Ask the Scholar
Document scope · 1 page
Scholar
Ask about this object, its catalog metadata, its source description, or the page inventory.
For page-specific OCR and visual context, open one of the page chats.
Scholar Source Context
Document identity
localId
16988020
label
Housing (3)
core
doc
dtoType
document
citationUrl
pageCount
1
Source metadata
id
16988020
sourceUrl
contentType
document
title
Housing (3)
citationUrl
collections
James M. Cannon Files (Ford Administration)
James Cannon's Issues Files
subjects
Housing
Industries
Legislation
Urban policy
iiifBase
thumbnailUrl
largeImageUrl
imageCount
1
hasImages
yes
source
import
hasTranscription
no
Source extras
naId
16988020
coverageEndDate
logicalDate
1976-08-31
month
8
year
1976
coverageStartDate
logicalDate
1975-03-01
month
3
year
1975
levelOfDescription
fileUnit
recordType
description
ocrSource
nara-archive
Single page context
seq
1
pageIndex
0
type
document
url
mediaId
95ca90bec9e05183
ocrText
The original documents are located in Box 17, folder "Housing (3)" of the James M.
Cannon Files at the Gerald R. Ford Presidential Library.
Copyright Notice
The copyright law of the United States (Title 17, United States Code) governs the making of
photocopies or other reproductions of copyrighted material. Gerald Ford donated to the United
States of America his copyrights in all of his unpublished writings in National Archives collections.
Works prepared by U.S. Government employees as part of their official duties are in the public
domain. The copyrights to materials written by other individuals or organizations are presumed to
remain with them. If you think any of the information displayed in the PDF is subject to a valid
copyright claim, please contact the Gerald R. Ford Presidential Library.
Digitized from Box 17 of the James M. Cannon Files at the Gerald R. Ford Presidential Library
THE WHITE HOUSE
WASHINGTON
P
M
a Detroit
DEPARTMENT
OF
U.S.
HOUSING
THE SECRETARY OF HOUSING AND URBAN DEVELOPMENT
AND
WASHINGTON, D. C.. 20410
URBAN
June 9, 1975
MEMORANDUM FOR: James Cannon
Domestic Council
The White House
Subject: Proposal for Domestic Council Hearings on National
Growth Issues
The attached work plan specifies a process for creating the
President's 1976 Growth Report, through combining HUD funded research
and the proceedings of a series of public hearings on "growth issues."
This work plan, in effect, amends the March 4, 1975 working paper
sent to you that calls for some form of public involvement in producing
the next report as well as relating it more directly to the annual
budget and legislative deliberations of the President.
I am aware of a number of concurrent activities under White House
auspices which deal with the search for directions that future domes-
tic policies may take. The recent Conference on Domestic and Economic
Affairs, in San Diego, is one example. Recently, we responded to the
Council's February survey of Cabinet agency views on "national needs
and policy issues." The attached work plan is yet another means to
FORD LIBRARY s GERALD
engender discussion on future policies. I believe the work plan we
have developed is a concrete, achievable program that the Council can
use, during this year, in discharging its assignment from the President
to assess national needs.
So that we have a clear agreement on the respective roles that the
Council and HUD will play, in preparing for the hearings and the next
growth report, I draw your attention to Part V of the work plan. This
part identifies several decision points on which there must be explicit
understanding and guidance from the Council on how to proceed.
I would like to meet with you, the third week of June, to discuss
this plan and agree on how to proceed. Mr. David Meeker, Assistant
Secretary for Community Planning and Development will also be in
attendance.
Carla A. Hills
Attachment
RECEIVED
JAN291976
CENTRAL FILES
HUD/CPD-UPC
April 17, 1975
PROPOSAL FOR DOMESTIC COUNCIL HEARINGS ON NATIONAL GROWTH ISSUES
I. BACKGROUND. On March 4, 1975, the Department of Housing and Urban
Development submitted to James Cannon, Director of the Domestic
Council, a working paper on options for development of the 1976
Growth Report. This report is required pursuant to Title VII,
Section 703 of the 1970 Housing and Urban Development Act which
mandates the President, through an identifiable unit of the
Domestic Council to send to Congress in every even-numbered year
a major statement on Federal policy regarding national growth and
development. The major recommendation of the options paper is that
the 1976 biennial report should result from a process of free
interchange and deliberation between the White House, working
through the Domestic Council, and major representative groups of
business, industry, consumers and State and local governments.
This recommendation reflects the President's style for "going to
the public" on domestic policy matters.
The Domestic Council subsequently endorsed the concept of public
FORD i LIBRARY 076830
participation and indicated that a series of open hearings could
be held instead of the conferences originally proposed in the
March 4 working paper.
This paper sets forth a general plan of action for conducting such
hearings, relating testimony to be acquired at the hearings with
HUD funded research on growth topics, and utilizing both the
testimony and the research as the basis for substantive develop-
ment of the 1976 Growth Report.
2
II. SUMMARY OF PLAN OF ACTION. The Domestic Council and HUD would
embark upon a joint course of action leading to development of
a draft 1976 report in late December 1975.
The Council would establish a core staff to schedule and manage
(with contract assistance) public hearings to be held in October
and early November. Seven hearings would be held in Washington
on transportation, shelter, natural resources, community develop-
ment, social services, manpower development, and government in
the 1970's. Four regional conferences would be held simultaneously,
each on the joint topic of energy needs/economic growth and change.
After the hearings, the Domestic Council would arrange for a
Presidential briefing to transmit the basic findings and insights
presented by witnesses at the hearings.
HUD would fund and manage growth research studies and commissioned
papers on four subjects:
1. National Growth Issues
2. The Impact of Federal Activities on Growth
3. State Experiences in Managing Growth
4. City and County Experiences
The HUD-funded issue papers would be particularly important, as they
would be utilized as the organizing frame work for the hearings.
Witnesses would be invited to present testimony in the context of
the issue papers. After the hearings HUD would revise the papers,
then assemble them with other HUD-funded research and the proceedings
of the hearings, into a draft 1976 Growth Report.
3
During January 1976, HUD would revise the growth report, as the
President may direct, to reinforce or strengthen policy positions
that may be set forth in the 1977 budget and State of the Union
addresses. The final growth report will also be submitted to the
United Nations as the U.S. country report for the June 1976
Conference on Human Settlements.
III. PLAN OF ACTION. Following is a description of the essential
process by which the 1976 report can be developed, through a
combination of HUD funded research papers and a series of open
hearings, to assist the President in formulating legislative and
budgetary proposals.
A. Roles and Responsibilities
The Domestic Council would sponsor a series of open hearings to
elicit voluntary testimony from public and private groups on
various "growth issues." After the hearings, the Council would
arrange to brief the President on summary findings and conclu-
sions of the witnesses and their views on national growth.
Basic protocol, and the underlying purpose of the Title VII
statute, indicate the need for Domestic Council visibility and
sponsorship of the hearings.
A Domestic Council Core Staff (assembled most efficiently by
detail of senior personnel from Federal agencies) would handle
all operations and logistics necessary to conduct the hearings
and develop proceedings. The core staff would contract for
4
management and reporting services for the hearings, utilizing
for example, the National Academy of Public Administration.
Contract funds would be provided by HUD.
HUD would continue with its responsibility to organize a program
of research studies for the 1976 report (completed) select and
approve contractors (starting) and oversee their work. The
Department would also arrange for distribution of draft research
papers to invited witnesses, so that all testimony received would
be organized around common themes and subject matter. HUD would
also assemble the research papers and conference proceedings into
the growth report.
HUD contractors would develop 1) nine study papers on "growth
issues" 2) analyses of Federal impacts on growth 3) inventory of
States experience with growth management and 4) selected summary
of local government experiences.
The Federal interagency task force assembled for the 1974 report
would be reconvened to function in a review capacity for the 1976
report, and to provide data and information to the HUD contractors
who will undertake the research studies.
B. Research Program
HUD funded research will provide the basic substance both for
the Report and the hearings. Particularly important will be the
"growth issues" studies which will concentrate on nine topical
areas.
5
Energy Needs and Resources
Economic Growth and Change
Natural Resources (non-energy)
Transportation
Shelter
Community Development
Social Services
Manpower Development
Government in the 1970's (Federal/
State/local)
These issue papers are designed to assist the President to
implement Title VII through the assessment of current and
foreseeable growth trends and the identification of policy
issues related to those trends. The papers are to assess
public policy issues likely to arise in the mid-range
future (3-5 years) within the areas of assigned responsibility
for each of the Cabinet agencies, thereby facilitating the
translation of issues into understandable public policy options
which in turn can be translated back to specific Cabinet agency FORD
responsibilities.
GERALD LIBRARY
Appendix A presents the scope of work for the issue papers
project.
The issues paper will serve the critical function of providing
a structured agenda for the hearings. The papers would be
circulated to appropriate public and private groups with a
6
request that their testimony respond directly to the issues
posed and to the policy options, if any, they would support.
After the open hearings, the issue papers would be revised
to include insights gained from the hearings and a summary
report on consensus and dissenting views of the witnesses
would be prepared for the Domestic Council and the President.
It is anticipated that the summary report and the revised
issue papers would be incorporated, substantially without
change, in the 1976 report, as documentation of the views of
major interest groups which have been presented to the Domestic
Council and the President for consideration in domestic policy-
making.
FORD in LIBRARY 018830
C. Hearings
Individual hearings would be conducted on each of the nine growth
issue topics.
For efficiency and to reduce travel costs, seven of the hearings
should be in Washington. Regional hearings (four simultaneously)
would be held only for the economy and energy topics, to secure
visibility elsewhere in the country and to learn about regional
views on these two topics in particular.
In regard to timing, the hearings should be held in October and
early November, the earliest practicable period by which HUD
contractors would have draft issue papers prepared and circulated
for pre-hearing review by invited witnesses.
7
Groups invited to submit voluntary testimony would represent
a balance of public and private and national, state and local
views. A cross section of groups would be invited to testify
on each topic, e.g., the transportation hearing would receive
commentary not only from "transportation" groups also from
those concerned with housing, access to social services and
economic growth.
As suggested by William Baroody's office, appearances by the
President or Vice President at one or more of the hearings
should be strongly considered.
D. Formulation of Report for the President
GERALD LIDDRA FORD
As indicated in the calendar of events, the hearings would be
completed about mid-November. Immediately thereafter the
Domestic Council core staff, in cooperation with its management
contractors and HUD support staff, would summarize the consensus
and dissenting views of witnesses, prepare a written report and
schedule a briefing for the President.
The purpose of the briefing would be to ensure timely and useful
contributions, from the effort of producing the 1976 Report, to
the President as the 1977 Budget and legislative programs are
being considered.
HUD meanwhile would provide its contractors with guidance on
revisions to the draft issue papers, to ensure that the insights
gained and range of policy issues are fully representative of
the positions presented at the hearings.
8
During December, after revision of the issue papers, HUD will
assemble both its contracted research studies and proceedings
of the hearings into a draft of the 1976 Growth Report, and
initiate the required review cycles within the Executive
Branch.
During January 1976, the draft report can be reworked, as the
President may direct, so that it reinforces and elaborates upon
policy positions contained in the 1977 budget and State of the
Union messages.
IV. CALENDAR OF EVENTS
The table following relates the roles of the Council, its core staff,
HUD and its contractors, and the Federal interagency task force, to
the major actions that need to be accomplished in order to conduct
the hearings, brief the President by December 1975, and publish the
next growth report by February 1976.
V. DECISION POINTS ON PLAN OF ACTION
It is essential that there be immediate and firm agreement, by
principals in the Domestic Council and HUD, on the following points,
in order to carry out. this plan of action.
Process of Report Development and Presidential Involvement
1. For 1976, a public approach will be taken to preparing the
growth report. Operationally, this will be accomplished by
conducting open hearings to elicit voluntary testimony from
public interest groups, state and local officials, and
business leaders on what are the important national growth
issues and appropriate Federal policy responses.
CALLMAR 01 EVENTS
1976 NATIONAL GROWTH REPORT
TIME
DOMESTIC COUNCIL
DOMESTIC COUNCIL CORE STAFF
HUD
HUD CONTRACTORS
FEDERAL TASK FORCE
April
Approve this proposal
develop research
1975
projects
May
Assomble core staff
develop management plan
advertize/select/
for hearings
approve contractors
June
Announce hearings
select/approve contractor
manage research
contract start-up
review research programs
to manage hearings
contracts
and provide data and
information to contractors
July
prepare invitational
mail-out
August
Send invitations to
supervise contractor
50-60 groups to testify
preparations for hearings
to include:
September
Send draft papers or growth
space arrangements
prepare distribution
complete draft papers
review draft growth
issues to invited witnesses
scheduling
of issue papers to
on growth issues
issue papers
publicity
invited witnesses
transcribing
preparation of
proceedings
October
Conduct 7 hearings in
coordinate with
Washington. plus 4 regional
contractor in manag-
hearings
ing the hearings
November
Conclude hearings by
submit proceedings to
arrange Executive
revise issue papers;
mid-month
Domestic Council
Branch review of
complete summary report
issue papers and
draft on issues
other research
work
December
Advise President on principal
assemble research
revise summary report;
review draft 1976 report
findings of hearings, as input
work into draft
all other research
to 1977 Budget and
1976 report;
studies due for
legislation; review draft
submit draft report
completion
1976 report
to President
January
review final 1976 report
assemble final 1976
review final 1976 report
1976
report
9
2. The Domestic Council will sponsor the hearings, rather than
any Cabinet agency, as a matter of basic protocol and to lend
visibility to the White House in fulfilling the requirements
of Title VII.
3. A core staff, necessary for effective management of the hearings,
will be assembled by directive of the Council and report directly
to it.
4. The President should receive a major briefing and summary of the
outcome of the hearings, the issues discussed and policy options
considered. The purpose of the briefing would be to provide an
organized means for transmitting public and private sector views
on national growth to the President at a major decision stage of
the annual budget and legislative cycles.
Substance of the Hearings
1. The hearings will be structured around the nine topical growth
issues for which HUD is contracting study papers.
2. The issues will be cast in functional terms, such as housing and
economic development, and oriented to the short term future (3-5
years), in order to assist the Domestic Council in fulfilling
the February 13, 1975 Presidential directive regarding "assessment
of national needs and policy issues," in a pragmatic fashion.
10
FOLLOW-UP
As soon as agreement is reached on these decision points, the
Council's core staff should be identified, assembled and charged
with formulation of a management plan for the hearings. HUD
support staff will be made available to coordinate the develop-
ment of HUD funded research work with the management plan and
the scheduling of the hearings.
Appendix A
WORK STATEMENT
FOR
ANALYSIS OF SELECTED NATIONAL GROWTH
ISSUES/PUBLIC POLICY CHOICES
1. BACKGROUND. This statement proposes a limited solicitation of a cost
reimbursable contract as part of the HUD research program in support
of Title VII, Section 703(a) of the 1970 Housing Act requiring prepara-
tion of a biennial report on national growth.
Specific provisions of Section 703(a) call for the Report to include:
a summary of significant problems facing the United States
as a result of urban growth trends and developments.
current and foreseeable needs in the areas served by
policies plans and programs designed to carry out national
growth policy.
recommendations for programs and policies for carrying out
such national growth policy.
The Domestic Council on February 13, 1975 was charged by the President
with the following responsibilities, among others:
-- assess national needs and identifying alternative ways of
meeting them;
-- identify major policy problem areas requiring Administration
attention and actions;
-- coordinate the formulation of policy options in the domestic
area;
-- initiate fact finding analysis;
-- develop policy options and recommendations for Presidential
decision, administration action and legislation.
The 1974 Growth Report covered a broad range of issues affecting national
growth under the topical headings of population, housing, regional growth,
metropolitan change, quality of life, and rural development. The treat-
ment of these issues was general, broad and cursory. The issues were
not ranked in order of importance nor translated specifically into publicly
debateable options for possible Federal policy and action.
The principal conclusion of the 1974 report was that the capacity of
government (including the Federal government) to identify, analyze and
deal effectively in a coordinated manner with growth issues needs to be
strengthened.
2
The purposes of this project therefore include:
1. Assist the Domestic Council in its policy analysis and review
responsibilities for the identification and analysis of selected
issues, directly relatable to the topic of growth, i.e., economic
change and physical development.
2. Conduct the work necessary to fulfill the intent of Section (a)
mandating a biennial review and summary of significant growth
problems, current and foreseeable needs related to growth, and
recommendations for programs and policies to carry out national
growth policy as a response to those needs.
On March 4, 1975 Domestic Council Director James Cannon received from
HUD support staff a set of recommendations on how to develop the 1976
report. These recommendations were premised on the need and desirability
to involve non-Federal, public and private sector groups in the formula-
tion of the report.
The Domestic Council subsequently endorsed the concept of public
participation, and indicated that a series of "open" hearings could be
held. The hearings are tentatively scheduled for the early fall of
1975, and will be designed to elicit voluntary testimony from public
interest groups, State and local officials, and business leaders on
FORD
what are the important national growth issues and appropriate Federal MORRAL
policy responses.
LIBRARY
The working papers to be prepared under this proposal will serve the
critical function of providing a structured agenda for the hearings.
It is HUD's intention to circulate the issue papers. to appropriate public
and private groups and to request that their testimony respond directly
to the issues posed and to the policy options, if any, they would support.
After the open hearings, the issue papers would be revised to include
insights gained from the hearings and a summary report on consensus and
dissenting views of the witnesses would be prepared for the Domestic
Council and the President. It is anticipated that the summary report
and the revised issue papers would be incorporated, substantially with-
out change, in the 1976 report, as documentation of the views of major
interest groups which have been presented to the Domestic Council and
the President for consideration in domestic policy-making.
It should be noted that, as the United States approaches the Bicentennial
Year of Celebration, there are several public and private initiatives
under way to develop reports that assess the Nation's past and reflect
upon its future. The coincidence of the requirement for a Presidential
report on national growth and development to be published in the same
year as the Bicentennial provides impetus for and lends importance to
a fresh and systematic attempt to define major growth issues that the
country is likely to face, particularly under the conditions of economic
change which the country is now experiencing. The 1976 Growth Report
will function as a major White House statement exploring such issues.
3
SCOPE OF WORK
The contractor shall perform all tasks, as specified following, in order to
produce 9 issue papers, each about 20-30 pages, on these topical areas.
Energy Needs and Resources
Economic Growth and Change
Natural Resources (non-energy)
Transportation
Shelter
Community Development
Social Services
Manpower Development
Government in the 1970's (Federal, State, local)
Professional services necessary to carry out the work tasks shall be furnished
by the contractor. Particular emphasis is placed upon the management capacity
of the contractor to adhere to the performance schedule, because the completion
of initial drafts of the issue papers are critical to the success of the open
hearings.
The final issue papers and summary reports shall be in a style and format
suitable for direct inclusion into the 1976 growth report.
TASK 1. Establish review committees. The contractor shall establish, with
HUD concurrence, a review committee of 3 persons for each of the
issue papers. Each committee shall consist of individuals with
recognized professional credentials and specialized experience in
the topical area represented by each issue paper. To the extent
practical, each review committee shall include at least one
representative of the Federal executive branch. The committees
shall review their respective issue papers. One member of each
committee shall be designated by the contractor to participate in
a review of the summary report to be prepared by the contractor.
TASK 2. Identify candidate subcontractors. Subject to HUD concurrence the
contractor shall identify potential subcontractors with known
expertise to serve as authors for each of the issue papers. Sub-
contractors may be private consultants, university faculty, or
individual staff within Federal agencies. Contractors shall
determine subject to HUD concurrence the need for such subcontractors
for each of the issue papers over and beyond the staff under the
immediate employ of the contractor. In the event, that Federal
employees are identified as potential subcontractors, HUD shall
arrange for the availability of such personnel through interagency
fund transfer or administrative detail.
TASK 3. Develop frame of reference for issue papers. The contractor subject
to HUD review shall develop a frame of reference and set of specifica-
tions regarding the scope of treatment of subject matter for each of
the 9 issue papers. This frame of reference shall serve to provide
a uniform treatment and depth of analysis for each of the 9 topical
areas. Within each topical area, the contractor shall specify with
HUD concurrence, the minimum number and the nature of specific
4
issues to be addressed. The subcontractor may consider additional
issues as approved by the contractor and HUD
The frame of reference shall include but not be limited to these criteria
for the analysis of growth issues and policy choices.
1. Functional orientation. The subject matter shall be treated in functional
terms so as to be relatable to appropriate cabinet agencies. For example,
the issue paper on transportation shall treat the functional modes of
highways, airways, waterways, railroads and mass transit. The purpose
of this criterion is to insure that the analysis of the growth issues is
cast in pragmatic and realistic terms, thereby facilitating the transla-
tion of the issue into understandable public policy choices, which in
turn can be translated back to mission responsibilities of specific
Cabinet agencies.
2. Three to five year outlook. The issue paper shall identify key problems
and issues that can be reasonably anticipated over the mid-range future,
i.e., the next three to five years. For example, the concern with the
future of the Nation's railways now centered on abandonment in the
Northeast and Northcentral portions of the country should include
anticipation of further abandonment problems in the rest of the Nation's
rail network. The intent of this criterion is to assist the Domestic
Council in taking a forward look at public policy beyond the standard
one year time frame of the annual Federal budget cycle and state of the
union and Presidential message, and to help provide the executive branch
with an expanded capability for future oriented policy analysis, consis-
tent with the five year forward analysis required by the Congress under
Budget Improvement Act of 1974.
3. Derivation from current conditions and trends. The growth issues
identified and discussed should be plausible and realistic interpretations
of problems likely to arise from current conditions and trends. For
example, the current increase in the population group of the household
formation age is bound to generate continuing demands for new household
units over the next three to five years. The nature of this demand is
more diverse than for the past generations, and ranges from elderly
couples desiring to return intown from suburbs to an increasing number
of households consisting of unrelated individuals. The mid-range housing
issues therefore becomes a matter of identifying as precisely as possible
the relative demands of these household types and appropriate private and
public sector responses. The purpose of this criterion is to anticipate
realistically future problems that can be expected to arise from current
national conditions.
4. Geographic orientation. In order to meet the Congressional concerns for
growth problems and issues in urban and rural America, the authors of
each issue paper must demonstrate how the mid-term issues are manifested
along a geographic continuum consisting of at a minimum central cities,
older suburban areas, developing suburban areas, and rural areas. The
purpose of this criterion is to provide a geographic frame of reference
around which interrelationships can be drawn from the functionally stated
issues.
5
5. Policy choices. Each author shall outline and develop possible
strategies for dealing with the identified issues, indicating whether
such issues can appropriately be solved by private action or public
action, and if through public action, which level cf government can
best handle, in order to promote professional, technical, and ultimately
policy debate. The authors for each issue paper shall present optional
strategies cast in non-partisan terms for addressing the issues. Such
options should represent a wide range of choices. Each author shall
to the extent plausible and feasible develop options which represent
a range of choice of public policies for responding to the identified
growth problems. This range should vary from policies of acceptance,
to mitigation, acceleration, or reversal of the problem.
TASK 4. Develop draft issue papers. The contractor shall manage and direct
the preparation of draft growth issue papers pursuant to the frame of
reference. The contractor will also provide specific guidance on
particular issues to be addressed within each of the nine topical
areas. Additional issues suggested by the subcontractor in the course
of developing the draft may also be addressed, subject to HUD concur-
rence. The contractor, in the course of developing the initial draft shall
consult with appropriate Federal agencies for purposes of securing a
continuing technical review, agency insights and available supporting
or informative data such as completed research, budget documents,
and policy studies. The draft working papers shall include executive
summaries of the key issues identified and the policy options
presented, to facilitate review by public and private organizations
invited to testify at open hearings.
TASK 5. Revise issue papers. The contractor shall revise each issue paper
subsequent to review by the technical advisory committees and the
outcome of the proposed open hearings on growth. The purpose of the
revision is to add insights on issues acquired and to ensure that
the range of policy options is broadly representative of the positions
presented at the hearings.
TASK 6. Preparation of summary report. The contractor shall assemble a report
which highlights and describes the basic issues and the range of
policy options identified in each of the nine papers along the
geographical continuum identified in the frame of reference. The
essential feature of the summary report will be identification and
discussion of the interrelationships of such issues and policies as
transportation, housing, energy requirements, as they are manifested
in urban areas and in metropolitan areas and within the various
sectors of metropolitan areas.
TASK 7. Revision of summary report. Subsequent to review by the advisory
committee and HUD, the contractor shall revise the summary report.
6
PERFORMANCE SCHEDULE
Assuming project start up on June 1, 1975, the contractor shall complete
the work itemized under the above tasks as follows:
Task 1: Within 4 weeks after the effective date of the contract (June 30).
Task 2: Within 4 weeks after the effective date of the contract (June 30).
Task 3: Within 4 weeks after the effective date of the contract (June 30).
Task 4: Within 15 weeks after the effective date of the contract (Sept 13).
Task 5: Within 25 weeks after the effective date of the contract (Nov 22).
Task 6: Within 25 weeks after the effective date of the contract (Nov 22).
Task 7: Within 28 weeks after the effective date of the contract,
but no later than December 15, 1975.
PROGRESS REPORTS
Contractor shall submit five copies of monthly narrative progress reports
which shall provide a brief factual summary of work accomplished on each
task during the reporting period. Progress reports will identify current
problems and proposed corrective actions in terms of schedules, cost and
manpower utilization in order to adhere to the firm deadline of December 15,
1975 for completion of the project. Attached to the progress reports shall
be fully executed:
1. Financial management report (HUD Form 533)
2. Scheduled performance report (HUD Form 534)
3. Manpower use report (HUD Form 535)
FINAL REPORTS
The contractor shall submit five copies of a final report not later than
three months after completion of the contract. This report shall summarize
the contractor's experience and problems with conduct of the project and
recommendations if any for furhter policy relevant research which may be
appropriate for Domestic Council consideration for the 1978 report.
PRODUCT REPORTS
The contractor shall submit 200 copies of the draft issue papers with
executive summaries not later than September 13, 1975; 100 copies of the
revised issue papers not later than November 22, 1975; 100 copies of the
draft summary report not later than November 22, 1975; and 100 copies of
the final summary report not later than December 15, 1975.
GERALD 9. FORD
ACTION
THE WHITE HOUSE
WASHINGTON
June 17, 1975
MEMORANDUM FOR
FROM
JIM CANNON
THE PRESIDENT Jan
SUBJECT
EMERGENCY HOUSING ACT OF 1975
(HR 4485)
I.
BACKGROUND
The Congress has forwarded to you the Emergency Housing
Act of 1975 (HR 4485). The last day for action is
Tuesday, June 24, 1975.
The most objectionable features of this legislation
include two mortgage interest subsidies programs, a
$1000 home purchase incentive payment plan, a fore-
closure relief program, and an extension of two
undesirable housing programs. A more detailed summary
is attached at Tab A. The outlay effect for FY '76 is
estimated at well over $1 billion and the total cost
is estimated at over $2.2 billion. HUD, OMB and the
Domestic Council are in agreement that this bill
should be vetoed.
II. CONGRESSIONAL SITUATION
In the House, Congressman Lud Ashley (D-Ohio) and
Congressman Garry Brown (R-Mich) led a strong attack
against the Conference Report. The House approved the
Conference Report by a vote of 253-155, more than enough
opposition votes to sustain a veto. However, a number of
the members voting in opposition, including Congressman
Brown, are counting on the Administration to propose some
constructive alternatives. The Senate approved the
Conference Report by a vote of 72-24.
Until recently, the National Association of Home Builders
had been the major force behind this legislation with tacit
support from the AFL-CIO. However, the AFL-CIO has decided
to make a strong battle to override the anticipated veto.
Congressman Ashley narrowly won re-election last year and
is sensitive to labor pressure. His continued opposition
to HR 4485 is critical in that many Democrats follow his
lead on housing legislation.
FORD is LIBRARY
-2-
As reported in this morning's Leadership meeting, to
increase the probability of sustaining the anticipated
veto, Congressman Ashley and Congressman Brown have urged
the Administration to:
-- propose an acceptable foreclosure program as
an alternative to the Congress' foreclosure
approach, and
-- support legislation expanding activity under
the Tandem Plan as an alternative to the
Congress' interest subsidy programs.
Congressman Reuss, Chairman of the House Banking, Currency
and Housing Committee, is seeking a vote to override the
veto prior to the June 27 recess. Given the strong support
of organized labor, Congressman Reuss believes that he can
persuade the leadership to try to override. It is
anticipated that Speaker Albert will try to bring strong
pressure to bear on other Democrats in support of an override.
III. PROPOSAL
Secretary Hills believes that in order to sustain a veto,
the Administration will have to propose positive
alternatives to the Congress' foreclosure plan and
interest subsidy programs.
HUD, OMB and the Domestic Council have reached agreement
on an alternative foreclosure relief program which would
be operated on the principle of co-insurance in lieu of the
direct Federal loan approach proposed by the Congress.
The remaining issue is whether or not the President should
propose an alternative to the interest subsidy programs
proposed by the Congress. Secretary Hills believes that
the Tandem Plan approach authorized in the Emergency Home
Purchase Assistance Act of 1974 (Brooke/Cranston Act) is
the most immediate, responsible and workable alternative.
She proposes that you:
-- allow release of the remaining Tandem Plan authority;
-- support legislation extending the Tandem Plan for
a year;
-- support legislation expanding HUD's Tandem Plan
to cover multi-family dwellings and condominiums,
as well as adding additional mortgage purchase
authority.
FORD LIBRARY is 03RALD
-3-
IV. OPTIONS
1.
Do nothing at this time
PROS
-- No increased outlays or additional Treasury borrowing
will be necessitated.
-- Improved credit conditions and increase in new home
sales do not support the need for additional subsidies.
-- Highlights Administration's determination to maintain
budgetary control.
CONS
-- Increases probability of a veto override.
-- By failing to provide an alternative, undercuts
friends of the Administration who have opposed the
bill.
-- Postures the Administration as insensitive to the
crisis in the ailing housing industry.
This option not recommended by anyone
Approve
Disapprove
2.
Release the remaining Brooke-Cranston Act tandem authority
to purchase up to $2 billion in residential mortgages
PROS
-- This does NOT cause a $2 billion outlay in that the
purchased mortgages are later resold. The program could
cost very little or actually run at a profit, as occurred
in 1971, if massive savings inflows substantially decrease
interest rates between the purchase and resale, as
predicted by the Administration's economists. HUD
has administrative devices, such as charging discount
points, to minimize costs. Estimated maximum outlay for
FY '76 approximately $60 million and up to $125 million
in FY. '77.
-4-
-- Is less expensive and intrusive on private market
operations than the Congressionally posed alternatives.
(Estimated outlays for FY 76 in excess of $1 billion).
--- Mitigates, somewhat, the danger of a veto override.
-- Demonstrates the willingness of the Administration to
use its existing authority to assist housing, which is
perceived as a crucial element to an overall economic
recovery.
--- Utilizes an existing rather than a new program.
CONS
-- Although costs are speculative, could increase Treasury
borrowing and have a maximum outlay impact of from
$60 to $125 million in FY 76 and FY 77. The ultimate
budget cost depends on the differential between the
purchase price and sale price.
-- Could be interpreted as a weakness in the
Administration's resolve to control spending.
Leaves the Administration with no other resources to
assist housing should another downturn occur.
-- Does not provide an Administration legislative
alternative to the interest subsidy provisions of
the Emergency Housing bill.
Recommended by Jack Marsh.
Approve
Disapprove
3.
Release the remaining tandem authority to purchase and
FORD
resell $2 billion in residential mortgages and support
legislation to extend and expand the standby tandem
authority
GERALD
LIBRARY
PROS
-- This does NOT cause a $2 billion outlay in that the
purchased mortgages are later resold. The program could
cost very little or actually run at a profit, as occurred
in 1971, if massive savings inflows substantially decrease
interest rates between the purchase and resale, as pre-
dicted by the Administration's economists. HUD has
administrative devices, such as charging discount points,
to minimize costs. Estimated maximum outlay for FY 76
approximately $60 million and up to $125 million in FY 77.
-5-
-- Provides the greatest potential for ensuring that a
veto of the Emergency Housing bill is sustained.
-- Is less expensive and intrusive on private market
operations than the Congressional posed alternatives.
(Estimated outlays for FY 76 in excess of $1 billion).
-- Demonstrates the Administration's commitment to a
recovery in the housing sector, which is perceived as
a crucial element to an overall economic recovery.
-- Gives the Administration an alternative legislative
program to the Congressional package.
--- The new authority would be discretionary.
-- Provides additional standby authority, in case there
is another severe downturn in housing.
-- Permits tandem authority to be used to assist the
multi-family sector which is the most seriously depressed.
CONS
-- Although costs are speculative, could increase Treasury
borrowing and have a maximum outlay impact of from
$60 to $125 million in FY 76 and FY 77. The ultimate
budget cost depends on the differential between the
purchase price and sale price.
-- Could be interpreted as a weakness in the
Administration's resolve to control spending.
-- May ultimately result in pressure being brought to
bear on the Administration to release some of the
additional standby tandem authority.
Recommended by Secretary Hills, Max Friedersdorf,
Phil Buchen, Robert Hartmann, Jim Cannon.
Secretary Hills: Even if the veto is sustained, the
Secretary believes that in absence of the actions she
recommends, the Congress will quickly pass legislation
combining foreclosure relief and a mortgage interest
subsidy which will be extremely difficult to
BERAL FORD VIBRARY
successfully veto.
- -6-
Robert Hartmann: It is crucial that the President's next
veto be sustained, and that when and if he gets overridden,
that the AFL-CIO NOT be the agent that tamed the
President when the veto-proof Congress failed. I therefore
favor Option 3 if, indeed, it offers the best way to
avoid an override.
Approve
Disapprove
NOTE:
Director Lynn recommends that you indicate your
willingness to support legislation expanding and
extending the Tandem Plan BUT that a determination on
releasing the remaining Tandem authority be withheld
at least until the latest housing starts and housing
permits figures are released later this week.
Approve
Disapprove
FOR IMMEDIATE RELEASE
JULY 2, 1975
OFFICE OF THE WHITE HOUSE PRESS SECRETARY
THE WHITE HOUSE
REMARKS OF THE PRESIDENT
UPON SIGNING OF
706
H.R. CS
THE EMERGENCY HOUSING ACT OF 1975
THE ROSE GARDEN
1:55 P.M. EDT
Let me make a comment or two.
First, distinguished Members of the Congress,
Secretary Hills, distinguished members of labor and
industry, and particularly the housing industry:
Obviously, I am very, very pleased to sign
into law H.R. 5398, the Emergency Housing Act of 1975.
This proposed legislation which I will sign into law
embodies basically the compromise provisions which
we worked out with the House and the Senate.
I commend the Members of the Congress on
both sides of the aisle and at both ends of the Capitol
for quickly enacting this meaningful and I think
effective housing legislation. This is an excellent
example of the way in which the Congress and the
Executive Branch can and should work together in the
best interest of the American people.
This Administration is committed to a prompt
recovery of the housing industry and to getting
construction workers back on the job. Both of these
objectives and actions are crucial to our overall
FORD
economic recovery.
This legislation provides an additional $10
billion of mortgage purchase authority to the Government
National Mortgage Association, which will be available,
if required, to sustain the housing recovery presently
underway. It also expands other types of housing
construction, including condominiums.
The bill also meets the problem of mortgage
foreclosures head-on. It provides standby authority
for the Secretary of Housing and Urban Development to
co-insure loans made by lending institutions to preclude
mortgage foreclosures on homes whose owners are in
temporary financial difficulty.
I hope and trust that the cooperation between
the Congress and the Executive Branch shown by the
effective action in this legislation, will continue
in the future on other badly needed legislative proposals.
END
(AT 1:57 P.M. EDT)
1mc
STATEMENT BY THE PRESIDENT
I am pleased to sign into law H.R. 5398, the
Emergency Housing Act of 1975. This Act embodies
sayot. may
the alternative approach which I urged at the time
of my veto of H.R. 4485 last Tuesday.
I commend Members of Congress of both parties for
quickly enacting meaningful and effective housing
legislation. This is an excellent example of the
way in which the Congress and the Executive Branch
can--and should work together in the best
interests of the American people.
This Administration is committed to a prompt
recovery of the housing industry and to getting
construction workers back on the job. Both of
these actions are crucial to our overall economic
recovery.
This legislation provides an additional $10 billion
of mortgage purchase authority to the Government
National Mortgage Association which will be
available if required to sustain the housing
-2-
recovery presently under way. It also expands
coverage to other types of housing construction,
including condominiums.
Last week I directed Secretary Hills to release
$2 billion in GNMA mortgage purchase funds. As a
result of the swift enactment of this new housing
bill by the Congress, those funds will be released
at an interest rate of 7-1/2 percent. Condominium
mortgages will also be eligible, thus assisting
a hard-pressed sector of the housing industry.
These funds will finance an estimated 65,000 units
of housing and provide jobs for the building trades.
The bill meets the problem of mortgage foreclosures
head on. It provides standby authority for the
Secretary of Housing and Urban Development to
co-insure loans made by lending institutions or to
make mortgage relief payments to other lenders to
preclude mortgage foreclosures. Presently, mortgage
foreclosures and defaults have remained level,
at rates less than those which prevailed during
the mid-1960s, indicating that private lenders are
cooperating with homeowners. However, if foreclosure
-3-
rates rise significantly, this legislation will
enable us to act quickly to keep owners from losing
their homes.
I hope the cooperation between the Congress and
the Executive Branch shown in this legislation will
continue in other badly-needed measures.
EMBARGOED FOR RELEASE
JULY 2, 1975
UNTIL 1:45 PM EDT
Wednesday, July 2, 1975
Office of the White House Press Secretary
THE WHITE HOUSE
7 1'll
STATEMENT BY THE PRESIDENT
I am pleased to sign into law H.R. 5398, the Emergency Housing
Act of 1975. This Act embodies the alternative approach which
1
urged at the time of my veto of H.R. 4485 last Tuesday.
I commend Members of Congress of both parties for quickly enacting
meaningful and effective housing legislation. This is an excellent
example of the way in which the Congress and the Executive Branch can--
and should--work together in the best interests of the American people.
This Administration is committed to a prompt recovery of the housing
industry and to getting construction workers back on the job. Both of
these actions are crucial to our overall economic recovery.
This legislation provi des an additional $10 billion of mortgage purchase
authority to the Government National Mortgage Association which will
be available if required to sustain the housing recovery presently
under way. It also expands coverage to other types of housing con-
struction including condominiums.
Last week I directed Secretary Hills to release $2 billion in GNMA
mortgage purchase funds. As a result of the swift enactment of this
new housing bill by the Congress, those funds will be released at an
interest rate of 7-1/2 percent. Condominium mortgages will also be
eligible, thus assisting a hard-pressed sector of the housing industry.
These funds will finance an estimated 65,000 units of housing and
provide jobs for the building trades.
The bill meets the problem of mortgage foreclosures head on. It
provides standby authority for the Secretary of Housing and Urban
Development to co-insure loans made by lending institutions or to make
mortgage relief payments to other lenders to preclude mortgage fore-
closures. Presently, mortgage foreclosures and defaults have remained
level, at rates less than those which prevailed during the mid-1960's,
indicating that private lenders are cooperating with homeowners. How-
ever, if foreclosure rates rise significantly, this legislation will enable
us to act quickly to keep owners from losing their homes.
I hope the cooperation between the Congress and the Executive Branch
shown in this legislation will continue in other badly-needed measures.
# # #
FOR IMMEDIATE RELEASE
July 2, 1975
Office of the White House Press Secretary
THE WHITE HOUSE
700
FACT SHEET
THE EMERGENCY HOUSING ACT OF 1975 (H.R. 5398)
President Ford today signed the Emergency Housing Act of 1975.
When he vetoed H.R. 4485, an action sustained by the House of
Representatives, the President urged enactment of alternative
housing legislation.
This Act includes provisions addressing mortgage foreclosure,
and expands the mortgage purchase programs of the Government
National Mortgage Association (GNMA or Ginnie Mae), as recom-
mended by the President at the time of his veto.
BACKGROUND
A housing recovery is now clearly under way from the depressed
levels of the last year. During this period, $15.5 billion,
including $2.0 billion released last week, has been committed
by the Federal government -- an unprecedented level of financial
support to the housing industry. H.R. 5398 continues this
effective program.
FEATURES OF THE EMERGENCY HOUSING ACT OF 1975
1. Extension of the GNMA Mortgage Purchase Program
H.R. 5398 expands the Emergency Home Purchase Assistance Act
of 1974, enacted at the President's urging in October. This
bill:
-- increases the GNMA mortgage purchase authority by $10
billion and extends the 1974 Act's expiration date to
July 1, 1976;
-- fixes a mortgage interest rate ceiling of 7-1/2% under
this program;
--- expands coverage to include condominium mortgages.
2. Mortgage Foreclosure Relief
The Act provides the Secretary of Housing and Urban Development
with standby authority to assist homeowners facing foreclosure
by:
--- co-insuring loans or credits advanced by lending
institutions;
-- making mortgage relief payments to lenders on behalf
of eligible homeowners.
more
2
Mortgage foreclosures and defaults have remained level demon-
strating that private lenders are cooperating with homeowners
during this temporary economic situation, indicating no present
need for mortgage foreclosure relief assistance. Foreclosure
rates are less than the rates which prevailed during the
mid-1960s.
3. Other Provisions of the Act
In addition to the foregoing, the Emergency Housing Act of
1975 includes several provisions added by the Congress:
-- extending the low interest rehabilitation loan program
to July 1, 1976 and providing a $100 million authori-
zation, subject to the appropriation process;
--- extending for seven months the deadline for applications
for financial assistance to correct defects in certain
homes insured under the National Housing Act;
--- deferring until January 1, 1976, a prohibition against
mortgage loans on certain properties located in flood
prone areas of communities not participating in the
Federal Flood Insurance Program.
# # # #
Mr. Cannon
STATEMENT ON HOUSE ACTION SUSTAINING THE
HOUSING VETO
PRESIDENTIAL PRESS CONFERENCE
Wednesday, June 25, 1975
- 1 -
I COMMEND THE HOUSE OF REPRESENTATIVES FOR ITS VOTE TO
SUSTAIN MY VETO OF THE HOUS ING LEGISLATION.
THIS VOTE DEMONSTRATES A GROWING SENSE OF FISCAL
RESPONSIBILITY IN THE CONGRESS AND THE REALIZATION BY AN
INCREASING NUMBER OF CONGRESSMEN THAT ECONOMIC RECOVERY NEED NOT
BE BOUGHT AT THE PRICE OF UNWISE LEGISLATION AND COSTLY INFLATION.
- 2 -
I AM PREPARED TO WORK WITH THE CONGRESS IN REACHING
OUR COMMON OBJECTIVES: A REVITALIZED HOUSING INDUSTRY, MORE
JOBS IN CONSTRUCTION, AND A SOUND ECONOMY.
I AGAIN URGE
THE CONGRESS TO EXTEND FOR ANOTHER YEAR THE EMERGENCY HOME PURCHASE
ASSISTANCE ACT OF 1974 AND TO EXPAND IT BY ANOTHER 7.75 BILLION
DOLLARS AS QUICKLY AS POSSIBLE.
- 3 -
TO HEAD OFF POSSIBLE FORECLOSURES OF HOMES WHOSE OWNERS
ARE TEMPORARILY OUT OF WORK, I AGAIN ASK THE CONGRESS TO ACT
EXPEDITIOUSLY ON LEGISLATION INTRODUCED BY CONGRESSMEN LUD ASHLEY
OF OHIO AND GARRY BROWN OF MICHIGAN AND OTHERS TO PROVIDE
MORTGAGE PAYMENT RELIEF LOANS AND CO-INSURANCE FOR LENDERS WHO
REFRAIN FROM SUCH FORECLOSURES.
- 4 -
TOGETHER, WE WILL MEET AND SOLVE THESE PROBLEMS.
END OF TEXT
FOR IMMEDIATE RELEASE
JUNE 24, 1975
OFFICE OF THE WHITE HOUSE PRESS SECRETARY
THE WHITE HOUSE
REMARKS OF THE PRESIDENT
UPON VETOING H.R. 4485
THE EMERGENCY HOUSING ACT OF 1975
THE BRIEFING ROOM
3:05 P.M. EDT
I would like to make a relatively short state-
ment, and then Secretary Hills will follow with an
extensive briefing.
To help speed the recovery already underway in
the housing industry, whose health is absolutely vital
to our overall economic recovery, I have today directed
Secretary Hills, head of Housing and Urban Development,
to release $2 billion in previously authorized Federal
funds to assist in the purchase of home mortgages.
This action will immediately make new mortgage
money available to home buyers. To help put more workers
in the building trades back to work, I am requesting the
Congress to authorize an additional $7 billion 750 million
for this program and to extend it for another year until
July 1, 1976.
To prevent the possibility of foreclosures on
homes whose owners are temporarily out of work, I am also
requesting the Congress to move as rapidly as possible on
legislation introduced by Congressman Lud Ashley of Ohio
and Congressman Garry Brown of Michigan, and others, to
provide mortgage payment relief loans and co-insurance
for lenders who refrain from such foreclosures.
This legislation will protect home owners and
head off needless foreclosures. The steps I have
announced today are the best way to meet the problems of
housing in this country at the present time.
I am, therefore, vetoing H.R. 4485 because it
will hamper the recovery now underway and will add to the
oversize Federal deficit.
Now, let me introduce Secretary Hills, who will
fill you in on my proposals to protect home owners,
stimulate home building and provide more jobs for the
building trades.
Secretary Hills?
END (AT 3:09 P.M. EDT)
EMBARGOED FOR RELEASE
JUNE 24, 1975
UNTIL 3:30 p.m.
Office of the White House Press Secretary
THE WHITE HOUSE
THE EMERGENCY HOUSING ACT OF 1975 (H.R. 4485)
FACT SHEET
President Ford today vetoed the Emergency Housing Act of 1975.
Simultaneously, the President directed the Secretary of the
Department of Housing and Urban Development to release the
remaining $2.0 billion in mortgage purchase authority available
to the Government National Mortgate Association (Ginnie Mae or
GNMA).
The President adivsed Congress that he would support alternative
housing legislation to extend and expand the Emergency Home
Purchase Assistance Act, enacted at his request in October 1974.
BACKGROUND - HOUSING INDUSTRY NOW IMPROVING
During 1974 housing starts declined markedly. To help stem
this decline, GNMA has committed to purchase federally-insured
mortgages at below market interest rates down to 7-3/4%. In
October a bipartisan majority of Congress enacted the Emergency
Home Purchase Assistance Act which extended the GNMA mortgage
purchase authority to include home loans which are not federally
insured -- so-called "conventional" mortgages. In all, GNMA has
committed $13.5 billion to purchase mòrtgages with below market
interest rates. To date, $3 billion of these mortgages have
actually been purchased; $1 billion in commitments have been
cancelled by the recipients; and the other $10 billion in
commitments remain in the hands of mortgage lenders and is
available to support the sale of new homes.
The unprecedented level of mortgage purchase support activity --
$13.5 billion over the past year, $9.0 billion since October --
is contributing to the housing recovery which is now clearly
under way.
In addition, the President's 1976 Budget proposes Federal support
for 400, 000 units of housing under the new Lower Income Housing
Assistance Program.
Also, Congress recently enacted a tax credit for buyers of
unsold housing, at a cost of $750 million.
Signs of the housing recovery include:
--
as the rate of inflation has declined markedly, savings
deposits in the nation's thrift institutions have
soared to record levels during 1975 --- up $19.7 billion
in the first five months, nearly four times the increase
during the comparable 1974 period and a third higher
than in the previous record year (1972)
--
new home sales increased 25% in April -- the largest
increase in 12 years
--- home building permits jumped 24% in April and an
additional 9% in May
more
2
housing construction starts gained 14% in May
mortgage interest rates have dropped significantly
from record highs of last summer.
Nonetheless, further improvement will be necessary to return
housing to a strong, healthy state. The President's release
of the additional $2.0 billion in GNMA funds will supplement
the forces of recovery.
OBJECTIONABLE FEATURES OF THE HOUSING ACT OF 1975
The President advised the Congress that H.R. 4485 would increase
the Federal deficit by over $1.0 billion in Fiscal Year 1976
and increase Federal expenditures by more than $2.0 billion over
the life of the program. In addition to the budget impact, the
President cited other specific defects:
Housing Construction Subsidy
The bill contains three new housing subsidies: (1) $1,000
homeownership grants, (2) subsidy payments, to be phased out
over six years, which could reduce mortgage interest rates to
6%, (3) a mortgage purchase assistance program with interest
rates set at 7%. Depending upon the choice a buyer made, sub--
sidies would be worth up to $3,000, or in some situations as
high as $6,500.
This approach is unsound and misguided because
the legislation could not be immediately implemented
due to time needed for appropriations, regulations,
and training --- many families would postpone purchases
waiting for new subsidies;
even when finally implemented, the bill would not have
the impact predicted, since most of those assisted would
have purchased without assistance additional starts
would number 50,000-80,000, not 400,000 as claimed by
proponents;
the legislation would prescribe interest rates well
below the level needed for a sound and healthy housing
industry; mortgage interest rates have not been as low
as 6% in 10 years in 1973, starts exceeded 2 million
when interest rates were in excess of 7-1/2%;
the 6% subsidy would be difficult to terminate; despite
the phase out provisions in the bill, intense pressures
would develop for extending the subsidy once purchasers
were faced with higher mortgage payments
the bill would create enormous inequity among citizens
of different regions of the country - benefitting
persons with incomes in excess of $25,000 in some areas
while precluding persons with incomes as low as $6,000
in other areas.
Other Objectionable Provisions
Other provisions of the bill would reverse decisions made last
year in the Housing and Community Development Act of 1974 after
the most comprehensive review of Federal housing policy ever
conducted. These provisions would
extend the deep homeowner interest subsidies
(Section 235) which Congress last year decided
to phase out;
more
3
extend and expand the rehabilitation loan program
which was consolidated last year into the community
development block grant program;
divert rental assistance funds from the newly-
authorized program of lower income rental housing
(Section 8).
Also, the President indicated that the bill's mortgage fore-
closure relief provision relied unnecessarily upon government
funding and administration.
ALTERNATIVE HOUSING APPROACH
Instead of the scattergun approach embodied in H.R. 4485, the
President recommended other approaches to stimulate housing
recovery and to deal with mortgage foreclosures.
EXTENSION OF THE GNMA MORTGAGE PURCHASE PROGRAM
The release of the $2 billion in mortgage purchase assistance
funds exhausts the statutory amount authorized in the Emergency
Home Purchase Assistance Act of 1974. The President supports
legislation which would
--
extend the mortgage purchase act, scheduled to expire
on October 18, 1975,
--
increase the GNMA mortgage purchase authority by
$7.75 billion,
-- extend coverage to include multi-family apartment
and condominium mortgages, the area of the housing
industry that is most depressed;
modify the statutory language which mandates a
fluctuating mortgage interest rate that has caused
confusion and uncertainty in the housing industry.
MORTGAGE RELIEF LEGISLATION
During the recent period of economic recession, mortgage
delinquencies -- i.e., late submission of monthly payments -
have risen. However, mortgage foreclosures and defaults
have remained level confirming survey reports that private
lenders are cooperating with homeowners during this temporary
economic situation, indicating no present need for mortgage
foreclosure relief assistance.
while delinquencies have increased during the past
year at the nation's thrift institutions, the level
is still significantly below that which prevailed
during the early 60's,
foreclosure rates have held steady at about one-half
of one percent -- less than the rates prevailing
during the mid-1960's.
The President would support appropriate standby legislation
of a temporary nature that could be quickly implemented should
foreclosure rates rise significantly. Such legislation would
co-insure lenders who forebear against losses they might
sustain because of eventual non-payment. Legislation which
includes authority for a co-insurance program has already
been introduced in the Congress.
more
4
BUDGETARY IMPACT
Full implementation of the bill would result in the following
outlays:
FY
Transition
Total Thru
FY 1976
Quarter
FY 1977
FY 1977
(millions of dollars)
Title I
Home Purchase
Assistance
714
180
534
1,428
Title II
Foreclosure Relief
250
125
125
500
Title III
Rehabilitation Loans 60
5
60
125
Total
1,024
310
719
2,053
1/ Assumes recipients select the home purchase assistance option
carrying the largest subsidy
# # # #
file
PRESIDENTIAL STATEMENT OPENING PRESS BRIEFING, TUESDAY,
JUNE 24, 1975
To help speed the recovery already underway in the housing
industry, whose health is vital to our overall economic recovery,
I have today directed the Secretary of Housing and Urban Development,
Carla Hills, to release $2 billion in previously-authorized Federal
funds to assist in the purchase of home mortgages. This action will
immediately make new mortgage money available to home buyers.
To help put workers in the building trades back to work, I am
requesting the Congress today to authorize an additional $7.75 billion
until July = 1976.
for this program and to extend it for another year past its October
expiration date.
To prevent the possibility of foreclosures on homes whose
owners are temporarily out of work, I am also requesting the Congress
to move as rapidly as possible on legislation introduced by Congressman
Lud Ashley of Ohio and Congressman Garry Brown of Michigan and
- 2 -
others to provide mortgage payment relief loans and co-insurance
for lenders who refrain from such foreclosures. This legislation will
protect homeowners and head off needless foreclosures.
Lbelieve Th the steps I have announced today are the best way to
meet the problems of housing in this country. I am therefore, vetoing
hangerhout the economic
*
H.R. 4485 becuase it will damage the recovery now underway.
Now I want to introduce Secretary Hills who will fill you in
proposables to fairer Streenlate
on the details and be available for your questions.
the Haming
Industry
Thank you.
Into Lome
brieding and
###
provide Guilding + rade
jobs
* and subtanially boost the
EMBARGOED FOR RELEASE
UNTIL 3:30 P.M. EDT
JUNE 24, 1975
Office of the White House Press Secretary
THE WHITE HOUSE
TO THE HOUSE OF REPRESENTATIVES:
I am today returning, without my approval, H.R. 4485,
the proposed Emergency Housing Act of 1975.
After careful examination of this bill and its provisions,
it is my considered judgment that H.R. 4485, due to its cost,
ineffectiveness, and delayed stimulus, would damage the housing
industry and damage the economy.
This Administration is committed to a prompt recovery of
the housing industry and to getting the construction workers
back to work -- which are crucial elements in our overall
economic recovery.
To reaffirm my commitment to such prompt recovery and my
support of the existing Federal mortgage assistance program,
I am today directing the release of the remaining $2 billion
in these funds and requesting Congress to authorize another
$7.75 billion in this assistance for housing. I will also
support a workable plan to prevent mortgage foreclosures for
home-owners who are out of work.
But H.R. 4485 is not acceptable for these reasons:
It could not be implemented without substantial
delay, and probably would actually provide a
disincentive to some home purchases. Consequently
it would delay for months putting construction workers
back to work.
It is in some respects inequitable. In some areas
of the country, families with $25,000 of income
could qualify for benefits, while in other areas
of the country, families with $6,000 of income
could not qualify.
The levels of mortgage subsidies (down to 6% in
some cases) would give some buyers an excessive
benefit at the taxpayers' expense.
For the modest benefits that might come in housing,
this bill is too expensive - over $1 billion in
additional Federal expenditures in FY 76, and more
in years to come.
This bill's provisions for the protection of home-owners
who are presently unemployed or under-employed due to our economic
conditions and who face foreclosure on their homes, though well
intentioned, unnecessarily place the Federal government in the
retail loan-making business as a sole means of relief. Depository
institutions have a stake in avoiding foreclosures and should be
active participants in any such mortgage payment relief program.
I believe there is a better way both to stimulate jobs in
construction and to provide standby protection for homeowners who
may be threatened by foreclosure:
more
2
1.
To add impetus to the industry's recovery and to put
the building trades back to work, I am today directing
the Secretary of Housing and Urban Development to make
available, immediately, under existing law, $2 billion
previously authorized for mortgage purchase assistance.
We know this program works, and this action will make
new mortgage money available immediately from thrift
institutions and other lenders. But since the mortgages
the Federal government purchases can be later resold,
the cost to the Federal government is relatively low
$60 million for FY 76.
2.
To continue this effective tandem authority program, I
propose that Congress extend this program beyond its
expiration date in October, and to expand it to cover
conventionally financed multi-family housing, including
condominiums. In addition, I request authorization
from Congress to put $7.75 billion more into this
program to insure financing is available if needed to
sustain the recovery of the housing industry.
3.
To protect home-owners against foreclosure, I
commend the efforts of the sponsors of legislation
recently introduced in the Congress that would
confer standby authority on the Secretary of Housing
and Urban Development to make mortgage payment relief
loans or to co-insure lenders who refrain from fore
closing on home-owners who are temporarily out of
work. We want to preserve the good relationship
between the home-owner and the bank or other insti-
tution which holds his mortgage and at the same
time provide some fiscal protection to the lender who
assists a home-owner.
While there continue to be many problems in the housing
industry, and while there is far too much unemployment among
housing construction workers, there are clear signs of recovery
in this vital part of the American economy.
During the current calendar year, funds needed for mortgage
loans have been flowing into savings institutions at record
levels --- $19.7 billion net during the first five months of
this year alone, nearly quadruple the level of the same period
last year. With this flow of funds, interest rates have fallen
substantially from their peaks of last summer.
Meanwhile, the government has been providing unprecedented
support to the housing industry. Since last October, the
Government National Mortgage Association has committed to
purchase nearly $9 billion in conventional, FHA and VA mort
gages with interest rates down to 7-3/4 percent. And this
March, a tax credit for unsold new homes was enacted into law.
There are now strong indications that new home construction
and sales are responding to these actions. New home sales in--
creased 25 percent in April, the largest increase in 12 years.
Home building permits climbed 24 percent in April and an
additional 9 percent in May. Also in May, housing starts
which represent not only new homes but new jobs rose sharply.
These favorable trends, however, do not mean that we
have overcome our problem in housing. To the contrary, the
level of home construction is still too low, and I fully
agree with those who believe that a swift recovery in housing
is a prime objective of national economic policy.
more
3
We must accelerate the improvement in housing that now
appears to be coming about.
My action today to commit $2 billion for mortgage purchase
assistance under the Emergency Home Purchase Assistance Act of
1974 will exhaust the current authorization under that Act.
In proposing that this Act be extended, broadened to multi-
family housing, and expanded by $7.75 billion, I am affirming
that we have a tried and tested mechanism for supplementing
and reinforcing housing construction.
Unfortunately, while H.R. 4485 does contain the multi-
family amendment I have recommended, it fails to extend the
current law, increase its authorization or effect any other
improvements. Worse, it would authorize a variety of new and
untried subsidies, including provisions for mortgages with
mandated 6 and 7 percent interest rates and $1,000 down-payment
grants. Since there appears to have been no consensus in
favor of any one of these new subsidies, the bill adopts all
of them in the hope that something will work.
The full implementation of these new subsidies, together
with other provisions of the bill, would add over $1 billion
to the fiscal 1976 deficit and ultimately cost more than
$2 billion. An addition to the budget of this magnitude to
benefit a few home-buyers is inequitable as well as costly.
It is most important to housing that we maintain a firm
line against ill-considered spending that adds to the growing
deficit and necessitates Federal government borrowing which
tends to drive up interest rates and depress housing construction.
I believe that budgetary restraint is a key element in our effort
to instill the kind of consumer confidence in the future that
is essential to a vigorous housing market.
Proponents of H.R. 4485 have argued that the budgetary
costs of this bill would be outweighed by stimulating an
upturn in housing starts, jobs and tax revenues. But critical
defects in the bill concerning its relative cost, impact,
timing and long-term implications will prevent it from
achieving these objectives.
First, the levels of subsidy provided are excessively
deep and costly. Under H.R. 4485, mortgages would be heavily
subsidized so that they could bear lower interest rates than
any previously available to other home-owners during the last
ten years. These deep subsidies would require substantial
Federal outlays. Moreover, experience demonstrates that a
strong and healthy housing industry can be maintained with-
out the deep subsidies contained in this bill.
Second, the bill would not work as intended even if
it could be immediately implemented. Although supporters of
H.R. 4485 have claimed that it would produce hundreds of
thousands of additional housing units, evaluation by HUD
and OMB does not suggest that the bill would have any impact
of this magnitude or that the units produced would necessarily
be additional to those that would be produced in the absence
of such large subsidies. Those most likely to be influenced
to buy under the bill would be families near the top of the
eligibility range. These same families would be most apt to
buy even without subsidy assistance on the scale proposed.
Third, because the bill could not be immediately
implemented, it would actually impede an early recovery in
housing starts. The subsidies which would be authorized in-
clude new approaches that have never been tried before. To
more
4
make this assistance available, it would not only be necessary
to secure appropriations and write regulations, but also to
prepare a variety of new forms, establish procedures and
familiarize government, lender and builder personnel throughout
the country with them. Even given top priority, months could
be required before implementation is completed. Thus, H.R. 4485
far from helping during the coming months -- would actually
inhibit home purchases among those eligible for assistance,
since these families would understandably want to wait until
the subsidies become available.
Fourth, the bill has long-term impacts and implications
that are inappropriate and undesirable for an "emergency"
measure. One of the subsidy options included in the bill
would require home-owners with 6 percent interest rate mort-
gages to make increasing monthly payments in the future, up
to the full payments that would be required at current market
interest rates. I believe there will almost certainly be in-
tense pressures for relief against these phase-up provisions
in years to come -- and thus for a continuation of the deep
subsidies this option involves. Moreover, even if this
approach works as intended, it would require substantial
government outlays in future years when the economy may be
operating at full capacity with inflationary forces at or
approaching their peaks.
Fifth, the subsidy provisions of H.R. 4485 pose
substantial problems of equity among those who would and would
not be eligible for the relatively large subsidies provided.
As the bill is written, substantial subsidies would be made
available to families within a given income group. Other
families with similar or even less income would receive no
subsidy at all and would be expected to pay full market rate
mortgages. These discrepancies would be very sharp and hard
to justify. In some areas, it would permit families with
incomes well over $25,000 to qualify while, in other areas,
families with incomes as low as $6,000 would be ineligible.
Sixth, H.R. 4485 would make a number of undesirable
changes in our housing and community development laws. For
example, the bill would extend the homeownership program
authorized under Section 235 of the National Housing Act.
It would also extend and expand the program of subsidized
government rehabilitation loans authorized under Section
312 of the Housing Act of 1964. These provisions would
reverse decisions the Congress itself enacted last year
after one of the most extensive reviews of Federal housing
policy ever conducted. Also objectionable are the pro-
visions which would divert funds from the new leased
housing program, and establish special rules for certain
State agency housing projects assisted under Section 236
of the National Housing Act.
Finally, the foreclosure provision of H.R. 4485 is too
limited in its mechanism for providing relief. This provision
reflects the concern that mortgage foreclosures may soar during
the recession. To date, no such trend has developed because
private lenders have been cooperating with home--owners through
forebearance and common sense arrangements. In fact, fore-
closures rates have remained stable ---- actually, at a level
lower than that experienced during the mid-1960s.
Nonetheless, I can appreciate the desire of Congress to
enact legislation, and I will support legislation which would
more
5
protect home-owners from loss of their homes due to temporary
economic hardship and which recognizes the provisions of such
relief is both a matter of concern for the federal government
and the depository institutions or other mortgagees involved.
Good housing is one of our greatest national assets, and
our objective was and is to assist in the recovery of the
housing construction industry and to help get the building
trades workers back to their productive and meaningful skills.
I shall be glad to work with the Congress toward this objective.
GERALD R. FORD
THE WHITE HOUSE,
June 24, 1975.
#####
TO THE HOUSE OF REPRESENTATIVES:
June
I am today returning, without my approval, H.R. 4485,
the proposed Emergency Housing Act of 1975.
After careful examination of this bill and its provisions,
due to its cost, tneffectiveness, and delayed stimulus,
it is my considered judgment that H.R. 4485 'A would damage the
housing industry and damage the economy.
This Administration is committed to a prompt recovery
construction workers
of the housing industry and to getting the 1 building trades
back to work --- which are crucial elements in our overall
economic recovery.
To reaffirm my commitment to such prompt recovery and my support of
HH support the existing Federal mortgage assistance program,
the remaining
and I am today directing the release of ^ $2 billion in these
funds and requesting Congress to authorize another $7.75 billion
will
in this assistance for housing. I also support a workable plan
to prevent mortgage foreclosures for home-owners who are out of
work.
But H.R. 4485 is not acceptable for these reasons:
without substantive delay,
-- It could not be implemented immediately, and
provide a disincentive to
probably would actually, delay some home purchases,
Consequently it would delay for months putting
construction workers
^ the building trades back to work.
-- It is in some respects inequitable. In some
areas of the country, families with $25,000 of
income could qualify for benefits, while in
other areas of the country, families with $6,000
of income could not qualify.
-- The levels of mortgage subsidies (down to 6% in
some cases) would give some buyers an excessive
benefit at the taxpayers' expense/ while providing better
stimulus to the industry.
-- For the modest benefits that might come in housing,
over
in additional Federal expenditures
this bill is too expensive ^ $1 billion in FY 76,
^
and more in years to come.
-2-
MASTER
This bill's provisions for the protection of home-owners
who are presently unemployed or under-employed due to
our economic conditions and who face foreclosure, on their
homes, though well intentioned, unnecessarily place the
federal government in the retail loan-making business as
a sole means of relief. Depository institutions have a
stake in avoiding foreclosures and should be active
participants in any such mortgage payment relief program.
I believe there is a better way both to stimulate jobs
provide standby protection for homeowners who
in construction and to protect home owners who are worried
may be threatened by
1 about losing their homes through foreclosure:
To add impetus to the industry's recovery and to
1.
1 put the building trades back to work, I am
today directing the Secretary of Housing and Urban
immediately,
Development immediately to make available X under
existing law, $2 billion previously authorized for
mortgage purchase assistance.
We know this program works, and this action will
make new mortgage money available immediately from
thrift institutions and other lenders.
banks and others wao finance housing But since
the mortgages the Federal government purchases are can be
later resold, the cost to the Federal government
is relatively low -- $60 million for FY 76. and up
to $125 million for FY 77.
2. To continue this effective tandem authority program,
I propose that Congress extend this program for
another year beyond its expiration date in October,
expand
and to ^ extend it to cover conventionally financed
multi-family housing, including condominiums. In
addition, I request authorization from Congress to
to insure
put $7.75 billion more into this program A we should
financing is available
to keep the building trades at work and to
sustain the recovery of the housing industry.
belley my recommendation with respect to this additional
authorization is CATTA, 1\will be g ad to carefully and
sympathetical initiative
in this regatos
3
3. To protect home-owners against foreclosure, I will
commend the efforts of the sponsors of
supports legislation recently introduced in the
Congress that would confer standby authority on
the Secretary of Housing and Urban Development to make
mortgage payment relief loans or
A to co-insure lenders who refrain from foreclosing
on home-owners who are temporarily out of work.
We want to preserve the good relationship between
or other institution
the home-owner and the bank ^ which holds his
mortgage -- and at the same time provide some
fiscal protection to the lender who assists a
home-owner. whose payments may be delinquent until
goas back to work.
While there continue to be many problems in the housing
industry, and while there is far too much unemployment among
housing construction workers, there are clear signs of recovery
in this vital part of the American economy.
During the current calendar year, funds needed for mortgage
loans have been flowing into savings institutions at record
levels -- $19.7 billion net during. the first five months of
this year alone, nearly quadruple the level of the same period
last year. With this flow of funds, interest rates have fallen
substantially from their peaks of last summer.
Meanwhile, the government has been providing unprecedented
support to the housing industry. Since last October, the
Government National Mortgage Association has committed to
purchase nearly $9 billion in conventional, FHA and VA mort-
gages with interest rates down to 7-3/4 percent. And this
March, a tax credit for unsold new homes was enacted into law.
There are now strong indications that new home construction
and sales are responding to these actions. New home sales in-
creased 25 percent in April, the largest increase in 12 years.
Home building permits climbed 24 percent in April and an
additional 9 percent in May. Also in May, housing starts --
which represent not only new homes but new jobs -- rose sharply.
4
These favorable trends, however, do not mean that we
have overcome our problem in housing. To the contrary, the
level of home construction is still too low, and I fully
agree with those who believe that a swift recovery in housing
is a prime objective of national economic policy.
We must accelerate the improvement in housing that now
appears to be coming about.
My action today to commit $2 billion for mortgage purchase
assistance under the Emergency Home Purchase Assistance Act of
I974 will exhaust the current authorization under that Act.
In proposing that this Act be extended, broadened to multi-
family housing, and expanded by $7.75 billion, I am affirming
that we have a tried and tested mechanism for supplementing
and reinforcing housing construction.
Unfortunately, while H.R. 4485 does contain the multi-
family amendment I have recommended, it fails to extend the
current law, increase its authorization or effect any other
improvements. Worse, it would authorize a variety of new and
untried subsidies, including provisions for mortgages with
mandated 6 and 7 percent interest rates and $1,000 down-payment
grants. Since there appears to have been no consensus in
favor of any one of these new subsidies, the bill adopts all
of them in the hope that something will work.
The full implementation of these new subsidies, together
LIBRARY
over
with other provisions of the bill, would add approximately $1
billion to the fiscal 1976 deficit and ultimately cost approxi- more
than mately $2 billion. An addition to the budget of this magnitude
to benefit a few home-buyers is inequitable as well as costly.
It is most important to housing that we maintain a firm
line against ill-considered spending that adds to the growing
deficit and necessitates Federal government borrowing which
tends to drive up interest rates and depress housing construction.
I believe that budgetary restraint is a key element in our effort
to instill the kind of consumer confidence in the future that is
essential to a vigorous housing market.
5
Proponents of H.R. 4485 have argued that the budgetary
costs of this bill would be outweighed by stimulating an
upturn in housing starts, jobs and tax revenues. But critical
defects in the bill concerning its relative cost, impact,
timing and long-term implications will prevent it from
achieving these objectives.
First, the levels of subsidy provided are excessively
deep and costly. Under H.R. 4485, mortgages would be heavily
subsidized so that they could bear lower interest rates than
any previously available to other home-owners during the last
ten years. These deep subsidies would require substantial
Federal outlays. Moreover, experience demonstrates that a
strong and healthy housing industry can be maintained with-
out the deep subsidies contained in this bill.
Second, the bill would not work as intended even if
it could be immediately implemented. Although supporters of
H.R. 4485 have claimed that it would produce hundreds of
thousands of additional housing units, evaluation by HUD
and OMB does not suggest that the bill would have any impact
of this magnitude or that the units produced would necessarily
be additional to those that would be produced in the absence
of such large subsidies. Those most likely to be influenced
to buy under the bill would be families near the top of the
eligibility range. These same families would be most apt to
buy even without subsidy assistance on the scale proposed.
Third, because the bill could not be immediately
implemented, it would actually impede an early recovery in
housing starts. The subsidies which would be authorized in-
clude new approaches that have never been tried before. To
make this assistance available, it would not only be necessary
to secure appropriations and write regulations, but also to
prepare a variety of new forms, establish procedures and
familiarize government, lender and builder personnel throughout
7
authorized under Section 235 of the National Housing Act.
It would also extend and expand the program of subsidized
government rehabilitation loans authorized under Section
312 of the Housing Act of 1964. These provisions would
reverse decisions the Congress itself enacted last year
after one of the most extensive reviews of Federal housing
policy ever conducted. Also objectionable are the pro-
visions which would divert funds from the new leased
housing program, and establish special rules for certain
State agency housing projects assisted under Section 236
of the National Housing Act.
is too limited
Finally, the foreclosure provision of H.R. 4485A would
in its mechanism for providing relief.
almost security cause more foreclosures than it provented
This provision reflects the concern that mortgage foreclosures
may soar during the recession. To date, no such trend has
developed because private lenders have been cooperating with
home-owners through forebearance and common sense arrangements.
In fact, foreclosures rates have remained stable -- actually,
at a level lower than that experienced during the mid-1960s.
Nonetheless, I can appreciate the desire of Congress to
enact legislation, and I will support legislation which would
confer standby authority on the Secretary of Housing and Urban
Beyelopment to co-insure lenders who withhold foreclosures.
Good housing is one of our greatest national assets, and
our objective was and is to assist in the recovery of the
housing construction industry and to help get the building
trades workers back to their productive and meaningful skills.
I shall be glad to work with the Congress toward this objective.
Nonetheless, I can appreciate the desire of Congress to
enact legislation, and I will support legislation which
would protect home-owners from loss of their homes due to
temporary economic hardship and which recognizes the
THE WHI'
provisions of such relief is both a matter of concern for
the federal government and the depository institutions
on other mortgages involved.
THE WHITE HOUSE
WASHINGTON
June 18, 1975
ADMINISTRATIVELY CONFIDENTIAL
MEMORANDUM FOR: - JIM CANNON
FROM:
JAMES CONNOR of
SUBJECT:
EMERGENCY HOUSING ACT OF 1975
(HR 4485)
Your memorandum of June 17, 1975 to the President on the above
subject has been reviewed and the following was noted:
Option 1 - Do Nothing at this time - Disapproved
Option 2 - Release the remaining Brooke-Cranston
Act tandem authority to purchase up to
$2 billion in residential mortgages -
Disapproved.
Option 3 - Release the remaining tandem authority to
purchase and resell $2 billion in residential
mortgages and support legislation to extend
and expand the standby tandem authority -
Approved.
Please follow-up with appropriate action.
cc. Don Rumsfeld
10RD LIBRARY is GERALD
Dunhan
Sentio Hullin
THE WHITE HOUSE
WASHINGTON
June 18, 1975
ADMINISTRATIVELY CONFIDENTIAL
MEMORANDUM FOR:
JIM CANNON
FROM:
JAMES CONNOR of
SUBJECT:
EMERGENCY HOUSING ACT OF 1975
(HR 4485)
Your memorandum of June 17, 1975 to the President on the above
subject has been reviewed and the following was noted:
Option 1 - Do Nothing at this time - Disapp roved
Option 2 - Release the remaining Brooke-Cranston
Act tandem authority to purchase up to
$2 billion in residential mortgages -
Disapproved.
Option 3 - Release the remaining tandem authority to
purchase and resell $2 billion in residential
mortgages and support legislation to extend
and expand the standby tandem authority -
Approved.
Please follow-up with appropriate action.
CC. Don Rumsfeld
10
BERALD FORD LIBRARY
THE WHITE HOUSE
WASHINGTON
June 17, 1975
MEMORANDUM FOR
FROM
THE PRESIDENT Jan
JIM CANNON
SUBJECT
EMERGENCY HOUSING ACT OF 1975
(HR 4485)
I.
BACKGROUND
The Congress has forwarded to you the Emergency Housing
Act of 1975 (HR 4485). The last day for action is
Tuesday, June 24, 1975.
The most objectionable features of this legislation
include two mortgage interest subsidies programs, a
$1000 home purchase incentive payment plan, a fore-
closure relief program, and an extension of two
undesirable housing programs. A more detailed summary
is attached at Tab A. The outlay effect for FY '76 is
estimated at well over $1 billion and the total cost
is estimated at over $2.2 billion. HUD, OMB and the
Domestic Council are in agreement that this bill
should be vetoed.
II. CONGRESSIONAL SITUATION
In the House, Congressman Lud Ashley (D-Ohio) and
Congressman Garry Brown (R-Mich) led a strong attack
against the Conference Report. The House approved the
Conference Report by a vote of 253-155, more than enough
opposition votes to sustain a veto. However, a number of
the members voting in opposition, including Congressman
Brown, are counting on the Administration to propose some
constructive alternatives. The Senate approved the
Conference Report by a vote of 72-24.
Until recently, the National Association of Home Builders
had been the major force behind this legislation with tacit
support from the AFL-CIO. However, the AFL-CIO has decided
to make a strong battle to override the anticipated veto.
Congressman Ashley narrowly won re-election last year and
is sensitive to labor pressure. His continued opposition
to HR 4485 is critical in that many Democrats follow his
lead on housing legislation.
GERALD FORD
As reported in this morning's Leadership meeting, to
increase the probability of sustaining the anticipated
veto, Congressman Ashley and Congressman Brown have urged
the Administration to:
-- propose an acceptable foreclosure program as
an alternative to the Congress' foreclosure
approach, and
support legislation expanding activity under
the Tandem Plan as an alternative to the
Congress' interest subsidy programs.
Congressman Reuss, Chairman of the House Banking, Currency
and Housing Committee, is seeking a vote to override the
veto prior to the June 27 recess. Given the strong support
of organized labor, Congressman Reuss believes that he can
persuade the leadership to try to override. It is
anticipated that Speaker Albert will try to bring strong
pressure to bear on other Democrats in support of an override.
III. PROPOSAL
Secretary Hills believes that in order to sustain a veto,
the Administration will have to propose positive
alternatives to the Congress' foreclósure plan and
interest subsidy programs.
HUD, OMB and the Domestic Council have reached agreement
on an alternative foreclosure relief program which would
be operated on the principle of co-insurance in lieu of the
direct Federal loan approach proposed by the Congress.
The remaining issue is whether or not the President should
propose an alternative to the interest subsidy programs
proposed by the Congress. Secretary Hills believes that
the Tandem Plan approach authorized in the Emergency Home
Purchase Assistance Act of 1974 (Brooke/Cranston Act) is
the most immediate, responsible and workable alternative.
She proposes that you:
-- allow release of the remaining Tandem Plan authority;
-- support legislation extending the Tandem Plan for
a year;
-- support legislation expanding HUD's Tandem Plan
to cover multi-family dwellings and condominiums,
as well as adding additional mortgage purchase
authority.
GERALD LIBRARY ? FORD
-3- -
IV. OPTIONS
1.
Do nothing at this time
PROS
--- No increased outlays or additional Treasury borrowing
will be necessitated.
-- Improved credit conditions and increase in new home
sales do not support the need for additional subsidies.
-- Highlights Administration's determination to maintain
budgetary control.
CONS
--- Increases probability of a veto override.
--- By failing to provide an alternative, undercuts
friends of the Administration who have opposed the
bill.
-- Postures the Administration as insensitive to the
crisis in the ailing housing industry.
This option not recommended by anyone.
Approve
Disapprove
2.
Release the remaining Brooke-Cranston Act tandem authority
to purchase up to $2 billion in residential mortgages
PROS
-- This does NOT cause a $2 billion outlay in that the
purchased mortgages are later resold. The program could
cost very little or actually run at a profit, as occurred
in 1971, if massive savings inflows substantially decrease
interest rates between the purchase and resale, as
predicted by the Administration's economists. HUD
has administrative devices, such as charging discount
points, to minimize costs. Estimated maximum outlay for
FY '76 approximately $60 million and up to $125 million
in FY '77.
FORD LIBRARY 07V839
- -4-
Is less expensive and intrusive on private market
operations than the Congressionally posed alternatives.
(Estimated outlays for FY '76 in excess of $1 billion)
Mitigates, somewhat, the danger of a veto override.
-- Demonstrates the willingness of the Administration to
use its existing authority to assist housing, which is
perceived as a crucial element to an overall economic
recovery.
-- Utilizes an existing rather than a new program.
CONS
-- Although costs are speculative, could increase Treasury
borrowing and have a maximum outlay impact of from
$60 to $125 million in FY 76 and FY 77. The ultimate
budget cost depends on the differential between the
purchase price and sale price.
-- Could be interpreted as a weakness in the
Administration's resolve to control spending.
-- Leaves the Administration with no other resources to
assist housing should another downturn occur.
-- Does not provide an Administration legislative
alternative to the interest subsidy provisions of
the Emergency Housing bill.
Recommended by Jack Marsh.
Approve
Disapprove
3.
Release the remaining tandem authority to purchase and
resell $2 billion in residential mortgages and support
legislation to extend and expand the standby tandem
authority
PROS
-- This does NOT cause a $2 billion outlay in that the
purchased mortgages are later resold. The program could
cost very little or actually run at a profit, as occurred
in 1971, if massive savings inflows substantially decrease
interest rates between the purchase and resale, as pre-
dicted by the Administration's economists. HUD has
administrative devices, such as charging discount points,
to minimize costs. Estimated maximum outlay for FY 76
approximately $60 million and up to $125 million in FY 77.
FORD & LIBRAR 07883
-5-
-- Provides the greatest potential for ensuring that a
veto of the Emergency Housing bill is sustained.
-- Is less expensive and intrusive on private market
operations than the Congressional posed alternatives.
(Estimated outlays for FY 76 in excess of $1 billion).
-- Demonstrates the Administration's commitment to a
recovery in the housing sector, which is perceived as
a crucial element to an overall economic recovery.
-- Gives the Administration an alternative legislative
program to the Congressional package.
-- The new authority would be discretionary.
-- Provides additional standby authority, in case there
is another severe downturn in housing.
-- Permits tandem authority to be used to assist the
multi-family sector which is the most seriously depressed.
CONS
-- Although costs are speculative, could increase Treasury
borrowing and have a maximum outlay impact of from
$60 to $125 million in FY 76 and FY 77. The ultimate
budget cost depends on the differential between the
purchase price and sale price.
-- Could be interpreted as a weakness in the
Administration's resolve to control spending.
-- May ultimately result in pressure being brought to
bear on the Administration to release some of the
additional standby tandem authority.
Recommended by Secretary Hills, Max Friedersdorf,
Phil Buchen, Robert Hartmann, Jim Cannon.
Secretary Hills: Even if the veto is sustained, the
Secretary believes that in absence of the actions she
recommends, the Congress will quickly pass legislation
combining foreclosure relief and a mortgage interest
subsidy which will be extremely difficult to
successfully veto.
FORD is LIBRARY GERALD
- -6-
Robert Hartmann: It is crucial that the President's next
veto be sustained, and that when and if he gets overridden,
that the AFL-CIO NOT be the agent that tamed the
President when the veto-proof Congress failed. I therefore
favor Option 3 if, indeed, it offers the best way to
avoid an override.
Approve
Disapprove
NOTE:
Director Lynn recommends that you indicate your
willingness to support legislation expanding and
extending the Tandem Plan BUT that a determination on
releasing the remaining Tandem authority be withheld
at least until the latest housing starts and housing
permits figures are released later this week.
Approve
Disapprove
FORD is LIBRARY GERALD
Some items in this folder were not digitized because it contains copyrighted
materials. Please contact the Gerald R. Ford Presidential Library for access to
these materials.
710 Housing
program
rington Post
REAL ESTATE
Homes
FORD LIBRARY & CERALD
SATURDAY, AUGUST 2, 1975
Chipping Away at America's Dream
By Kenneth R. Harney
iest Americans because in-
by 57 per cent, property
floor of a suburban condo-
substantially at the 63 per
comes in the U.S. haven't
taxes by 64 per cent, and
minium.
cent American Dream. Al-
Second of two articles
kept pace with the sharp
fuel and utilities by 62 per
Clearly, If rises in the cost
ready real estate brokers
Twenty five years ago, two
rises in costs of land, mate-
rials, labor, mortgage credit
cent.
of housing continue to out-
across the country are
out of three families could
strip rises in income, we
worrying about softness in
afford to buy a median-
and energy. The costs asso-
Before 1965, only 6 per
can't remain a nation of
the "move up" resale mar-
priced new home. Today,
ciated with buying a typical
cent of all new houses con-
home owners in the tradi-
ket; people who have owned
fewer than one out of five
new home, in fact, have
structed sold for more than
tional sense. Sixty three per
their homes and would like
risen twice as fast as the
$35,000. In the Washington
cent of all American fami-
a newer one are now staving
THE WHITE HOUSE
WASHINGTON
August 12, 1975
MEMORANDUM FOR
JACK MARSH
FROM
JIM CANNON Due
SUBJECT
OLD DOMINION SAVINGS AND LOAN:
FEDERAL HOME LOAN MORTGAGE CORPORATION
CAPITAL REQUIREMENTS
PURPOSE: You forwarded for our review the attached
correspondence from Old Dominion Savings and Loan (Tab A)
complaining that the Federal Home Loan Mortgage Corporation's
(FHLMC) $5 million capital requirement for participating
private mortgage insurance companies is arbitrary and restricts
the entry of smaller companies into the industry. This
memorandum provides brief background to the capital
requirement issue and attaches a response for your
signature (Tab B).
BACKGROUND: FHLMC purchases mortgages insured by private
mortgage insurance companies (PMIs). By statute, FHLMC is
required to establish eligibility requirements for
participating PMIs. Under the FHLMC regulations, eligible
PMIs must meet capital requirements of $5 million. The
mortgage insurance industry at large has, according to FHLMC,
viewed the $5 million as a minimum which should be raised.
Recent entries into the national mortgage insurance business
have been capitalized at multiples of the FHLMC requirement.
Three small PMIs capitalized at well under $5 million are
complaining that the requirement is discriminatory. These
companies are Secura Insurance, Mid Atlantic and Home
Guaranty (the subject of the attached request).
RECOMMENDATION: FHLMC is a quasi regulatory agency under the
Federal Home Loan Bank Board. The issue is a regulatory
matter which has been brought to the attention of the
Counsel's office. I suggest you sign the attached
acknowledgement. Counsel's office (Chapman) concurs.
ACTION: The attached response is for your signature (Tab B).
FORD LIBRARY & BERALD
THE WHITE HOUSE
WASHINGTON
August 30, 1975
Dear Fred:
Thank you very much for your letter of July 17 regarding
the Federal Home Loan Mortgage Corporation's capital
requirements for private mortgage insurance companies.
It seems to me that your comments have great merit, and
I am hopeful that an appropriate resolution of the
problem can be found.
As you know, the Federal Home Loan Banking Board and the
Federal Home Loan Mortgage Corporation are quasi-regulatory
agencies, and it is our policy to work through the office
of Philip Buchen, Counsel to the President, in resolving
matters relating to them. I have talked with Phil about
your letter, and I am sure he will look into the matter.
I very much appreciate your bringing this matter to my
attention.
With best wishes and warm personal regards,
Sincerely,
John O. Marsh, Jr.
Counsellor to the President
Mr. Fred L. Glaize, Jr.
Old Dominion Savings and Loan Association
Post Office Box 826
202 West Boscawen Street
Winchester, Virginia 22601
LOG NO. 7501228
THE WHITE HOUSE
REQUEST
WASHINGTON
November 28, 1975
Housing
MEMORANDUM FOR:
JIM CANNON
file
FROM:
TOD HULLIN
SUBJECT:
Detroit
FORD & LIBRARY GERALD
ISSUE: Will HUD insure the mortgage for a proposed develop-
ment called International Towers?
BACKGROUND: The proposed development of International Towers
would be located on the Detroit River, west of Cobo Hall and
south of Jefferson in downtown Detroit. The proposal under
consideration is the first phase of a larger development
potentially totalling up to 3,000 units. All of the buildings
in subsequent phases, as well as the first phase, would be
high-rise construction. The phase under consideration at this
time would have 915 units in two buildings.
At the present time, a proposal to insure the International
Towers project has not been officially submitted. However,
in preliminary discussions with the developer, HUD has ten-
tatively concluded that the stability and depth of the luxury
high-rise market in the area in which this project is to be
located is at best tenuous. Over 3,000 apartments in this
area have been analyzed. More than 60% are HUD insured devel-
opments. Almost all of the HUD insured apartments are in some
form of financial distress with several of the mortgages in
default and others actually owned by HUD.
A final decision on this proposal cannot be made until an
official proposal is submitted. However, HUD's preliminary
economic analysis seems to indicate that the market will have
a difficult time supporting a project as large as International
Towers.
Recently, Secretary Hills had an interview with Storer Broad-
casting in which she was asked about the International Towers
project. At that time, she indicated that HUD had some eco-
nomic problems with the project in that the luxury high-rise
market in the Detroit area was "soft." Detroit Mayor Coleman
Young is a supporter of this project and has asked for a
meeting with Secretary Hills to discuss it.
This is not an issue in which we should become involved. It
should be worked out between the developer and HUD.