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This file contains material relating to Financial Institutions Act, Section 8 Program - Rental Subsidy, of Housing and Community Development Act of 1974.
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4/28/75 - American Bankers Association, Denver, Colorado
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4/28/75 - American Bankers Association, Denver, Colorado
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This file contains material relating to Financial Institutions Act, Section 8 Program - Rental Subsidy, of Housing and Community Development Act of 1974.
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Carla A. Hills Speeches
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Interest rates
Rent subsidies
Federal aid
Housing
Urban policy
Banks and banking
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Revenue sharing
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1975
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The original documents are located in Box 1, folder "4/28/75 - American Bankers
Association, Denver, Colorado" of the Carla A. Hills Speeches 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States of America his copyrights in all of his unpublished writings in National Archives collections.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.
FINAL
AMERICAN BANKERS ASSOCIATION
DENVER, COLORADO
APRIL 28, 1975
THANK YOU FOR THAT KIND INTRODUCTION. I APPRECIATE
BEING ASKED TO ADDRESS YOUR 15TH NATIONAL CONFERENCE AND
TO HAVE A PART IN MARKING THE 100TH ANNIVERSARY YEAR OF
THIS OUTSTANDING ORGANIZATION. I CONGRATULATE YOU ON
ATTAINING THAT SIGNIFICANT MILESTONE,
YOUR INVITATION PROVIDES ME WITH MY FIRST PUBLIC FORUM
SINCE BECOMING SECRETARY OF HOUSING AND URBAN DEVELOPMENT.
I AM BEGINNING HERE WHAT I HOPE WILL BE A CONTINUING DIALOGUE
WITH GROUPS IN THE PRIVATE SECTOR, REGARDING SOME OF THE GOALS
AND PRIORITIES I HAVE ESTABLISHED FOR THE COMING YEAR,
HUD's MISSION AS SET FORTH IN THE HOUSING ACT OF 1949,
IS "A DECENT HOME AND SUITABLE LIVING ENVIRONMENT FOR EVERY
AMERICAN FAMILY." THUS, "EVERY AMERICAN FAMILY" IS HUD's
CONSTITUENCY. To SERVE THAT CONSTITUENCY, HUD MUST ADDRESS
A VARIETY OF NEEDS.
I SEE FOUR MAJOR CHALLENGES IN THE COMING YEAR,
FORD & LIBRARY
Digitized from Box 1 of the Carla A. Hills Speeches at the Gerald R. Ford Presidential Library
-2-
FIRST, WE MUST LOOK FOR NEW WAYS OF MAINTAINING FOR
A SIGNIFICANT PROPORTION OF AMERICAN FAMILIES, A REALISTIC
OPPORTUNITY FOR HOMEOWNERSHIP -- THAT MEANS A CONSTANT AND
ADEQUATE SUPPLY OF MORTGAGE CREDIT.
SECOND, WE MUCH PROVIDE ADEQUATE HOUSING FOR MORE LOWER
INCOME FAMILIES.
THIRD, HUD AND THE PRIVATE SECTOR MUST PROVIDE NOT
ONLY HOUSING BUT A SUITABLE LIVING ENVIRONMENT. IN MANY
CASES, THAT MEANS PRESERVING OUR URBAN CENTERS FROM BLIGHT
AND DECAY,
FINALLY, HUD MUST PROTECT THE CONSUMERS OF HOUSING IN
THE MARKETPLACE. HERE IS WHERE WE PARTICULARLY NEED THE
SUPPORT AND COOPERATION OF THE PRIVATE SECTOR,
LET ME DISCUSS BRIEFLY THESE FOUR CHALLENGES,
FIRST, REALISTIC OPPORTUNITY FOR HOMEOWNERSHIP FOR A
SIGNIFICANT PROPORTION OF AMERICAN FAMILIES CANNOT BE ACHIEVED
WITHOUT A STABLE AND ADEQUATE SUPPLY OF MORTGAGE CREDIT. THE
CURRENT CRISIS IN THE HOUSING INDUSTRY IS AN EXAMPLE OF THE
"FEAST OR FAMINE" CYCLES WHICH PLAGUE IT.
FORD & LIBRARY GRAVED
-3-
PERIODIC DISINTERMEDIATION FROM THRIFT INSTITUTIONS
PRODUCES SCARCITIES OF MORTGAGE FUNDS, RESTRICTIVE MORTGAGE
TERMS, AND PROHIBITIVELY HIGH INTEREST RATES, RESULTING IN
SERIOUS DECLINES IN HOUSING STARTS. THE CATASTROPHIC DROP
IN MORTGAGE LENDING AND HOUSING STARTS WHICH OCCURRED IN
1974 EXEMPLIFIES THESE PHENOMENA. AND, IT IS THESE PHENOMENA
WHICH ACCOUNT FOR THE PRESIDENT'S GREAT CONCERN WITH THE
PROSPECT OF A GROWING FEDERAL BUDGET DEFICIT. INCREASING
REQUIRED TREASURY BORROWING WILL DEPLETE AVAILABLE CAPITAL
AND DRIVE UP THE COST OF MONEY CREATING ANOTHER ADVERSE
CYCLE IN THE ECONOMY IN GENERAL AND IN HOUSING IN PARTICULAR,
THE GOVERNMENT IS VERY CONCERNED ABOUT THE SUPPLY OF
MORTGAGE CREDIT, IT HAS ENGAGED IN PREFERENTIAL TREATMENT
OF THE MORTGAGE SECTOR OF THE CREDIT MARKET SINCE THE EARLY
1930's. IN THE MIDST OF OUR WORST DEPRESSION IT CREATED A
SYSTEM OF PRIVATE THRIFT INSTITUTIONS WHOSE INVESTMENTS WERE
LIMITED TO MORTGAGES. AT THE SAME TIME THE FHA MORTGAGE
INSURANCE PROGRAM BROUGHT ABOUT MARKET ACCEPTANCE OF THE
LONG-TERM, LOW DOWNPAYMENT MORTGAGE, THEREBY MAKING HOME-
OWNERSHIP A REALISTIC POSSIBILITY FOR MILLIONS OF FAMILIES,
GERALO R. FORD LIBRARY
-4-
BUT, THE CURRENT SYSTEM HAS NOT ENDED CYCLICAL
FLUCTUATIONS IN THE AVAILABILITY OF MORTGAGE CREDIT. NOR
HAS IT PROVIDED ADEQUATE MORTGAGE FUNDS DURING MAJOR
PORTIONS OF THE ECONOMIC CYCLE. ACCORDINGLY, WE MUST
FIND NEW WAYS TO STABILIZE THE AVAILABILITY OF MORTGAGE
CREDIT.
TEMPORARY INTEREST SUBSIDIES WILL NOT SOLVE THE
PROBLEM. IN A TIME OF SCARCE CREDIT, A SUBSIDY TO ONE
SEGMENT OF THE HOUSING MARKET MAY ONLY SUBSTITUTE THOSE
WHO BENEFIT FROM THE SUBSIDY FOR THOSE WHO WOULD HAVE
BUILT HAD THE PRIVATE MARKET OPERATED WITHOUT INTERFERENCE,
SUCH SUBSIDIES DISRUPT THE FINANCIAL MARKETPLACE WITHOUT
INCREASING THE CREDIT AVAILABLE FOR RESIDENTIAL CONSTRUCTION
OR CORRECTING THE DAMAGING FLUCTUATIONS,
HUD DOES NOT YET HAVE THE COMPLETE ANSWER TO THE
DIFFICULT PROBLEM OF MORTGAGE CREDIT AVAILABILITY, WE URGE
PASSAGE OF THE FINANCIAL INSTITUTIONS AcT IN THE BELIEF
IT WILL HELP REDUCE THE SEVERITY OF HOUSING CREDIT CYCLES.
GERALD R. FORD
-5-
THE FINANCIAL INSTITUTIONS Act CALLS FOR DIVERSIFICATION
IN THE SERVICES OFFERED BY AND INVESTMENTS AVAILABLE TO
VARIOUS KINDS OF FINANCIAL INSTITUTIONS. INTEREST-BEARING
CHECKING AND CORPORATE SAVINGS ACCOUNTS WILL BE PERMITTED
ON A NATIONAL BASIS FOR COMMERCIAL BANKS. THE RANGE OF
SERVICES PROVIDED BY THE THRIFTS WILL ALSO BE INCREASED.
THAT DIVERSIFICATION SHOULD NOT ONLY RELIEVE THE FINANCIAL
COMMUNITY OF MUCH UNNECESSARY GOVERNMENT REGULATION, BUT
ALSO INCREASE EFFICIENCY THROUGH THE PRESSURES OF INCREASED
COMPETITION,
THE FINANCIAL INSTITUTIONS ACT LOOKS TOWARD THE ABOLITION
OF ALL INTEREST RATE CEILINGS WITHIN 5-1/2 YEARS OF ENACTMENT,
PRIOR TO THE END OF THAT PERIOD, THERE WILL BE A THOROUGH
STUDY OF THE FINANCIAL MARKET AND THE WAY IN WHICH THE AcT
HAS OPERATED. BASED UPON THE FINDINGS OF THE STUDY, THE
ADMINISTRATION WILL RECOMMEND TO CONGRESS WHETHER TO ABOLISH
INTEREST RATE CEILINGS,
FORDO a LIBRARY GERALD
-6-
OTHER FINANCIAL INSTITUTIONS, SUCH AS CREDIT UNIONS,
WILL BE DRAWN INTO MORTGAGE LENDING BY THE LIBERALIZED
PROVISIONS OF THE AcT. DIVERSIFICATION OF SERVICES AND
INVESTMENTS BY INSTITUTIONS HEAVILY INVOLVED IN MORTGAGE
FINANCE COULD REDUCE THEIR VULNERABILITY TO ECONOMIC
CYCLES, THE ABOLITION OF INTEREST RATE CEILINGS COULD
STEM THE FLIGHT OF FUNDS FROM LENDING INSTITUTIONS TO THE
CAPITAL MARKET DURING PERIODS OF TIGHT MONEY AND HIGH
INTEREST RATES,
To ENCOURAGE BROADER INVESTMENTS IN RESIDENTIAL
MORTGAGES THE AcT PROVIDES A TAX CREDIT OF BETWEEN 1-1/2
PERCENT AND 3-1/2 PERCENT OF THE INTEREST INCOME RECEIVED
FROM MORTGAGE ASSETS, WHERE AT LEAST 10 PERCENT OF AN
INSTITUTION'S PORTFOLIO IS MAINTAINED IN QUALIFIED
RESIDENTIAL MORTGAGE LOANS, THIS IS SIMILAR TO THE TAX
TREATMENT CURRENTLY ENJOYED BY THRIFT INSTITUTIONS IN
CONNECTION WITH BAD DEBT RESERVES.
THIS MORTGAGE INTEREST TAX CREDIT HAS A COUNTER
CYCLICAL EFFECT BECAUSE THE RATE ADVANTAGE OF MORTGAGES
WILL RISE DURING TIMES OF TIGHT MONEY MAKING MORTGAGES
RELATIVELY MORE ATTRACTIVE TO INVESTORS WHEN CREDIT IS
SCARCE.
R. FORD
-7-
THE FINANCIAL INSTITUTIONS ACT HAS BEEN CRITICIZED
BOTH FOR DOING TOO MUCH AND FOR DOING TOO LITTLE. SOME
SAY IT CHANGES COMPETITIVE POSITIONS IN THE INDUSTRY
WITHOUT GOOD REASON. BUT WE SEE THE AcT AS SEEKING TO
PROVIDE FOR A LESS REGULATED MARKET IN WHICH ALL BANKING
INSTITUTIONS CAN COMPETE MORE EFFECTIVELY. THE BENEFITS
TO BANKING FROM THIS DEREGULATION SEEM TO ME TO FAR
OUTWEIGH ANY FEATURES WHICH ARE SEEN ON A SHORT-RUN BASIS
TO FAVOR ONE GROUP OF INSTITUTIONS OVER ANOTHER.
DEREGULATION WILL HELP PROVIDE A MORE CONSTANT AND MORE
ADEQUATE SUPPLY OF MONEY WHICH IS ESSENTIAL TO A HEALTHY
AND STABLE HOUSING INDUSTRY. A FREER MARKET IS WORTH
SEEKING.
THOSE WHO SAY THAT THIS Act DOES NOT DO ENOUGH MUST
REMEMBER THAT WE HAVE NOT AS YET PASSED THIS AcT, WE
CAN ONLY PROCEED ONE STEP AT A TIME, TAKE THIS STEP,
AND IF THE RESULTS ARE AS WE ANTICIPATE, WE CAN TAKE THE
NEXT STEP, IT IS NOT EASY TO REVERSE THE TREND TOWARD
HEAVIER REGULATION. MODEST AS SOME MAY THINK THE PROPOSED
Act MAY BE, ITS THRUST IS IN THE RIGHT DIRECTION.
A FORD
-3-
WE ARE TAKING OTHER STEPS TO IMPROVE MORTGAGE CREDIT.
PROCEDURES ARE BEING STREAMLINED TO SERVE BETTER BOTH
LENDERS AND HOME PURCHASERS. FOR EXAMPLE, HUD HAS INITIATED
A PARTIAL CO-INSURANCE PROGRAM. IN RETURN FOR ASSUMING A
PORTION OF THE RISK, MORTGAGE LENDERS CAN ELIMINATE MOST OF
THE RED TAPE ASSOCIATED WITH GOVERNMENT MORTGAGE INSURANCE.
THE LENDER WILL TAKE OVER CREDIT AND PROPERTY UNDERWRITING
FUNCTIONS NOW PERFORMED BY FHA.
ALSO, WE ARE LOOKING FOR, AND WE WILL FIND, NEW SOURCES
OF INVESTMENT FUNDS WHICH ARE LESS SUBJECT TO CYCLICAL
PRESSURES FOR USE IN MORTGAGE FINANCE,
AND, WE WILL ASSIST IN THE DEVELOPMENT OF NEW KINDS
OF MORTGAGE INSTRUMENTS TO SEE IF THERE ARE ALTERNATIVES TO
THE LONG-TERM STABLE PAYMENT MORTGAGE WHICH COULD INCREASE
THESE AREAS WHERE YOUR INDUSTRY CAN CONTRIBUTE VALUABLE
INSIGHTS AND EXPERIENCE.
-9-
PERHAPS OUR MOST VISIBLE EFFORTS THIS YEAR WILL BE
SEEN IN OUR FIRM DETERMINATION TO IMPROVE THE OPERATION
OF FHA. IT CAN BE MADE MORE EFFICIENT. FHA HAS A LARGE
GROUP OF LOYAL AND DEDICATED EMPLOYEES, AND I AM PERSONALLY
COMMITTED TO MAKING SUCH CHANGES IN PROCEDURES, AND WHERE
NECESSARY IN STRUCTURE, TO ENABLE THEM TO SERVE MORE
EFFECTIVELY THOSE SEGMENTS OF THE MARKET FOR WHICH FHA HAS
PARTICULAR IMPORTANCE, A MORE EFFICIENT FHA WILL ENABLE
MORE FAMILIES TO ENJOY THE BENEFITS OF HOMEOWNERSHIP AT
AN EARLIER STAGE IN THEIR LIVES,
WITH RESPECT TO OUR RESPONSIBILITY TO PROVIDE HOUSING
FOR THE POOR, WE MUST RECOGNIZE THAT FOR MANY PEOPLE, THE
ISSUE IS NOT HOW TO PURCHASE A BETTER HOME BUT RATHER HOW
TO SECURE DECENT SHELTER, SEVEN MILLION AMERICAN FAMILIES
LIVE IN SUBSTANDARD HOUSING AND ARE UNABLE TO AFFORD ANY
BETTER. ANOTHER NINE MILLION ARE PAYING A DISPROPORTIONATE
SHARE OF THEIR INCOME FOR THE MOST MODEST OF HOUSING
ACCOMMODATIONS. PUT ANOTHER WAY, 16 MILLION HOUSEHOLDS IN
AMERICA ARE OFFICIALLY CLASSIFIED AS "HOUSING POOR".
FORDO & LIBRARY GERALD
-10-
THE GOVERNMENT IS CONCERNED. BEGINNING WITH THE
HOUSING Act OF 1937, THE FEDERAL GOVERNMENT HAS ASSISTED LOWER
INCOME FAMILIES TO LIVE IN DECENT HOUSING. SINCE THE PASSAGE
OF THE HOUSING Act OF 1968, THE FEDERAL GOVERNMENT CAUSED
MORE SUBSIDIZED HOUSING UNITS TO BE CONSTRUCTED THAN HAD
BEEN BUILT IN THE ENTIRE 35 YEARS OF PRIOR GOVERNMENT
INVOLVEMENT.
AND YET MANY OF OUR REMEDIAL MEASURES HAVE SPAWNED NEW
AND DIFFICULT SOCIAL PROBLEMS. HOUSING LOWER INCOME FAMILIES
HAS TOO OFTEN MEANT NEW PROJECTS BUILT EXCLUSIVELY FOR LOWER
INCOME FAMILIES. SERIOUS SOCIAL PROBLEMS HAVE BEEN CREATED
BY THIS FOCUS,
THE NUMBER OF ELIGIBLE FAMILIES THAT CAN BE HOUSED
IN SUCH PROJECTS IS LIMITED BECAUSE NEW CONSTRUCTION IS
THE MOST COSTLY METHOD OF PROVIDING HOUSING ASSISTANCE.
FOR THOSE FEW LOWER INCOME FAMILIES WHO DO HAVE ACCESS
TO SUCH FEDERALLY ASSISTED HOUSING, THERE IS LITTLE OR NO
CHOICE AS TO WHERE OR IN WHAT TYPE OF HOUSING THEY WILL LIVE.
FOID IS LIBRARY GERALD
-11-
Too OFTEN THE CONCENTRATION OF LOWER INCOME FAMILIES
IN GOVERNMENT-SUBSIDIZED PROJECTS HAS CREATED NEW GHETTOS
IN WHICH THE PROBLEMS OF THE RESIDENTS AND THE COMMUNITY
ARE COMPOUNDED.
AND, TOO OFTEN NEW CONSTRUCTION TO HOUSE THE POOR HAS
LEFT THE CENTRAL CITIES BLIGHTED, DECAYED, AND FINALLY
ABANDONED.
OUR EXPERIENCE OVER THE PAST 35 YEARS HAS TAUGHT US
THAT THERE ARE NO ALL-PURPOSE ANSWERS. BUT, WE HAVE
LEARNED THAT THESE CRUCIAL SOCIAL PROBLEMS ARE MOST
SUSCEPTIBLE TO SOLUTION WHEN THE FEDERAL, STATE AND LOCAL
GOVERNMENTS WORK TOGETHER WITH THE PRIVATE SECTOR, EACH
LOCALITY HAS SPECIAL NEEDS AND EACH SHOULD BE GIVEN THE
CHANCE TO DEVELOP ITS OWN MODEL,
HUD IS NOW IMPLEMENTING A NEW RENTAL SUBSIDY PROGRAM,
THE SECTION 8 PROGRAM, AUTHORIZED BY THE HOUSING AND
COMMUNITY DEVELOPMENT Act OF 1974 WHICH REPRESENTS, I
BELIEVE, A PROMISING AND FLEXIBLE NEW APPROACH TO HOUSING
THE POOR,
P.
FORD
GERALD
-12-
IT INTRODUCES THE COMPETITION OF THE MARKETPLACE
REGARDING THE DESIGN AND LOCATION FOR NEW CONSTRUCTION.
IT IMPOSES MARKET DISCIPLINE ON THE COST OF HOUSING FOR
LOW INCOME FAMILIES BECAUSE THOSE COSTS ARE NOT PERMITTED
TO EXCEED MARKET RENTS,
BESIDES NEW CONSTRUCTION, SECTION 8 CAN BE USED
FOR STANDARD EXISTING HOUSING AND FOR REHABILITATION
OF SUBSTANDARD STOCK. THIS APPROACH CAN HELP TO STEM
THE FLOW OF FAMILIES FROM THE INNER CITY.
FINALLY, SECTION 8 ALLOWS AN ELIGIBLE FAMILY TO KNOW
HOW MUCH IT CAN AFFORD TO SPEND FOR HOUSING WITH ITS
SUBSIDY AND TO CHOOSE ITS OWN HOME AND LIVING ENVIRONMENT.
THESE LOWER INCOME FAMILIES WILL HAVE A FREEDOM AND
RESPONSIBILITY WITH RESPECT TO THEIR HOUSING WHICH THEY
HAVE NEVER HAD BEFORE,
HUD IS ALSO CONDUCTING A LARGE-SCALE EXPERIMENT WITH
A DIRECT CASH ASSISTANCE PROGRAM, THAT STUDY SHOULD PROVIDE
ANSWERS TO THE IMPORTANT QUESTION OF WHETHER RELIANCE ON THE
HOUSING DEMANDS OF THE POOR WILL BETTER MEET THEIR NEEDS
THAN OUR PAST PRACTICE OF BUILDING STRUCTURES, HOPING THEY
WILL BE INHABITED AND PROPERLY MAINTAINED.
GERALD R. FORD LIBRAGE
-13-
IN ADDITION TO EFFORTS TO ASSIST EVERY FAMILY TO OBTAIN
A STANDARD UNIT OF HOUSING, WE MUST GIVE ATTENTION TO THE
ENVIRONMENT IN WHICH THAT STRUCTURE IS LOCATED. WE NEED TO
DEVELOP WAYS TO ENSURE THE RATIONAL AND SOCIALLY PRODUCTIVE
GROWTH OF OUR COMMUNITIES,
URBAN DECAY IS ONE OF THE MOST SERIOUS HUMAN ENVIRONMENT
PROBLEMS. IN TOO MANY CITIES THERE ARE BLOCK UPON BLOCK OF
ABANDONED HOUSES NOT FAR FROM OVERCROWDED TENEMENTS.
ABANDONMENT OF OUR CENTRAL CITIES BY LARGE SEGMENTS OF THE
POPULATION HAS CREATED ENORMOUS SOCIAL AND ECONOMIC COSTS,
As CORE AREAS OF OUR CENTRAL CITIES ARE ABANDONED,
SUBSTANTIAL STOCKS OF HOUSING GO TO WASTE,
As THOSE NEIGHBORHOODS DECAY AND BECOME BLIGHTED,
THE RESULTS IMPACT MOST HEAVILY UPON THE POOR, WHO ARE
LEFT BEHIND. AND, OUR URBAN SLUMS BREED THE SOCIAL ILLS
WHICH ARE THE BANE OF OUR COLLECTIVE CONSCIENCE.
R
FORD
GERALD
-14-
WE MUST ATTACH ^ HIGH PRIORITY TO THE PRESERVATION
OF OUR CITIES. SECTION 8 ALONE CANNOT STEM THE TIDE OF
URBAN DECAY, ACCORDINGLY, CONGRESS AND THE ADMINISTRATION
HAVE RESPONDED TO THIS PROBLEM WITH COMMUNITY DEVELOPMENT
GRANTS, WHICH GIVE FUNDS DIRECTLY TO LOCAL GOVERNMENTS
AND AFFORD LOCAL OFFICIALS WIDE LATITUDE IN UTILIZING
THESE FUNDS WITHIN THEIR COMMUNITIES. THE COMMUNITY
DEVELOPMENT PROGRAM IS BASED UPON THE CONCEPT OF SPECIAL
REVENUE-SHARING. IT CONSTITUTES AN AMBITIOUS EXPERIMENT
IN NEW FEDERALISM BY WHICH OUR COMMUNITIES ARE ENCOURAGED
TO FIND NEW WAYS TO REVITALIZE THEIR URBAN ENVIRONMENT.
FINALLY, HUD IS CURRENTLY PLAYING A FAR MORE IMPORTANT
ROLE IN PROTECTING THE CONSUMERS OF HOUSING. THE PRIVATE
MARKETPLACE HAS CHANGED SIGNIFICANTLY IN THE LAST DECADE,
THE RULE OF LET THE BUYER BEWARE HAS GIVEN WAY TO A RULE OF
LET THE SELLER BE HONEST, THE BUYER BE KNOWLEDGEABLE, AND
THE PRODUCT BE SERVICEABLE,
FORDO 5. LIBRARY 07VH39
-15-
HUD IS INCREASINGLY BEING GIVEN A REGULATORY ROLE BY
CONGRESS IN CONSUMER PROTECTION, FOR EXAMPLE, HUD IS NOW
PROMULGATING SAFETY AND DURABILITY STANDARDS FOR MOBILE
HOMES PURSUANT TO TITLE VI OF THE COMMUNITY DEVELOPMENT
ACT OF 1974.
HUD IS ALSO IMPLEMENTING THE REAL ESTATE SETTLEMENT
PROCEDURES Act WHICH WILL AFFECT NEARLY EVERY RESIDENTIAL
REAL ESTATE TRANSACTION IN THE COUNTRY, IN ENACTING THAT
LAW, CONGRESS STRUCK THE BALANCE BETWEEN THE NEEDS OF
CONSUMERS AND THOSE OF THE MARKETPLACE, OPTING FOR
DISCLOSURE RATHER THAN OUTRIGHT REGULATION, WE EXPECT
THAT LAW TO BENEFIT ALL PARTIES TO THE REAL ESTATE
TRANSACTION -- BUYER, SELLER AND LENDER -- BY MAKING THOSE
PARTICIPANTS BETTER INFORMED, HUD's GENERAL COUNSEL,
ROBERT ELLIOTT, WILL BE DISCUSSING THE COMPLEXITIES OF
THAT IMPORTANT PIECE OF LEGISLATION WITH YOU ON WEDNESDAY.
OUR OTHER CONSUMER PROTECTION ACTIVITES INCLUDE
PROPOSED LEGISLATION CONCERNING ENERGY EFFICIENCY STANDARDS
FOR RESIDENTIAL CONSTRUCTION AND A STUDY OF THE CONDOMINIUM
MARKET LOOKING TOWARD POSSIBLE LEGISLATIVE PROPOSALS
CONCERNING THIS GROWING SEGMENT OF THE HOUSING INDUSTRY,
GERALD P PORT
-16-
MORE CAN AND WILL BE DONE AT HUD TO ENSURE CONSUMER
CONFIDENCE IN HOUSING. OUR NEW CONSUMER PROTECTION ROLE
REQUIRES US TO FACE A NUMBER OF DIFFICULT ISSUES CONCERNING
OUR REGULATORY FOCUS, THE PROPER BALANCE BETWEEN THE NEEDS
OF THE CONSUMER AND THE NEEDS OF THE MARKETPLACE, AND THE
INTERRELATIONSHIP BETWEEN FEDERAL, STATE AND LOCAL GOVERNMENTS.
OUR CHALLENGE IS TO PERFORM OUR ROLE OF CONSUMER
PROTECTION WITHOUT SO ENCUMBERING THE HOUSING INDUSTRY
WITH REGULATIONS THAT THERE WILL BE NO CONSUMERS TO PROTECT.
WITH THAT PROBLEM WELL IN MIND AND WITH THE FULL COOPERATION
OF GROUPS IN THE PRIVATE SECTOR, SUCH AS YOURS, WE CAN DO THE
JOB,
Now, LET ME ADMIT THAT ALL OF MY WORDS HAVE IGNORED
WHAT IS OBVIOUS: THE HOUSING INDUSTRY TODAY IS IN A TERRIBLE
SLUMP, A SLUMP THAT THREATENS OUR NATIONAL HOUSING GOALS
AND INDEED OUR NATION'S ECONOMY,
NONE OF THE EFFORTS AT HUD WHICH I HAVE MENTIONED WILL
PULL THE INDUSTRY OUT OF THE SLUMP, HUD HAS NO MASSIVE
SPENDING PROGRAM BEFORE CONGRESS.
GERALD R. FORD TERRITO
-17-
WE SEE THE KEY TO IMPROVED HOUSING AS IMPROVED CONSUMER
CONFIDENCE. CONFIDENCE THAT INFLATION IS UNDER CONTROL;
CONFIDENCE THAT THE JOBLESS RATE WILL DECLINE; AND, MOST
OF ALL, CONFIDENCE THAT OUR ECONOMY IS UNDER INTELLIGENT
DIRECTION. WE EXPECT THE HOUSING INDUSTRY TO IMPROVE AHEAD
OF GENERAL ECONOMIC IMPROVEMENT, BUT HOUSING CANNOT STAY
ON THE TRACK IF THE OVERALL ECONOMY FALLS OFF THE TRACK,
IT IS ALL TOO EASY TO SAY THAT WE CAN SPEND OUR WAY
OUT OF THE HOUSING SLUMP, BUT IF THIS NATION YIELDS TO
THAT TEMPTATION, WE ARE VERY LIKELY TO FIND OURSELVES IN A
NEW AND CRIPPLING INFLATIONARY SPIRAL. THAT EVENT WOULD
EXACERBATE THE FEAST AND FAMINE CYCLES IN THE HOUSING
INDUSTRY AND DESTROY MUCH OF ITS PRODUCTIVE CAPACITY,
HUD CAN AND WILL CONTINUE TO DEVELOP PROGRAMS TO
STIMULATE AND TO GUIDE THE HOUSING INDUSTRY AS IT RECOVERS
ALONG WITH THE GENERAL ECONOMY SO THAT ITS FUTURE WILL BE
MORE STABLE, so THAT ITS CYCLES WILL BE LESS EXTREME, so
THAT MORTGAGE CREDIT WILL BE MORE READILY AND STEADILY
AVAILABLE, so THAT MORE FAMILIES CAN SHARE IN THE BENEFITS
OF A REJUVENATED ECONOMY, AND so THAT CONSUMERS OF HOUSING
CAN HAVE MORE CONFIDENCE IN THE HOUSING THEY SELECT,
FORD LIBRADA
-18-
THIS IS THE PHILOSOPHY THAT WILL GUIDE HUD IN THE MONTHS
AHEAD. I LOOK TO THE PRIVATE SECTOR, AND MORE PARTICULARLY
ON SUCH WELL RESPECTED GROUPS SUCH AS YOURS, FOR COUNSEL,
FOR CONSTRUCTIVE CRITICISM, AND MOST IMPORTANTLY, FOR A
SPIRIT OF COOPERATION IN MEETING OUR COMMON GOAL OF "A DECENT
HOME AND SUITABLE LIVING ENVIRONMENT FOR EVERY AMERICAN
FAMILY.
THANK YOU.
OERALO A FORD 1