means to be able to